Musgrave v. Liberty Mut. Ins. Co.

• Decision Date: 02 December 1952
• Docket Number: No. 7897,7897
• Citation: 250 P.2d 909,73 Idaho 261
• Parties: MUSGRAVE, State Ins. Manager, v. LIBERTY MUT. INS. CO.
• Court: Idaho Supreme Court

Page 909

250 P.2d 909

73 Idaho 261

MUSGRAVE, State Ins. Manager, v. LIBERTY MUT. INS. CO.

No. 7897.

Supreme Court of Idaho.

Dec. 2, 1952.

Richards, Haga & Eberle, Dale O. Morgan, Boise, for appellant.

Robert E. Smylie, Atty. Gen., Glenn A. Coughlan, Asst. Atty. Gen., for respondent.

KEETON, Justice.

By a policy of insurance dated June 28, 1947, the State Insurance Fund, hereinafter referred to as the Fund, insured the John F. Beasley Construction Company under the Workmen's Compensation Law, covering liability to injured workmen of the insured. Other contingent liability of the John F. Beasley Construction Company was written by the Liberty Mutual Insurance Company, hereinafter referred to as the Mutual Company.

At the time the Fund assumed liability to injured workmen under the Idaho Workmen's Compensation Law, the Mutual was not qualified to write such insurance in Idaho, but was qualified to write certain other kinds of liability insurance. Thereafter the Mutual Company qualified to write workmen's compensation insurance and filed a policy covering the workmen of the insured dated July 17, 1947. This policy was not ordered by the insured, it having already complied with the Workmen's Compensation Act by insuring with the Fund.

All premiums for the workmen's compensation insurance due or becoming due under the Workmen's Compensation Law, during the time the Fund's policy was in effect, were paid by the Beasley Company to the Fund, and Mutual was paid nothing. The mistake of double coverage was not discovered by the insured until some time prior to December 8, 1947, at which time the Fund was advised by the insured that the insurance of the Mutual Company was never ordered or authorized by the insured; further that all reports had been made to the Fund, and all premiums paid to it, and asked that the Fund coverage be canceled effective November 1, 1947.

Under date of November 25, 1947, the Mutual Company called the error to the attention of the Industrial Accident Board, and asked to have its coverage canceled as of July 10, 1947. A part of the letter is as follows:

'Through a misunderstanding, we issued the above mentioned Bond and at the same time Beasley secured coverage with The Idaho State Insurance Fund with premiums being paid to this Fund.

'In view of the fact that Beasley had duplicate coverage in the State of Idaho, we request that you approve our cancellation notice to be effective July 10, 1947.'

The board advised the Mutual Company in a letter dated November 28, 1947, that it had no authority to recognize a pre-dated cancellation and declined to cancel the policy of the Mutual Company.

During the time the Fund's policy was in effect, and for which it had been paid premiums, certain workmen were injured. The Fund, as well as the Mutual Company, was notified of the injuries, and the liability to the injured workmen was paid by the Fund, except some small items of hospital bills which were paid by the Mutual under authority of the Mutual's adjuster.

There was some correspondence between adjusters representing the Fund, and the Mutual Company, as to who should pay the losses, and in a letter dated March 24, 1948, the adjusters representing the Mutual Company suggested to it that each pay one-half of the losses--such adjusters evidently being under the impression that the Mutual Company's policy had been ordered and written by authority of the insured.

The Fund having paid all the liability to the injured workmen brought this action against the Mutual Company for contribution from said company for one-half of the sums so paid.

In an answer, among other defenses, the Mutual Company alleged that its policy covering workmen's compensation liability was written through error, and by mistake, and without authority of the insured, and there was no consideration therefor, and asked that the plaintiff take nothing.

The matter was tried, and the lower court decided the matter in favor of the Fund fixing the liability of the Mutual at one-half the sums paid by the Fund.

The question...