
    CASE 54. — ACTION BY THE FIDELITY & CASUALTY COMPANY AGAINST THE PALMER TRANSFER COM- . PANY.
    April 28, 1909.
    Palmer Transfer Co. v. Fidelity Casualty Co.
    Appeal from McCracken Circuit Court.
    W. M. Reed, Circuit Judge.
    Judgment for plaintiff, defendant appeals.
    Affirmed.
    Insurance — Accident Insurance — Premiums — Policy—Construction. — Where an accident policy issued by plaintiff covering the drivers of vehicles of defendant transfer company provided that the premium was based on the entire compensation earned by the drivers, and that, if it should exceed the sum set forth in the schedule furnished, defendant should pay the additional premium earned, plaintiff was entitled to a premium based on the entire compensation paid the drivers, though part of the time they were employed as stablemen.
    CRICE & ROSS and MILLER & MILLER for appellant.
    WHEELER, HUGHES & BERRY for appellee.
   Opinion of the Court by

Judge Lassing.

Affirming.

The Palmer Transfer Company is a corporation doing a general transfer and passenger business in the city of Paducah. In the course of its business it employs a number of men to drive its hapks, busses and other vehicles, and also employs a number of men as stablemen, hostlers, blacksmiths, etc. On November 1, 1904, it took out a policy of accident insurance in the appellee company, covering its drivers of vehicles. This policy was No. 43,076, and the premium charged therefor was estimated from a statement made by the appellant company, showing the number of drivers in its employ, and the weekly salary paid to each. This policy ran for 12 months. On November 1, 1905, the first policy expired, and another policy was issued in lieu thereof, for 12 months; the premium upon this policy being estimated the same as upon the first policjr. On November 1, 1906, a third policy was issued for the same purpose, and the premium was estimated in the same way. In the application for each of these policies it was-represented that there would be three hacks, one hotel coach, one United States mail wagon, and two baggage wagons engaged in the conduct of appellant’s business. Each policy contained the following provision regulating the premium thereon: “Condition J: The premium is based upon the entire compensation earned by the drivers of the assured during the period of this policy. If the assured himself drive any draught or driving animal or vehicle there shall be included therefor in the compensation a sum equivalent to the average compensation of the driver of a team covered hereunder. Whenever employes are compensated, in whole or in part, by store certificates, board, merchandise, credits or any other substitute for cash, the amount of compensation covered by such substitutes shall be included in the compensation. If such compensation exceeds the sum set forth in the schedule, the assured shall immediately pay the company the additional premium earned; if such compensation is less than the sum set forth in the schedule, the company will return the unearned premium, when determined; but the company fehall receive or retain not less than fifty dollars ($50.00), it being agreed that this sum shall be the minimum earned premium. ’ ’

At the date of the delivery of each of these policies the estimated premium thereon was paid by appellant, and at some time after the expiration of the first and second of said policies, upon a statement made by appellant to appellee, appellee rebated to appellant company a portion of the premium which it had paid at the date of issue of the policy. It appears that no auditor of appellee had, in the meantime, audited the books of appellant to ascertain whether or not the statement made by appellant as to the amount of money annually paid to its drivers was correct. Some question having been raised as to the correctness of the reports furnished by appellant, appellee caused the books of appellant company to be audited,, and this investigation. disclosed the fact that appellant had, during each of the years covered by the contract of insurance, paid to its drivers, a sum largely in excess of that reported in the statement which it had made to appellee, and demand was therefore made by appellee upon appellant, not only for the return of the premium rebated, but also for the payment of the additional premium for each year as called for by the contract of insurance. Appellant, while aamltting that it had paid to its drivers the amount of money reported by the auditor for appellee company, insisted that, inasmuch as their said drivers had not devoted more than one-half of their time to the business cf driving, the sum which they had reported as paid to their drivers was, in fact, in excess of what it should have been. The appellant company had charged one-half of the sum paid to those employed as drivers to their account as stablemen. It seems that these drivers, when not actively engaged in driving, were required to do other work around the transfer barn.

It appears from the pleadings that appellant also took out other accident insurance with appellee, covering its stablemen and other employes. The annual premium charged on this latter class of’ policies was much cheaper than that charged on the policy covering the drivers. Appellant refused to pay the sum demanded by appellee, or any sum whatever as additional premiums, and thereupon appellee instituted a suit to recover same. Appellant answered and joined issue which formed the basis of appellee’s claim, and, in addition, pleaded that as to the claim on policies 1 and 2 there had been a settlement and an adjustment thereof, in which the appellee company had refunded to it certain designated portions of the premium which had been paid when the policy was issued. It also pleaded that the method of bookkeeping which had been adopted and followed by it had been approved, acquiesced in, and consented to by the local agent of the appellee company. The material allegations of the answer were traversed, proof was taken, and the case submitted to the chancellor for judgment. lie found in favor of the insurance company for the full amount sued for, and, being dissatisfied with that finding and judgment, the transfer company appeals.

