Points v. Wills , 44 N.M. 31 ( 1939 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] Claim was filed by the dependents of W.R. Points, deceased, for compensation for his death against W.O. Wills, Jr., his employer, and Pioneer Mutual Compensation Company, insurer.

The insurance company answered denying liability to claimant on the insurance policy and set up four defenses to a claim of liability under the policy in an answer by way of new matter and cross-action against the employer, to-wit, that the death of Points occurred prior to an acceptance of the policy, that the subject matter of the policy had been partially destroyed prior to acceptance, that the policy was dated December 5th through clerical error, and because of concealment on the part of the employer of the accident and because of such clerical error, the policy should be reformed to be effective from December 8th, and because of such failure by the employer to notify the insurance company, the insurance company was entitled to rescind and cancel the policy.

The employer filed no answer. He was represented by counsel at the trial but presented no evidence, and is not represented here. The trial court found against claimant and entered judgment dismissing the claim both as to the employer and the insurance company.

The circumstances surrounding the issuance of the insurance policy here involved and the accident which resulted in the death of the workman are these:

On December 5, 1937, the employer, W.O. Wills, Jr., filled out an application for a policy of workmen's compensation insurance upon a form furnished by the agent of the insurance company at Lordsburg, New Mexico. In the space provided therefor the employer asked that the insurance period be from December 5, 1937, to December 5, 1938. This application was mailed with a check for $150, the required deposit, to the agent of the insurance company whose office is at Lordsburg, and was received by the agent on the morning of December 6th. On December 7th, the agent endorsed the check and sent it with the application to the office of the insurance company in Santa Fe, where it was received on the morning of December 8th. On the 8th, the company accepted and approved the application and issued a policy of workmen's compensation insurance to be effective for one year from 12:01 A.M., December 5, 1937. The policy was delivered by the agent to the employer at Lordsburg on or about December 11th, and on December 13th, the policy was approved by George W. Hay, District Judge, and was filed in the office of the County Clerk of Hidalgo County on the same day.

The accident, which resulted in the almost immediate death of W.R. Points, the employee, occurred shortly after noon on December 6th. The employer was advised by telephone of the accident the same afternoon. The employer did not notify the insurance company or its agent of the accident until December 20th, which was after the issuance and delivery of the policy.

Appellant (claimant below) assigns as error the admission of certain testimony of Maybelle Harrington, who had previously testified that she was employed by the Pioneer Mutual Compensation Company in the capacity of office manager of the Compensation Underwriters and that her duties as office manager consisted of "accepting, separating the applications, making up the policies, taking care of the payrolls." The testimony objected to is as follows:

"Q. And the policy date which you filled in the policy was December 5, 1937, 12:01 A.M., expiring December 5, 1938. Will you state what the policy of the company is with respect to the effective dates of the policy?

"Mr. Hodges: We object to that as being immaterial as to what the policy of the company is. The policy speaks for itself and this witness should not be allowed to dig up some private rule that is unknown to the people dealing with them. It is manifestly unfair.

"Mr. Dailey: It is material on the question of mistake conforming with the constructive fraud defense we have set up. It is also material under the first defense we have set up that no contract was made because there was no meeting of the minds of these parties by reason of the facts that the date of December 5th instead of December 8th was inserted in the policy through clerical error. What I want to establish is the policy of the company, the authority of Miss Harrington as its general agent who filled in the date to show that she neither had the authority to insert that date and that she did it through a mistake, clerical error.

"Mr. Hodges: To which I reply that the company is bound by the acts of its own agents. They acknowledged the check for the principal and issued the policy under that date and there can't be any question to it.

"The Court: Overruled.

"Mr. Sanders: May it please the court I want to make the same objection on behalf of the claimants.

* * *

"Mr. Hodges: To which ruling we except.

"Mr. Sanders: Yes, sir.

"A. It is the policy of the company to date the policies as of the date they are received in the office and each date is stamped on the application when we get it, and when I made up this policy I was following the application and I made an error which is not the policy or rule of the company at all, it was my own error.

"Mr. Sanders: May I enter an objection to any mistake on the part of the company?

