Great American Indemnity Co. v. Blakey

• Decision Date: 24 March 1937
• Docket Number: No. 9981.,9981.
• Citation: 107 S.W.2d 1002
• Parties: GREAT AMERICAN INDEMNITY CO. et al. v. BLAKEY.
• Court: Texas Court of Appeals

Page 1002

107 S.W.2d 1002

GREAT AMERICAN INDEMNITY CO. et al. v. BLAKEY.

No. 9981.

Court of Civil Appeals of Texas. San Antonio.

March 24, 1937.

Rehearing Denied July 28, 1937.

Appeal from District Court, Nueces County; W. B. Hopkins, Judge.

Action by C. R. Blakey against the Great American Indemnity Company and another. Judgment for plaintiff against the named defendant, and the named defendant appeals.

Judgment denying recovery against other defendant affirmed, and judgment in favor of plaintiff against the named defendant reversed and rendered.

John C. North and Leslie S. Lockett, both of Corpus Christi, for appellant.

Sidney P. Chandler, of Corpus Christi, for appellee.

MURRAY, Justice.

Appellee, C. R. Blakey, as plaintiff below, instituted this suit against the Great American Indemnity Company, and the City of Corpus Christi, seeking to recover the sum of $5,344.50, as compensation for an injury to his back, sustained by him while he was an employee of the City of Corpus Christi.

A trial was had before the court, without a jury, and judgment was rendered in the sum of $3,531.80 in favor of appellee and against the Great American Indemnity Company. Recovery against the city was in all things denied. The Great American Indemnity Company has appealed.

Appellant contends that the trial court erred in not sustaining its general demurrer to appellee's petition, because said petition does not allege that the City of Corpus Christi was a subscriber under the Workmen's Compensation Law, nor does it allege that he received his injury as a result of the negligence of the City of Corpus Christi, its agents, employees, or servants.

The general rule is well established that where an employee sues a nonsubscribing employer he must allege and prove that he received his injury as the result of the negligence of the employer or his agents or servants. Article 8306, section 1, subdivision 4, R.S.1925; West Lumber Company v. Smith (Tex.Com.App.) 292 S.W. 1103; Rio Bravo Oil Company v. Matthews (Tex.Civ.App.) 20 S.W.(2d) 342; Davis v. W. T. Carter & Bro. (Tex.Civ.App.) 19 S.W.(2d) 336; Hutton v. Burkett (Tex. Civ.App.) 18 S.W.(2d) 740; West Lumber Co. v. Morris & Barnes (Tex.Civ.App.) 257 S.W. 592.

Appellee has answered this contention by pointing out, in the first place, that the City of Corpus Christi cannot become a subscriber under the Workmen's Compensation Law. City of Tyler v. Texas Employers' Ins. Ass'n (Tex.Com.App.) 288 S.W. 409. And that in view of this fact the Great American Indemnity Company issued to the City of Corpus Christi a policy of insurance such as is ordinarily issued to subscribers under the Workmen's Compensation Act, and placed a rider on said policy styled "Voluntary Compensation Endorsement," as follows:

"Voluntary Compensation Endorsement

"For attachment to Policy No. C 90452.

"In consideration of the premium provided for in the Policy, the Company hereby agrees to voluntarily pay to employees injured in the course of their employment and covered by said Policy, or to their dependents in fatal cases, such amounts as would be payable according to the Workmen's Compensation Law cited and described in another endorsement attached to this Policy, including the cost of such medical, surgical and hospital treatment as is provided in said law, even though such persons may not have a legal claim under said Compensation Law against this Employer; provided, however, that such payments shall be made only on condition that the employee or dependents shall execute a full legal release of all claims against this Employer as may be required by the Company and shall in addition execute an assignment to the Company of any right of action which may exist in behalf of the injured employee or any person claiming by, through, or under him against any person, firm, corporation, or estate other than this Employer which is or may be legally liable for such injury. If the Company proceeds upon such assignment and recovers and collects a judgment against the party at fault in excess of the amount of compensation voluntarily paid and incurred under this Policy, the Company shall first take the necessary expenses of the procedure and shall pay any remaining balance of such excess so obtained to the person or persons executing the assignment. The Company shall have full power and discretion to proceed against the party at fault or to settle with such party upon such terms as may seem desirable to the Company, either without litigation or during the pendency thereof.

"If the injured employee or any person claiming by, through, or under him shall refuse to accept the voluntary compensation payments offered under the provisions of the preceding paragraph, then the Company shall be permitted at any time in its discretion to withdraw such proposal to pay compensation without notice, under which circumstances the Company will be no longer bound by the undertakings expressed in the preceding paragraph. If thereafter any claim, suit or demand is made upon this Employer for damages for such injuries, the obligation of the Company as expressed in Paragraph One (b) of the Policy, as well as all parts of the Policy having reference thereto, shall be available to this Employer and shall be and remain the obligations of the Company as fully and completely as if this endorsement had not been written.

                "Great American Indemnity Company
                                     "Jesse S. Phillips
                                          "President."
                

It is appellee's contention that this rider upon the policy gives him the right to sue the indemnity company directly and relieves him from the necessity of alleging and proving the negligence of his nonsubscribing employer, because the rider states that the company will voluntarily pay such compensation, regardless of whether or not the employee would have a legal claim under the Workmen's Compensation Law against his employer.

This contention presents a very difficult question, in view of the fact that the Workmen's Compensation Act provides (article 8306, § 1, subd. 4): "In all such actions against an employer who is not a subscriber, as defined hereafter in this law, it shall be necessary to a recovery for the plaintiff to prove negligence of such employer or some agent or servant of such employer acting within the general scope of his employment."

Article 8306, § 4, provides, in effect, that in suits by employees against employers who are not subscribers the provisions of section 1 shall be applied, and, of course, this includes subdivision 4, as above set out. See, also, section 12h, article 8306.

It occurs to us that the language of the voluntary compensation endorsement rider, attached to the policy, is not sufficiently definite and clear to show that it was the intention of the parties to the policy to provide that an employee might bring a suit directly against the indemnity company, without the necessity of complying with the provisions of the law requiring him to show that his injury was the result of the negligence of his employer or his agents or servants.

And, if such rider was sufficiently definite and clear to show such intention, we are not certain that such a provision would be sufficient to relieve the employee of the necessity of complying with the provisions of article 8306, section 1, subdivision 4, R.S. 1925. Davis v. W. T. Carter & Bro. (Tex. Civ.App.) 19 S.W.(2d) 336, 337 (writ refused).

In other words, we are here confronted with the question of whether or not a municipal corporation, such as the City of Corpus Christi, may enter into a policy of insurance with an indemnity company and thereby secure to itself and its employees all of the benefits and protections that are given to subscribers and their employees under the Workmen's Compensation Act.

While the law does not expressly exclude cities from becoming subscribers under the Workmen's Compensation Act, our courts have definitely held that they are by necessary implication excluded from the provisions of the act. There is no provision in the act that a city may elect to come under the provisions of the act. It, therefore, seems to us that it would be impossible for the city, by the simple method of taking an insurance policy with an indemnity company, containing a rider such as is attached to the policy in this case, to receive all the benefits and responsibilities of subscribers under the Workmen's Compensation Act, when the act, by necessary implication, says in effect that a city cannot become a subscriber.

Another thing occurs to us, and that is, that the city could not be relieved from its common-law liability by reason of its insurance policy in this case. It is clear to our mind that any employee of the city might repudiate the insurance policy and stand on his common-law action against the city for any injuries received by him; thus the employee could accept the...