Kelly v. Howard

• Decision Date: 07 November 1938
• Parties: CLAY KELLEY, EMPLOYEE, RESPONDENT, v. MRS. E. M. GEORGE HOWARD AND C. H. HOWARD, DOING BUSINESS AS NEVADA BAKING COMPANY, EMPLOYERS, APPELLANTS, CASUALTY RECIPROCAL EXCHANGE AND BRUCE DODSON AND COMPANY, INSURERS, RESPONDENTS
• Court: Kansas Court of Appeals

123 S.W.2d 584

233 Mo.App. 474

CLAY KELLEY, EMPLOYEE, RESPONDENT, v. MRS. E. M. GEORGE HOWARD AND C. H. HOWARD, DOING BUSINESS AS NEVADA BAKING COMPANY, EMPLOYERS, APPELLANTS, CASUALTY RECIPROCAL EXCHANGE AND BRUCE DODSON AND COMPANY, INSURERS, RESPONDENTS

Court of Appeals of Missouri, Kansas City

November 7, 1938

Appeal from Vernon Circuit Court.--Hon. Thomas W. Martin, Judge.

REVERSED AND REMANDED (with directions).

Judgment reversed and cause remanded.

B. C Howard for appellants.

(1) The findings of fact as to the alleged fraud in the reinstatement of the policy, and the award based thereon declaring that the insurers, Casualty Reciprocal Exchange, are not liable under their policy, and declaring that there was no insurer in the case, were not supported by any competent evidence in the record, but were against the evidence and against the law under the evidence. Sec. 3342, R. S. Mo. 1929; Thurman v Fleming-Young Coal Co. (Mo. App.), 49 S.W.2d 288, 291; Allison v. Byerman Const. Co. (Mo. App.), 43 S.W.2d 1063, 1064; Hartzell v. Sloan (Mo. App.), 111 S.W.2d 942, 943; Yancey v. Egyptian Tie & Timber Co. (Mo App.), 95 S.W.2d 1230, 1231; Stepaneck v. Mark Twain Hotel (Mo. App.), 104 S.W. 761, 765; Mercantile Mutual Ins. Co. v. Benjamin F. Folsom, 18 Wall. 237, 21 L.Ed. 827. (2) The award, purporting to declare the nonliability of the Casualty Reciprocal Exchange under its policy, is in conflict with the affirmative evidence in the record, and with the law under the evidence; and specifically is in conflict with Section 3325, Revised Statutes of Missouri, 1929. Mercantile Mutual Ins. Co. v. Benjamin F. Folsom, 18 Wall. 237, 21 L.Ed. 827; Sections 3325-3326, R. S. Mo., 1929. (3) The alleged fraud (even assuming that the commission had jurisdiction to determine the question, and that it was established by competent evidence, both of which are denied by appellants) would not and did not have the effect of automatically invalidating the reinstatement of the policy, or destroy the liability of the insurers, under their policy, for payment of the compensation to the employee for his injuries on December 10, 1936. (4) The commission acted without and in excess of its powers when it assumed jurisdiction to determine the question of alleged fraud in the reinstatement of the policy, and in making findings declaring such fraud, and in declaring in its award that there was no insurer in the case, because of such fraud, and in declaring that there was no liability on the Casualty Reciprocal Exchange because of such alleged fraud. Oren v. Swift & Co. (Mo.), 51 S.W.2d 59, 61; Continental Casualty Company v. Industrial Commission of Utah, 61 Utah 16, 210 P. 127; Sec. 3325, R. S. Mo., 1929.

Ewing, Ewing & Ewing for respondents.