"The Court: You may make that objection.

"Mr. Hodges: And I join on the part of the employer.

"The Court: Overruled."

In a note in Ann.Cas. 1914C, page 72, on admissibility of parol evidence to show custom or usage pertaining to matters contained in an insurance policy, the note writer says:

"Parol evidence is admissible as to a uniform, continuous and well settled usage or custom pertaining to the matters embraced in the contract, unless such usage or custom contravenes a rule of law, or alters or contradicts the express or implied terms ofan unambiguous contract. (Citing cases.) * * * (Emphasis ours.)

"Where, however, a written contract is susceptible on its face of a plain and unequivocal interpretation, resort cannot be had to evidence of custom or usage to explain its language or qualify its meaning. (Citing cases.)

"In Lattomus v. Farmers' Mut. Fire Ins. Co., 3 Houst. (Del.) 254, the holding of the court seems to be to the effect that the insurer could not show a by-law whereby it was liable to contribute and pay on a fire insurance policy only in proportion to what was paid on the same property insured in a third company, or a custom to the effect that such payment and contribution was a satisfaction in full and a discharge of the policy. The decision seems to rest on the ground that the custom sought to be introduced in evidence was a particular custom and that none but a general custom having the effect and operation of a general rule or law could be shown. * * * In Northwestern Fire Marine Ins. Co. v. Connecticut Fire Ins. Co., 105 Minn. 483,117 N.W. 825, it was held proper to exclude proof by the insurer of a usage among insurance companies that the effect of a binder was to obligate the insurer from the issuance and date thereof,because it directly contradicted the time stated in thepolicy." (Emphasis ours.)

In Orient Mutual Ins. Co. v. Wright, 1 Wall. 456, 470,17 L. Ed. 505, the court, in excluding evidence of usage, said: "When we have satisfied ourselves that the policy is susceptible of a reasonable construction on its face, without the necessity of resorting to extrinsic aid, we have at the same time established that usage or custom cannot be resorted to for that purpose. * * * In the case of The Reeside, 2 Sumn., 567, Mr. Justice Story, after using language strongly condemning the tendency to introduce and rely on usages in courts of justice, and defining their true office * * * proceeds to say: `But I apprehend that it can never be proper to resort to any usage or custom to control or vary the positive stipulations in a written contract, and a fortiori, not in order to contradict them. An express contract of the parties is always admissible to supersede or vary or control a usage or custom; for the latter may always be waived at the will of the parties. But a written and express contract cannot be controlled or varied or contradicted by a usage or custom, for that would not only be to admit parol evidence to control, vary or contradict written contracts, but it would be to allow mere presumptions and implications, properly arising in the absence of any positive expressions of intention to control, vary or contradict the most formal and deliberate written declarations of the parties.'" See also 14 R.C.L., title "Insurance", § 111; 27 R.C.L., "Usages Customs", § 28; Transatlantic Shipping Co. v. St. Paul Fire Marine Ins. Co., 2 Cir., 9 F.2d 720, 46 A.L.R. 946, which contains a collection of the leading cases on this point; Restatement of the Law of Contracts, §§ 245, 247.

It was not shown that the "policy or rule" referred to by the witness was a custom or usage of insurance companies generally or that the custom was known to the insured. See Restatement of the Law of Contracts, § 247. The policy on its face is plain and unequivocal as to the effective date.

Let us eliminate for the moment the questions of the policy or rule of the company as to dating its insurance policies and the admissibility of the evidence as to mistake, and consider whether the purported mistake in inserting the effective date of the policy is ground for reformation.

