Legal Security Life Insurance Co. v. Thomas , 1972 Tex. App. LEXIS 2494 ( 1972 )

KEITH, Justice

(dissenting).

If I felt free to discard the accepted rules governing suits upon policies of insurance which have been hammered out by our courts over the past century, and could adopt the ancient rule of admiralty known as rusticum judicium,^* I might be able to come to the same conclusion that was reached by the majority.

At the outset, I point out that the quotation from the insuring clause of the policy is not complete. Immediately following the ellipsis, are found these words: “ . . . whose names for the period of insurance granted hereunder, including renewal thereof, appear on the payroll records of the Policyholder during the effective period hereof.”

The policy we consider in this case is anything but a model of clarity and I have difficulty in determining who, if anyone other than Bishop himself, was covered thereby. I might add, this difficulty extends to counsel in the case as we learned from questions put to them during oral submission of the cause. Without pleading ambiguity, plaintiffs procured findings of “intention” on the part of Bishop and the defendant; yet, the majority says that the policy is not ambiguous.

I agree that “[tjhere is no express exclusion in this policy for independent contractors” but add, there was no inclusion either. The two out of state decisions relied upon by the majority for the proposition that an independent contractor is an employee are inadequate to the task assigned them. Hughes actually held that the words “not employed by” rendered the policy ambiguous and subject to construction under the ordinary rules of contract law. Marcario’s survivors were denied coverage under the Workmen’s Compensation Law because he was working as a log hauler under a written contract which created an independent contractor relationship. This is in accord with Texas law. Industrial Indemity Exchange v. Southard, 138 Tex. 531, 160 S.W.2d 905, 907 (1942).

If a contract is unambiguous, as has been held by the majority, there is no resort to the rules of construction and courts must interpret and enforce it as it was made by the parties. United Services Automobile Ass’n v. Miles, 139 Tex. 138, 161 S.W.2d 1048, 1050 (1942); Republic National Life Insurance Co. v. Spillars, 368 S.W.2d 92, 94, 5 A.L.R.3d 957 (Tex. Sup.1963). And, as was said by our Supreme Court in Transport Insurance Co. v. Standard Oil Co. of Texas, 161 Tex. 93, 337 S.W.2d 284, 288 (1960), “The rule of liberal construction in favor of the insured applies only when the contract is ambiguous and susceptible of more than one interpretation.” The reference to Trinity Universal Insurance Company v. Tubbs, 342 S.W.2d 209, 210 (Tex.Civ.App., Amarillo, 1969, error ref. n. r. e.), an opinion by Justice Denton while upon the Court of Civil Appeals, does not quite hit the mark since the actual holding in that connection was expressed in this manner: “The general rule is that contracts of insurance are to be strictly construed in favor of the insured, but this does not affect another general rule that contracts of insurance are to be construed as other contracts.”

Plaintiffs pleaded that the deceased was “an employee of, and on the payroll records of, A. N. Bishop” but proved, as stated in the brief here that “Thomas was an independent contractor, cutting and hauling pulpwood to the Owens-Illinois plant under an agreement with C. N. Bishop, a pulpwood dealer from Newton, Texas.” Without going into the evidence in detail, it is sufficient to say that Thomas was an independent contractor under all of the tests laid down by Judge Sharp in the leading case of Industrial Indemnity Exchange v. Southard, supra. (160 S.W.2d at 907)

There was no pleading of ambiguity in the policy or that the parties intended that independent contractors be included in its coverage. Yet, the first witness, Bishop, was interrogated in detail (over defendant’s objections) as to his intent in taking out the policy. Such extrinsic evidence was admissible only to remove ambiguity in a policy found to be ambiguous. The rule governing pleading of ambiguity was set out with clarity in Ross v. Burleson, 274 S.W.2d 105, 107 (Tex.Civ.App., San Antonio, 1954, no writ):

“An ambiguity in a contract must be raised by the pleadings and in the absence of such a pleading the court will not hear evidence as to the intention of the parties which is different from that expressed in the contract.”

See also Jones v. Dumas Development Co., 229 S.W.2d 936, 939 (Tex.Civ.App., Amarillo, 1950, error ref. n. r. e.); Anderson-Dunham, Inc. v. Lee Rubber & Tire Corp., 378 S.W.2d 99, 102 (Tex.Civ.App., Dallas, 1964, error ref. n. r. e.); Skyline Furniture, Inc. v. Gifford, 433 S.W.2d 950, 954 (Tex.Civ.App., El Paso, 1968, no writ); 2 McDonald, Texas Civil Practice, § 6.14.5, p. 107 (1970 Rev.Vol.); 13 Tex.Jur.2d, Contracts, § 373, p. 648 (1960).

Plaintiffs were required to plead and prove coverage under the policy as a prerequisite to a recovery. Mutual Benefit Health & Accident Ass’n v. Hudman, 398 S.W.2d 110 (Tex.Sup.1965). They alleged coverage as an “employee” with his name upon a “payroll record”, proved that he was an independent contractor, procured findings of the intent of the policyholder, and are now permitted to recover. These are some of the questions presented in defendant’s brief, none of which are even mentioned in either opinion of the majority.

I would hold that the policy is ambiguous, and with proper pleadings and proof, could be construed to include persons such as plaintiffs’ decedent. But, that is not the case which we review. Finding error in the record, I would reverse the judgment below and remand the cause for a new trial under appropriate pleadings.

* “[I]t is an application of that sense of fair dealing and of justice imbedded in our nature, the conclusions of common sense, of a mind ‘abnormis sapiens’.” The Yictory, (4th Cir. 1895), 68 F. 395, 400.