Northwestern National Life Insurance Co. v. Black

FANNING, Justice.

Appellant insurance company issued to Texarkana Water & Sewer Systems a group life insurance policy upon the full-time employees of . said employer. The policy was dated October IS, 1956, and a certificate was issued as evidence "that, subject to policy terms and provisions, Mr. E. C. Black was insured by the policy.

Provisions in the said group life insurance policy relative to definition of' the term “employees” and the “eligibility of employees” are as follows:

“1. DEFINITION OF THE TERM'EMPLOYEES’:
“The term ‘employees’ as used herein means all full-time employees employed and compensated by the employer.
“2. ELIGIBILITY OF EMPLOYEES:
“All present employees
are each eligible for insurance hereunder on the effective date here. AH ether present employees end New employees shall be eligible for insurance hereunder on the 1st day of the policy month coinciding with or next following the date of commencing continuous service with the employer.”

Mr. Black died Jan. 24, 1960. Proof of death was filed, payment of the policy’s $1,000.00 death benefit was refused, and all insurance premiums theretofore paid on members of the Board of Public Utilities of the City of Texarkana, Arkansas, were refunded to Texarkana Water & Sewer Systems, and a refund of premiums paid upon E. C. Black was tendered to his widow and policy beneficiary, Mrs. Vivian C. Black, and such premiums were later tendered into the registry of the court after Mrs. Black *808filed suit upon the policy. Plaintiff in her suit sought judgment for the amount of the policy, 12% penalty, attorney fee, interest, costs, etc.

The trial court submitted three special issues to the jury. The findings of the jury in responses were in effect, to-wit:

(Special Issue No. 1) The deceased, E. C. Black, from Oct. IS, 1956, to the date of his death was a full-time employee of the Texarkana Water & Sewer Systems ; '
(Special Issue No. 2). Northwestern National Life Insurance Company accepted the premiums on behalf of E. C. Black’s certificate of insurance with the knowledge of the type and character ,of his employment; .and (Special Issue ¡No. '3) the. deceased, E, C. Black, relied upon the company’s ' acceptance of the premiums as acknowledgment .on the part of the company that the insurance policy was applicable to him.

Appellant insurance company did not file a motion for new trial and review of alleged error is confined to the grounds asserted for judgment in appellant’s unsuccessful motion for judgment notwithstanding the verdict. Wagner v. Foster, 161 Tex. 333, 341 S.W.2d 887; Rule 324, Vernon’s Ann.Rules of Civil Procedure. The motion requested the trial court to disregard the jury’s answers to the said three special issues mentioned. The principal question for review is whether or not there is evidence of probative force to support the jury’s findings on these special issues.

The case was once before this court and the cause was reversed and remanded for fuller development. Northwestern National Life Insurance Company v. Black, Tex.Civ.App., 362 S.W.2d 141, wr. ref., n. r. e. (1962). In the first trial of this cause the Arkansas statutes referred to in the Ordinance appointing Mr. Black to the Board of Public Utilities of Texarkana, Arkansas (B-810) were- not placed in evidence.

Ordinance B-810 of the City of Texar-kana, Arkansas, was introduced in evidence in the first of trial in this cause and also in the second trial. We quote the following excerpt from said ordinance:

“Section 13. That there is hereby created a water and sewer committee, to be known as the ‘Board of Public Utilities’ of said City, to have and exercise the powers and perform the duties as by Section 9978, 9979, 10022, 10023, and 10024 of Pope’s Digest of the Statutes of Arkansas provided the initial members of which shall consist of: Earl C. Black, Roy W. Davis, M. C. Jacobson.
“All such powers exercised and duties performed by said Board of Public Utilities shall be prescribed by ordinance or resolution of the Council of said City subject to applicable laws and the covenants and undertakings on behalf of said City as set forth in this ordinance.”

The Arkansas statutes referred to in said ordinance were placed in evidence in the second trial from which this appeal results.