(1) The finding of the commission that the employer procured the reinstatement of the policy through fraud upon the insurers and its award declaring that because of such fraud the insurers were not liable on such policy, and the judgment of the circuit court affirming such award in all respects, are supported by ample competent evidence. (a) Because competent evidence in the record shows that appellants wilfully made statements as to existing material facts known by them to be false, to induce insurers to reinstate the policy. Zehnder v. Stark, 248 Mo. 39, l. c. 50; Black v. Epstein, 221 Mo. 286, l. c. 309-10; Castle v. Bullard (U. S.), 16 L.Ed. 424; 27 C. J. 65. (b) Because competent evidence in the record shows that appellants wilfully made statements to insurers as to existing facts material to the risk to induce insurers to reinstate the policy, which were not true in fact and which even though innocently made, had the effect of fraud upon insurers. Jenkins v. Covenant Life Co., 171 Mo. 375, l. c. 382; Smith v. American Ins. Co., 188 Mo.App. 297, l. c. 303; Kenney v. Franklin Fire Ins. Co., 247 S.W. 249, l. c. 250; Restatement of the Law--Restitution Mutual mistake of basic fact, p. 36, sec. 9, p. 70-73, sec. 16. (2) Respondent insurers are not estopped to deny liability because of fraud in procuring the reinstatement of the policy. Mercantile Mutual Ins. Co. v. Folsom, 21 L.Ed. 827; Johnson v. Continental Ins. Co. (Tenn. Sup.), 107 S.W. 688; Jenkins v. Covenant Life Co., 171 Mo. 375, l. c. 382; State Mutual Life Co. v. Rosenberry (Tex. Sup.), 213 S.W. 242. (3) Appellants cannot attack in this court upon appeal the jurisdictions of the commission to determine the issue of fraud in procuring reinstatement of insurance. (a) Because such question of jurisdiction, or lack of it (1) depends upon whether the applicable sections of the Workmen's Compensation Act be construed as an attempt to vest the exercise of the judicial power of the State in a tribunal not known to the constitution, and (2) is a constitutional question not raised at the first opportunity in the inferior court and not within the appellate jurisdiction of this appellate court. Constitution of Missouri, Article VI, Sections 1, 12 and 22, and Amendment of 1884; Oren v. Swift (Mo.), 51 S.W.2d 59; State ex rel. v. Court, 105 Mo. 299; State ex rel. v. Court, 97 Mo. 276; Lohmeyer v. St. Louis Cordage Co., 214 Mo. 686. (b) Because appellants sought relief under the compensation act and upheld the jurisdiction of the commission in this respect when such question was raised at the time this cause was before the commission, and are estopped to raise such question of jurisdiction. 3 C. J. 752-4; State ex rel. v. McKee, 150 Mo. 233, l. c. 241; Lohmeyer v. Cordage Co., 214 Mo. 685, l. c. 688; 12 C. J., 773. (4) The commission acted within its powers in assuming jurisdiction to determine the issue of fraud in procuring the reinstatement of the policy, and in finding fraud and refusing to make any award against insurers upon the ground that the policy was not enforcible because of such fraud. 71 C. J. 916; General Accident Assurance Co. v. Industrial Accident Commission (Cal.), 237 P. 33; Edward Scott Green v. Great Central Transportation Co. (Missouri Workmen's Compensation Commission, No. J-52486).

BLAND, J. Shain, P. J., concurs; Kemp, J., not sitting.

OPINION

BLAND, J.

This is a proceeding arising before the Compensation Commission. The employers, Mrs. E. M. George Howard and C. H. Howard, partners, doing business as Nevada Baking Company, have appealed from a judgment of the circuit court affirming a final award of the Missouri Compensation Commission, in which Clay Kelly, an employee of said employers, was awarded compensation in the sum of $ 2035.33, as against the employers, only. The Commission found in favor of the insurance carrier, The Casualty Reciprocal Exchange and Bruce Dodson & Company, on the ground that the reinstatement of the insurance policy issued by them was procured by fraud of the employers after it had been cancelled by the carriers for nonpayment of the premium; that by reason of the circumstances such reinstatement amounted to fraud on the part of the employers.

The evidence shows that the policy in question was issued on August 1, 1936, insuring the employers for one year; that the same was cancelled by the insurer on November 3, 1936, for nonpayment of the premium; that a compensable accident happened to claimant in the bakery operated by the employers in Nevada, Missouri, on December 10, 1936; that the policy was reinstated on December 11, 1936, as of the date of its cancellation, to-wit, November 3, 1936, by the payment of the premium by one of the employers to the insurers. According to the testimony adduced in behalf of the insurance carriers the employer who procured the reinstatement of the policy knew of the accident to claimant at the time the reinstatement was procured and, not only failed to disclose the matter to the insurers, but represented that there had been no accident. However, according to the testimony on behalf of the employers, said employer had no knowledge of the accident at the time the policy was reinstated. The Commission found in accordance with the contention of the insurance carriers; that the employer in question falsely represented that there had been no accident "as far as she knew" and found that the "purported reinstatement was void" and, under the heading "Final Award on Hearing," stated that there was no insurer.

An issue is raised in this court in regard to the competency of the evidence to sustain the finding of the Commission in this regard. As the case will be decided upon another point, it is unnecessary to pass upon this matter.

The employers are not appealing from the award in favor of the claimant against them but, in this appeal, the only question raised is as to the action of the Commission in finding in favor of the insurance carriers.

It is the contention of the employers, among others, that the Commission acted in excess of its powers when it assumed jurisdiction to determine the question of alleged fraud in the reinstatement of the policy and in making a finding and ruling that there had been fraud and that the reinstatement of the policy was void.

It has been held several times by the Supreme Court that the Commission is an administrative agency and is not a court; that the Compensation Act does not vest it with judicial power in a constitutional sense and that it has no power to authoritatively expound any principle of law or equity. [Oren v. Swift & Co., 51 S.W.2d 59, 61; State ex rel. Brewen-Clark Syrup Co. v. Mo. Workmen's Compensation Commission, 320 Mo. 893, 8 S.W.2d 897; DeMay v. Liberty Foundry Co., 327 Mo. 495; Waterman v. Chicago Bridge & Iron Works, 41 S.W.2d 575. See also Jos. H. Weiderhoff, Inc., v. Neal, 6 F.Supp. 798.]

The question as to the power of a commission of this kind to modify, reform, cancel, set aside or to declare void a policy of...