Opinion
No. 38419.
June 9, 1952.
1. Workmen's Compensation — rule requiring notice of cancellation or termination of insurance.
The Workmen's Compensation Commission had the power to promulgate a rule, consonant with the statute, that to effectuate the cancellation or termination of a carrier's insurance policy thirty days prior notice thereof must be given in writing to the Compensation Commission. Sec. 33 Chap. 354 Laws 1948.
2. Workmen's Compensation — insurance carrier's binder — fifteen day binders.
An insurance carrier's binder is a contract of insurance and is within the statute and the rule of the Commission above stated, and the statute as well as the rule applies to binders each issued for a fifteen day successive period.
3. Workmen's Compensation — fifteen day binders — failure to notify Commission of termination.
Where an insurance carrier under the Workmen's Compensation Act had issued fifteen day binders to the employer the last of which was to expire on April 8, and on March 22 the carrier notified the employer that the insurance would not be renewed, but the carrier failed to notify the Compensation Commission, and the employer had failed to obtain other insurance coverage, the carrier's liability remained and was in effect when the employee in question was accidentally killed in the line of his duty on May 26.
4. Workmen's Compensation — hearings on the question of liability.
A hearing was had on the question of liability under the Workmen's Compensation Act but shortly thereafter and before any opinion had been rendered or adjudication made, the claimant filed an amended application and due notice having been given to all parties concerned of an additional hearing at which all parties appeared and introduced proof and upon which hearing an adjudication was made: Held that the second hearing was a valid proceeding under the statute. Secs. 18, 21, 22, Chap. 354 Laws 1948.
Headnotes as approved by Roberds, P.J.
APPEAL from the circuit court of Marion County; SEBE DALE, Judge.
Henry Mounger, and Watkins Eager, for appellant.
I. The issuance of one or of several fifteen day binders, the last of which expired by its own terms upon April 8, 1950, did not result in workmen's compensation insurance coverage from the appellant to the appellee upon May 26, 1950, the date of injury.
A. The Mississippi statutes are silent upon the matter of fifteen day binders and section 33 of the Mississippi Workmen's Compensation Act applies to regular policy contracts. Sec. 33, Mississippi Workmen's Compensation Act of 1948, as amended; Rule 5, Mississippi Workmen's Compensation Act.
B. Even assuming that the Mississippi statute could apply to binders still there is no automatic extension of insurance where there is no cancellation but rather there is expiration. Sec. 33, et seq., Mississippi Workmen's Compensation Act; Seiderman v. Herman Perla, 197 N.E. 190; Anderson v. Polleys, 173 A. 114; Kolb v. Brummer, 173 N.Y.S. 72; Sec. 54, subsec. 5, (Consol. Laws) of New York.
C. Insofar as Rule 5 of the Mississippi Workmen's Compensation Commission would attempt to add anything to the provisions of section 33 of the Mississippi Workmen's Compensation Act, such rule is void. Rule 5, Mississippi Workmen's Compensation Act; Motsinger v. Perryman, et al. 218 N.C. 15.
II. There was no authority in law for the conduct of the second hearing by the attorney-referee of the Mississippi Workmen's Compensation Commission. Sec. 36, Mississippi Workmen's Compensation Comm.; Sec. 5, Mississippi Workmen's Compensation Comm.
Grayson B. Keaton, for appellee.
Under point I of their brief counsel for appellants contend that "the issuance of one or of several fifteen day binders, the last of which expired by its own terms upon April 8, 1950, did not result in Workmen's Compensation Insurance coverage from the appellant to the appellee upon May 26, 1950, the date of injury".
Appellants freely concede that they issued these five fifteen day binders, providing workmen's compensation coverage. Appellants contend that the reason that they issued binders instead of the usual policy was that they were waiting for Rube Morris to obtain boiler insurance. In answer to this contention we wish to point out that the reasons which appellants had for handling the coverage in this matter is absolutely immaterial insofar as appellee is concerned. An insurance binder, or binding slip, is just as much a contract of insurance as is a regular policy, and this is particularly true in view of section 33 of the Compensation Act.
Appellants seem to make much of the fact that the binders were for only fifteen day periods, while the statute requires thirty days notice. The appellants could have issued ninety day binders, one hundred and twenty day binders, or six month binders. The fact that in this case the binders covered only fifteen days each is of no significance. The appellants cannot claim immunity from the law simply because they selected the course of issuing a series of fifteen day binders, instead of binders for a longer period. Section 33 of the Compensation Act applied to binders and policies alike, regardless of their duration. If the intent and purpose of section 33 can be evaded and by-passed by the use of fifteen day binders, then the entire scope and purposes of the law can be circumvented through the issuance by the insurance companies of short-term binders instead of regular policies. Here, the appellants issued one binder after another, until a total of five had been issued, and there was no break in the continuity of the coverage.
"When the binder was signed by the agent of the Globe Indemnity Company and delivered to the broker, the contract of insurance was closed and the binder became in effect the same as a regular insurance policy including by inference all the terms of a regular policy." Quoting from Seiderman v. Herman Perla, Inc., 268 N.Y. 188, 197 N.E. 190.