' Counsel for appellant can not seriously rely upon the defense of settlement as to the dispute over premiums covering the first and second policies of insnr ■ anee. There was no settlement, but the insurance company, without investigation, accepted the statement furnished it by appellant as correct, and fixed the premium for each year according to the statement as regulated' by the terms of the policy. If, as a matter of fact, the statement for each of said years, as furnished by appellant, was not correct, and appellee was deceived or misled by reason thereof, appellant would be in no position to avail itself of its own error or wrong. The policy itself furnishes the real contract. The method of bookkeeping adopted anid used by appellant has nothing to d!o with the questions involved in this litigation. The contract of insurance provides definítelyanid distinctly the manner in which the premiums to be paid shall be estimated at the date upon which the policy is issned, and determined with accuracy M the expiration thereof. Hence it is immaterial that the local agent of appellee was advised of the method of bookkeeping used by appellant. 'The premium to be paid is determined, not by the method of bookkeeping employed, but by the amount of money laletualjly paid to the drivers. The only question therefore which we deem it necessary to consider is whether or not, under the provisions of the policy, appellant had the right to- have the premiums on said policies fixed by considering the total compensation paid to the drivers while actually engaged in the busineisis of driving, or whether the total compensation received by them while in the employ of appellant company must he taken into account.

While the business of appellant is a hazardous one, the 'greater part of the hazard is Confined to the use of its vehicles, 'arid hence the cost of insuring it on account of loss by ‘accident that may occur to passengers riding in itis vehicles, or to the public that may b© injured by reason 'of any negligence of its drivers, is correspondingly high. It would be impossible to 'determine what would be a fair charge to make for assuming this risk without some data to serve as a guide, and hence appellee required that appellant furnish certain information concerning the nature, character, and extent of its business as a condition prerequisite to ©nitering into 'a oontriact of insurance. This information is the “statement” in the policy. The facts therein set ou!t were exclusively Within t(h!e knowledge of appellant, and, as they form the very balsis and foundation of the contract, it is bounld by ¡tern. It will be ¡observed that the statement describes the number and character of vehicles used in the transportia/tion of passengers and freight, and gives the number of drivers employed and their compensation. There is no intimation in this information furnished as to what part of e'ach driver’s time is employed in driving. No such information is sought, and if it had been i)t could not have been furnished with any degree of accuracy, for this would necessarily depend upon the run of business Which appellant would have. No estimate of the hazard assumed could be based upon ¡su!dh information, 'but when appellee knew the number and kind of vehicles used by ¡appellant in its business, ¡and the number of drivers employed and their pay, a basis was furnished upon which an estimate could be made. Upon such statement the value of the haz!a/rd was figured and the contract of insurance made, with the proviso that, should there be an increase or decrease of drivers so employed, the cost - of insurance should be increased or 'decreased accordingly.

If appellant’s contention is correct, then there would have been no occasion for issuing ia different policy covering different grades of employes; but all that would, have been necessary- to do would be to staite the total nurqher of employes, and how much of the time of each (estimating1 as he proposes in this case to do) would be -devoted to the discharge of the several duties that might be assigned to them. The 'fact that the bn-siness was not conducted in 'this w|ay is persuasive -that such a -plan was not contemplated. If part o'f the time of the driver wa,s taken up in the discharge of .other -duties, and Ms compensation while so employed properly chargeable as pay to ‘ ‘ stableman, ’ ’ then f or suidh dime he wa.s not a driver, and if an accident liiald •occurred while he was driving, -and the insurance company had sought to defend upon the ground that he was a stableman, would such a defense be regarded as, meritorious Certaiinltly not; and, as such fact could not be used a-s -a defense by the insurance, company, it can no more be uls'ed ais a shield by the transfer company to enable it to escape liability when called upon to pay the premium 'as fixed by the terms 'of the contract.

Thie contract fixes the premium by taking into consideration the number of vehicles used, and the drivers employed, and their compensation, without regard to the length of time actually -employed by each driver while 'driving, and the trial court having so construed it, and entered Ms judgment accordingly, we are of opinion that it should he ,and is, affirmed.  