Court Opinion

ID: 3571569
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:24:36.338188+00
Date Added: 2024-06-11T13:49:10.229471
License: Public Domain

On Motion for Rehearing.
The appellee has filed a motion for rehearing, the principal reliance of which is the *Page 47 
assertion that this court failed to pass "upon a material and controlling point raised in the briefs, and argued before this court and upon which issue was joined by appellee and appellant, namely: That there had been no contract of insurance entered into by and between the appellee and W.O. Wills, the employer-applicant, at the time of the injury and death of the employee, W.R. Points, deceased, and that the concealment by the employer-applicant of the fact of the death of the employee, W.R. Points, prior to an acceptance of the application was such fraud as prevented the policy attaching." Appellee is mistaken. After the consideration of alleged mistake in inserting on December 8th the date December 5th as the effective date of the policy, we said: "But the insurance company says that the employer was guilty of fraud in procuring the insurance, and is therefore entitled to reform the policy so that it will defeat the claim of appellant." This necessarily involved a consideration of whether the policy had attached and was still in effect as to appellant.
We considered it sufficient answer to point to Lopez v. Townsend, 42 N.M. 601, 82 P.2d 921, and to draw an analogy thereto. In support of the analogy we cited decisions which are quite persuasive.
Appellee says that it believes that the rule announced herein as further reflected by our decision in Lopez v. Townsend, supra, "is correct insofar as it applies to policies of insurance already in effect — that is the employee or his dependents should be allowed to recover even though the employer has done some act contrary to the provisions of the policy when and after acontract of insurance has been entered into." Appellee may well concede this much because the principle as to the mortgagee's immunity against defenses raised by the misconduct of the insured mortgagor is recognized universally where such misconduct takes place subsequently to the issuance of insurance policies. It is when the alleged act or neglect of the mortgagor is a representation, breach of warranty or fraudulent concealment which has occurred prior to or at the time of the issuance of the policy that there occurs a divergence of judicial opinion. The weight of authority, however, in the United States protects the mortgagee even in this case, notwithstanding its invalidity in the mortgagor's hands. For an extended discussion of the decisions on this question, see 17 Cornell Law Quarterly, 151, 158, on "Rights of Mortgagee Under Standard Mortgage Clause in Insurance Policies". See also National Fire Ins. Co. v. Dallas Joint Stock Land Bank, 174 Okla. 596, 50 P.2d 326, and notes in 18 L.R.A., N.S., 197, 206, and in 97 A.L.R. 1165, for an appraisal of the authorities on the question; see also 58 Am. St. Rep. 671, where it is said: "Until within the last twenty-five years the customary method of indemnifying a mortgagee against loss by fire was to endorse upon the policy words making the loss, if any, payable to the mortgagee, as his interest might appear, or words of similar import. Today such an endorsement is rare. The reason for the change is found *Page 48 
in the fact that the old indorsement made the mortgagee a simple appointee of the mortgagor, and put his indemnity at the risk of every act or neglect of the mortgagor that would avoid the original policy in his hands. Indemnity so `precarious, so liable to be destroyed by the ignorance, carelessness, or fraud of the mortgagors, was not satisfactory to the mortgagees,' and they proceeded to make such contracts with the insurance companies, for the purpose of securing indemnity to their interests, as would not be affected by any act or negligence of the mortgagors: Syndicate Ins. Co. v. Bohn, 8 Cir.,65 F. 165, 173, 27 L.R.A. 614, per Sanborn, Circuit Judge. So, where the loss is made payable to the mortgagee, the policy, or `mortgage clause,' appended thereto, and made part thereof, now usually contains a condition that the insurance shall not be invalidated by any act or neglect of the mortgagor or owner of the insured property. In such cases, the `mortgage clause' operates as a separate and independent insurance of themortgagee's interest. It gives him the same benefit as if he had taken out a separate policy, free from the conditions imposed upon the owner, and making him answerable only for his ownacts. It follows, therefore, that if a policy of insurance makes the loss, if any, payable to a mortgagee, but also expressly provides that no violation of its conditions by the mortgagor shall affect the mortgagee, the latter may recover to the extent of his own interest, notwithstanding any such violation, whether it occurred before or after the issuance of the policy." (Citing cases.)
