Elsenpeter v. Potvin , 213 Minn. 129 ( 1942 )

Not only Potvin's affidavit, made in support of the petition to reopen, but also his testimony at the district court trials, is that long before the accident Norris Bowman, father of the deceased, had leased the repair shop and was operating it at the time of the accident which resulted in the death of his son. Potvin admits that his initial report to his insurer was otherwise and motivated exclusively by his desire to "get some money for Mrs. Bowman," the widow.

The testimony of Norris Bowman, father of the deceased, leaves no doubt that, beginning in 1931, he was a lessee of "the repair shop," first as colessee with one Kaylor and afterwards (Kaylor having withdrawn September 1, 1936) as sole lessee and operator.

After Kaylor left and until October 1, 1940, Norris Bowman had no help. On or about that date, anyway "just lately" and not long before the accident, his son Eddie "was helping" him as an apprentice. His father "tried to teach him the trade, automobile repairing, etc."

On the record as now presented, there is no ground upon which to hold that Edward Bowman was an employe of Potvin. There is no evidence that Potvin had, with the deceased, any agreement of employment, express or implied. There is no evidence of a wage, agreed upon or not, to be paid by Potvin. There is no suggestion of a right to, or exercise of, control of Edward Bowman by Potvin.

Mason St. 1927, § 4289, declares for policies of compensation insurance "that jurisdiction of the employer for any purpose shall be jurisdiction of the insurer, and that the insurer will, in all things, be bound by and subject to the awards rendered against such employer upon the risks so insured."

The decision of the majority of the commission that "the relief sought must be granted or denied as to both petitioning parties" seems to be based largely upon that statute. It properly held that Potvin's initial action, favorable to the widow, was fraudulent as to his insurer, and could not be considered a "mistake of fact" by Potvin. It went on to hold that Potvin being bound, the insurer was equally so.

That theory, so applied, is erroneous. Even though Potvin has bound himself, there is yet lacking an element which, under the statute, is condition precedent to holding the Hardware Mutual Casualty Company as insurer. The essential element so wanting is the presence of an insurer liable as such under the facts. The Hardware Mutual, on the facts as they now appear, was not an insurer at all. It insured only in respect to employes of Potvin, and Edward Bowman appears not to have been an employe. Absent an insurer, the statute has no application. It was not intended as an instrument of vicarious charity. To make it one is to make it, pro tanto, unconstitutional. It is hardly due process or equal protection of law to legislate that one litigant shall be cast in judgment solely on the false and fraudulent assertion of another.

An insurance company does not become an insurer automatically or by unilateral action of the insured. It becomes so only by bilateral contract. There is no evidence that the Hardware Mutual was an insurer of the risk here involved. The whole present showing is that it was not.

There may be compensation cases where an employer is held for compensation for which no insurer is liable as such or at all. Washel v. Tankar Gas, Inc. 211 Minn. 403, 2 N.W.2d 43, was such a case. This may be another. That is so wherever the contract of insurance does not include the risk. If so, there is as to such risk no insurer and the statute (Mason St. 1927, § 4289) does not apply.

There remains another factor of consideration. Essential to the proper functioning of compensation insurance, so important to industrial security, is honesty and truthful dealing by the insured with the insurer. The latter is not required to presume that, in case of accident, the insured will deal in falsehood in order to get money from the insurer where it owes none. Insurers should have the right, until the contrary appears, to rely upon the representations of their insured. If, before beginning payment, they must resort to their own independent investigation, the whole procedure will be complicated and payment to the needy dependents unnecessarily delayed.

There is no rule and no precedent that even the judgment of a court, procured through fraud, should not be promptly set aside upon proper showing of such fraud, with opportunity for rehearing and decision on the merits, where the circumstances so require in the interest of justice. That rule applies even where an insurance company happens to be the victim.

In Meehan v. Mitchell Battery Co. 191 Minn. 411,254 N.W. 584, 585, we reversed an order of the industrial commission denying the employer's petition to reopen the proceeding after an award. The insurer (which had become insolvent) had handled the whole matter, had submitted to the award, and the employer had not participated originally. The evidence for the employe, upon which the award was based, was on the petition to reopen "brought into serious question." The showing in support of the petition to reopen indicated "strongly that the award was based in substantial degree upon false testimony." In consequence, we held it an abuse of discretion not to grant a rehearing. I feel the same way about this case.

There is no reason why Potvin should have the privilege of a rehearing. There is no excuse for his attempt to be charitable with money not his own. But as to the Hardware Mutual Casualty Company, there is no ground, as the case now appears, on which reasonably to deny a rehearing on the merits.

The order of the industrial commission should be affirmed on the petition of Potvin. But on the petition of the Hardware Mutual Casualty Company, it should be reversed, with directions to order a rehearing.

All that I have said presupposes that the testimony taken at the district court trials is properly in the record. The members of the industrial commission, all of them, certainly considered it so, for both the majority and the minority opinions show that the district court testimony was considered. That alone makes it rather late for us to raise the point that the testimony was not in the record.

That aside, there has been no trial on the merits before the industrial commission. We are reviewing its order denying a motion or application for rehearing. I know of no good reason why sworn testimony, such as that now involved, should not be used in support of or opposition to such a motion. In any event, the testimony of Potvin was admissible as an admission.

Finally, Mason St. 1927, § 4313, declares that:

"The commission * * * in making an investigation or conducting a hearing under this act, shall not be bound by common law or statutory rules of evidence * * * and shall make such investigation or inquiry or conduct such hearing in such manner as to ascertain the substantial rights of the parties."

It is respectfully submitted that, even for a hearing on the merits, that statute very sensibly permits the use of such evidence as we are now considering. It has been subjected to the test of cross-examination and considered by a district judge competent upon a similar issue in the district court. There being no contradiction of it, nothing to discredit it, why shouldn't it be used by an administrative board?