The Boards of Public Utilities of the Cities of Texarkana, Arkansas, and Tex-arkana, Texas, operated the water and sewer systems of the adjoining municipalities under the name of Texarkana Water & Sewer Systems. The Boards of the respective cities met jointly and Mr. Black served as Chairman of the group at one time. The Board laid down operating policy, recommended rates to the Council, etc. Management of operations was the prerogative of the general manager, under him the office manager was authorized to direct office personnel and procedure. The Board employees were classified and their hours of employment and rates of pay were specially scheduled. Of these employees, possibly excepting the general manager and office manager or casual labor hired on an hourly basis, all classifications were on a forty hour week basis, and considered ’ full-time employees. Board members were not in-*809eluded in any classification of employees maintained by the Board, and were not subject to the direction of any of the admitted employees of the Board or system. No withholding taxes were taken from the $20.00 per month compensation of Mr. Black or of any of the other Board members.

The above referred to ordinance of the City of Texarkana, Arkansas, appointed Mr. Black as a member of the Board of Public Utilities of the City of Texarkana, Arkansas. The ordinance and the Arkansas statutes referred to therein, all introduced in evidence on the second trial from which this appeal arises, as well as all the evidence adduced, have been carefully examined and considered, and it is held that Mr. Black occupied, at all times pertinent hereto, the status of a public officer and was neither an employee nor a full-time employee.

The proper rule of construction to he applied in this cause to determine the meaning of the terms “employee” and “full-time employee” is the rule that language used in insurance policies is given its usual and popular meaning unless it is ambiguous or it is shown that the parties intended it to have a special meaning. Insurance 32 Tex. Jur. (2) 115, Sec. 57.

Public officer has been variously defined, and in 67 C.J.S. Officers § 2, pp. 101-102, the term is referred to:

“ * * * an individual who has been appointed or elected in a manner prescribed by law, who has a designation or title given him by law, and who exercises the functions concerning the public assigned to him by law; a person whose duty it is to perform an agency for the state; an officer who discharges any duty in the discharge of which the public is interested or who is invested with the authority and is required to perform.the duties of a public office; one who has some duty to perform concerning the public.”

Knox et al. v. Johnson, Tex.Civ.App., 141 S.W.2d 698, writ refused (1940), in discussing the definition of a public officer cites with approval-the rule laid down in 53 A.L.R. 595, as follows:

“ 'It may be stated, as a general rule deducible from the cases discussing the question, that a position is a public office when it is created by law, with duties cast on the incumbent which involve an exercise of some portion of the sovereign power and in the performance of which the public is concerned, and which also are continuing in their nature and not occasional or intermittent ; while a public employment, on the--other hand,.is a position which lacks one or more of the foregoing elements. ”

The rule laid down in 53 A.L.R. 595 is also in harmony with the definition of-¡a public officer given by the Supreme Court of Texas in Kimbrough v. Barnett, 93 Tex. 301, 55 S.W. 120 (1900).

The determining factor which distinguishes a public officer from an employee is whether any sovereign function of the government is conferred upon the individual to be exercised by him for the public largely independent of the control of others. Aldine Independent School District v. Standley, 154 Tex. 547, 280 S.W.2d 578 (1955).

An employee is one who works for an employer; a person working for a salary or a wage. The word is applied to anyone so working, but usually only to clerks, workmen, laborers, etc., and but rarely, to officers of a government or corporation. United States v. Schlierholz, D.C., 137 F. 616, 624.

The relation of employer and employee is contractual. Mercury Life & Health Company v. DeLeon, Tex.Civ.App., 3.14 S.W.2d 402, wr. ref., n. r. e. (1958)! It may be oral or written, express or implied. C. C. Slaughter Cattle Company v. Pas-*810trana, Tex.Civ.App., 217 S.W. 749, wr. dism. (1920). The words “servant” and “employee” are in most cases practically synonymous. Texas Life Insurance Company v. Roberts, 55 Tex.Civ.App. 217, 119 S.W. 926, no writ, (1909). Also the word “employee” in its general significance is governed by the. same rules whether a claim lies within the field of common law liability or arises.out of the Workmen’s Compensation Statutes. See Harris v. Cochran et al., Tex. Civ.App., 288 S.W.2d 814, wr. ref., n. r. e. (1956), wherein it was also stated:

“A servant is'a person employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master.”