Massachusetts by statute apparently adopted the majority view as a rule of practice and decision in compulsory motor vehicle liability policy cases by enacting: "No statement made by the insured or on his behalf, either in securing the policy or in securing registration of the motor vehicle or trailer covered thereby, no violation of the terms of the policy and no act or default of the insured, either prior or subsequent to the issue of the policy, shall operate to defeat or avoid the policy so as to bar recovery within the limit provided in the policy by a judgment creditor proceeding under the provisions of * * *". See Royal Indemnity Co. v. Granite Trucking Co., Mass., 4 N.E.2d 809,811. Under the foregoing and other statutory provisions, the court there held:
"Insurer which dated back compulsory liability policy in ignorance that insured had been involved in an accident prior to issuance of policy, but subsequent to effective date of policy as dated back, held estopped to deny liability as to parties injured, when insurer issued certificate which was field with registrar of motor vehicles (G.L. (Ter.Ed.) c. 90, §§ 34A to 34C).
"Liability on compulsory motor vehicle liability policy which was dated back by insurer in ignorance that insured had been involved in accident prior to issuing policy, but within effective date of policy as dated back for loss suffered in such accident, held *Page 49 
absolute as soon as policy became effective. * * *
"Insurer on compulsory motor vehicle liability policy which had been dated back by insurer in ignorance that insured had been involved in accident prior to issuing policy but within effective time of policy as dated back, and insurer thereafter having issued certificate of insurance, held not entitled to reform policy so as to make effective date subsequent to accident and defeat recovery by persons involved in accident with insured."
Since we think that the statutory provision above quoted is merely declaratory of correct legal principles which we have already approved in Lopez v. Townsend, supra, we think the decision is valuable and illustrative in support of our conclusion in the case at bar.
It is to be noted that in Lopez v. Townsend, supra, we relied on Hastings v. Westchester F. Ins. Co., 73 N.Y. 141, the leading case for the majority view, and also upon Reed v. Firemen's Ins. Co., 81 N.J.L. 523, 80 A. 462, 35 L.R.A., N.S., 343, and also that these two decisions are cited as authority in Goldstein v. National Liberty Ins. Co., 1931, 256 N.Y. 26, 175 N.E. 359, which settles the question as to where the State of New York stands in regard to the rights of a mortgagee under the so-called "standard" mortgagee clause. The Hastings decision is also relied upon by the New York Court of Appeals in the case of Aioss v. Sardo, 249 N.Y. 270, 164 N.E. 48, which we cited in our original opinion herein.
So it would appear that we have in the Lopez case adopted the majority view, and we adhere thereto in the case at bar. In the Lopez case we said, 42 N.M. at page 616, 82 P.2d at page 930: "The statutory rider, certainly as against the named assured, limits the insurer's liability to losses incurred through operations pursuant to such a certificate." We also adopted the view that the clause in the policy which we said was akin to the "standard" or "union" mortgage clause in fire insurance policies recognized the public as a distinct party in interest and created a new contract which was not dependent upon the original contract between the insurer and the named assured for its vitality. And it also appears that whatever may have been the vitiating effect of the absence of the certificate of convenience and necessity, it would have been the same so far as it bore upon the relations existing between the insurer and the named assured whether such absence existed before, contemporaneous with or subsequent to the issuance of the policy.
This seems a good place to refer to the argument of convenience made by counsel for appellee that under our decision the compensation insurance companies must of necessity increase their staffs of investigators and assume additional burdens in investigating each and every application before it is accepted and a policy issued to the employer, and that hereafter the insurance company must determine whether or not an injury or death has occurred subsequent to the mailing of the application and prior to *Page 50 
the receipt of the application in the home office of the company and that this additional burden will result in an increased rate on compensation insurance in order to meet the increased expense of such investigations. When we contemplate that the majority rule has not disturbed the situation as between the applicant for insurance and the insurance company and that the insurance carrier, having paid an otherwise invalid award, has a cause of action against the insured employer, and that the situation here dealt with is limited to a class of cases where the insurer is issuing a policy and antedating its effective date and that such companies maintain agencies frequently quite near the places where the workmen are engaged in the hazardous employments and that their policies provide for free inspection of the workings and the books, records and payrolls of the employer, and in view of the fact that a workman and his dependents entitled to the benefits of the Workmen's Compensation Law are favored in the law, we do not apprehend that our decision places too heavy a burden upon the insurance companies. Indeed, insofar as that part of the contract which is for the protection of the workman and his dependents is concerned, considering the effects of the clause in question, we think that is where the burden belongs.
