NATIONAL AUTOMOBILE INS CO v. INDUSTRIAL ACCIDENT COMMISSION OF CALIFORNIA

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District Court of Appeal, First District, Division 2, California.

NATIONAL AUTOMOBILE INS. CO. v. INDUSTRIAL ACCIDENT COMMISSION OF CALIFORNIA et al.†

Civ. 10774.

Decided: June 22, 1938

S. Norman Hays, of San Francisco, for petitioner. Everett A. Corten and Eldon B. Spofford, both of San Francisco, for respondent Industrial Accident Commission.

Petitioner seeks the annulment of an award made by the respondent commission in favor of Eddie S. Higdon and against the petitioner.

Higdon was originally employed as a “floor manager and bouncer” by H. E. Schmidt and Oscar Mester, as copartners doing business under the name of Bal Masque ballroom in San Francisco. He left their employ but returned late and was reemployed by Schmidt after the dissolution of the copartnership. The business was then being conducted by Schmidt individually. Thereafter, and while working for Schmidt, Higdon's hand was injured when it came in contact with the face of one of the customers.

During the existence of the copartnership, petitioner issued its policy of insurance to “Oscar Mester and H. E. Schmidt, jointly and not severally, a copartnership d.b.a. Bal Masque Ballroom.” The commission found that “Eddie S. Higdon, applicant, while employed as a floor manager and bouncer on December 31, 1936, at San Francisco, by H. E. Schmidt, also known as Whitie Smith, and Oscar Mester, doing business under the firm name and style of Bal Masque Ballroom, sustained injury. * * *” In denying a petition for rehearing, the commission stated in its order, “This commission is of the opinion that a transfer of partnership interests by defendant Mester to defendant Schmidt (alias Smith) prior to injury would not void a valid and existing compensation insurance policy issued to them jointly, as partners, and that the finding that the applicant was at the time of his injury in the employ of Schmidt and Mester, doing business under the firm name and style of Bal Basque Ballroom, if erroneous, is nevertheless not one which prejudices or gives cause for grievance to defendant carrier.”

Petitioner contends that the commission acted without and in excess of its powers as there was no evidence to sustain the finding to the effect that the copartnership was the employer at the time the injury was sustained by Higdon. It further contends that its policy did not cover the liability of Schmidt as an individual employer. We are of the opinion that petitioner's contentions must be sustained.

A similar policy was under discussion in National Automobile Insurance Co. v. Industrial Acc. Comm., Cal.App., 80 P.2d 1024, the opinion in which last–mentioned cause has been this day filed. The facts in the two cases differ, but some of the discussion in the above–mentioned opinion is pertinent here. It is not claimed here that the policy, as written, did not express the true intention of all parties and consequently the commission made no order for reformation. As written, the policy insured against the liability of the then existing copartnership as employer and clearly provided that it did not insure against the liability of either of the named individuals as employer. We therefore conclude that as Higdon was admittedly the employee of Schmidt alone when the injury was sustained, there is no justification in the record for the award against petitioner.

The respondent commission cites and relies upon the authorities cited in the other opinion and particularly the case of First Nat. Bank v. Industrial Acc. Comm., 213 Cal. 322, 2 P.2d 347, 78 A.L.R. 1324. We find none of these cases in point as none involved a policy similar to the one before us. In the last–named case the facts, other than the provisions of the policy, are quite similar. It was there said (page 351): “It will be noted that the policy, in naming the employer, names two individuals who are not even described as a copartnership. It does not specify that the partnership, as an entity, is named as the employer.” But here the partnership was named as the employer and it was specifically provided that the partners were covered “jointly and not severally”. The cases are therefore distinguishable on their facts. The policy here appears to be precisely the type of policy which the court had in mind when it said, “Had this insurance company desired to insure only this copartnership as an entity, it could have been easily so designated in naming the employer.”

The respondent commission also relies upon section 304 of the Insurance Code, St.1935, p. 504. Said section provides: “In the case of partners, joint owners, or owners in common, who are jointly insured, a transfer of interest by one to another thereof does not avoid insurance, even though it has been agreed that the insurance shall cease upon an alienation of the subject insured.” We are of the opinion that said section is not applicable here. The contract of the parties expressly provided that the policy should not cover the liability of either of the named individuals as an employer at any time and said section did not have the effect of enlarging the terms of the policy upon the dissolution of the copartnership. The situation is not comparable to that presented in First Nat. Bank v. Industrial Acc. Comm., supra, where the policy merely named “Charles Hascall and S. W. Powell, d.b.a. Hascall & Powell” as the employer.

The award is annulled.

SPENCE, Justice.

We concur: NOURSE, P. J.; STURTEVANT, J.

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