United States Fidelity & Guaranty Co. v. Taylor

Boyd, C. J., delivered the opinion of the Court. While Charles E. Briscoe was in the employ of the appellee, who was engaged in road construction work in St. Mary’s County, Md., he was killed. The appellant had issued to' the appellee a compensation insurance policy which the appellant and the appellee understood did not cover and protéct Briscoe, but his widow, Margaret Briscoe, filed a claim for compensation before the State Industrial Accident Commission, and after a hearing the Commission passed an order that the appellee, employer, and the appellant, insurer, pay to her, until the further order of the Commission, compensation at the rate of $3.60' per week, payable weekly, for the period of eight years from the 21st of July, 1915, and such further sum, not to exceed $75.00, as the widow had paid for funeral expenses. The appellee and the appellant appealed from the order and the award of the Commission, and the appellant further appealed independently and on its own behalf, to the Superior Court of Baltimore City, but that Court confirmed the decision of the Commission. ⁵¹³ The appellant had paid the $3.60 weekly, up to the time of bringing this suit, and also $47.00 for funeral expenses, and it sued the appellee to recover the payments so made by it.

There are live counts in the narv,—the first being for money paid by the plaintiff for the defendant at its request, and the other four being special counts. The defendant (appellee), in addition to the general issue pleas, filed a special plea to each of the five counts, but as the questions before ns are presented by the rulings on the prayers and a demurrer to the plea to the fifth count, we will not set out the pleadings at length. The theory of the plaintiff (appellant) is that, although by reasons of certain provisions in the Workmen’s Compensation-Law, which is now Article 101 of the 3rd volume of the Code, and in the policy issued by it in conformity with that law and the requirements of the State Industrial Accident Commission, it was liable to the widow of Briscoe under the award of the Commission, affirmed by the Superior Court o-f Baltimore City -on appeal, it was not liable to- the appellee, and hence is entitled to recover from him what it has paid by reason of the award of the Commission. It denies any attempt to impeach that award, hut claims that, as it was not intended to insure such employees as Briscoe, and that was so- understood by the appellee, he should be required to return to it what it has paid to Briscoe’s widow, who was his only dependent.

The record shows that the appellee- was about to have-awarded to him a contract for road construction work in St. Mary’s County, when an agent of the appellant called upon him and proposed to insure him in that company against loss on account of accidents to his employees under that contract. The appellee replied that his road construction work was not of such a hazardous nature as to require him, under the law, to take out insurance. The agent told him that he was satisfied that the work was such as to require insurance, but the appellee insisted that it was not, and said that be would not take out insurance for that, but be told the agent that he was the owner of a number of automobiles which be was operating ⁵¹⁴ in C'alvert County, in transporting the mail and passengers, and that he would take a policy from the plaintiff company for protection against accidents to his employees in that enterprise. The premium wasi adjusted upon the basis of the number of employees of the defendant engaged in the automobile business, and was paid, and a policy dated January 20, 1915, was issued.

The appellee did not begin the road work until the following April. He testified that he did not think it was of such nature as to require him to insure, and had no intention when the policy was taken out, nor after he commenced the road work, of insuring against accidents to his employees on that work; and he thought he was not insured against accidents to such employees by the policy mentioned in the declaration until the decision of the Commission, but when the Commission and the Court said he was so insured he accepted the decision. Briscoe was at the time he was killed at work on a gravel pit, used in connection with the road construction work, which seems to be covered in terms by section 32, sub-section 19, of Article 101, as an extra hazardous employment. In the policy the company agrees with the employer “as respects personal injuries sustained by employees, including death at any time resulting therefrom, as follows: “Compensation. 1.

To pay in the manner provided by Chapter 800 of the Acts of the General Assembly of Maryland, 1914, and all amendments thereto (hereinafter called ‘Maryland Workmen’s Compensation Law’) any sum due or to become due from the Employer because of any such injuries or death, and the obligation for compensation therefor imposed upon the Employer by such law,” etc. “Liability. 2. To indemnify the Employer against loss by reason of the liability imposed upon the Employer by law for damages on account of such injuries or death.” “Employees Covered. 6. This policy shall cover all employees of the Employer, legally employed.” ⁵¹⁵ There are also, certain conditions which the policy is subject to, amongst, which are the following: “Condition A. The premium is based upon the entire remuneration earned during the term of the policy by all employees of the Employer * * * If there shall be any change in or extension of the Employer’s trade, business, profession or occupation, the earned premium therefor shall be adjusted at the Company’s manual rates respectively applicable thereto. If the earned premium thus computed is greater than the advance estimated premium paid, the Employer shall immediately pay the additional amount to the Company; if less, the Company shall immediately return the unearned premium to the Employer.” “Condition M. The Employer, by the acceptance of this policy, declares the statements in items numbered 1 lo 11, inclusive, in said Declaration to be true, except such as are declared to be matters of estimate* only; and this policy is issued in consideration thereof and the provisions of the policy as respects its premium and the payment of such premium; provided, however, that nothing in this Condition and no default on the part of the Employer with respect to any of the provisions or conditions of this policy, shall in any way affect the right of any employee, or his dependents, to recover from the Company the compensation provided for in the Maryland Workmen’s Compensation Law and intended to be insured hereunder.” In the declaration, which was made a part of the policy, there are eleven items numbered from 1 to 11, as referred to in Condition M. above.

