Plaintiff issued to defendant a workmen's compensation insurance policy covering defendant's liability under the workmen's compensation act, effective July 19, 1929, and continuing for a period of one year thereafter. The policy terminated by its terms on July 19, 1930, and was not renewed. Plaintiff failed, however, to give notice of such termination to the department of labor and industry until after an employee of the defendant had been injured during the course of his employment. The employee was injured on January 23, 1932, and died as a result on January 24, 1932.
Defendant filed a compensable report of such injury with the department of labor and industry, naming the plaintiff as its insurer. An award was made by a deputy commissioner on March 29, 1932, granting compensation to the widow and minor children of the deceased employee in the sum of $18 per week for a period of 300 weeks from January 24, 1932, together with the sum of $200 for last sickness and burial expenses. This award was later affirmed by the department of labor and industry. Plaintiff made part of the required payments under this award and brought this action in assumpsit to recover from defendant the money so paid. After trial in the circuit court without a jury, the circuit judge found for plaintiff, and judgment was entered for it in the sum of $3,444.97. Defendant appeals therefrom.
Defendant contends that the workmen's compensation policy issued by plaintiff on July 19, 1929, did *Page 222 not expire until 10 days after February 29, 1932, when it alleges notice of termination of the policy was served by plaintiff on the department of labor and industry. Defendant bases its contention on the provisions of a "rider" attached to the policy, known as "Michigan compensation endorsement," and which contained the following provision, among others, as required by 2 Comp. Laws 1929, § 8460:
"Notwithstanding any language elsewhere contained in this contract or policy of insurance, the insurance company or organization issuing this policy hereby contracts and agrees with the insured employer: * * * (f) That it will file with the industrial accident board,* at Lansing, Michigan, at least ten days before the taking effect of any termination or cancellation of this contract or policy, a notice giving the date at which it is proposed to terminate or cancel this contract or policy; and that any termination of this policy shall not be effective as far as the employees of the insured covered thereby are concerned until ten days after such notice of such proposed termination or cancellation is received by the said industrial accident board.*"
The statute compels the insertion of the foregoing provision in each workmen's compensation insurance policy issued in this State. This provision does not prevent the termination of the contract as to the employer, for it provides that,
"Any termination of this policy shall not be effective as faras the employees of the insured covered thereby are concerned, until ten days after such notice of such proposed termination or cancellation is received by said industrial accident board." *Page 223
While under certain circumstances, not here involved, the statutory provision may be for the benefit of the employer, without doubt, this provision is for the especial benefit of the employee. Zakrzewski v. American Box Board Co., 256 Mich. 26; Gratopp v. Carde Stamping Tool Co., 216 Mich. 355.
Plaintiff, not having given notice of termination of the policy, continued, by virtue of the above statutory provision contained in the contract of insurance, liable to the employee.
But this did not affect the rights of the insurer and employer (plaintiff and defendant) inter sese. As far as they were concerned, between themselves, the policy had expired July 19, 1930. The policy so stated, and we do not see that the statutory provision, relative to notice of termination, supersedes the definite agreement between the parties. Because the statute requires a contract provision protecting employees is no reason for holding that such provision extends the coverage of the policy between the contracting parties for a longer term than that covered by its express terms.
We hold that as between the insurer and the employer, in the instant case, the contract of insurance was terminated July 19, 1930, and no renewal being made, it was therefore not in existence, inter se, on January 23, 1932, when defendant's employee was fatally injured.
We come then to the next serious question before us: Can the plaintiff (insurer) recover from the defendant (employer) the amount it has been obliged to pay the dependents of the deceased employee, after the contract of insurance has expired between the parties, but where such payments to the dependents of the employee were made because *Page 224 of the statutory provision incorporated in such contract — a provision required for the protection of the employee? Defendant contends for the negative. Its counsel in their brief say:
"This is an action in assumpsit and under the circumstances it must be predicated upon a contract express or implied, both of which require the assent of the appellant (employer) to the obligation sought to be fastened upon it."