The law in respect to jurisdiction of courts of equity to grant relief where a mutual mistake in the writing of a contract results in the written terms of the contract not expressing the clear intent and understanding of the parties is well settled by the courts. Dearborn v. Niagara Fire Ins. Co. of City of New York, 17 N.M. 223, 125 P. 606. And in Restatement of the Law of Contracts, § 504, we find the following: "* * * Where both parties have an identical intention as to the terms to be embodied in a proposed written conveyance, assignment, contract or discharge, and a writing executed by them is materially at variance with that intention, either party can get a decree that the writing shall be reformed so that it shall express the intention of the parties, if innocent third persons will not be unfairly affected thereby." In § 503 of the same text is this statement: "A mistake of only one party that forms the basis on which he enters into a transaction does not of itself render the contract voidable. * *"

Appellee cites some authority to the effect that a clerical error is ground for reformation of an insurance policy, and that where the mistake is due to clerical error it is not necessary to show mutuality of the mistake. Couch Cyc. of Insurance Law, § 1391. This text refers to the case of Born v. Schrenkeisen,110 N.Y. 55, 17 N.E. 339, where it is said: "Where there is no mistake as to the terms of an agreement, but through a mistake of the scrivener, or by any other inadvertence in reducing it to writing, the instrument does not express the agreement actually made, it may be reformed by the court; it is only where anaction is to reform the agreement itself that it is necessary to allege in the pleadings and prove on the trial that the mistake was mutual." (Emphasis ours.) This case is followed in MacDonald v. Crissey, 215 N.Y. 609, 109 N.E. 609. See also Haley v. Sharon Tp. Mut. Fire Ins. Co., 147 Minn. 190, 179 N.W. 895; Mutual Life Ins. Co. of Baltimore v. Metzger, 1934, 167 Md. 27, 172 A. 610.

In 11 C.J. 839, "Clerical Error", it is said:

"A clerical error exists when without evident intention one word is written for another, when the statement of some detail is omitted the lack of which is not a cause of nullity, or when there are mistakes in proper names or amounts made in copying but which do not change the general sense of a record; a mistake in copying; a mistake in copying or writing; a mistake of a clerk in writing; a mistake in copying or transcribing a written instrument; a mistake which naturally excludes any idea that its insertion was made in the exercise of any judgment or discretion, or in pursuance of any determination; * * * an error which appears to be such on the face of an instrument, and the nature of which is ascertainable from the instrument itself; an error made by a clerk in transcribing, or otherwise, which must be apparent on the face of the record, and capable of being corrected by reference to the record only."

"* * * The expression [clerical error] assumes that the mistake or negligence or carelessness is that of one engaged in the subordinate service of transcription, copying, or comparison; a labor not requiring original thought." Morimura v. United States, C.C., 160 F. 280, 281.

Miss Harrington's duties consisted of "accepting, * * * making up the policies, etc." And she testified that in making up the policy she followed the application and inserted the date December 5th, and that it was her own error. She did not copy from another paper which said the policy should be effective from December 8th, and inadvertently insert the wrong date. She had authority to accept and write policies, and in inserting the date of December 5th in the policy she wrote up, she accepted the application in the terms in which it was written. It may be true, if we regard the testimony of the witness as to the policy of the company, that she made an error, but it was not a mechanical error. She wrote what she intended to write. If error was made, it was in forming an incorrect intention. It was not a lapsus calami; it was more like a lapsus memoriae.

We must view the matter, therefore, as governed by the principles applying to reformation of contracts for mutual mistake. See Couch, Cyc. of Insurance Law, § 1391, note 7; National Union Fire Ins. Co. v. Patrick, Tex.Civ.App.,198 S.W. 1050; Hay v. Billeter, 83 Ind. App. 244, 148 N.E. 159; Cline v. Iowa State Live Stock Ins. Co., 195 Iowa 918, 192 N.W. 309.

In St. Paul F. M. Ins. Co. v. Shaver, 76 Iowa 282,41 N.W. 19, 20, the court said: "Defendants, then, were not parties to the mistake; for the policy afforded them the protection which they sought, and they had no knowledge, until after the loss, that Giberson, in his communication with Anderson Son, had departed from their instructions. It was proven, however, that defendants were informed, before the policy was issued, that none of the insurance companies doing business in Cedar Rapids would accept a single risk upon property situated in different buildings, unless the policy contained what is known as the `average clause,' * * * and it is probably true that they understood that that provision would be inserted in the policy, but it was not. If plaintiff had acted promptly with reference to the matter, after it discovered this omission, it may be that it would now be entitled to a reformation of the policy in that respect. But it did not. * * * Upon this state of facts, it is very clear, we think, that plaintiff is not now entitled to relief [reformation]. The mistake was its own, and it permitted defendants to remain in ignorance that one had been committed until the loss occurred. * * *"

