Jernigan v. New Amsterdam Cas. Co.

• Decision Date: 18 December 1961
• Docket Number: No. 6849,6849
• Citation: 69 N.M. 336,367 P.2d 519,1961 NMSC 170
• Parties: Max O. JERNIGAN, Plaintiff-Appellant, v. NEW AMSTERDAM CASUALTY COMPANY and Werntz Agency, Inc., Defendants-Appellees.
• Court: New Mexico Supreme Court

Page 519

367 P.2d 519

69 N.M. 336

Max O. JERNIGAN, Plaintiff-Appellant, v. NEW AMSTERDAM CASUALTY COMPANY and Werntz Agency, Inc.,

Defendants-Appellees.

No. 6849.

Supreme Court of New Mexico.

Dec. 18, 1961.

Bingham & Klecan, Albuquerque, for appellant.

Rodey, Dickason, Sloan, Akin & Robb, James C. Ritchie and Joseph J. Mullins, Albuquerque, for New Amsterdam Casualty.

Meritt W. Oldaker, Roy F. Miller, Jr., William H. Oldaker, Albuquerque, for Werntz Agency.

NOBLE, Justice.

Recovery is sought against New Amsterdam Casualty Company upon a policy of Workmen's Compensation and Employers' Liability insurance issued to Clark and Day Exploration Company, a partnership, and in the alternative, if the policy fails to cover plaintiff, against Werntz Agency, Inc. for negligent failure to secure the insurance coverage agreed upon. Appeal is taken from an order dismissing the complaint against both defendants for failure to state grounds upon which relief can be granted.

We shall refer to the parties as they appeared in the court below. The insurance company will hereafter be referred to as New Amsterdam, and Werntz Agency, Inc. as Werntz Agency; and, for clarity, we shall discuss the allegations of the complaint which are in six counts as they apply to each of the defendants separately, taking up first those against New Amsterdam. The defendants are represented by separate counsel and filed separate motions to dismiss.

Upon the dismissal of a complaint for failure to state a cause of action, we examine the complaint in the light of the rule that the motion to dismiss admits all facts well pleaded and that such a motion will only be granted where it appears that under no state of facts provable under the claim could plaintiff recover or be entitled to relief. Chavez v. Sedillo, 59 N.M. 357, 284 P.2d 1026; Adams v. Cox, 52 N.M. 56, 191 P.2d 352; Ritter v. Albuquerque Gas & Electric Co., 47 N.M. 329, 142 P.2d 919, 153 A.L.R. 273.

The complaint against New Amsterdam alleges that Jack Frizzell and plaintiff were working partners of Clark and Day Exploration Company and wanted workmen's compensation insurance which would cover and protect the working partners while acting within the scope of their employment by the partnership. Frizzell requested such insurance from Werntz Agency who selected New Amsterdam as the insurance company. It is alleged that Werntz Agency, as agent of New Amsterdam, prepared an application for the policy which included the salaries of the working partners upon which the insurance premiums were based; that Werntz Agency knew Frizzell and plaintiff were working partners of Clark and Day; and that only a policy was desired which would cover them as working partners. It is further alleged that it was known there was some question as to whether working partners could recover benefits against the partnership under the Workmen's Compensation law, 1953 Comp. Sec. 59-10-1 et seq., and that there was correspondence, the contents of which are unknown to plaintiff, between the agent Werntz Agency and New Amsterdam regarding the coverage; that thereafter, the policy was issued, forwarded to Werntz Agency for delivery and delivered by Werntz Agency with the assurance that the working partners were covered. It is alleged that the premium was paid and that plaintiff relied upon the assurance that he was protected by the policy. Plaintiff was accidentally injured while in the course of his employment.

This is the second appeal growing out of the alleged injuries. Plaintiff, in the first action, filed his claim in workmen's compensation against Clark and Day and New Amsterdam, as its insurance carrier, by which, in addition, claimant alleged the contract with New Amsterdam to insure plaintiff as a working partner and estoppel to deny the coverage. Benefits under the Workmen's Compensation law were awarded plaintiff by the district court upon the theory of contract and estoppel. The judgment was reversed on appeal in Jernigan v. Clark & Day Exploration Co., 65 N.M. 355, 337 P.2d 614, 621 upon the ground that working partners are not entitled recover against the partnership under the Workmen's Compensation law. It is conceded in this action that there is no liability on the part of Clark and Day and is seriously contended that the policy limits the liability of New Amsterdam to that of Clark and Day.

