Farmers' Petroleum Co. v. Shelton

• Decision Date: 11 March 1918
• Docket Number: (No. 331.)
• Parties: FARMERS' PETROLEUM CO. et al. v. SHELTON.
• Court: Texas Court of Appeals

202 S.W. 194

FARMERS' PETROLEUM CO. et al. v. SHELTON.

(No. 331.)

Court of Civil Appeals of Texas. Beaumont.

March 11, 1918.

Rehearing Denied April 3, 1918.

Appeal from District Court, Harris County; Henry J. Dannenbaum, Judge.

Action by T. F. Shelton against the Farmers' Petroleum Company and others. Judgment for plaintiff, and defendants appeal. Affirmed.

Harry P. Lawther, of Dallas, for appellants. Woods, King & John, of Houston, for appellee.

BROOKE, J.

January 13, 1915, appellee, Shelton, an employé of the Farmers' Petroleum Company, had his right arm badly injured while engaged in assisting in "making up" some pipe at well No. 4, which was then being drilled by the company in their Humble field. At the time the Farmers' Petroleum Company was the holder of a policy in the Texas Employers' Insurance Association, providing for the payment of compensation to its employés under the provisions of the Texas Employers' Liability Act, 33d Leg. c. 179, and was a "subscriber," under the terms of the act. After the accident, and prior to the institution of this suit, namely, on November 7, 1915, the Farmers' Petroleum Company was, by action of its stockholders, voluntarily dissolved, T. P. Lee being its president and one of its directors, and J. S. Cullinan, James L. Autry, Will C. Hogg, and E. F. Woodward being its other directors at the time.

Upon the contention that the provisions of the Employers' Liability Act were inoperative as to him, because he had never been given the notice provided for in section 19, pt. 3, of the act (Vernon's Sayles' Ann. Civ. St. 1914, art. 5246x), and ignoring the act, appellee instituted this suit at common law for damages for the personal injuries sustained by him against the dissolved corporation, the Farmers' Petroleum Company, and against the Republic Production Company, and also against the said Lee, Cullinan, Autry, Hogg, and Woodward, individually, alleging that the Republic Production Company had acquired all of the assets of the Farmers' Petroleum Company, and had assumed all of its liabilities; or, if this were not true, that the said Lee, Cullinan, Autry, Hogg, and Woodward had each received, in money or other property, from the Republic Production Company, in consideration of the transfer to it of the assets of the Farmers' Petroleum Company, or that each received assets of the Farmers' Petroleum Company in excess of appellee's claim.

By trial amendment appellee urged specific acts of negligence, and that his said injuries were the direct and proximate result of the carelessness and negligence of his said foreman, the said defendants' vice principal, setting out the specific acts.

Appellants answered with plea in abatement, suggesting the dissolution of the Farmers' Petroleum Company, and that Lee, Cullinan, Autry, Hogg, and Woodward, the surviving directors, were not sued in their capacity as trustees for the creditors and stockholders, and general and special demurrers, and plea in bar that, at the time of the receipt of the alleged injury, appellee was in the employment of the Farmers' Petroleum Company, who was a "subscriber" within the provisions of the Texas Employers' Liability Act, having provided for compensation to its injured employés by insuring with the Texas Employers' Insurance Association, of which fact appellee had notice in writing and in print, as provided in the act; that no claim for compensation had been made by appellee, and that no question arising under the act between the interested parties had been determined by the Industrial Accident Board; also by general denial, plea of assumed risk of a known danger, and plea of contributory negligence.

The case was tried by a jury in the Harris county district court upon special issues, and upon the answers of the jury judgment was rendered, dismissing appellee's suit as to the Republic Production Company, and in favor of appellee against the defunct Petroleum Company, and against Lee, Cullinan, Autry, Hogg, and Woodward as individuals, jointly and severally, for $15,000, and for the same amount against the same parties as representatives of the dissolved corporation. The appeal has been perfected to this court by supersedeas bond.

