Court Opinion

ID: 5450590
Source: CourtListenerOpinion
Date Created: 2022-01-08 18:36:26.357792+00
Date Added: 2024-06-11T08:32:20.816840
License: Public Domain

EDMONDS, J., Concurring.
I concur in the decision, but I believe that the court should expressly overrule the case of Reed v. Industrial Acc. Com., 10 Cal. (2d) 1,91 [73 Pac. (2d) 1212,114 A. L. R. 720], and disapprove the holding in Zimmerman v. Industrial Acc. Com., 119 Cal. App. 253 [6 Pac. (2d) 291], These cases reach a conclusion directly contrary to the position now taken by this court. Although the policy here considered limits the coverage to the liability of the insured as an “individual employer” to the exclusion of “any liability arising by being a member of a copartnership”, the same restriction was at least impliedly made in the policies whose terms were construed in the two earlier cases.
In the Zimmerman ease, the insured was designated as an individual doing business under a fictitious name. He took in a partner and the court held the insurer liable for a compensable injury to an employee of the' copartnership. The decision was based upon the conclusion reached in the case of First Rational Trust & Sav. Bank v. Industrial Acc. Com., 213 Cal. 322 [2 Pac. (2d) 347, 78 A. L. R. 1324], although the facts in that case were entirely different. There the policy insured the liability of two individuals, doing business under a firm name and described in the declaration as a co-partnership. One of the named insured dropped out of the business and the other continued it as before but without having the policy changed. The court held the insurance *693carrier liable for a compensable injury to an employee which occurred after the retirement of the partner, stating as reasons therefor that the policy did not insure the partnership as an entity and also that in this state a copartnership is not usually considered a legal entity. The decision was also said .to be compelled by the mandate of section 2557 of the Civil Code, as then in effect, which provided: “A transfer of interest by one of several partners, joint owners, or owners in common, who are jointly insured, to the others, does not avoid an insurance, even though it has been agreed that the insurance shall cease upon an alienation of the thing insured.”
The policy in this case included a schedule of questions asked of the insured, one of which was “Individual, copartnership, corporation or estate Í” The answer to this question was “Copartnership”. It is difficult to understand why such a policy should not have been held to be one which insured the liability of the copartnership. At the time this decision was rendered the Workmen’s Compensation Act (Stats. 1917, chap. 586, sec. 7) required the term “employer”, as used in it, to be construed as including every firm and voluntary association. Although for some purposes a co-partnership may not be a legal entity, the Workmen’s Compensation Act expressly recognized it as such and the insurance contract disclosed that the individuals named were carrying on their business as a copartnership. The right of an insurer to limit its contract of coverage cannot be questioned (Zurich Gen. Acc. Ins. Co. v. Stadelman, 208 Cal. 151 [280 Pac. 687]; Ocean Acc. etc. Co. v. Industrial Acc. Com., 208 Cal. 157 [280 Pac. 690]) and courts must uphold the agreement of the parties.
The additional reason which the court gave for its decision is a doubtful one. The code section specifying that a transfer of interest by one of several co-owners does not avoid insurance might properly have been applied where there was “an alienation of the thing insured”. But the policy of workmen’s compensation insurance which the court was there considering covered the liability imposed by law upon an employer. Was the withdrawal of one member of a copartnership “an alienation of the thing insured” within the meaning of such a policy 1
*694Under the policy in the Reed case the liability of W. B. Mellott, designated as an “individual”, was insured. Later Irwin G. Gordon became interested in the insured’s business and it was thereafter conducted as “W. B. Mellott and Irwin G. Gordon, doing business as Gordon and Mellott”. The insurance company, so far as the record shows, had no knowledge of Mr. Gordon’s connection with the business but was held liable for a compensable injury to one who was employed by the copartnership of Gordon and Mellott. No distinction can properly be made between the liability of the insurer under that policy and the one issued to Mr. Sherbert in the present case.
Houser, J., concurred.