This action is directly against the insurance company upon the theory that the policy insures plaintiff against accidental injury while working in the course of his employment for Clark and Day, based upon the formulae of the benefits provided by the New Mexico Workmen's Compensation law, and that the company is estopped by its conduct from denying such coverage.

The insurance company asserts that our decision in Jernigan v. Clark & Day is res judicata of the issues involved on this appeal. By that decision we held that application of the doctrine of estoppel and the contract theory invoked the jurisdiction of the district court 'quite apart from any possessed by it under a due administration of the act invoked * * *' and that in applying the contract theory and estoppel, the court acted in excess of its jurisdiction. Defendant urges, nevertheless, that plaintiff has had his day in court on the issues now before us and that they are res judicata. We cannot agree. We did not decide those issues upon the merits, but reversed the judgment as to those issues, because the trial court was without jurisdiction to hear or determine them. Trial of issues before a court without jurisdiction is the same as if the issues had never been presented. Dunham v. Stitzberg, 53 N.M. 81, 201 P.2d 1000. There is no real distinction between a court acting without jurisdiction and acting in excess of its jurisdiction.

The insurance company next directs our attention to the insuring provisions of the contract: (Coverage A)

'To pay promptly when due all compensation and other benefits required of the insured by the workmen's compensation law.' and Coverage B: to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages to any employee. It is conceded there is no liability of Clark and Day under the Workmen's Compensation Act and no liability of New Amsterdam under Coverage B; that its liability is fixed by these policy terms, and is limited to the liability of Clark and Day. It further asserts that to enlarge the coverage of the policy to afford additional insurance to plaintiff would require a complete change in, and additions to the contract. Standing alone, these insuring provisions of the contract strongly indicate that the company is liable only to an employee whose injury is compensable under the Workmen's Compensation law, or where Clark and Day is liable to such employee under Coverage B; but, the limits of obligation or liability under a contract of insurance are not determined by a single sentence or clause of the instrument. It is to be examined as a whole and a proper construction arrived at from its four corners.

Plaintiff points out that when the instrument is considered as a whole, in the light of the interpretation given its language by the parties, New Amsterdam obligated itself directly to plaintiff in addition to that of Clark and Day, under the Workmen's Compensation law. It is well settled that an insurance contract may be drafted to cover liability in addition to that of an employer under the Workmen's Compensation law, and to make such additional liability thus assumed a direct obligation of the insurance company to the person so covered. Fidelity & Casualty Co. of New York v. Gray, 181 Okl. 12, 72 P.2d 341; Maryland Casualty Co. v. Whitt, 167 Okl. 261, 29 P.2d 65; Iott v. Continental Cas. Co., 129 Kan. 650, 284 P. 823; Robertson v. Board of Commissioners of Labette County, 122 Kan. 486, 252 P. 196; American Mutual Liability Ins. Co. of Boston v. Duesenberg, 214 Ind. 488, 14 N.E.2d 919, 16 N.E.2d 698, 117 A.L.R. 1293; Sindelar v. Liberty Mut. Ins. Co. (C.C.A. 7), 161 F.2d 712.

A similar question was presented in Maryland Casualty Co. v. Whitt, supra, under a policy which contained similar insuring clauses. The court there, in looking to the whole instrument, found that the persons intended to be covered as employees of the city were listed in another part of the policy and among them were 'police officers.' It was also found that the salaries of such officers were included in the city's payroll upon which premiums were based. A police officer who was injured was not entitled to compensation under the Workmen's Compensation law because not within the hazardous occupations required by the law. The court held, however, that listing 'police officers' as employees covered, and basing the premium partly upon their salaries amounted to a construction by the parties creating additional coverage to such police officers based upon the amount of benefits provided by the Workmen's Compensation law, notwithstanding they were ineligible to receive compensation under the Workmen's Compensation law. See, also, Robertson v. Board of Commissioners of Labette County, supra.

An examination of the instant policy shows the employees and classification of operations purported to be covered by the policy set forth in the declaration, made a part of the policy, as: 'Geophysical Exploration--N.O.C.--all employees including Drivers, Chauffeurs and their Helpers' and the estimated total annual payroll of such employees is listed as $12,000.

We then consider the persons described as covered, together with the allegations of the complaint that the insured was assured by the agent of the company that the working partners were covered and the allegation that their salaries were intentionally included by the agent in the payroll upon which the premium was based. We think the situations are analogous. In the one instance, the police officers and their salaries were specifically listed....