Opinion
Rehearing Denied April 22, 1929
Hearing Granted by Supreme Court May 21, 1929
Proceeding under the Workmen’s Compensation Act by Pete Stadelman, claimant, for compensation for injuries, opposed by Peter C. Stadelman, employer, and the Zurich General Accident & Liability Insurance Company, Limited, insurer. From an order of the Industrial Accident Commission, awarding compensation, the insurer brings certiorari. Affirmed.
COUNSEL
R.P. Wisecarver and Redman & Alexander, all of San Francisco, for petitioner.
Daniel W. Burbank, C.F. Laumeister, and Orrick, Palmer & Dahlquist, all of San Francisco, amici curiae.
G.C. Faulkner, of San Francisco, for respondents.
OPINION
STURTEVANT, J.
This is a proceeding under title 1, part 3, Code of Civil Procedure. The case presents two questions regarding the construction of an insurance policy.
Peter C. Stadelman was the owner of a dairy farm located near Tulare in this state. At times there were working for him several laborers, including, among others, some of his sons, one of whom was Pete V. Stadelman. The latter was an adult of the age of 28 years. While so working for his father, Pete V. Stadelman was in an accident which resulted in some serious injuries to his right hand by reason of his hand being drawn into an ensilage cutter which he was operating. He applied for compensation. At the time of the injury the petitioner was the insurance carrier of Peter C. Stadelman. The respondents made an award against the carrier, and in this application the carrier insists that the award was beyond the jurisdiction of the respondents, because, as it claims, under the terms of the policy, it did not cover any of the members of the family of the employer. The respondents make two major replies. They contend that when properly construed the policy did cover the son. They also contend that, if by the terms of the policy the carrier attempted to exclude from its provisions the members of the employer’s family, then and in that event the attempt was futile, because the carrier did not comply with the statute, subdivision a of section 31 of the Workmen’s Compensation Act (St.1917, p. 860); that is, it did not indorse on the policy "limited compensation policy."
In the body of the policy proper nothing is said whether members of the family of the insured are covered or not covered. A part of one of the riders is as follows: "(d) It is agreed upon the delivery and acceptance of this Policy, that if this Employer is an individual and has a family (meaning husband, wife, son, daughter, brother, sister or parent residing within this Employer’s household), this Policy shall not apply to any member or members of such family except those named in the Declarations with disclosures of the annual amounts of wages, salaries, emoluments, or profits of each, but not less than $2,700.00 for each. The amounts so stated shall be considered the remuneration of such members of the family subject to audit as respects any increase thereof as in the Policy provided. The proper premium rate for the hazard to which such member of the family is exposed shall apply to this remuneration." It is clear the policy attempted to exclude the son.
It is next asserted by the respondents that the attempt was invalid. Skuey v. Bjerkan, 173 Minn. 354, 217 N.W. 358; Northwestern Casualty & Surety Co. v. Doud (Wis.) 221 N.W. 766; Buckhorn Coal & Lumber Co. v. Georgia Casualty Co., 222 Ky. 683, 2 S.W.(2d) 383; Aioss v. Sardo, 223 A.D. 201, 227 N.Y.S. 708. Those cases were decided on statutes different in material respects, and are not controlling, but they are, nevertheless, helpful in certain respects. In this state there have been decisions construing covenants similar to the one in the policy which is before us, but in every instance the language of the policy was not challenged as being invalid. Pacific Coast C. Co. v. Industrial Acc. Com., 176 Cal. 24, 26, 27, 167 P. 539; Worswick Co. v. Industrial Acc. Com., 181 Cal. 550, 185 P. 953; Western Indemnity Co. v. Industrial Acc.Com., 43 Cal.App. 487, 185 P. 306; State Comp. Ins. Fund v. Industrial Acc. Com., 70 Cal.App. 650, 234 P. 116. The policy recited, among other things: "It is agreed that all of the provisions of each Workmen’s Compensation Law covered hereby shall be and remain a part of this contract as fully and completely as if written herein, so far as they apply to compensation or other benefits for any personal injury or death covered by this policy, while this policy shall remain in force." By one of the riders, chapter 176 (Stats. of 1913, p. 279), chapter 607 (Stats. of 1915, p. 1079), chapter 586 (Stats. of 1917, p. 831), chapter 471 (Stats. of 1919, p. 910), with one exception not involved here, are all adopted.