The situation in the case at bar does not resemble the taking of marine insurance upon a ship known to be lost or fire insurance upon a building known to have been burned and entirely destroyed. The appellee in its answer by way of new matter alleges:
"That the alleged injury and death set out in the claim herein occurred before the application heretofore mentioned was received by the Pioneer Mutual Compensation Company and before any policy of insurance was issued to said W.O. Wills, Jr.;
"That because of such alleged injury and death, the subject matter of the said contract had, prior to the acceptance of the application of W.O. Wills, Jr., by the Company, ceased to exist or at least was materially affected."
This contention of appellee requires some examination. If the deceased Points had been an applicant for accident or life insurance, he would doubtless be the subject matter of the insurance contract applied for. If the applicant died during negotiations and prior to the acceptance of the application, it might be properly said that the subject matter had ceased to exist. If, on the other hand, the physical condition and state of health of the applicant had changed pending negotiations and before the acceptance of the application, such changes might be said to materially affect the risk, and nothing more. If Points, being injured on December 6th, had lingered and died on December 10th, two days after the application was accepted, the insurer could and doubtless would have made the same contention it now makes. *Page 51 
It is difficult to define just what is the subject matter of the contract of insurance under consideration. Under such policies of insurance as were involved in Lopez v. Townsend, supra, and in the case at bar, the traveling public in the one case, and workmen and their dependents entitled to the benefits of the Workmen's Compensation Law in the other, enjoy relations akin to third party beneficiaries, yet the covenants of the insurer are diverse, and we are unable to say that the traveling public in the one case and the workmen and their dependents in the other are solely the subject matter of the policies. Appellee has not been able by citation of authority or by satisfactory argument to establish that such is the case.
In Citizens State Bank v. State Mut. Rodded Fire Ins. Co.,276 Mich. 62, 267 N.W. 785, 787, which involved a fire insurance policy with the standard or union mortgage clause attached, the court said: "The effect of this clause has been the subject of much litigation, and the conclusion derived is well stated in 5 Couch, Insurance Law, § 1215 B: `The so-called "standard" or "union" mortgage clause, making the mortgagee payee, and stipulating that the insurance shall not be invalidated by the mortgagor's acts or neglect, constitutes an independent contract between said mortgagee and insurer, and in such case the subject-matter of the insurance is the mortgagee's insurable interest, and not the real estate, and the risk will not be avoided by any acts, representations, or omissions of the mortgagor or owner, whether done or permitted prior or subsequently to, or at the time of, the issuance of the policy.' Since the case of Hastings v. Westchester Fire Ins. Co., 73 N.Y. 141, the courts have declared this to be a separate contract between insurer and mortgagee and not subject to most of the defenses which the insurer might have against the mortgagor."
This suggests the idea that so far as the separate contract between the workman and his dependents and the insurer is concerned the subject matter of the insurance may be the insurable interest which the workmen and their dependents have in the law's compulsion that where the relation of master and servant exists and the servant is engaged in the named extra hazardous employments the master shall pay compensation to the workman and/or his dependents if the workman suffers accidental injury in the course of his employment.
It must be remembered that in the policy under consideration the third party beneficiaries included the dependents of the workman, as well as the workman. Suppose the workman Points had merely been injured by the loss of a foot, instead of being killed. Could it be said that the subject matter of the contract had been destroyed? We think that all the appellee may properly contend for in the case at bar, even as to the named assured, is that the circumstance of the death of Points, prior to the acceptance of the application for insurance, materially affects the risk. Even if it could be said that the workmen *Page 52 
collectively listed on the payroll are the subject matter of the contract, which is very doubtful, it would require the destruction of the entire group fully to meet the analogy of a loss of a vessel or the destruction of a building by fire. If the payroll consisted of a thousand workmen, the injury and consequent death of one, though material to the risk, might not impel the insurer to decline the risk. The definitions of "subject of insurance" found in Words  Phrases, Third Series, page 214, lend support to this thought. They are:
"Where insurance policy provided if `subject of insurance' be personal property an incumbrance thereon would render policy void, `subject of insurance' means all property covered by policy, and chattel mortgage on a part only of such property would not avoid policy, rwle that condition against incumbrances of insured property as entirety is not broken by incumbrance of part only applying. Western Assur. Co. v. Bronstein,77 Colo. 408, 236 P. 1013, 1015.
