Mull v. United States Fidelity & Guaranty Co.

• Decision Date: 26 April 1922
• Citation: 35 Idaho 393,206 P. 1048
• Parties: C. H. MULL, Respondent, v. UNITED STATES FIDELITY & GUARANTY COMPANY, a Corporation, Appellant
• Court: Idaho Supreme Court

206 P. 1048

35 Idaho 393

C. H. MULL, Respondent, v. UNITED STATES FIDELITY & GUARANTY COMPANY, a Corporation, Appellant

Supreme Court of Idaho

April 26, 1922

EMPLOYERS' LIABILITY INSURANCE-PRINCIPAL AND AGENT-INSURANCE CONTRACT-ADMISSIBILITY OF PAROL EVIDENCE TO VARY CONTRACT-ESTOPPEL.

1. Where an employers' liability insurance policy issued on November 30, 1917, contained the following clause: "This policy does not cover the liability of the assured under any workmen's compensation agreement, plan or law, unless otherwise indorsed," but the general agent of the insurance company represented to the insured that the policy would continue in force after January 1, 1918, the date when the workmen's compensation law of Idaho became effective and that it would not be necessary for the insured to arrange for such insurance with the state insurance department, and the insured relied upon such representations, the insurance company was bound by the representations of its agent, and parol evidence is admissible for the purpose of raising an estoppel against the company's availing itself of the provisions of such clause, after loss under the policy had occurred.

2. An insurance company will not be permitted to defeat a recovery upon an insurance policy issued by it, by proving the existence of facts which would render it void, where it had full knowledge of such facts when the policy was issued.

3. Where an insurance company has knowledge of facts entitling it to treat a policy as no longer in force, and thereafter it demands and receives a premium on the policy, it is estopped from declaring a forfeiture.

APPEAL from the District Court of the Fourth Judicial District, for Twin Falls County. Hon. O. R. Baum, Presiding Judge.

Action to recover on contractors' employers' liability policy. Judgment for plaintiff. Affirmed.

Judgment of the trial court affirmed. Costs awarded to respondent.

E. M Wolfe, J. F. Martin and L. A. Wade, for Appellant.

The loss for which plaintiff is attempting to recover does not come within the terms of his contract and was not such a loss as plaintiff was insured against. This accident occurred while the workmen's compensation law was in force. (C S., sec. 6214.) Under this law, the question of negligence is immaterial. The damage which the plaintiff was compelled to pay was the result of an award had under a proceeding before the "State Industrial Accident Board." The proceedings before this board are not a "suit," nor is its award a judgment after a "trial," as provided in the contract. Thus, it is apparent that the plaintiff cannot maintain this action, conceding that this contract was in full force and effect.

Walters, Hodgin & Bailey and R. P. Parry, for Respondent.

Parol evidence is admissible to show knowledge, representations and acts of insurer that would operate to estop insurer from denying liability. (16 L. R. A., N. S., 1193, and cases cited; Carroll v. Hartford Fire Ins. Co., 28 Idaho 466, 154 P. 985.)

Insurer may, by representations, knowledge of then existing facts or acts, either of self or agent, be estopped from relying on a strict construction of the written policy and denying liability. (14 R. C. L. 166, point 18, and cases cited; Parsons, Rich & Co. v. Lane, 97 Minn. 98, 7 Ann. Cas. 1144, 106 N.W. 485, 4 L. R. A., N. S., 231; Fishbeck v. Phoenix Ins. Co., 54 Cal. 422; Bellevue etc. Mill Co. v. London etc. Ins. Co., 4 Idaho 307, 39 P. 196; Allen v. Phoenix Assur. Co., 12 Idaho 653, 10 Ann. Cas. 328, 88 P. 245, 8 L. R. A., N. S., 903, 14 Idaho 728, 95 P. 829.)

Insurer is, by accepting and retaining premium, after loss, estopped from denying liability for loss. (14 R. C. L. 367; Scottish Union etc. Ins. Co. v. Wylie, 110 Miss. 681, 70 So. 835; Manning v. Connecticut Fire Ins. Co., 176 Mo.App. 678, 159 S.W. 750; St. Paul Fire etc. Ins. Co. v. Cooper, 25 Okla. 38, 105 P. 198; American etc. Ins. Co. v. Robinson (Tex. Civ.), 219 S.W. 277; New Jersey Rubber Co. v. Commercial etc. Assur. Co., 64 N.J.L. 580, 46 A. 777; McKune v. Continental Casualty Co., 28 Idaho 31, 154 P. 990.)