Without showing that the employer had knowledge that it was the policy or rule of the company to date contracts of insurance as of the date applications were received, appellee could not show that the employer knew that the policy would be written to be effective as of the 8th, or that there was an agreement, express or implied, between the insurer and the employer that the effective date would be other than December 5th. To the contrary, the application was for a policy of workmen's compensation insurance to be effective from "Dec. 5, 1937 to Dec. 5, 1938." And the application is usually given great weight in determining the intention of the parties in a suit for reformation. Peterson v. Commonwealth Casualty Co., 212 Mo. App. 434, 249 S.W. 148; St. Paul F. M. Ins. Co. v. Shaver, supra; Norris v. President of Insurance Co. of North America, Pa., 3 Yeates 84, 2 Am.Dec. 360. Where is the showing that the minds of the parties did not meet as to the date the contract was to be effective and that the contract as written did not embody the terms agreed upon by the parties?

If Points had been killed on December 6, 1938, instead of a year earlier, is it unreasonable to surmise that the insurance company would have been content to abide by the terms of the policy as written, with its expressed expiration date as of Dec. 5, 1938? How could the dependents have proved that there had been a mistake and that the policy did not expire until December 8th? In the case of Cline v. Iowa State Live Stock Ins. Co., supra, an insured was attempting to reform a policy of insurance in order to extend the expiration date to cover a loss which occurredafter the date shown in the policy on the ground that the policy was dated back through "error or oversight" and should have been dated as of the date it was written and accepted instead of dating from the expiration of an old policy. The court there said [195 Iowa 918, 192 N.W. 310]: "* * * The insured was clearly entitled to insurance for 12 months; but, unless he has made out a case for the reformation of the policy, we must treat the term as commencing October 17, 1919, and no recovery can be had in this action. To entitle him to reformation, the evidence of mistake or oversight must be clear, convincing, andsatisfactory. The question is different from what it would be if the animal had died after the application was signed and delivered with the oral agreement that the insurance should commence at once, and before the policy was delivered. If that was the situation, a jury might readily find upon the record before us that appellant [insurance company] waived the provision in its policy quoted above and return a verdict for the plaintiff. Appellant, of course, concedes in this case that the provision was waived and that the insurance became effective upon the expiration of the prior policy. * * *" (Emphasis ours.)

Appellant argues that the statements of the witness quoted supra should be disregarded because of the self-serving character thereof. Appellant did not object to the testimony on that specific ground, and we assume that self-serving testimony, if believed by the trial judge, might under ordinary circumstances be sufficient to sustain the finding as to mistake; but since we find the testimony of the witness relative to the "policy or rule" of the company as to the effective date of the risk must be disregarded because inadmissible, we are constrained to the belief that the trial judge would have given less consideration to such testimony because of its self-serving nature, when shorn of the support given it by the testimony regarding the so-called custom, in determining whether the evidence of mistake was "clear, convincing and satisfactory."

We must conclude, therefore, that the finding and conclusion of the trial court that the dating of the policy of insurance by the insurance company as of December 5, 1937, was an error made in the office of the company, that the policy should have been dated December 8, 1937, and that the same was effective as a policy of workmen's compensation insurance on December 8, 1937, and should be reformed to so read, was erroneous.

With the elimination of the question of mistake in inserting the date, we have before us a policy of workmen's compensation insurance which upon its face became valid and binding on December 5, 1937, and under which the insurance company is clearly liable to the appellant in this case. But the insurance company says that the employer was guilty of fraud in procuring the insurance, and therefore it is entitled to reform the policy so that it will defeat the claim of appellant.