"`Subject of insurance' as used in condition of forfeiture in policy means a definite single subject that is, a house, one house, and not a house and other property. Northern Assur. Co., Limited of London v. Case, (C.C.A.N.C. [4 Cir.]) 12 F.2d 551, 554."
Furthermore, under the rule of uberrimae fidei, even conceding that it applies in its full extent to fire insurance contracts, it seems that the same principles apply, whether the material circumstance is that the building has burned or is burning or is in immediate danger. Of course, one circumstance might affect the action of the insurance company more than another. It is not how much the circumstance material to the risk may pecuniarily affect the insurance company, but it is the fact that the insurance company before finally accepting the application has the right to be possessed of any knowledge material to the risk which the applicant has acquired during the period of negotiations prior to acceptance of the application in order that the insurance company may elect whether it will go on the risk notwithstanding. It is, of course, essential in order to vitiate the policy of insurance that the alleged misrepresentation or the concealment shall be of facts which are material to the risk. Whether such facts are material to the risk, this does not of itself alone determine the question of the validity of the policy. Such nondisclosure or concealment must be of facts material to the risk which are known to the assured and not known to the insurance company. This is not all. Before the policy can be vitiated, it must appear that the assured, knowing the facts, intentionally, willfully and fraudulently failed and refused to exercise due diligence in countermanding the application or otherwise notifying the company of such material facts. The decisions of the courts are at variance as to whether the element of intention to deceive the insurance company is an essential element of the so-called fraud necessary *Page 53 
to vitiate the policy. Some courts seem to hold that a negligent failure of the assured to make proper disclosures of material facts coming to his knowledge pending negotiations is sufficient to void the policy. These views probably turn upon whether active fraud by the assured is required or whether constructive fraud is sufficient.
While we think that what has been said heretofore is decisive, it may be worthwhile to point out that apparently the appellee sought to defeat the cause of action of appellant (dependents of the deceased workman) upon the ground of fraudulent concealment of facts material to the risk, and that the allegations of appellee's answer were appropriate to the charge of active, actual fraud.
In 32 C.J. 1293, § 320, it is said: "Good Faith. Good faith or the absence thereof on the part of the insured is immaterial as to the effect of a warranty and if it is shown to be false there can be no recovery upon the policy no matter how innocently the statement may have been made. However, there is authority to the effect that in an action by the company in equity for the cancellation of the policy, mere falsity of the statements and breach of warranties of the contract are alone insufficient to authorize relief upon the ground of fraud but insured must have had knowledge of their falsity and acted in bad faith." We need not take a position as to whether it is always necessary for the insurer seeking to avoid a policy on the ground of concealment by the insured to show that such concealment was with the design to deceive — we do no more than to construe the pleadings in the case at bar as presenting an issue of active fraud on the part of named assured.
In Hare  Chase v. National Surety Co., 2 Cir., 60 F.2d 909,912, the court, in discussing the proposition as to whether a nondisclosure not inquired about shall be actually fraudulent in order to render the policy void, said: "Probably the rule requiring that fraudulent intent be proved to support the defense of concealment in fire and life insurance cases rests largely upon the fact that ordinarily the insured has not sufficient acquaintance with the insurance business to enable him to judge when the insurer will consider a fact material to the risk. [Citing cases.]" and proceeds with a statement which aids in distinguishing General Acc. F.  L. Assur. Corp. v. Industrial Acc. Com., 196 Cal. 179, 237 P. 33, relied upon strongly by appellee and hereinafter referred to. The court said: "Where the insured has paid premiums in reliance upon coverage, it would be harsh to disallow recovery on the policy if the insured neither knew nor ought to have known that he was guilty of suppressing information in whose existence the insured had a legitimate interest." The Court goes on to show that some situations require a stricter rule of disclosure than others.
