Martin v. Argonaut Ins. Co.

• Decision Date: 21 November 1967
• Docket Number: No. 9908,9908
• Citation: 91 Idaho 885,434 P.2d 103
• Parties: Richard MARTIN, R. W. Woods, individually and dba Woods Lumber Company, Plaintiffs-Respondents, v. ARGONAUT INSURANCE COMPANY, Defendant-Appellant.
• Court: Idaho Supreme Court

Page 103

434 P.2d 103

91 Idaho 885

Richard MARTIN, R. W. Woods, individually and dba Woods Lumber Company, Plaintiffs-Respondents, v. ARGONAUT INSURANCE COMPANY, Defendant-Appellant.

No. 9908.

Supreme Court of Idaho.

Nov. 21, 1967.

Moffatt, Thomas, Barrett & Blanton, Boise, for appellant.

Bandelin & Cogswell, Sandpoint, for respondent, R. W. Woods.

Stephen Bistline, Sandpoint, for respondent, Richard Martin.

McFADDEN, Justice.

This declaratory judgment was instituted by Richard Martin and Robert W. Woods, the latter doing business as Woods Lumber Company, against defendant-appellant Argonaut Insurance Company, a foreign corporation authorized to do business in Idaho. Other defendants initially named in the action were subsequently dismissed. Martin, while employed by Woods in Woods Lumber Company mill on Pack River, was seriously injured at 11:20 A.M., May 1, 1962. Martin filed a claim for compensation with the Industrial Accident Board, joining Woods as the employer and Argonaut Insurance Company as surety for Woods.

The Board dismissed Argonaut Insurance Company from that proceeding and an appeal from that order to this court culminated in affirmance of the Board's refusal to decide the issue on Argonaut's liability to Woods. See: Martin v. Robert W. Woods Lumber Co., 90 Idaho 105, 408 P.2d 474 (1965).

This action was also previously before this court. In Martin v. Argonaut Insurance Co., 90 Idaho 107, 408 P.2d 475 (1965), the judgment of the trial court that it did not have jurisdiction because of the then pending proceedings before the Industrial Accident Board was reversed and the cause remanded for further proceedings.

After remand, the trial court entered its findings of fact, conclusions of law and its decree, which decree reads in part:

'IT IS HEREBY ORDERED ADJUDGED AND DECREED That the defendant herein, the Argonaut Insurance Company, was, on the 1st day of May, 1962, and throughout the whole of said day, and particularly at the time of the injury to the plaintiff, Richard Martin, the Workmen's Compensation Surety and carrier for the plaintiff, R. W. Woods, doing business as the Woods Lumber Company, and further ordered adjudged and decreed that said defendant is estopped to deny its liability to the plaintiff Woods as surety, at the time of the injury to the plaintiff, Martin, and, in those proceedings still pending before the Industrial Accident Board of the State of Idaho, the defendant, Argonaut Insurance Company, is fully liable to the plaintiff Woods, to pay all of that liability which has attached to the plaintiff Woods by reason of the industrial accident which on the 1st day of May, 1962, occurred to the plaintiff, Martin, at the sawmill then and there being operated by the plaintiff Woods.'

The trial court also awarded respondent Woods the sum of Five Thousand Dollars as reasonable attorney's fees.

This appeal is taken from the judgment and decree so entered.

Respondent Woods operated a lumber mill a few miles from sandpoint, Idaho. One of his employees was respondent Martin. Woods, for a number of years, had the F. G. Harrell Agency (later mentioned as Harrell Agency) of Sandpoint handle his fire insurance, and workmen's compensation insurance on his employees. The Harrell Agency (owned by LeRoy J. (L. J.) McArthur, whose wife, Wilma Mae McArthur, also worked in the agency) was the agent of a number of insurance companies, including appellant.

During the course of Woods' association with the Harrell Agency and the McArthurs, Woods left the selection of the companies that would carry his particular policies with this agency. Most of his transactions were with Mr. McArthur during his lifetime.

Appellant Argonaut Insurance Company, having its home office in Menlo Park, California, and its Idaho district office at Boise, appointed the Harrell Agency as its sole representative in Sandpoint. By the agency agreement, executed March 1, 1958, appellant appointed the Harrell Agency its agent to solicit, receive and accept applications for insurance and to receive and remit premiums on its behalf. By an addendum to this agreement, the provisions of the agency agreement were made applicable to workmen's compensation insurance. Although the appellant named 'F. G. Harrell Agency' in the agency agreement, both L. J. McArthur and Wilma Mae McArthur were appointed and certified as being agents of appellant.