The company agreed with the employer:

"One (a) To pay promptly to any person entitled thereto under the Workmen's Compensation Law and in the manner therein provided, the entire amount of any sum due, and all installments thereof as they become due. * *

"One (b) To indemnify this Employer against loss by reason of the liability imposed upon him by law for damages on account of such injuries to such of said employees as are legally employed, * * * to serve this employer (a) by inspection of work places, etc. * * * (b) upon notice of such injuries, by investigation thereof and by settlement of any resulting claims in accordance with law. To defend, in the name and on behalf of this Employer, any suits or other proceedings which may at any time be instituted against him on account of such injuries, etc." upon certain conditions, including the following:

"B. This Policy may be cancelled at any time by either of the parties upon written notice to the other party stating when, not less than ten days thereafter, cancellation shall be effective. * * *

"D. The obligations of Paragraph One (a) foregoing are hereby declared to be the direct obligations and promises of the Company to any injured employee covered hereby, or, in the event of his death, to his dependents; and to each such employee or such dependent the Company is hereby made directly and primarily liable under said obligations and promises. This contract is made for the benefit of such employees or such dependents and is enforceable against the Company, by any such employee or such dependent in his name or on his behalf, at any time and in any manner permitted by law, whether claims or proceedings are brought against the Company alone or jointly with this Employer. * * * The obligations and promises of the Company as set forthin this paragraph shall not be affected by the failure of thisEmployer to do or refrain from doing any act required by thePolicy; nor by any default of this Employer after the accident inthe payment of premiums or in the giving of any notice requiredby the policy or otherwise; * * *"

"E. As between the employee and the Company, notice to or knowledge of this Employer of any injury or death covered hereby shall be notice or knowledge as the case may be of the Company; * * *"

This court in Lopez v. Townsend, 42 N.M. 601, 82 P.2d 921, 932, had under consideration a policy of public liability insurance which was claimed by the insurance company to be invalid because liability under the policy was conditioned upon operation by the bus company under a certificate of convenience and necessity and it was not shown that operations were being carried on under such certificate. Attached to the policy there involved was a statutory rider containing this provision: "The policy to which this endorsement is attached is written in pursuance of an is to be construed in accordance with the following law of the State of New Mexico, to-wit, House Bill No. 249, Chapter 129, Laws of 1929, and the rules and regulations of the Corporation Commission adopted thereunder, and is subject to all the provisions thereof. In consideration of the premium of the policy to which this endorsement is attached, the insurer hereby agrees to pay any final judgment within the limits set forth in the schedule below set out for injury to and/or death of persons * * * and damage to property * * * resulting from the ownership, maintenance or use of any and all motor vehicles pursuant to a certificate of public convenience and necessity issued by the Corporation Commission of New Mexico. It is further understood and agreed by and betweenthe Insurer and the Assured that the right of any person torecover hereunder shall not be affected by any act or omission ofthe Assured or any employee, of the Assured with regard to anycondition or requirement of said policy, but all terms andconditions of the policy shall remain in full force and bebinding as between the Insurer and the Assured; and the Insurershall be reimbursed by the Assured for any and all loss, costs orexpenses paid or incurred by the Assured which the insurer wouldnot be obligated to pay under the provisions of the policyindependent of this endorsement."

As to this clause we said:

"Undoubtedly this italicized clause has been borrowed from the language of the standard or union mortgage clause employed with respect to a mortgagee's rights under fire insurance policies. It is very similar in form. * * *

"The position of the public for whose benefit the policy is issued is akin to that of the mortgagee under the standard or union mortgage clause found in fire insurance policies. * * *

"The insurer will be taken to have appropriated the language quoted supra with a knowledge of the construction given it by the courts in fire policies. * * *

"Strong reasons support, whether or not such is the effect of the statute without it, the inclusion of such a provision. These policies are required by law for protection of the public. The motor carrier operating over a given route knows, or its officers should know, whether it has its certificate of convenience and necessity. The travelling public neither knows, nor has ready means of ascertaining, whether such be the case. A passenger about to purchase a bus ticket and employ the carrier's services will not pause to inquire, nor does this policy provision contemplate that he shall do so, whether such carrier has its certificate of convenience and necessity or has fulfilled other conditions or requirements of the policy essential to its validity as between the carrier and the insurer."