Joyce on Insurance, § 1848, Couch Cyc. of Ins. Law, § 782, and 32 C.J. "Insurance" *Page 54 
§ 487, are authority for the proposition that as to other than marine risks the policy of the law is to require that the nondisclosure of a fact which is not inquired about shall be fraudulent in the sense that the concealment alleged must have been a designed and intentional withholding of information.
How much more harsh it would be in a case like this to disallow recovery to the dependents of the deceased merely because the employer failed to properly appraise the situation and disclose with promptitude knowledge he may have thought to be immaterial.
Ordinarily a pleader is not to be held to his pleadings with an extreme degree of strictness, and sometimes certain allegations may be regarded as surplusage. But in this case, where a nondisclosure is relied upon to defeat the policy of insurance in favor of a third party beneficiary and the rules as to whether the nondisclosure must have been intentional and actually fraudulent being somewhat obscure, we think we may rely on the defendant's view of the law as reflected in its answer as controlling upon it in our consideration of the evidence and the findings of the court. The defendant as to the concealment relied upon alleged that the named assured, W.O. Wills, Jr.:
"Willfully, intentionally and fraudulently concealed the fact of said death from said representative and this company; that two days after such alleged death and without notice of the same the Pioneer Mutual Compensation Company was allowed and induced because of such fraudulent concealment by the employer, W.O. Wills, Jr., to issue a policy of insurance under the circumstances set out in Paragraph IV of the First Answer by Way of New Matter herein;
"That the fact of said death was unknown to Pioneer Mutual Compensation Company and could not have been discovered at the time said policy was issued, and this fact was also known to said W.O. Wills, Jr."
What is the evidence produced to support these allegations? All that appears is the following from the cross-examination of appellant's witness Schossow, who had testified as to taking the injured workman Points in an automobile to Duncan, Arizona, in search of medical attention, the death of Points en route, and the subsequent trip to the undertaking parlor at Lordsburg, New Mexico:
"Q. Did you call Mr. Wills on that trip? A. Yes.
"Q. Where did you telephone him from? A. Duncan.
"Q. And you told him that Mr. Points had been killed in the accident? A. Yes.
"Q. What time of the afternoon did you call Mr. Wills from Duncan? A. It must have been between one and two o'clock, somewheres in there."
It does not appear where Mr. Wills was when the telephone conversation took place. *Page 55 
In Springfield Fire  Marine Ins. Co. v. National Fire Ins. Co., C.C.A., 8 Cir., 51 F.2d 714, 715, 76 A.L.R. 1287, the court decided: "Uberrimae fidei rule does not require insured to use extraordinary diligence or to employ extraordinary means to inform insurer of changes in risk which have taken place during negotiations and before policy has attached." To the same effect, see 6 Couch Cyc. of Ins. Law, § 1331, note 9, where it is said: "If a person who has directed the procurance of marine insurance at a distant point receives intelligence of a loss of the insured property before his order is executed, he should countermand the policy, or transmit the intelligence by the earliest and most expeditious route of mercantile communication, although it is not obligatory on him to resort to an unusual and extraordinary mode of transmission."
All we know from the evidence above quoted is that Mr. Wills had access to a telephone. We are not able to say that it was obligatory upon Mr. Wills to use telephonic or telegraphic communication. There is no evidence from which it could be determined when a letter mailed, even on the afternoon of the 6th of December at the place where Mr. Wills then was, would reach Santa Fe. It seems to be conceded by defendant that information communicated in due course to the insurer after the acceptanceof the risk on the 8th of December would not affect the rights of the dependents of the workman Points. It also appears that the company's agent Reynolds was negligent in forwarding the application promptly. The following colloquy between counsel for the insurance company and its agent. Mr. Reynolds, who was called as a witness in its behalf shows this:
"Q. You feel certain it was the 6th instead of the 7th day of December that the application reached you? A. Yes, sir.
"Q. You held it in your office, then, one day before you forwarded it to the company in Santa Fe? A. Yes, I remember that, that is the reason I remember, it must have been the sixth because I know it was mailed next day."
