Employers Casualty Co. v. American Employers Ins. Co.
| Decision Date | 01 November 1965 |
| Docket Number | No. 7534,7534 |
| Citation | 397 S.W.2d 292 |
| Parties | EMPLOYERS CASUALTY COMPANY, Appellant, v. AMERICAN EMPLOYERS INSURANCE COMPANY, Appellee. |
| Court | Texas Court of Appeals |
Underwood, Wilson, Sutton, Heare & Berry, Amarillo, for appellant.
Simpson, Adkins, Fullingim & Hankins, Amarillo, for appellee.
This suit is between Employers Casualty Company and American Employers Insurance Company to determine which of the two insurance carriers are liable for the benefits under the Workmen's Compensation Act for the death of Arthur R. Meathenia. The case was submitted to the trial court on stipulated facts. The court entered judgment holding Employers Casualty Company liable for all death benefits to the deceased's beneficiaries.
There two insurance carriers have by agreement shared the payments to the beneficiaries, but each reserved the right to litigate the ultimate question of liability. The beneficiaries have been paid in full and are not parties to this litigation. Employers Casualty Company will be referred to as Employers, and American Employers Insurance Company will be referred to as American Employers.
Throughout the year 1962 K. L. Towle Construction Company and K. L. Towle, Incorporated were separate corporations, each with its principal office in Hobbs, New Mexico. The two corporations officed in the same building but in different rooms, and each maintained separate sets of books. For convenience we will refer to K. L. Towle Construction as Towle Construction and K. L. Towle, Incorporated as Towle, Inc. K. L. Towle was president of both corporations, and the same auditor served both companies; but both corporations did not have identical officers and directors. Some of the officers and directors were common to both companies but not all. Employers carried the workmen's compensation insurance on the employees of Towle Construction, and American Employers carried the workmen's compensation insurance on the employees of Towle, Inc. From June 10, 1962, until the time of his death on August 31, 1962, Meathenia was carried on the payroll of Towle, Inc. During this period his wages were reported to American Employers and not to Employers for workmen's compensation purposes; and premiums computed on his wages were paid to American Employers and not to Employers. Both Towle Construction and Towle, Inc. had contracts with El Paso Natural Gas Company for construction of a pipe line. The contracts defined the amounts to be paid for the particular services to be rendered by each of the companies. During the period from August 27 to August 31, 1962, which includes the date of Meathenia's death, the work was being done under El Paso's contract with Towle Construction. Meathenia's wages during this five-day period were charged on the book of Towle Construction, and Towle, Inc. was reimbursed by Towle Construction for the wages thus paid during that five-day period. During this same period a third company, K. L. Towle Trucking Company, was solely owned by K. L. Towle; but it has no connection with the present controversy.
Delmar Crossland acted as foreman for all three Towle companies. He served as foreman for the three companies from time to time, and his wages were handled in the same manner as was Meathenia's described above. During the month of August of 1962 Crossland was carried on the payroll of Towle Construction. On August 27 Crossland sent Meathenia to a rock pile near Shamrock, Texas, with a Huff Payloader and instructed him to take the machine and load trucks with rocks to be used in making water crossings. Crossland did not tell Meathenia how to load the rocks as he was an experienced operator, but he did instruct him to stay away from the walls of the pit and to get the loose rocks. The record does not show which company owned or controlled the payloader. This work by Meathenia was charged by Crossland to Towle Construction. Crossland, who had the authority to hire and fire employees of either company, including Meathenia, was the only person in direct control of Meathenia at the time of his death, which occurred while performing the duties previously mentioned.
In response to a request, the trial court found the stipulations of the parties to be its findings of fact and conclusion as a matter of law: Meathenia was an employee of Towle Construction at the time of the accident; that at such time Meathenia was doing work for Towle Construction pursuant to its contract with El Paso Natural Gas Company; that Delmar Crossland was an employee of Towle Construction during August of 1962; that Crossland had the right of control over Meathenia as to details of the work he was performing at the time of his fatal accident; and that American Employers was not estopped to deny that it owes workmen's compensation benefits to Meathenia's beneficiaries.
Appellant's contentions are: (1) since Meathenia was an employee of Towle, Inc. and American Employers was the compensation carrier for that company and obligated to pay the benefits unless the loaned employee principle has application. It asserts the loaned employee principle does not apply because the stipulated facts do not show an agreement transferring control of Meathenia from Towle, Inc. to Towle Construction; (2) That since Meathenia was on Towle, Inc.'s Payroll and American Employers received premiums on these wages, it had a contractual liability to pay the death benefits; (3) American Employers is estopped by its receipt and retention of the premiums to deny its liability; that alternatively American Employers is barred from a recovery from Employers; (4) American Employers had not sustained its burden of proof.
The primary question is which of the two insurance carriers is liable for payment of the death benefits to Meathenia's beneficiaries. This question involves the manner of direction and control exerted over Meathenia by the employers. The special or borrowed employee principle is applicable in workmen's compensation cases as well as in common law cases involving personal injuries to servants or employees. Insurors Indemnity & Inc. Co. v. Pridgen, 148 Tex. 219, 223 S.W.2d 217; Texas Employers' Ins. Ass'n v. Baker (Tex.Civ.App.), 278 S.W.2d 419; Hanover Ins. Co. v. Holleman (Tex.Civ.App.), 372 S.W.2d 554, (...
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