Before we proceed further we call particular attention to the general nature of the instrument that is before us. In the first place it is an indemnity contract in which, in advance, the indemnity is not fixed and cannot be fixed; the employees are not named and generally cannot be named; the operations of the employer at the date the contract was executed can be and sometimes are named, but are subject to change, and if changed, the contract remains in force and the premium is altered to fit the change; no "compensation payable" is fixed or can be fixed until the happening of the event and then, and in that event, the factor "compensation payable" is measured and estimated by the rules enumerated in the statute; and no premium is fixed, or can be finally fixed, until the end of the term and after it has been ascertained what operations have in fact been performed and what employees have, in fact, been employed in performing them and the total wages paid to all. In the meantime, each of these factors is necessarily open, necessarily undetermined, and therefore not limited.
In construing a statute regard is to be had not so much to the exact phraseology in which the intent of the Legislature has been expressed, as to the general tenor and scope of the entire legislative scheme embodied in the act. Palache v. Pacific Ins. Co., 42 Cal. 418, 430; People ex rel. Attorney General v. Eichelroth, 78 Cal. 141, 143, 20 P. 364 (2 L.R.A. 770); Abbey v. Board of Directors, 58 Cal.App. 757, 762, 209 P. 709; Endlich’s Interpretation of Statutes, § 76. The purpose in enacting the Workmen’s Compensation Act is stated: "This act and each and every part thereof is *** intended to make effective and apply to a complete system of workmen’s compensation the provisions of section seventeen and one-half of article twenty and section twenty-one of article twenty of the constitution of the State of California. A complete system of workmen’s compensation includes adequate provision for *** any and all employees *** to the extent of relieving from the consequences of any injury incurred by employees in the course of their employment, irrespective of the fault of any party; *** full provision for adequate insurance coverage against the liability to pay or furnish compensation, full provision for regulating such insurance coverage in all its aspects *** full provision for otherwise securing the payment of compensation, *** all of which matters contained in this section are expressly declared to be the social public policy of this state, binding upon all departments of the state government." Section 1 (St.1917, p. 832). That purpose, in brief, was, among other things, to impose a liability upon the employer for injuries sustained by his employees in the course of their employment, irrespective of the fault of any party, and to strengthen that liability by provisions for adequate insurance coverage against liability to pay such awards. Having ascertained the intent and purpose of the Legislature, the court will have regard to the carrying of that purpose into effect and will not be hampered by the particular phraseology used. "The language will be so interpreted, if possible, as to aid the design and intent of the legislature, and to effectuate the evident objects and purposes of the law." 23 Cal.Jur. 139. These rules are peculiarly applicable to the question before us by reason of a mandate contained in the statute which we are called upon to interpret. Section 69, subd. a, thereof (St.1917, p. 877) provides: "Whenever this act, or any part or section thereof, is interpreted by a court, it shall be liberally construed by such court with the purpose of extending the benefits of the act for the protection of persons injured in the course of their employment."
The son, working for his father under a written contract of employment, was an employee under the terms of the Workmen’s Compensation Act. Section 8, subd. a (St.1917, p. 835). (That section, and all other sections hereinafter used, unless otherwise stated, will be understood as referring to the Workmen’s Compensation Act.) The father, as employer, was liable to his son, as such employee, for injuries sustained in the course of his employment. Section 6 (St.1917, p. 834, as amended by St.1919, p. 912, § 2). But he was entitled to protect himself by insurance: "Every employer *** shall secure the payment of compensation: *** 1. By insuring and keeping insured against liability to pay compensation in one or more insurance carriers duly authorized to write compensation insurance in this state." Section 29, subd. a (St.1917, p. 857, as amended by St.1919, p. 921, § 9, and St.1925, p. 494). The father was under the imperative duty to take out insurance on all employees, including his son, and if he failed to do so he committed a misdemeanor. Section 29, subd. c (as added by St.1925, p. 495). Into each policy, it is provided (section 30, subd. c [St.1917, p. 859]), there must be written: "Every contract *** must contain a clause to the effect that the insurance carrier shall be directly and primarily liable to the employee *** to pay the compensation, if any, for which the employer is liable; *** and that the insurance carrier shall in all things be bound by and subject to the orders, findings, decisions or awards rendered against the employer under the provisions of this act." The employer, having insured himself under the act, the employee had the right to make his claim directly and solely against the carrier by filing a separate application, against the carrier, which may, in whole or in part, have insured against liability for such compensation. Section 30, subd. b (St.1917, p. 858). When that policy was written it was "conclusively presumed to contain all the provisions required by this act." Section 30, subd. d (St.1917, p. 859). In 1917 the Legislature added section 31, subd. a (St.1917, p. 860): "If any insurance policy shall be issued covering liability for compensation, which policy shall contain any limitation as to the compensation payable, such limitation shall be printed in the body of such policy in bold-face type and in addition thereto the words ‘limited compensation policy’ shall be printed on the top of the policy in bold-face type not less than eighteen point in size. Failure to observe the foregoing requirement shall render such policy unlimited." Here there was no such indorsement.