In Security Union Ins. Co. v. McLeod, Tex.Com.App., 36 S.W.2d 449, 451 (1931), (a workmen’s compensation case), it was stated' in part as follows:

“To constitute one an employee *. .there must exist between the parties the relation of master and servant.in the broad sense that the one has fRe,, right pf. ultimate control and direction over the other. •
“The relation of master and servant exists, where the master retains or exercises the power of control in directing, not merely the end sought to be accomplished, but as well the means and details of its accomplishment; not only what shall be done, but how it shall be' done. Shannon v. Western Indemnity Co. (Tex.Com.App.) 257 S.W. 522, 523; Wallace v. S. C. O. [Southern Cotton Oil] Co., 91 Tex. 18, 40 S.W. 399; Southern Surety Co. v. Shoemake (Tex.Com.App.) 24 S.W.2d 7.”

Under the evidence the Texarkana Water & Sewer Systems did not control Mr. Black; instead the Board of which Mr. Black was a member and for some time the Chairman, was in ultimate control of the

Systems. Mr. Black’s physical conduct, as a Board member and Chairman, was not controlled by the Texarkana Water & Sewer Systems. One of the functions of the Board, as the governing body of the systems, was to make contracts of employment. Mr. Black could not at the same time be both an employer and an employee, as it takes two parties to make a contract of hiring. Southern Surety Company v. Inabnit et al., Tex.Com.App., 119 Tex. 67, 24 S.W.2d 375 (1930). Mr. Black, of course, was not hired by the Systems; he was appointed by a City Ordinance as a member of the Board which governed the Systems.

It is clear that the function performed by Mr. Black was exercised by him for the benefit of the public, and his exercise of that function was largely independent of the control of others, except that of course he worked in cooperation with the other Board members. Certainly to the extent that the ordinance appointing Mr. Black to his office and the Arkansas statutes under which the ordinance was passed describe his duties and responsibilities as a Board member, such ordinance and statutes controlled Mr. Black’s performance of his duties as a member of the Board and as a public officer. Thus it seems clear that the Texarkana Water & Sewer Systems did not control Mr. Black, one of its governing public officers, and consequently, Mr. Black was not an employee of said systems.

It is held that there is no evidence of probative force to support any finding that Mr. Black was an employee of the Texarkana Water & Sewer Systems.

It is furthermore thought that if Mr. Black could in any event be held an employee, he was not a “full-time employee” of the Texarkana Water & Sewer Systems. Apart from the assumption that Mr. Black was “on call” twenty-four hours a day, it is not seriously contended that the work done or the duties performed by him employed his full time. The fact is the Board *811met regularly once a month with two or three meetings in addition. Neither the evidence nor reasonable inferences and deductions therefrom proves that Mr. Black devoted more than a small portion of his time to the performance of Board duties. The concept of being “on call” twenty-four hours daily confuses responsibility as a Board member with the daily performance of a Board member’s duties. Membership on the Board carried with it a responsibility for operation of the system; this responsibility was continuous, existing at all times. However, responsibility and the willingness to assume it is quite different and a thing apart from actual employment. A Board member’s responsibility is always with him, but his duty to act in the discharge of his obligation as a Board member occurred only at the regular or called meetings of the Board. Using any adequate definition of the term “full-time employee”, the evidence, when given its most favorable meaning, does not show that Mr. Black was a full-time employee of the Systems.

The judgment of the trial court can not~beH;upportediípoír'tlrc"theories of waiver"" and estoppel.