Item 3 is as follows: “Location of all factories, slops, yards, buildings,, premises or other workplaces of the employer, by town or city, witb street and number: Calvert County, Maryland.” Then under a column of “Divisions of operation” there are a number of classideations lettered from (a) to (T) inclusive. Opposite these are three columns for “Estimated payroll of employees for policy ⁵¹⁶ term,” “manual premium rate per $100 of employees’ payroll,” and “Estimated advance premium.” The only one filled up is “(g) Chauffeurs and helpers, wherever engaged,” and the figures 1200, 1.79, 21.48 are in the three columns just referred to. Item 4 states: “The estimated payroll as stated above, included the entire remuneration of whatsoever kind earned by all persons employed in the service of the employer in connection with the employer’s trade, business, profession or occupation, as provided in Condition A. to whom remuneration of any nature in consideration of service is paid, allowed or due, except that the remuneration of officers of a corporation whose duties or practices do not expose them to any operative hazards of the business may be excluded.” Item 9 is: “FTo operations of any nature not herein disclosed will be conducted by the employer, execpt as follows: No exceptions.” “Calvert County, Maryland,” at the end of Item 3, arid “hTo exceptions,” at the end of Item 9 were the answers of the employer (italics ours). We have thus set out at some length the provisions of the policy, including the conditions and declarations, which are a part of it, which seem to Dei most applicable to the questions involved in this case, but the provisions of the Maryland Workmen’s Compensation Law are expressly made a part of the policy “so far as they apply to compensation for* any personal injury or death covered by this policy while it shall remain in force?’—being a part of paragraph 1 as to Compensation, quoted in part above.

Under Section 15 of Article 101 of the Code, the employer is required to secure compensation to be paid his employees in one of the three ways: (1) By insuring in the State Accident Fund; (2) By insuring with a stock corporation or mutual association authorized to transact the business of the Workmen’s Compensation Insurance in this State; or (3) With the approval of the Commission, insuring the payment of compensation himself. Ample provision is made for the protection of employees when the third plan is adopted, which was doubtless authorized for the benefit of railroads and other companies ⁵¹⁷ or persons who employ a great many employees, and concerning whose ability to pay the Commission can readily determine. In this case the employer adopted the second plan. The form of such policy is approved by the Commission—indeed no company or association can enter into such policy of insurance until it obtains .from the Insurance Commissioner of Maryland a license for the purpose, “and until the form of such policy shall have been approved by the State Industrial Accident Commission.” Section 29 of Article 101.

This case is a very peculiar one and we have not been referred to any decision that is very apposite1. So far as the liability of the appellant to the widow for the compensation is concerned, there can no longer he any question. That was determined by the Commission and affirmed by the Superior Court of Baltimore City—no appeal having been taken to this Court. In its opinion the Commission referred to the contention of the insurance company that the “coverage provisions” were limited by the “Declarations” of the employer contained in his application for insurance, which declared that he employed no other employees except chauffeurs and helpers, and that therefore only such employees were covered by the policy, and said: “If the rights of third parties were not involved we might accept this view as correct, hut however the terms of the application and the declarations of the employer may affect the question as. between the insurer and the employer, they can not affect the right of the injured employee, or his dependents, in case of death, to the security of payments of compensation stipulated in paragraph one of the policy, and this is so because of condition M. of the policy.” After quoting Condition M. the opinion went on to say that “The proviso clause in this condition of the policy was inserted by the Commission for the express purpose of defeating any such contention as that now made by the insurance company, and we are of the opinion that it does have that effect, and that, notwithstanding the “Dec ⁵¹⁸ larations” of the employer, the policy is effective in securing the payment of compensation to which the employee, or his dependents, may he entitled, regardless, of the statements or declarations made by the employer in his application for insurance.” That is practically the position now taken by the appellant, and after giving the matter thorough consideration we have reached the conclusion that the appellant is not barred by the award of the Commission, but is entitled to- recover from the appellee the payments