Franklin Mortg. Corp. v. Walker

• Citation: 367 S.E.2d 191,6 Va.App. 108
• Decision Date: 05 April 1988
• Docket Number: No. 0725-86-4,0725-86-4
• Parties: FRANKLIN MORTGAGE CORPORATION, et al. v. Jo C. WALKER, et al. Record
• Court: Court of Appeals of Virginia

Page 191

367 S.E.2d 191

6 Va.App. 108

FRANKLIN MORTGAGE CORPORATION, et al. v. Jo C. WALKER, et al.

Record No. 0725-86-4.

Court of Appeals of Virginia.

April 5, 1988.

Stephen W. Robinson (McGuire, Woods, Battle & Boothe, McLean, on brief), for appellants.

Peter M. Sweeny (Thacher, Swiger, Sweeny & Day, Fairfax, on brief), for appellee Jo C. Walker.

John K. Coleman (Conrad A. Fontaine; Slenker, Brandt, Jennings & Johnston, on brief), Fairfax, for appellee Aetna Cas. & Sur. Co.

Present: KOONTZ, C.J., and BAKER, BARROW, BENTON, COLE, COLEMAN, DUFF, KEENAN and MOON, JJ.

OPINION ON REHEARING EN BANC

DUFF, Judge.

This appeal to the Court en banc, from an Industrial Commission award of compensation to Jo C. Walker, claimant, and a finding that Federal Insurance Company (Federal) was solely liable for payment thereof presents the following issues: (1) whether the commission erred in finding that the claimant suffered an injury that arose out of and in the course of her employment; and (2) whether the commission erred in finding that Federal was the sole insurance carrier liable for the payment of benefits to claimant. Although both issues were briefed, only the latter issue was argued. However, pursuant to the provisions of Code 8.01-679.1, the failure to argue an issue raised on brief shall not constitute a waiver. Accordingly, we have considered both issues and affirm the final order of the Industrial Commission.

With respect to the compensability of Mrs. Walker's accident, the standard for our review is well settled. A finding by the commission that an injury arose out of and in the course of employment, is a mixed question of law and fact, and is properly reviewable on appeal. Dublin Garment Co. v. Jones, 2 Va.App. 165, 167, 342 S.E.2d 638, 638 (1986). Findings of fact made by the commission will be upheld when supported by credible evidence. Russell Loungewear v. Gray, 2 Va.App. 90, 92, 341 S.E.2d 824, 825 (1986).

The record reveals that Mrs. Walker was employed by Franklin Mortgage Corporation (Franklin) on May 28, 1985 as an underwriter and branch manager of the Company's Woodbridge, Virginia, office. Her duties required that she travel between this office and the company's main office in Fairfax, Virginia. She lived near the Woodbridge office. Her official working hours were from 9:00 a.m. to 5:00 p.m., but her schedule was flexible, and she frequently worked later in the evening. On May 28, 1985, at approximately 4:00 p.m., prior to leaving the Fairfax office, Mrs. Walker obtained a check for the rental payment on the Woodbridge office and a check for cleaning services for that office from Lynn McVicker, the president's wife and part-time bookkeeper. She was seriously injured in an automobile accident at 4:30 p.m. on Route 50, approximately one mile from the Fairfax office. Timothy Walker testified that at approximately 4:15 p.m. he spoke with his wife by telephone. She told him that she was going by the Woodbridge office and that she might be late getting home because it was raining heavily and that traffic "was a bear."

At the scene of the accident, Mrs. Walker's briefcase containing various business documents and the previously-mentioned checks were recovered.

The commission found that Mrs. Walker was injured during regular working hours while traveling between the Fairfax and Woodbridge offices in the course of her duties as a branch manager of the Woodbridge office. The fact that evidence from which a contrary conclusion might be drawn is of no consequence if there is credible evidence to support the Commission's finding. Russell Loungewear v. Gray, 2 Va.App. at 95, 341 S.E.2d at 826. There was credible evidence presented to support such finding. Accordingly, we find no error in the Commission's award to Mrs. Walker.

Turning to the second issue involving the dispute between Aetna Casualty and Surety Company and Federal Insurance Company, the record contains the following factual background essential to an understanding of the problem presented: Prior to April 8, 1985, Franklin Mortgage Company (Franklin) carried its workers' compensation insurance with Aetna. On April 8, 1985, Franklin was purchased by NS & T Bank. At that time, NS & T Bank was insured by Federal under a policy which specifically provided for workers' compensation coverage for any business or corporation owned or acquired by NS & T Bank during the policy period. Consequently, Franklin automatically became insured by Federal on April 8, 1985, when Franklin was acquired by NS & T Bank. Federal, however, did not immediately notify the commission of this coverage as required by Code § 65.1-105. However, the parties do not dispute that as of April 8, 1985, Franklin was insured under both the Federal and the Aetna policies.

