Coal Operators Cas. Co. v. C. L. Smith & Son Coal Co.

• Decision Date: 05 September 1951
• Docket Number: No. 3847,3847
• Court: Virginia Supreme Court
• Parties: COAL OPERATORS CASUALTY COMPANY v. C. L. SMITH & SON COAL COMPANY, ET AL. Record

Page 521

66 S.E.2d 521

192 Va. 619

COAL OPERATORS CASUALTY COMPANY v. C. L. SMITH & SON COAL COMPANY, ET AL.

Record No. 3847.

Supreme Court of Appeals of Virginia

September 5, 1951.

Greear, Bowen, Mullins & Winston, for the appellant.

Kiser, Vicars & Kiser, J. A. Runyon, Francis D. Burke and Kenneth A. Howe, for the appellees.

JUDGE: BUCHANAN

BUCHANAN, J., delivered the opinion of the court.

The Industrial Commission held that the compensation insurance issued by the appellant, herein called the insurer, to C. L. Smith, herein sometimes called the employer, covered T. J. Harris, who was killed as the result of an accident arising out of and in the course of his employment by Smith as a coal miner. On this appeal the insurer denies liability, as it did before the Commission, on the grounds that after the issuance of the policy and before the accident (1) the employer was changed from C. L. Smith, individual, to C. L. Smith & Son Coal Company, a partnership; and (2) the mining operation was changed to a location different from the one described in the policy; both without notice to the insurer.

Harris was killed June 21, 1949, by the explosion of a carbide container under the tipple while attempting to get some carbide for his miner's lamp. The insurance policy then in effect was a renewal of the original policy issued by the insurer November 19, 1947, for one year, which was renewed to November 19, 1949, and again on the latter date to November 19, 1950, the three policies being in identical terms except as to dates. All were issued on the original application and contained a declaration, based on the application, that the name of the employer was C. L. Smith, individual, and the location of all premises or other work places was 'one mile north of Wise, Wise County, Virginia. ' Under 'Classification of Operations' was '1016 Bituminous Mining.' Another item of the Declaration was: 'This Employer is conducting no other business operations at this or any other location not herein disclosed -- except as herein stated: No exceptions.'

We need not linger over the defense of non-liability because of change of employer. There was in fact no change. The evidence shows clearly that the name of Smith's son, a fifteen-year-old school boy, was added to satisfy a whim of Smith's wife. Smith remained the sole owner. The report of the accident, made June 22, 1949, gave the name of the employer as C. L. Smith and Son Coal Company, but was signed by C. L. Smith, owner. The change in the name was made in August, 1948, and there were filed in evidence seven checks given for premiums dated from August 3, 1948, to June 6, 1949, signed 'C. L. Smith & Son Coal Company By C. L. Smith. ' The policy was renewed twice in the name of C. L. Smith after the first of these checks was received. The last renewal was made after the insurer's claim adjuster had visited the mine after the accident, inquired whether the son had any interest and was informed that he did not. If the change in name was ever material, the right of the insurer to rely on it was waived. It does not appear to have been material. See Commercial Cas. Ins. Co. v. Industrial Acci. Comm., 91 Cal.App. 304, 266 P. 988.

Even had Smith formed a partnership with his son, it has been held that the insurer could not have avoided liability on that ground, but we do not reach that question here. Reed v. Industrial Acci. Comm., 10 Cal. (2d) 191, 73 P. (2d) 1212, 114 A.L.R. 720, and Annotation at p. 724.

The policy involved was on a standard form approved by the Industrial Commission as required by Code, § 65-109. By its terms, as well as by the terms of the Virginia Workmen's Compensation Act (Acts 1918, ch. 400, p. 637, as amended, now Code, 1950, §§ 65-1 ff.), the provisions of the Act are part of the policy.

Section 65-99 requires that 'Every employer subject to the compensation provisions of this Act shall insure the payment of compensation to his employees in the manner hereinafter provided. * * *.'

Section 65-107 provides: 'No policy of insurance against liability arising under this Act shall be issued unless it contains the agreement of the insurer that it will promptly pay the person entitled to the same all benefits conferred by this Act and all installments of the compensation that may be awarded or agreed upon and that the obligation shall not be affected by any default of the insured after the injury or by any default in giving notice required by such policy or otherwise. Such agreement shall be construed to be a direct promise by the insurer to the person entitled to compensation, enforceable in his name.'

The Commission held that 'the liability of the insurer is in all respects the same as that of the employer throughout the Commonwealth of Virginia. * * * The coverage afforded is inclusive, without restriction or limitation. ' We are of opinion to sustain the award as against the defense of change of location, but in terms somewhat less broad.

The case of Georgia Cas. Co. v. Ft. Wayne, 82 Ind.App. 396, 145 N.E. 284, cited by the Commission, was a suit by the insurer to collect an additional premium from the assured on the theory that under the Indiana law it was liable for compensation to all the employees of the Park Board of the city, notwithstanding the coverage stated in the policy was only on employees engaged in the care of trees. The claim was based on the Indiana statute, Acts 1919, § 73, p. 173, providing that all insurance policies insuring payment of compensation under the act 'shall be conclusively presumed to cover all the employees and the entire compensation liability of the insured;' and that any provision attempting to limit or modify such liability shall be wholly void. 145 N.E. at p. 286. The court held that this provision did not limit the right of the insurer and insured to contract with respect to the liability of the insurer as indemnifier, but was for the purpose of protecting the employees of the insured in their right to hold the insurer for the payment of compensation under the provisions of the act.

It will be observed that section 65-107, supra, does not in terms require, as did section 73 of the Indiana law, that all policies shall be conclusively presumed to cover all employees and the entire compensation liability of the insured.

Even as between the insurer and the employee, a number of courts have recognized that the insurer may by its policy limit its risk so as not to cover the entire liability resting upon the employer. The differing views arise in part at least from the different language of the various acts. 58 Am.Jur., Workmen's Compensation, § 564, p. 926; Annotations, 45 A.L.R. 1329, and 108 A.L.R. 812.

In Miller Bros. Const. Co. v. Maryland Cas. Co., 113 Conn. 504, 155 A. 709, the construction company sought indemnity against its liability for an injury to one of its employees in Vermont under a policy applying to work places in Connecticut and New York, relying on a provision of the Connecticut compensation law requiring that 'the entire liability of the employer' shall be assumed in compensation policies in that State. The court held that this statute did not require coverage of the entire liability of the employer anywhere and at any time, 'but such liability of the employer as the insurance company undertakes to assume must be assumed in its entirety. Full coverage of the entire liability of an employer at a given place or places, on specified work, fully meets the intent of the statute in this respect.' *

However, in the case of In re Cox, 225 Mass. 220, 114 N.E. 281, the insurer was held liable for the injury to an employee of the assured in a shoe store in Boston under a policy applicable on its face to shoe and military goods manufacturing in Framingham, on the ground that the Massachusetts compensation law did not permit 'an employer to become a subscriber as to one part of its business and to remain a nonsubscriber as to the rest of a business which is in substance and effect conducted as one business. ' The court said it did not include in the scope of the decision 'those conducting two wholly different and distinct kinds of business quite disconnected with each other in place, nature and management. ' 'The practical administration of the act,' the court said, 'renders it highly desirable that a single rule of liability should apply throughout any single business;' that the 'obligation of the policy is 'to pay the compensation * * * provided for by The Workmen's Compensation Act * * * to any person * * * to whom...