Counsel for appellants severely criticize the Commission for adopting its Rule 5. We submit that this rule goes no further than sec. 33 of the Compensation Act, and that, therefore, the commission did not exceed its powers in adopting the rule. Actually, we think the statute is more stringent than the regulation, and that appellants have no right to complain. Hattie Mae Russell relies upon the plain provisions of the statute, and it is wholly immaterial whether the rule adopted by the commission is valid or invalid.
Under point II of their brief counsel for appellants contend that there was no authority in law for the conduct of the second hearing by the attorney-referee. Counsel do not support their argument with any authorities.
The appellants are seeking to have this Court place a hard and strained interpretation upon the Workmen's Compensation Act, when they stress this highly technical point. Such was not the intention of the Legislature when it adopted the act.
"The Workmen's Compensation Act is to be given a liberal and sensible interpretation in order to effect its salutary purposes, and doubtful cases should be resolved in favor of compensation. Deemer Lbr. Co. v. Hamilton, (Miss.), 52 So.2d 634. This attitude is adopted by every court which has considered the matter. 58 Am. Jur., Workmen's Compensation, Sec. 27." Brookhaven Steam Laundry v. Watts, 55 So.2d 381.
Under a liberal and sensible interpretation of the Act there was full authority for the attorney-referee to take notice of the second request, particularly where it was apparent that the second request concerned the same parties and the same subject matter as was involved in the first hearing. The attorney referee merely consolidated the two requests and granted a further hearing. Certainly, there was no abuse of discretion in this action.
This Court has not made any decision construing section 33 of the Workmen's Compensation Act. However, there have been numerous decisions from other states construing similar statutes, and these decisions consistently hold the insurance carrier to be liable to the injured workman or his dependents, if such carrier failed to give the notice required by law.
A strong case supporting appellee's contention is the New York case of Passarelli v. Columbia Engineering Contracting Co., 270 N.Y. 68, 200 N.E. 583. See also Otterbein v. Babor Comeau Co., et al., 272 N.Y. 149, 5 N.E.2d 71, and Employers' Liability Assurance Corp. v. Matlock, et al., 151 Kan. 293, 98 P.2d 456.
An interesting annotation on this subject may be found in 107 A.L.R. 1514, wherein there are annotated and discussed numerous decisions from a large number of jurisdictions, holding in accordance with appellee's contention.
The main question for determination in this case is whether appellant was a compensation insurer for the benefit of Noah Russell at the time of his death May 26, 1951, as an employee of Rube Morris. The attorney-referee, the full commission and the circuit court held that appellant was such an insurer, and this appeal is from those holdings. The question arises under these circumstances:
Morris was operating a sawmill. Russell was his employee. Russell came to his death as a result of an accident in the line of duty. Beginning January 24, 1950, appellant issued to Morris five successive binders, each for fifteen days, the last expiring at midnight April 8, 1950. By such binders the insurer acknowledged itself "* * * bound by a liability insurance undertaking", under the Mississippi Workmen's Compensation Law. Chapter 354, General Laws of Mississippi 1948 page 507. The binder method of insurance was adopted instead of issuance of a regular policy because Morris was undertaking to procure boiler insurance. On March 18, 1950, Morris wrote appellant that the inspector for the boiler insurance carrier had disappoved the boiler risk and the boiler insurance had been cancelled. On March 30, 1950, appellant wrote Morris, saying the binder it had sent to Morris under date March 22 "covering your operations under the Mississippi Compensation Law" would expire at midnight April 8, 1950, "and we wish to advise that we will not be in a position to renew the binder upon expiration, or to write coverage for you at this time, as we understand that you are unable to obtain boiler insurance." The binder also stated it would expire at midnight of April 8, 1950. Near the beginning of the negotiations between Morris and appellant for issuance of said insurance Morris had deposited with appellant $614, estimated premium for four months. Some ten days before the accident which resulted in the death of Russell, the insurer audited the payrolls of Morris and retained out of such deposit the sum of $356.89 to pay the premiums for the insurance covered by the binders.
The Workmen's Compensation Commission had never been notified, either by Morris or appellant, that Morris had any workmen's compensation insurance, and no notice was given the commission by either party of the expiration of the binder contract, or that the insurance would not be renewed. It is admitted that at the time of the death of Russell no liability insurance existed as between Morris and appellant, but it is contended by appellee, the claimant herein, that such insurance did exist as between appellant and the claimant because of the failure of the insurer to give thirty days' notice to the commission, as required by Section 33 of the Workmen's Compensation Law and by Rule 5 of the commission, that the binder insurance contract would terminate on April 8, 1950, and would not be renewed. The attorney-referee, the full commission and the circuit court held that the insurance was in force on May 26, 1951, when Noah Russell was killed.
