Case Name: BERNARD v. FIDELITY UNION CASUALTY CO.
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1927-06-01
Citations: 296 S.W. 693
Docket Number: No. 3403
Parties: BERNARD v. FIDELITY UNION CASUALTY CO.
Judges: 
Reporter: South Western Reporter
Volume: 296
Pages: 693–697

Head Matter:
BERNARD v. FIDELITY UNION CASUALTY CO.
(No. 3403.)
Court of Civil Appeals of Texas. Texarkana.
June 1, 1927.
Rehearing Denied June 23, 1927.
1 R. H. Ward, John L. Meany, and Gordon O. McGehee, all of Houston, for appellant.
Collins & Houston, of Dallas, for appellee.

Opinion:
LEVY, J.
(after stating the facts as above). The controlling question on the appeal-is that of the liability of appellant to pay the premiums for the two policies of compensation insurance. The validity or legal operation of the policies themselves is not involved In the controversy. The appellee contends that there is shown a legal obligation of express or implied agreement on the part of appellant to pay the premiums sued on, for the evidence sufficiently establishes that he made and signed in his own name a written application for the insurance for his own benefit as an employer of labor as an independent contractor constructing the particular warehouse for Kent H. Easter Warehouse Company. The appellant contends that it was expressly agreed and understood by the parties before and at the time the application was signed for insurance that it should not take effect as a contract binding him personally to pay the premiums. In other words, the appellant insists, in effect, that, although the insurance was to run in his name, and may be legally regarded for his benefit as an employer of labor, yet the real contract as to who was to pay . for the premiums was an unwritten one, which bound only the Kent H. Easter Warehouse Company, the owner of the building, to pay the same. That is the intendment and legal effect of appellant's pleading. It is elementary that a person may show that a writing which, if real, would bind him upon its face was a mere colorable transaction, and was understood by the parties at the time to be not a contract at all, and that the real contract was not in writing, and bound only another person. So in this case we believe that, if it were true that the application offered in evidence was understood and agreed to be a mere colorable transaction, intended to obscure appellant's real connection with the contract, he would be relieved from liability to pay the premiums. It is believed that the evidence sustains the appellant's contention as the true theory of the case. The evidence was without dispute as to the preliminary negotiations, and final and complete agreement of the parties. The ap-pellee's soliciting agent testified:
"I introduced myself to Mr. Bernard, and told him who I was representing. He informed me that he wa's building the warehouse for the Kent H. Easter Warehouse Company, and that I would have to see Mr. Easter relative to the insurance, provided there was any taken out. Then I went to see Mr. Easter, and Mr. Easter said, 'Yes,' he realized they needed insurance, and that whatever was satisfactory to Mr. Bernard was • satisfactory to him."
The agent then went back to Mr. Bernard, and the following occurred, as testified by the agent:
"Then I went to Mr. Bernard, about 2 or S o'clock in the afternoon, and told Mr. Bernard what Mr. Easter had said. Mr. Bernard asked me whether or not he might be liable (for premiums) in the event he signed the application. The best I remember, I told Mr. Bernard he would not be obligated in any way, as he was only (in) the contract for Kent H. Easter Company. I talked some 20 or 30 minutes to Mr. Bernard before he signed the application."
After this conversation, and before the signing of the application, the agent and Mr. Bernard then went together to the private office of the president of the Kent H. Easter Warehouse Company. The following occurred, as testified by appellant:
"The plaintiff's agent and I were in Mr. Easter's private office. The question came up as to who was going to sign the application. Mr. Easter wanted me to sign it. I asked him, 'Why don't you sign for the company?' He said he wanted to keep the records straight for the company. I asked him if I would be responsible for it (premiums), and the agent said I would not, but that he would hold the Kent H. Easter Warehouse Company for the payment of all the dues. When that statement was made, I signed the application. I would not otherwise have signed it if I would be responsible for the dues."
The president of the warehouse company admits agreement on behalf of the company to pay the premiums. No intention of the agent to claim premiums from appellant can be inferred in the circumstances. There was a meeting .of the minds of all the parties, and they all understood and meant precisely the same thing — that "he (the agent) would hold the Kent H. Easter Warehouse Company for the payment of all the dues," and that appellant "would not be obligated in any way" nor "responsible" for the premiums. His "signing the application" was to be merely formal or colorable. The statement of the agent to appellant was plainly his interpretation and understanding of the agreement as a fact, evidencing his intention in respect thereto, and was not purely an opinion on his part of the legal effect of signing the application. Thus it appears that the appellant did not upon his own initiative and at his own voluntary and independent election take out insurance and agree to pay the premiums. The president of the Kent H. Easter Warehouse Company offered to take out insurance to run in appellant's name and to pay the premiums therefor, and the agent for the company accepted the offer and promise to pay the premiums. The appellant then formally signed the application, with the understanding and agreement that he was not signing the same agreeing thereby to pay the premiums. The building contract was sufficient consideration for the Kent H. Easter Warehouse Company's undertaking to pay the premiums. In fact, it was its own debt. As admittedly shown, thd Kent H. Easter Warehouse Company was to pay out of its own money "all the costs of the building," which would include premiums of compensation insurance if taken out, and the appellant was not to advance or spend "any of his own money in the construction of that building." An agent having power to solicit insurance; negotiate contracts, agree on amount "of advance or deposit premium," and agree as to whether "premium is to be adjusted, monthly, quarterly, or semiannually," has authority, binding on the company, to enter into an agreement of the kind here that the owner of the building should pay premiums for compensation insurance issued in the name of the contractor constructing the building. The insurance, running as it did in the name of the contractor as "employer," was in accordance with the terms of article 8309, § 1, of the Workmen's Compensation Law (Rev. St. Í925, art. 8309). It was not an illegal contract, forbidden by that act, for the owner of the building, instead of the contractor, to agree to pay the premiums for such insurance.
In another view, in the circumstances it would appear that appellant merely signed the application as agent, not intending thereby to bind himself personally for the premiums; his principal being disclosed and the agent of the insurance company having full knowledge and assenting thereto. Assuming the appellant might be held liable as an independent contractor as to third parties for tort (Edmondson v. Coco-Cola Co. [Tex. Civ. App.] 150 S. W. 273), yet as between the owner of the Irailding and himself he could be and act as agent specially in the particular matter of agreeing to pay premiums of insurance.
The judgment is reversed, and, as the record discloses a full development of the case, judgment is here rendered in favor of appellant,-with all costs of trial court and of appeal.