The same situation exists in connection with workmen's compensation insurance. Sec. 2, Ch. 92, L. 1937 (§ 156-104, N.M.S.A. 1938 Supp.) provides that an employer is conclusively presumed to have accepted the provisions of the Act unless prior to the date he becomes such employer he shall have filed with the County Clerk a notice in writing that he elects not to accept the provisions of the Act. An employee, then, when he enters such employment can assume that unless such notice is filed with the County Clerk his employer has accepted the terms of the Act, with the consequent duty of providing insurance or satisfying the district judge that such security is unnecessary, as prescribed by the statute. If, as the insurance company contends, it can deny liability to the employee because of a failure or fraud upon the part of the employer, the effect would be to place upon the employee the duty of inquiring about the status of the insurance carried by his employer, finding out when premium payments were due and seeing that they were paid, checking the payroll statement for errors and misstatements — in other words, seeing that his employer complies with every condition of the policy.

Many courts have recognized that the employee stands on a different footing as regards recovery under a workmen's compensation insurance policy than does the employer.

In Southern Casualty Co. v. Freeman, Tex.Com.App.,24 S.W.2d 370, 372, the court said: "The insurance was then in effect for the benefit of Fowler and his employees who became interested in and parties to the contract, and Freeman's [the employee's] rights to compensation thereunder which had already accrued could not be abrogated to his detriment."

In Aioss v. Sardo, 223 A.D. 201, 227 N.Y.S. 708, 710, affirmed 249 N.Y. 270, 164 N.E. 48, the court said:

"Whatever the rights may be between the carrier and the insured employer, so long as the policy, once it is issued, is outstanding, the carrier's liability to the injured employee remains. No question of warranties or of false representations made by the employer in securing the policy and no stipulations of the policy as between the employer and carrier have force or effect as between the carrier and such an employee who was injured while the policy is outstanding.

"A chief purpose of this law is to assure payment of any and every award to an injured employee; this is accomplished by requiring that every employer, except a self-insurer, shall insure and keep insured. Our construction effectuates this purpose."

In the per curiam opinion affirming this decision, Aioss v. Sardo, 249 N.Y. 270, 164 N.E. 48, it is said: "There is here a distinct and independent contract with the employee. Workmen's Compensation Law (Consol. Laws, c. 67) §§ 10, 25, 50, 54. So the policy itself provides. It adds: `The obligations and promises of the company as set forth in this paragraph shall not be affected by the failure of the employer to do or refrain from doing any act required by the policy,' — and further that the company shall be bound by any award rendered against the employer. Under these circumstances, as between the insurance carrier and theemployee the fact that a policy is issued upon untrue statements made by the employer is no defense. Hastings v. Westchester Fire Ins. Co., 73 N.Y. 141. To relieve the carrier of liability, there must be a cancellation as provided in section 54." (Emphasis ours.) (The case of Hastings v. Westchester Fire Ins. Co., supra, cited as authority in the above quotation, is a case dealing with a fire insurance policy containing a mortgagee clause.)

In United States Fidelity Guaranty Co. v. Taylor,132 Md. 511, 104 A. 171, 173; 18 Neg. Comp. Cases Anno. 566, the insurance company sued the employer to recover compensation payments which it paid to the dependents of a deceased employee under an award made by the Industrial Accident Commission, the insurance company claiming that as between it and the employer the policy was void because of false representations. The court said:

"This case is a very peculiar one, and we have not been referred to any decision that is very apposite. So far as the liability of the appellant to the widow for the compensation is concerned, there can no longer be any question. That was determined by the commission and affirmed by the superior court of Baltimore City, no appeal having been taken to this court. In its opinion the commission referred to the contention of the insurance company that the `coverage provisions' were limited by the `declarations' of the employer contained in his application for insurance, which declared that he employed no other employes except chauffeurs and helpers, and that therefore only such employes were covered by the policy, and said:

"`If the rights of third parties were not involved, we might accept this view as correct; but, however the terms of the application and the declarations of the employer may affect the question as between the insurer and the employer, they cannot affect the right of the injured employe, or his dependents, in case of death, to the security of payments of compensation stipulated in paragraph 1 of the policy, and this is so because of Condition M, of the policy.'

