Georgia Casualty & Surety Co. v. Rainwater

Evans, Judge.

This is a workmen’s compensation case. J. A. Rainwater was a builder of dwelling houses, in which he used subcontractors for each and every item of construction. He employed his brother, Leon Rainwater, to install all roofing. Leon Rainwater did all the work himself. J. A. Rainwater contends he did not have any employees except casual day laborers for some specific job, and that he used subcontractors in erecting his buildings.

Georgia Casualty & Surety Co. issued a policy of workmen’s compensation insurance to J. A. Rainwater, doing business as J. A. Rainwater, Builder. The policy provided that the premium to be paid would be determined by the amount of compensation paid by the insured to various classifications of operations, including roofing.‘T\ie policy also provided for audits of the payroll of J. A. Rainwater from time to time. Georgia Casualty collected the premiums and increased same because of an audit as to the roofing work for which Leon Rainwater was paid. Leon Rainwater was injured thereafter, on the job and applied for workmen’s compensation. The insurer defended on the theory that Leon Rainwater was not an employee of J. A. Rainwater, but was an independent contractor.

The testimony before the board shows that J. A. Rainwater’s insurance premium was increased and collected by the insurer because of the labor or work performance as to roofing work for which Leon Rainwater was paid (Tr. pp. 33-39).

The insurer is now estopped to contend that Leon Rainwater was not covered by the policy. Under the provisions of Code § 114-607 a policy of workmen’s compensation insurance "shall always first be construed as an agreement to pay compensation.”

". . . [A]n insurer who issues a policy of compensation insurance to an employer not subject to this Title shall not plead as a defense that the employer is not subject to the Title; and an insurer who issues to an employer subject to this Title a policy of compensation insurance covering an employee or employees ordinarily exempt from its provisions shall not plead the exemption as a defense. ” (Emphasis supplied.) Pasler v. Maryland Cas. Co., 97 Ga. App. 263, 264 (103 SE2d 90).

The law further provides that compensation shall be paid "as if the employer and/or employee was subject to this title, the policy of compensation insurance constituting a definite contract between all parties concerned. ” (Emphasis supplied.) New Amsterdam &c. Co. v. Thompson, 100 Ga. App. 677, 680 (112 SE2d 273).

But even if the claimant was an independent contractor, since the insurance carrier issued a policy to cover the work to be done by the claimant and others, it is bound by the contract of insurance, and cannot set up as a defense to the claim that claimant was not subject to the Act. Liberty Mut. Ins. Co. v. Henry, 56 Ga. App. 868 (194 SE 430). Further, in the Henry case, supra, at page 872, the contract was held to be a definite contract in favor of such workmen, and was binding on the insurer. This case is similar on its facts to the case sub judice, and must be followed here.

Argued January 11, 1974 Decided May 23, 1974 Rehearing denied June 19, 1974 Gambrell, Russell, Killorin, Wade & Forbes, Edward W. Killorin, Richard L. Stumm, for appellants.

The policy of compensation insurance was issued. Leon Rainwater was covered under the policy by payment of premiums. Leon Rainwater is suing for payment of compensation under a definite contract between all parties concerned, and the insurer is estopped to question whether he is or is not an employee or independent contractor. The workmen’s compensation board did not err in holding that the insurer was estopped to deny that Leon Rainwater was an employee. Whether or not he was an independent contractor or employee is a moot question, since the insurer is liable for payment of benefits under the provisions of Code Ann. § 114-406.

Code § 38-114 defines certain acts which constitute an estoppel, among which is "other admissions upon which other parties have acted, either to their own injury or the benefit of the persons making the admissions.” The insurance company here collected premiums for the remuneration paid by J. A. Rainwater to Leon Rainwater in that it collected premiums based upon the compensation received by Leon Rainwater from J. A. Rainwater, Builders. This was of definite benefit to the insurer. If Leon Rainwater was not an employee, then to require J. A. Rainwater, Builder, to pay premiums based upon the compensation received by Leon Rainwater, was a definite and distinct disadvantage and injury to J. A. Rainwater, Builder. All of the elements of estoppel are present here. Estoppel is abundantly shown in this case against the insurer. The insurer is not allowed to fail to recognize the claimant as one covered under its policy, because it has collected premiums based on his work, and has recognized him as one covered under the policy and as an employee whose pay it has audited and increased its premiums as a result of payments to this employee.

Judgment affirmed.

Bell, C. J., Deen, Quillian, Clark, Stolz and Webb, JJ, concur. Eberhardt, P. J., and Pannell, P. J., dissent. George & George, William, V George, for appellee.