It cannot be questioned but that the workman's compensation act fixes the liability of the employer to the employee or his dependents for injuries sustained by the employee under stated circumstances. This liability is a primary one and is upon the employer. He may indemnify himself against it, or carry his own risk, as he may elect. Should he elect to be insured against this liability, he contracts therefor, and as we have hereinbefore pointed out, that contract must contain certain statutory provisions for the protection of the employee. When that contract terminates, the employer is still liable to the employee. Except for the required statutory provisions protecting the employee, the liability of the insurer ceased when the insurance policy expired.
As we have pointed out, the contract of insurance, in the instant case, between the plaintiff and defendant terminated on July 19, 1930. As between these parties therefore the liability under the workman's compensation act rested again solely in defendant. The award made by the department of labor and industry to the dependents of the deceased employee was properly against both the employer and insurer — against the employer because of its primary liability under the act — against the insurer because it *Page 225 had failed to give notice of termination as required by the statutory provision contained in the policy. But for this provision, no liability would have attached to the insurer. Yet this liability upon the part of the insurer was not as a result of contract between it and the employer. It existed merely because of the intent of the act to protect the employee. The insurer was required to pay the award, because by the statutory provision it had not been released as to the employees of defendant. However, in all good conscience and fair dealing it was the debt of the employer. Had the employer desired insurance against this liability, it could have renewed its policy with plaintiff, or secured another insurer; not having done either, the debt became the employer's. Although the award was paid by plaintiff, there was no contractual liability upon it to make such payment. It was not a voluntary quittance. There was no consideration paid by defendant to plaintiff therefor. It was paid only because such defrayment was required for the protection of the employee. In all equity, it was the employer's debt. Having paid the debt of another, under these circumstances, may the plaintiff recover in an action of assumpsit? We answer in the affirmative.
Mr. Justice WIEST, speaking for the court inCascaden v. Magryta, 247 Mich. 267, said:
"There are two kinds of implied contracts: one in fact, and the other implied in law. The first does not exist unless the minds of the parties meet, by reason of words or conduct. The second is quasi or constructive, and does not require a meeting of minds, but is imposed by fiction of law, to enable justice to be accomplished, even in case no contract was intended.
"In order to afford the remedy demanded by exact justice and adjust such remedy to a cause of *Page 226 action, the law sometimes indulges in the fiction of aquasi or constructive contract, with an implied obligation to pay for benefits received."
Another instructive opinion on this subject, wherein the difference between constructive or quasi-contracts and implied contracts is pointed out, is found in Woods v. Ayres, 39 Mich. 345 (33 Am. Rep. 396). See, also, Hoyt v. Paw Paw Grape JuiceCo., 158 Mich. 619, and cases therein cited.
In the instant case, the statute compels the plaintiffs to pay the debt of defendant. Without the statute there would be no duty to make such payment. Plaintiff having performed the duty and paid, there was in existence then a consideration in addition to the duty. From this the law, by its legal fiction, presumes a promise to have been made. The reasoning contained in 6 R. C. L. p. 589, may be here applied:
"There must always be the fact of a consideration outside of and in addition to the statute or rule of law; and the promise is implied rather from the consideration than from the statute. The statute or the rule establishes the duty, but the consideration raises the implied promise to perform that duty. For instance, where one town has been compelled to expend money in the necessary support of a pauper who belongs to another town, there is an implied promise by the latter town to pay the former one, because the former has paid money which the latter ought to have paid. To be sure, without the statute there would be no duty to perform. But the existence of the duty does not of itself raise any implied promise to perform it. There being a consideration in addition to the duty, the conditions exist from which the law presumes a promise to have been made."
In the case at bar, the plaintiff paid money under compulsion of law, which should have been paid by *Page 227 defendant, and which, ex æquo et bono, it ought to repay.Kuchenmeister v. Dusza, 218 Mich. 497. The duty and the consideration being present, the law will constructively supply the promise.
The judgment should be affirmed, with costs to plaintiff.
WIEST and EDWARD M. SHARPE, JJ., concurred with TOY, J.
* The powers and duties of the industrial accident board have been transferred to the department of labor and industry and the board abolished. See 2 Comp. Laws 1929, § 8312. — REPORTER.