It cannot be doubted that it was the duty of the agent to forward the application promptly, and it is inherently probable that if it had been mailed on the sixth instead of the seventh of December the application would have been received and accepted in Santa Fe on the seventh instead of the eighth. This being so, the time for effective communication by Mr. Wills after receiving information on the afternoon of the 6th of December with the office of the insurer in Santa Fe would be reduced to probably less than twenty-four hours. As we have said, there is no evidence as to where Mr. Wills was when he received the telephone message, nor any evidence as to the mail schedules to establish when a letter mailed on the 6th of December would arrive in Santa Fe. We regard the evidence as insufficient to *Page 56 
establish any actual or active fraud, and as unsatisfactory to establish negligence on the part of the employer Wills.
It must be remembered that in the case at bar it was strongly urged by appellant that Mr. Reynolds, the agent of the insurance company at Lordsburg, who solicited the insurance and who received the application and the premium, was the general agent of the insurance company. Mr. Reynolds testified that he thought he was a general agent. It is true that the trial court found otherwise and that Reynolds' authority did not permit him to make a contract of insurance. So far as the employer Wills is concerned, it may be proper to inquire whether that matter was so clear as a question of law and fact that he may not have honestly believed that he could rely upon coverage for his employees when he had responded to the solicitations of the agent Reynolds by executing the application furnished to him and paying the premium. The employer may have made a mistake of fact or law or both. We know that it is sometimes loosely said by courts and text writers that everyone is presumed to know the law. It may be doubted if there is such a presumption. The declaration many years ago of Lord Mansfield is as true now as then. He said: "It would be very hard upon the profession if the law was so certain that everybody knew it; the misfortune is that it is so uncertain that it costs much money to know what it is, even in the last resort." Said Mr. Justice Maule, in Martindale v. Falkner, 2 C.B. 719, 52 R.C.L. 719: "There is no presumption in this country that every person knows the law; it would be contrary to common sense and reason if it were so." In speaking of the maxim, Mr. Justice Campbell of the Michigan Supreme Court (Black v. Ward, 27 Mich. 191, 15 Am.Rep. 162) observed: "But the maxim referred to in regard to knowledge of the law is misapplied. No man can avoid a liability, as a general thing, because he is ignorant of the law. This is an essential rule of society. But the law is not so senseless as to make absurd presumptions of fact." And says Mr. Elliott in his work on Evidence, Vol. 1, § 96: "But it is a perversion of the maxim that ignorance of the law is no excuse to say that everyone is, under all circumstances, presumed to know the law."
The foregoing quotations are taken from the concurring opinion of Mr. Justice Straup in State ex rel. Utah Savings  Trust Co. v. Salt Lake City, 35 Utah 25, 99 P. 255, 261, 18 Ann.Cas. 1130, who remarked: "Ignorance of the law will not relieve one from, nor excuse him of, the legal consequences of his wrongful or negligent acts; nor will it relieve him from the legal effect of his contract obligations. It is only in respect of such matters that the maxim is applicable, and it is only in such sense that it may be said every one is presumed to know the law." Mr. Justice Straup went on to say: "Nor do I agree with the statements, loosely made by some courts, and with the principle intimated in the opinion of the *Page 57 
majority members of the court, that relief cannot be given on the ground of mistake or misapprehension of the law. * * * It is not necessary now to go into the particulars to ascertain when relief will be granted in such case. It is enough to know that the maxim is not so broad that ignorance or mistake of the law is no ground for either defensive or affirmative relief. It is not even so broad in its application that a mistake of law cannot be shown to ascertain the state of one's mind or motive."
Furthermore, if Mr. Wills made a mistake in appraising the situation as not calling upon him for the performance of a duty immediately, such mistake may have been one of fact and not of law.
We indulge this discussion for no other purpose than its bearing possibly upon Mr. Wills' state of mind or motive and consequently the presence or absence of bad faith in his failure to communicate promptly with the insurance company the information he had received concerning Mr. Points' death.
The inquiry arises whether Mr. Wills was obliged to communicate with the insurer prior to ascertaining sufficient details of the accident as to render it probable that a claim against him as employer, and the insurance company as insurer, would arise therefrom. Did the death resulting from injury by accident "arise out of and in the course of his employment"? § 156-102, N.M.S.A. 1929. Was the injury occasioned by intoxication of such workman? § 156-108, N.M.S.A. 1929. If investigation brought a negative answer to either of these inquiries, the death was not within the coverage afforded by the policy. In other words, was he compelled to communicate the fact of death to the insurer forthwith without any opportunity to ascertain details which would render likely liability on his part as employer and its part as insurer? Must he prejudge, without information or knowledge on the subject, the question of his own liability and the materiality of the circumstance? If he may so investigate, how long would it take to do so and how long did it take? The record is silent.