For a number of years prior to 1960, L. J. McArthur has obtained workmen's compensation insurance for Woods, with the policies being placed in various companies other than appellant. In 1960, McArthur placed Woods' workmen's compensation insurance with appellant Argonaut Insurance Company, which company issued a policy countersigned by Wilma Mae McArthur for the policy period from May 1, 1960 to May 1, 1961, '12:01 standard time * * *.' At the time this policy was issued, Woods paid the required deposit premium. Under the terms of this policy, monthly payroll reports were submitted and the actual monthly premiums computed, billed and paid. Following issuance and delivery of this policy, Woods discussed it with McArthur, Woods stating:

'A He (L. J. McArthur) told me that he and Wilma both were agents for Argonaut, and I questioned him at that time about the policy of renewal, because in the past, it had been, as far as I was concerned, automatic, and that was one thing that worried me, and he said that Argonaut operated the same way; that I would put up my deposit, at that time it was $306, and if I paid my premiums on time, made out the reports properly and there was no other reason, no reason that Argonaut wouldn't renew it, because, as it had been in the past. So I was satisfied, and I said, 'all right, I will buy Argonaut Insurance.'

Q Did you agree to make the deposit premiums and make the premiums?

A It was made, and I made every premium payment.

Q And that was under your agreement with Roy?

A That was right.

Q And his agreement was that these renewals were just like they had been. They--

A Well, it is true. I questioned him for the simple reason, that with Liberty and with Argonaut once before, and I will admit that since then I have heard this, it isn't the same company, but they call it Argonaut, and with Liberty again; that I wanted to be assured that it would be the same way, because I have got too much to do to have to keep track of all these, like a renewal of insurance policy, when to me, it always had been automatic.'

Examination of exhibits reflects that previously when there was a change of insurance carrier from one company to another, these changes in each instance were accomplished without any period of time that Woods was not covered by one policy or the other.

Following issuance of this first policy by Argonaut, another policy identical to the first, except for its designation as a 'renewal policy,' was issued for the period of 'May 1, 1961 to May 1, 1962 12:01 a. m. * * *.' This renewal policy was issued without any formal application being made by Woods, or any particular request being made by McArthur. Appellant's Idaho District Manager testified in substance that within the company, renewals work automatically, that the procedures involved for renewal of a policy are put in effect without any affirmative action on the part of the insured or of the agent; he testified that about eighty per cent of the policies are renewed. Wilma Mae McArthur testified that she and her husband were not agents for any compensation carrier other than appellant during the period of May 1, 1960 to May 1, 1962, and that Woods' renewal policy came to them from appellant for signature by her. She stated that in some instances renewal policies were received prior to expiration date, a few on the expiration date, and even some after the expiration date of the previous policy.

During various times throughout the life of the original policy and the renewal policy, a safety engineer of appellant inspected the Woods' lumber mill. Reports of these inspections were sent to the main office. The final inspection was made in February 1962, and in that report it was stated, 'Mr. Woods was advised that return engineering calls to his sawmill would be made on a scheduled basis.'

On March 1, 1962, appellant's district manager told the McArthurs that appellant was terminating their agency. Notice of such termination was filed with the Department of Insurance of this state. No constructive notice to Woods arose from such filing with the Department of Insurance. Tucker v. American Aviation & Gen. Ins. Co., 198 Tenn. 160, 278 S.W.2d 677 (1955). No actual notice of such cancellation of authority or termination of agency was submitted either by the McArthurs to Woods, or by Argonaut to Woods.

Following this termination, Mr. and Mrs. McArthur went to Seattle to contact certain insurance brokers to try to place Woods' policies, and other insurance they had written. While there, LeRoy J. McArthur died on March 7, 1962.

Woods knew that Mr. McArthur had passed away. He stated, however, that he did not receive any word that Mrs. McArthur's authority had been cancelled. He stated:

'Q In connection with Roy's death, did you have any doubts or inquiries to make about any insurance?

A Well, surely. I suppose, about a month after Roy's death, I went in to see Wilma in regard to my insurance, as I have several policies that I have purchased through them. It was more of a casual conversation, but I did ask her.

A And she told me that she was Agent in her own right, and she was Agent for Argonaut and various insurance companies, and that she was going to continue the business. And I asked her if things was going to be as usual and she assured me that they would be. It would go along just like when Roy had been alive. She was Agent. She was going to run the business, and when my renewals come up, they would be renewed.'

This testimony is rebutted by Mrs. McArthur's testimony, wherein she stated that she...