Fid. & Cas. Co. v. Hill Const. Co.

• Decision Date: 14 January 1933
• Docket Number: No. 2191.,2191.
• Parties: FIDELITY & CASUALTY CO. v. HILL CONST. CO.
• Court: New Jersey Supreme Court

164 A. 16

FIDELITY & CASUALTY CO.

v. HILL CONST. CO.

No. 2191.

District Court of New Jersey. Burlington County.

Jan. 14, 1933.

Suit by the Fidelity & Casualty Company against the Hill Construction Company. Judgment for plaintiff.

Lawrence V. White, of Camden, for plaintiff.

Palmer & Powell, and Harold T. Parker, all of Mt. Holly, for defendant.

MATHEWS, J.

This is a suit brought for premiums alleged to be due to the plaintiff from the defendant on two policies of workmen's compensation insurance taken out by the defendant with the plaintiff.

Because it was anticipated that there would be a large amount of detailed accounting testimony in the case, the matter was referred to Henry Rosenfeld, Jr., Esq. as referee. After the testimony was taken, it developed that the main, and in fact the only, controversy between the parties was rather a question of law than one of fact. A report of the findings of the referee has been filed. There is little or no serious dispute as to the facts. From the report of the referee and the statement of counsel, the facts are briefly as follows:

The insurance policies issued by plaintiff are in accordance with the standard form of compensation policy issued in this state. In the policies and under the heading "Classification of Operations," under heading B, appear the following words: "Concrete Construction—Bridges or Culverts—where floor is more than 10 feet above ground or span exceeds 20 feet—including piers or abutments —excluding excavation, pile driving or all work in tunnels, subways, or caissons—including employees engaged in making, setting up, or taking down forms, scaffolds, false work or concrete distributing apparatus."

While the report of the referee is in words which do not import a specific finding of fact as to this particular point, I think, from the argument of counsel, there is no doubt about It, and it can be assumed for the present purpose, that the amount of premium sued for covered the pay roll of employees who were engaged by the defendant actually in excavation or pile driving or some work included in the terms following the word "excluding" in the classification above quoted.

The referee finds as a fact that the rates applied were strictly according to the manual of the New Jersey Insurance Board.

There is in the case no question of the proper rate to be applied, and the fact that the plaintiff, if it is entitled to recover at all, would be entitled to recover on the rate according to pile driving work, is not involved.

The contention of the defendant is that the clause above quoted, construed in connection with the other terms of the policy, shows a contract between the parties whereby the plaintiff did not insure the defendant against injuries to any employees of the defendant who were employed in the excluded character of work, and therefore plaintiff is not entitled to recover premiums for those employees based on defendant's pay roll.

I further do not think it important to the issue that it is a fact that the plaintiffs agent received the information from which it made up its charges from an employee of the defendant who stated that the entire pay roll was for work other than that embodied in the excluded items.

The sole question at issue is whether or not the plaintiff by its policies of insurance actually insured employees of the defendant engaged in the excluded operations or any of them because, if it did so, and was thereby liable under the policy for injuries sustained by defendant's employees while so engaged, it is certainly entitled to receive premiums based on the pay roll of such employees. If it did not, it is equally clearly not entitled to premiums for assuming a risk that it really did not assume under the contracts or policies.

Fundamentally, the contracts or policies must be construed from the language contained therein. Plaintiff contends that, because the law requires the contract to cover certain things, the contract must necessarily cover them. Defendant says that, since the law prohibits the collection of premiums on policies which violate the law in this respect, there is a recognition that such contracts may so violate the law and therefore recognizes the fact that there may be such contracts, and that the contracts in question are in that class.

The question of whether a contract is given pursuant to a statute, and, if it is, the construction of such contract in the light of the statute, is an interesting one. The court, as counsel in another case, has had occasion to look into the question somewhat quite recently. So far as this particular case is concerned, there can be no question that the contract was made pursuant to the workmen's compensation statute of this state. Paragraph (1) under section 1(a) says: "To pay promptly to any person entitled thereto under the workmen's compensation law, and in the manner therein provided, the entire amount of any sum due and all installments thereof as they become due."

A rider attached to the policy refers specifically to the act. A reading of the entire provisions of the contracts can leave no other sensible impression than that they were made pursuant to and in contemplation of the statute.

There is therefore settled in this case this primary question, which I have found from the reading of a number of cases has been very confusing to the courts. To my mind there is a vast difference between a contract which specifically mentions a statute, or states that the contract is given pursuant thereto and/or the general terms of which leave the reader in no doubt that the contract had the statute in contemplation, and a contract which nowhere mentions a statute, whose provisions have no connection therewith but on the contrary are either in entire disaccord therewith or omit some salient features which the statute provides they must contain. One is a contract made between parties with the statute or the necessary terms thereof embodied by implication, if the provisions of the statute are mandatory, and therefore it is no violation of the contract between the individuals for the court to construe the contract in the light of the terms of the statute. The other is a contract made between parties which either has absolutely no connection with the statute whatsoever, or, although mentioning it, is in terms diametrically opposed to the words or provisions of the statute. To say that either of this last class of contracts is executed pursuant to a statute and to proceed to so construe it either by putting in terms which the parties by the wording of their contract never intended or deliberately throwing out specific terms of the contract and substituting statutory language therefor is to clearly make a contract for the parties instead of construing the contract which they have made.

It is fundamental, of course, that, where two constructions can reasonably be placed upon the terms of a contract, that which will give it legality and validity is to be preferred over that which will make it...