BUDGE, J. RICE, C. J., McCarthy, Dunn and Lee, JJ., concurring.

OPINION

BUDGE, J.

This action was brought by respondent to recover upon a contractors' employers' liability policy.

From the record it appears that during the years 1917 and 1918 respondent was engaged as a contractor in the construction of several steel bridges in Twin Falls county, and in November, 1917, he made application, through one Taylor, a general agent for appellant, for a policy of insurance to protect him for the period of one year, or during such time as said bridges were being constructed, against loss or liability by reason of accidents occurring to his workmen employed upon such work. The evidence shows that Taylor solicited respondent's application, and that a conversation ensued with respect to which respondent testified as follows:

"Q. Did you have a conversation with Mr. Taylor at that time as to the Employers' Workmen's Compensation Act which had been passed by the legislature in 1917? . . . . At the time that the application for insurance was taken from you by Mr. Taylor . . . . ?

"A. I did.

"Q. What was said by him?

"A. . . . I believe I had reached the point where I had said that I had just been awarded a contract for some bridges. Mr. Taylor asked me for the liability policy and I told him that inasmuch as I did a great deal of my business with the state that I thought I would take out my policy with the State Insurance Department. Mr. Taylor called my attention to the fact that I had given him practically all of my business and it had been very satisfactory, and that he would like to continue to receive my business, and that if I had the policy issued by his company I would not be put to the trouble of taking out another policy at the beginning of the year. I took those things into consideration, and the fact that there was but a few days remaining in the year, and that I would not commence this work until after 1918, and gave Mr. Taylor this application.

"Q. What was said by Mr. Taylor about the policy protecting you in 1918?

"A. He assured me that it would,--that it would not be necessary to take out any insurance with the State Insurance Department."

This testimony, which was nowhere contradicted, was corroborated by W. H. Patton, who testified that: " . . . . as I remember it the conversation was that Mr. Taylor was wanting to write Mr. Mull's insurance on this business, and Mr. Mull asked him about this state compensation law, and he told him that their company would take care of that, and that their policy was good. Mr. Mull stated that he was going to California and would not be here the first of the year, and that if his policy was such that it would cover him that he would write it that day, which he did. Then he made application for the policy."

The policy, which was delivered at respondent's office during his absence, purports to be for a term of one year beginning November 30, 1917, and contains a clause on the margin which was evidently stamped thereon after the printing of the policy, providing that: "This policy does not cover the liability of the assured under any workmen's compensation agreement, plan or law, unless otherwise indorsed."

On March 30, 1918, Alex Lawson, one of respondent's workmen, was injured in an accident on one of the bridges. Respondent immediately notified appellant of the injury, and the latter in a letter dated April 4, 1918, informed respondent that his policy "is hereby canceled . . . . said cancelation to become effective at 12 o'clock midnight December 31, 1917," due to the fact that the workmen's compensation law of Idaho became effective at that time. On June 10, 1918, however, appellant billed respondent for the premium due on the policy for the full term thereof, which respondent paid on June 17, 1918.

Thereafter Lawson instituted proceedings before the Industrial Accident Board, of which appellant was notified but declined to appear and defend on behalf of respondent. On November 22, 1918, Lawson was awarded $ 2640.25, by the board, of which $ 876.25 had theretofore been paid under the order of the board, leaving a balance of $ 1,764 due and unpaid, pursuant to which judgment was rendered against respondent in the district court for Twin Falls county for $ 1,764 on December 24, 1918, which was paid by him on the same day, and released. Notice of the proceeding in the district court was also given to appellant, but it declined to enter its appearance.

This action was brought by respondent to recover $ 2,640 paid to Lawson, and $ 350 in damages for attorney fees and costs expended, or a total of $ 2,990.25, together with interest and costs. The cause was tried to the court without a jury. From a judgment in favor of respondent for $ 3,167.47 and costs, this appeal is taken.

Appellant makes nine assignments of error, but we deem it necessary to discuss only assignments 1 and 2, which predicate error upon the action of the court in admitting in evidence the testimony of respondent and Patton as set out above, for the reason that the policy could not be varied by parol, that it insured against accidents resulting from negligence by respondent only, while under the compensation law the question of negligence is immaterial, and that the policy automatically expired when the workmen's compensation law became effective. These latter two contentions, however, rest upon the first, and appellant's liability upon the policy, under the facts of this case, depends upon whether or not parol evidence is admissible to raise an estoppel against an insurance company to rely upon a provision that the policy does not cover the liability of the assured under...