"After quoting Condition M [which is substantially the same as Condition D in the policy here under consideration, quoted supra], the opinion went on to say that:

"`The proviso clause in this condition of the policy was inserted by the commission for the express purpose of defeating any such contention as that now made by the insurance company, and we are of the opinion that it does have that effect, and that, notwithstanding the "declarations" of the employer, the policy is effective in securing the payment of compensation to which the employe, or his dependents, may be entitled,regardless of the statements or declarations made by theemployer in his application for insurance.'

"* * * There are two distinct obligations upon the insurance company; one to secure payment of the compensation to the employe, and the other to indemnify the employer against loss for the liability imposed upon him by law for damages on account of such injuries or death. By reason of the provisions of Condition M, the company cannot rely on the statements of the employer in the items in the declaration, so far as they affect the right of an employe or his dependents, to recover compensation; but that ought not and does not prevent it from requiring the employer to live up to his declarations and the terms of the policy, in so far as the rights between them are concerned. * * *"

This court is committed to the doctrine that a liberal construction in favor of a claimant under the terms of the Workmen's Compensation Act should be favored, as the theory of the legislation is compensation, not the lack of it. Gonzales v. Chino Copper Co., 29 N.M. 228, 222 P. 903. And in Christensen v. Dysart, 42 N.M. 107, 76 P.2d 1, 3, we said: "While the effects on the public and the employer were given consideration, the main purpose of this legislation was to afford compensation for injuries and protection to employees engaged in hazardous occupations and to provide benefits to their dependents in case of death. It is not in keeping with the public policy of the state to countenance overreaching on the part of an employer in making contracts with his employees which deprive them of part of the compensation to which they would be entitled under the terms of the Workmen's Compensation Act."

Much less should we countenance an attempt by an insurance carrier to avoid liability to an employee or his dependents in contravention of the plain and express terms of the insurance contract itself, because the employer failed in his duty to the insurance company in respect to securing the insurance or keeping it in effect. If the insurance company is aggrieved by the conduct of the employer, then it is he who should respond to the company, not the innocent employee.

The trial court in his judgment dismissed the claim both as to the employer, W.O. Wills, Jr., and the Pioneer Mutual Compensation Company, insurer. The evidence does not show that the employer had given any notice in compliance with the terms of the Workmen's Compensation Act that he elected not to come under the Act; it follows that he was bound by the conclusive presumption provided in § 156-104, N.M.S.A. 1938 Supp. In addition, a provision in the "New Mexico Standard Workmen's Compensation Endorsement" attached to the insurance policy is as follows: "This employer, upon the acceptance of this Policy, agrees that at the effective date hereof he is bound by the above cited Workmen's Compensation Law in full compliance with Section 2 thereof, and will not give any notice or make any declaration to the contrary, as provided in Section 9 thereof, during the Policy Period." The employer was clearly liable.

We therefore hold that claimants should have had judgment for compensation and funeral expenses in the amount allowed by Section 9, Ch. 92, L. 1937 (§ 156-117, N.M.S.A. 1938 Supp.) against the Pioneer Mutual Compensation Company, insurer, and W.O. Wills, Jr., employer, jointly and severally.

Counsel for appellant assign as error the court's refusal to award a reasonable attorney's fee for the prosecution of the suit on behalf of claimant in the lower court, and ask that this court allow an attorney's fee for the prosecution of the appeal. In view of the determination of this cause, counsel for claimant and appellant are entitled to a reasonable and proper attorney's fee for the prosecution of this case in the trial court and in the Supreme Court (§ 156-122, N.M.S.A. 1938 Supp.) in addition to the compensation awarded the claimant. A reasonable fee for such representation in this court is $400.

The judgment is reversed, and the cause remanded to the district court, with instructions to enter judgment in accordance with the views herein expressed, and to allow counsel for appellant a reasonable fee for prosecution of the cause in the district court in addition to the amount of $400, for services in this court; and it is so ordered.

BRICE, ZINN, SADLER, and MABRY, JJ., concur.