If the circumstances above mentioned may be to a degree excusatory of Mr. Wills in a contest between him as the named assured and the insurance company, all the greater reason exists for the application of the principles underlying the "union" or "standard" mortgage clause as expounded by a strong majority of the courts to the end that the workman and his dependents in the situation of the case at bar shall not be deprived of the protection which the law designs for them because of mistakes or mere inattention of his employer in the performance of a duty.
We have gone into the matter of the alleged fraud of the employer Wills because we do not wish to anticipate a decision not necessary to a disposition of the problem here presented, and because the present case shows how injurious it would be to defeat the rights of the dependents *Page 58 
of the deceased workman upon charges of fraud so tenuously supported.
In this connection we deem it advisable to refer to a case heavily leaned upon by appellee, namely, General Acc. F.  L. Assur. Corp. v. Industrial Acc. Com., supra. In that case the employer was uncertain whether he would take out insurance. He was impressed with the importance of industrial accident coverage, but, being hardpressed for finances, he was considering whether he would be able to pay the premium on a policy of insurance. He was also apprehensive that a declining oil market might at any time cause a suspension of the industry upon which he depended for employment, thereby rendering an outlay of money for an insurance policy an unnecessary expenditure. It appears that on the 26th of July, 1922, he visited the office of certain insurance agents with the apparent purpose of making inquiry as to the cost of a policy of insurance. Certain discussions and negotiations were had, but no application was signed. An unsigned application was made up and sent by the agents to the other parties authorized to write insurance, together with a letter inquiring as to the rate as well as the minimum premium deposit required. On July 28, 1922, a policy complete in form and detail was received by the insurance agents from the general office with information concerning the premium. The agents notified the employer of the receipt of the policy but said employer did not consent to accept the policy. It was understood that the policy should be held by the agents for a few days to give the employer further time for making a decision as to whether he would pay the premium and accept the policy. The matter drifted along without further development until August 12th, on which day at the hour of 3:30 o'clock one Lindquist, who worked for the employer in question, received the injuries from which he died. On the afternoon of the same day the employer presented himself in the office of the insurance agents and paid the premium required to secure the policy. The agents then and there delivered to the employer the policy of insurance. The conversation at this visit was brief; no mention was made of the accident having occurred. The portion of the opinion relied upon by the appellee in the case at bar is as follows [196 Cal. 179, 237 P. 37]: "It is the contention or suggestion of respondent Commission that the dependents of the employee have an enforceable right against petitioner under the alleged policy, even though the employer be cut off from any remedy against petitioner. We are unable to understand what principle of law would give the dependents of the employee a cause of action against petitioner upon a contract which is void or voidable as to the employer." Because of the strong reliance of the appellee upon that case, we have taken the pains to make inquiry concerning the manner of its presentation, and we are advised that the respondent commission in support of its contention above referred to cited only 2 Cooley's *Page 59 
Briefs on Insurance, §§ 1227-1231, and urged that the factual situation presented should be regarded as analogous to the mortgagor-mortgagee insurance relationship. In reply to this contention and in support of the negative disposition of the issue, the insurance carrier, as petitioner seeking to annul the award, contended in opposition to the commission's argument that there was no provision in the policy which made the situation analogous to that of the mortgagor-mortgagee relationship and our inquiry discloses that the failure of the commission in the reply brief to refer the court to a policy provision analogous to the standard mortgage clause indicates that none existed in the particular policy there involved.
So it appears that that case is readily distinguishable from the case at bar, as are others cited by appellee. We have read many decisions which support the view we have taken of the matter which we deem unnecessary to cite. The student will find in Citizens State Bank v. State Mut. Rodded Fire Ins. Co., 276 Mich. 62,  267 N.W. 785, many of the more important decisions collected.
Only the importance of the question and the vigorous brief of able counsel for appellee have seemed to warrant an opinion of this length.
The motion for rehearing should be denied, and it is so ordered.
BRICE, ZINN, SADLER, and MABRY, JJ., concur.