We quote the applicable part of said Section 33: "every contract for the insurance of the compensation herein provided for, or against liability therefor, shall be deemed to be made subject to the provisions of this act, and provisions thereof inconsistent with the act shall be void. Such contract shall be construed to grant full coverage of all liability of the assured under and according to the provisions of the act, notwithstanding any agreement of the parties to the contrary unless the insurance department has theretofore by written order specifically consented to the issuance of a policy on a part of such liability. No such policy shall be cancelled within the policy period until a notice in writing shall be given to the commission and to the assured, fixing the date on which it is proposed to cancel it, or declaring that the company does not intend to renew the policy upon expiration date, such notices to be served personally or by registered mail on the commission at its office in Jackson, and upon the assured. No such cancellation shall be effective until thirty (30) days after the service of such notice, unless the employer has obtained other insurance coverage, in which case such policy shall be deemed cancelled as of the effective date of such other insurance, whether or not such notice has been given."
Rule 5 of the commission is as follows:
"Any insurance carrier having issued a policy to an employer and desiring to cancel or terminate same, shall be required to give 30 days prior notice thereof in writing to the Commission and to the employer. In the event a request for cancellation is occasioned by the employer's having taken coverage with another company or if for any reason the employer chooses to reject a policy presented to him by the carrier, the Commission shall, upon application of the carrier and upon proper showing, waive the 30 day prior notice requirement.
"The employer whose policy has thus been cancelled or terminated, shall, on or before the fifteenth day after receipt of notice of cancellation or termination thereof, file evidence with the Commission of having obtained other coverage in accordance with the Act; or that he has been rejected by at least three companies registered to write compensation in this State, in which event his request for insurance shall be processed under the assigned risk plan as provided for in Section 50 of the Act."(Hn 1) We think the commission had the power, under the statute, to promulgate the rule. The statute was embodied into the insurance contract as though written therein. It, in effect, so expressly provides. The main purpose of both is assurance to the commission that eligible employees are protected under the act. (Hn 2) It is urged by appellant that the statute does not cover a binder; that it has reference only to regular insurance policies. It will be noted that Section 33 uses the phrase "Every contract for the insurance of the compensation herein provided for, or against liability therefor * * *", etc. A binder is a contract of insurance.
Appellant strongly contends that the requirement of thirty days' notice to the commission of the intent not to renew a policy cannot be applicable to a binder which is to run only fifteen days. The first answer to that is the binders could have been written for sufficient duration to enable the carrier to comply with the law, or not be written at all, and the second is that by the method here adopted, or any other method not permitting time to comply with the statute, the requirements of the law could be entirely defeated.
(Hn 3) We think the insurance was in force as to Russell when he was killed May 26, 1951. Passarelli v. Columbia Engineering Contracting Co., 270 N.Y. 68, 200 N.E. 583; Otterbein v. Babor Comeau Co., 272 N.Y. 149, 5 N.E.2d 71, 107 A.L.R. 1510.
(Hn 4) There were two hearings upon the question of liability, the first on February 9, 1951, at Columbia, and the second on February 26, 1951, at Jackson, Mississippi. Liability of appellant-carrier was adjudicated after the second hearing. Appellant says no authority existed for the second hearing. On January 13, 1951, the widow of decedent made application "To determine liability of the employer." Due notice was given the employer of such application and the time and place of the hearing The hearing was had on February 9th. Both the employer and the appellant appeared at that hearing and contested the claim. No opinion on liability was given by the attorney-referee upon that hearing. Before any opinion was rendered, and on February 14, 1951, Hattie Mae Russell, the widow, filed an amended application to determine liability of appellant as insurance carrier and also of Rube Morris as employer. Both Morris and appellant appeared and contested the application. Proof was introduced at both hearings. On March 2, 1951, the attorney-referee rendered his opinion, finding that the death of Russell was compensable and that both the employer and the insurance carrier, the appellant, were liable.
No case, or statutory provision, is cited to support the contention here made. The answer is to be deduced from the 1948 Workmen's Compensation Law, supra, in effect when this matter was heard. Section 18 of that law provides that "Informal conferences and hearings in contested cases may be conducted by a commissioner or a duly designated representative of the commission", — in this case the attorney-referee. That section further provides the commission "* * * shall make or cause to be made such investigation as it deems necessary, and upon application of either party, or upon its own initiative, shall order a hearing * * *". Section 21 empowers the commission upon its own initiative, or upon application of any party in interest, to reopen and reexamine an award, or denial of award, within the time stated in the statute. Section 22 contains this provision: "In making an investigation or inquiry or conducting a hearing the commission shall not be bound by common law or statutory rules of evidence or by technical or formal rules or procedure, except as provided by this act, but may make such investigation or inquiry or conduct such hearing in such manner as best to ascertain the rights of the parties". We find no statute denying the power of the attorney-referee to conduct the second hearing under the circumstances above disclosed, especially since appellant took part in the first hearing and since the attorney-referee had rendered no opinion or finding on that hearing when the amended application was filed for the second hearing and due notice was given appellant of such second hearing and it appeared and contested the amended application.
Affirmed.
Alexander, Lee, Holmes and Arrington, JJ., concur.