The first assignment of error is as follows:

"The court erred in refusing to direct a verdict for these defendants as requested by them in their special charge No. 2, because the evidence was undisputed that, at the time of the receipt by the plaintiff of the injuries complained of by him herein, he was in the employment of the Farmers' Petroleum Company; that said Farmers' Petroleum Company, while the plaintiff was an employé, became a subscriber to the Texas Employers' Liability Act, c. 179, General Laws of the Thirty-Third Legislature and amendments thereto, by insuring with the Texas Employers' Insurance Association of Dallas, Texas; that it had given notice to its employés of the fact that it was such a subscriber, in the manner provided by the order and rules of the Industrial Accident Board."

Several propositions are urged under this assignment, as follows:

(a) "The act is not rendered inoperative as to employés of a subscriber because of the latter's failure to give the notice prescribed in section 19, part III, of the act of 1913."

(b) "A clause of a statute is directory when the provision contains mere matters of direction and no more, but not so when it is followed by words of positive prohibition."

(c) "Section 19, part III, Texas Employers' Liability Act of 1913, providing, `Every subscriber shall, as soon as he secures a policy, give notice, in writing or print, to all persons under contract of hire with him, that he has provided for payment of compensation for injuries with the association,' not being followed by words of prohibition, is directory only, not mandatory."

(d) "Appellee had actual knowledge that his employer had provided for payment of compensation for injuries with the association."

Two counter propositions are urged, as follows:

(a) "To defeat appellee's common-law action by the provisions of the Employers' Liability Act, it was essentially necessary that the Farmers' Petroleum Company should have given him notice, in writing or print, that it had become a `subscriber' to such act, or to show that he had actual notice of such fact."

(b) "The defense urged by appellants under first assignment of error is available to appellants Cullinan, Autrey, Lee, Hogg, and Woodward only as made through the Farmers' Petroleum Company, or themselves as stockholders and managing directors of said corporation, and such defendants against whom judgment was rendered not having filed a motion for new trial or assignments of error, because of which failure the judgment as against such defendants is entitled to be affirmed upon the record, and cannot avail the individual defendants upon this appeal, even though the assignment announced a correct proposition of law."

Not only has the entire act been passed upon by the Supreme Court of this state, but section 19, pt. 3, of the act of 1913, has been passed upon by two of our courts of Civil Appeals, to wit, that of San Antonio and Amarillo, each of which held that the act is rendered inoperative as to employés of a "subscriber" because of the latter's failure to give the notice prescribed in section 19, pt. 3, of the act of 1913. Having carefully read the opinions in the cases of Kampmann v. Cross, 194 S. W. 439, and Rice v. Garrett, 194 S. W. 668, we are firmly convinced that the position taken by the said courts with reference to section 19, pt. 3, of the act of 1913, is correct, and, quoting from the case of Kampmann v. Cross, we are of opinion that the language used by the said court is conclusive of the matter referred to, said court saying:

"It is true that it is provided in article 5246i that the employés of a subscriber to the association shall have no right of action against the employer for damages for personal injuries, but that article must be construed with articles 5246x and 5246xx, which require notice to employés. So far as the employé who has not been notified is concerned, the employer is not a subscriber. The notice creates the relation of subscriber employer and employé, and without the notice the relation cannot exist."

It is not our purpose to go into details and analyze the reasoning of the above cases, which have fixed the rule in our Texas courts, and, in our judgment, they are in consonance with the opinion handed down by our Supreme Court in the case of Middleton v. Texas Power & Light Co., reported in 185 S. W. 556. We do not believe, and on the contrary are firmly impressed with the idea, that the clause of the statute is mandatory, and not directory, because the entire opinion of our Supreme Court in the Middleton Case strongly tends to show that in the mind of the court, as said by Judge Fly in the quotation just made, "the notice creates the relation of subscriber employer and employé, and without the notice the relation cannot exist." No unprejudiced person can read the Middleton Case without arriving at the same conclusion; and in this connection it might be well to say that it is the opinion of this court that the posting of notices alone, without any fact or circumstance going to show that the employé had read or become acquainted personally with the notice, would not be sufficient, but that the act is not only mandatory, and requires the actual giving of written or printed notice by the employer to the employé, and that these facts should not be left to presumption, but should rest upon actual proof. The fact, as contended by appellants, that section 19, pt. 3, of the act of 1913, is not followed by words of prohibition, could not and would not, in our opinion, render the said clause any the less mandatory and compelling; and the fact, if it be a fact, that there were posted upon the premises on and about which appellee worked notices that it had provided...