Court Opinion

ID: 3918514
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:45:56.43453+00
Date Added: 2024-06-11T14:16:15.613320
License: Public Domain

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 appellee's soliciting agent testified:
"I introduced myself to Mr. Bernard, and told him who I was representing. He informed me that he was 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 3 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, *Page 696 
`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, the 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. 1925, 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 building 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.
                               On Rehearing.
The members of this court have reviewed the record in the light of the argument of the attorneys for the parties, and have reached the conclusion, as before, that the appellant cannot be held personally liable for the debt sued upon. The appellant was acting as agent merely, and the liability insurance was arranged for and taken out at the instance and for the benefit of the Easter Warehouse Company, known to the agent of appellee. Such intention of the parties is manifest, and as between themselves is controlling. Therefore the motion for rehearing will be overruled.
As the original opinion is not sufficiently definite, and may be misleading as to the precise point of ruling, we incline to explain and limit the ruling as applicable to the present case. We sustained, as we do now, the assignment of error quoted in the original opinion. The suit was brought for the purpose of charging the appellant for the balance of unpaid premiums on a policy of liability insurance issued by appellee. There was no express agreement to pay premiums. The appellant pleaded and offered evidence for the purpose of showing that he was not personally bound to pay the premiums, and had acted in arranging for liability insurance as agent merely for the Kent H. Easter Warehouse Company, a corporation, who was the principal known to the agent of appellee. The appellee claimed that the appellant was not an agent, and could not be legally held to be an agent, but an independent contractor, and that the indemnity insurance was for his benefit as an independent contractor, and because thereof he was personally liable for the premiums. In our opinion, the evidence established the contention of appellant, and judgment was in this court directed in his *Page 697 
favor. The following inaptly appears in the opinion:
"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)," etc.
It was not intended to hold that appellant was an independent contractor, and that the case referred to was decisive of, or similar to, the present case. The distinction between the two cases is of marked character. In that case Arthur Tufts was to erect the building and to be paid therefor "the total cost of the building, plus 10 per cent." Tufts, and not the owner of the building, was to furnish and to pay out of his own money, in the first instance, for the materials and labor. In the present case the appellant was to be paid for his services as superintendent of the construction "10 per cent." of the cost of construction. He was not to furnish and pay for any materials and labor. The Easter Warehouse Company was to provide and pay, in the first instance, out of its own money, "for all materials and labor." While appellant was given the choice of employees, and given the authority to discharge if not satisfactory to him, as incidental to the duties of superintendent, he was not capable of contracting with reference to the work, except in the capacity of agent. He was not the employer that must indemnify the injured workman. He had no specific interest in the contract independently of his service. He was to furnish nothing but his services. He incurred no liability for material and wages of the workmen. He had the right to cease his services should he so desire. The contract imports a hiring for the duration of the erection of the building, unless the appellant is guilty of some breach of duty warranting his discharge. Therefore the evidence does not conclusively show, as urged by appellee, that appellant was in the relation of independent contractor, and nowise in the relation of principal and agent, entirely negativing and disproving the defense in the case.