In^the first place there is no evidence of probative force in the record to show that any statements that may have been made by the soliciting agent of appellant insurance company was to have been either authorized, known or ratified by the appellant insurance company. In this connection, see Traders & General Insurance Company v. Lange, Tex.Civ.App., 354 S.W.2d 178, wr. ref., n. r. e. (1962), and authorities cited therein, wherein it was stated in part as follows:

“Regardless of what Neil Cooper said, or did, there is no evidence in the record to show that his principal, the appellant insurance company, did any act or made any omission which would indicate that the principal knew about Cooper’s representations or acts, or ever ratified such acts, and under this record there is no pertinent act or omission traceable directly to the principal.”

In the second place, if Mr. Black was neither an “employee” nor a “full-time employee” he was not covered by the .basic terms of the policy, and to apply the doctrine of waiver and estoppel to the situation at bar would in effect make the contract of insurance cover a loss it never covered by its terms and would create a liability not created by the contract and never assumed by the appellant insurance company under the terms of the policy, and of course this .would not be correct. In this connection, see Washington National Insurance Company v. Craddock, Tex.Com.App., 130 Tex. 251, 109 S.W.2d 165 (1937), 113 A.L.R. 854, wherein it was further stated:

“ * * * In other words, by invok- , ing the doctrine of estoppel and waiver ( it is sought to bring into existence a contract not made by the parties, to ' create a liability contrary to the express provisions of the contract the parties did make.”

Also in this connection see Great American Reserve Insurance Company v. Mitchell, Tex.Civ.App., 335 S.W.2d 707, writ refused (1960) wherein it was stated in part as follows:

“Plaintiff’s claim and recovery run directly contrary to the settled Texas law of waiver and estoppel with respect to risks designated in an insurance, policy. Waiver and estoppel may operate to avoid a forfeiture of a policy, but they have consistently been denied operative force to change, re-write and enlarge the risks covered by a policy. In other words, waiver and estoppel can not create a new and different contract with respect to risks covered by the policy. This has been the settled law of Texas since the decision in Washington Nat. Ins. Co. v. Craddock, 130 Tex. 251, 109 S.W.2d 165, 113, A.L.R. 854. See also, Vaught v. Texas Employers’ Ins. Ass’n, Tex.Civ.App., *812257 S.W.2d 445; Powell v. American Casualty & Life Co., Tex.Civ.App., 250 S.W.2d 744; Massachusetts Bonding & Insurance Co. v. Dallas Steam Laundry and Dye Works, Tex.Civ.App., 85 S.W.2d 937; C. E. Carnes & Co. v. Employers’ Liability Assur. Corporation, 5 Cir., 101 F.2d 739; 29 Am.Jur., Insurance, § 1135; 163 A.L.R. 691; 113 A.L.R. 857. In Hunter v. Jefferson Standard Life Insurance Co., 241 N.C. 593, 86 S.E.2d 78, the general rule is specifically applied to the continued acceptance of premiums after insured became overage under a policy risk. There was an acceptance of premiums for more than, four years after the policy termination date, yet the Court adhered to the general rule, citing a multitude of precedents.
‘No't-'Svery jurisdiction adheres to the rule followed in exas, though-it is the rule of the majority * * * The point, howevér, is ñok’an open one in Texas. * * *.
“The judgment is reversed and rendered that all relief he denied the plaintiff other than the recovery of premiums paid after the termination of the insurance.”

It is concluded that this case has now been fully developed and that there is no evidence of probative force in the record to support the jury’s findings upon the three special issues submitted to them; that. Mr. Black was neither an “employee” nor a “full-time employee” of Texarkana Water & Sewer Systems, and further that the judgment of the trial court can not.be supported on the theories of estoppel and waiver.

The judgment of the trial court is reversed-and judgment is here rendered that all relief be denied the plaintiff-appellee other than the recovery of premiums heretofore paid into the registry of the court by appellant.

Reversed and rendered.