By letter dated June 11, 1985, Mr. Clarence Spiva, Senior Vice-President of NS & T Bank, instructed Aetna to cancel its policy covering Franklin, effective April 8, 1985. Both NS & T Bank and Aetna were aware of the claimant's accident on May 28, 1985. In fact, the employer, Franklin, had listed Federal's parent company, the Chubb Group, as the carrier on the employer's First Report of Injury filed with the Industrial Commission. Following NS & T Bank's instructions, Aetna cancelled the policy, effective April 8, 1985, and issued a premium refund for the period subsequent to that date. However, Aetna did not notify the Industrial Commission of the cancellation until October 9, 1985. ¹ The commission held Federal solely liable to pay the award to the claimant.

The Virginia Supreme Court recently construed Code § 65.1-105 in Hartford Co. v. Fidelity & Guaranty, 223 Va. 641, 292 S.E.2d 327 (1982). In Hartford, Fidelity insured the employer, but cancelled the policy for nonpayment of premiums on April 11, 1980. Fidelity, however, failed to notify the commission of the cancellation, as required by Code § 65.1-105. After receiving notice of the cancellation, the employer obtained coverage from Hartford, which was in full force and effect on the date of the industrial accident, June 2, 1980. Id. at 643, 292 S.E.2d at 327-28.

On appeal Hartford argued that Fidelity was jointly liable for the workers' compensation award because Fidelity's failure to comply with the notice provisions of Code § 65.1-105 defeated its attempt to cancel the policy. The court, however, upheld the cancellation of the policy, citing the legislative intent behind the statute as being to protect a worker against a lapse in his employer's insurance coverage. The Court in Hartford noted that the statute served two purposes: (1) to give the employer an opportunity to acquire other insurance, and (2) to make it possible for the Commission to timely invoke its enforcement authority under Code § 65.1-106. Since the coverage did not lapse, and the injured worker's interests were fully served, the Court found Hartford solely liable for the loss.

In the present case, the commission's holding is in accordance with the purposes articulated in Hartford because there was adequate coverage for the claimant under Federal's policy. The commission's holding also finds support in opinions from other jurisdictions. In Saracione v. Oliver Construction Co., 87 A.D.2d 926, 450 N.Y.S.2d 63 (1982), the court overruled a workers' compensation board decision finding dual coverage where a carrier failed to comply with the cancellation and notice provision of the compensation code. In language similar to that found in Hartford, the Saracione court stated:

The purpose of the statutory notice requirement is to protect employers from an unexpected lapse of coverage, not to provide a windfall to subsequent insurers who have assumed the risk. Accordingly, since the employer had obtained other coverage, there was no need to impose the remedy of continued liability on American Mutual for its failure to comply with the notice requirement.

Id. at 926, 450 N.Y.S.2d at 64.

In Hines v. Cherokee Lines, Inc., 509 P.2d 669 (Okla.1973), the Oklahoma Supreme Court addressed the issue whether a carrier's failure to comply with the notice and cancellation statute would result in joint and several liability with the other carrier. The court construed a statute similar to Virginia's and stated:

[W]hen ... the employer and employee are protected by other insurance then the statute should not be rigidly construed so as to unjustly penalize an insurance carrier for its failure to strictly comply with the notice requirements. Especially is this so where the employer himself has requested the cancellation and has procured insurance protection from another carrier.

Id. at 671 (emphasis added).

Aetna concedes that it did not timely notify the commission of the cancellation of its policy by NS & T Bank. However, as in Hines, it urges that the purpose and intent of the statute have been met since the claimant was not deprived of coverage or benefits and no hardship has been placed on Federal, as it has received a full premium for the period covering the claimant's industrial accident. See Neeman v. Otoe County, 186 Neb. 370, 183 N.W.2d 269 (1971); St. Paul Fire & Marine Insurance Co. v. Central Surety & Insurance Co., 234 Ark. 160, 350 S.W.2d 685 (1961); Knox County Feed & Hatchery Inc. v. Ivers, 130 Ind.App. 481, 166 N.E.2d 132 (1960); Musgrave v. Liberty Mutual Ins. Co., 73 Idaho 261, 250 P.2d 909 (1952); Eurich v. General Casualty & Surety Co., 152 Md. 209, 136 A. 546 (1927). These cases recognize, as did Hartford, that statutes such as Code § 65.1-105 are designed to prevent employees from being left without compensation coverage. However, the cases also recognize that notification requirement statutes should not extend beyond the reason for their existence, and an insurer who accepted premiums, should accept the loss, although strict technical cancellation by another carrier had not been accomplished. We agree.

The courts have allowed back-dated cancellation in situations...