Section 31, subd. a, supra, was not addressed to the factor of dollars and cents to be paid to an injured employee. This is so, because that subject was already covered by the provisions of the statute (section 9 [St.1917, p. 836]) and the covenants in the policy adopting the provisions of the statute. It was not addressed to any other one of the several factors above named for the reasons hereinabove shown. However, by fundamental rules of statutory construction, some force and effect must be given to the provisions of every part of a statute, and, if possible, to every word contained therein. The excerpts quoted above show that the Legislature contemplated that the employer might have at one and the same time two or more policies written by two or more different carriers. That contingency may possibly arise with reference to an employer having several places of business and perhaps as many different occupations. When an employer obtains a contract of insurance such as we are considering, it is obvious that, if there is nothing in the contract to the contrary, the insurance runs in favor of every employee. That being the fact, it is patent that no employer would at one and the same time buy two contracts, one of which would duplicate the other. It follows that the only possible application of the provisions of section 31, subd. a, supra, is this: When, and only when, a policy purports to cover only a part of the employees whether they are limited by number, by occupation, by location, by kinship, or otherwise, then and in that event the policy is a limited policy within the meaning of that term as expressed in section 31a, supra.
The employee is not to be punished. The lawmaking power has taken from him all of his common-law rights and all of his previous statutory rights, and has given him new rights. He does not, and cannot, have a hand in writing the insurance. He is entitled to rest secure that the Legislature has protected him, and that those on whom the duty rests have so acted as to protect him and protect themselves; in other words, that the employer has taken out insurance and that the insurance company has collected or will collect the full amount of its premiums. Before the enactment of these statutes the injured employee could sue for any sum designated in his complaint. Now he can apply for the statutory allowance which is secured by insurance. Without any act on his part the Legislature has taken from the employee all of his rights, and has substituted a new one. Under all proper rules we are bound to assume that the new one is, and was intended to be, full and complete in every respect. It may be conceded that an employer may insure under one policy those employees who are of his kith and kin, and under another policy those who are not of his kith and kin. But he is bound to insure all or he commits a misdemeanor. By the same token a carrier can write such a policy as the insured may request; but, if it is limited in any respect, as hereinabove indicated, then, and in that event, it must be written as section 31a commands; and, if the carrier does not do so, the purported limitation is ineffective. This is no imposition on the carrier. It has full protection. It is in the business of collecting premiums. It collects an initial premium which is tentatively correct; but, under the terms of its policy, the premium is subject to correction when the final account is settled and the carrier can fully protect itself.
We have shown above that by the express provisions of the statute the employer’s insurance contracts cover, and must cover, each and all of his employees. That statute provides for, and commands the making of, certain contracts, and prohibits the making of certain other contracts. The provisions of such a statute cannot be waived, in whole or in part, directly or indirectly, by the parties concerned. Civ.Code, § 1667; 6 Cal.Jur. 101-106. If the employer could make a contract whereby he expressly excepted from the risk one employee, he could likewise except all of them. If he did so, then he would have no insurance. But that contingency is not only prohibited, it is penalized. Section 29, subd. c. Again, if the statute is so construed that, as to one employee, the employer has not and need not have insurance, then the right given to such employee by the Constitution and the statute is materially diminished, if not altogether taken away.
The petitioner relies on the principle of departmental construction, and cites a ruling, made by the respondents on October 17, 1923, which it is contended was against the position now taken by respondents. The award in the instant case was made June 18, 1928. Neither before nor after October 17, 1923, was any other ruling made by the respondents on the subject. That was the only ruling. The time elapsing between that ruling and the ruling in the instant case was less than five years. If a statute is ambiguous, the contemporaneous construction by the department whose duty it is to administer the statute has weight. In applying that rule, the court should consider (1) the length of time the departmental construction has continued (Riley v. Thompson, 193 Cal. 773, 778, 227 P. 772; 23 Cal.Jur. 776; State ex rel. Fishback v. Globe Casket & Undertaking Co., 82 Wash. 124, 143 P. 878, L.R.A.1915B, 976, 980); (2) whether the usage has been uniform (O’Donnell v. Glenn, 9 Mont. 452, 467, 23 P. 1018 (8 L.R.A. 629); and (3) whether the statute is ambiguous (Fairbank v. U.S., 181 U.S. 283, 311, 21 S.Ct. 648 [45 L.Ed. 862]). Under the facts we think the principle is not helpful in this case.
Finally, it is said the construction claimed by respondents will require the rewriting of 150,000 policies. That result does not follow; but, on the other hand, the policy charges between employers and carriers will be increased or decreased as the facts may appear from the examinations made by the examiners of the carriers as provided in the policies.
The award is affirmed.
We concur: KOFORD, P.J.; NOURSE, J.