Shortridge v. Hipolito Co.

A judgment was rendered in the Superior Court of Los Angeles County against the defendant for an alleged unpaid portion of insurance premiums on policies issued under the Workmen’s Compensation, Insurance and Safety Act. The defendant appealed therefrom and thereafter a receiver of the plaintiff corporation was appointed, who continues the proceedings here.

The contentions below, and upon appeal arose principally from the question as to whether the insurance company or the defendant employer was responsible for the erroneous classification. Appellant insists that the respondent advised that the employees performing the outside work in controversy be classified as salesmen, and that since such designation was illegal the contract of insurance was void and unenforceable. It appears, however, that the respondent corporation was ignorant of the duties of these men, that there was no such labor known to it when the policies were issued, and that appellant’s predecessor sought to base such contentions wholly upon . hearsay evidence of statements alleged to have been made by an insurance agent for which the respondent was not legally answerable. Reports made by the insured did not bear information descriptive of the duties of the employees in question, and the insurer became aware of the discrepancy only upon, investigation in 1927. That the insurer is not bound by the statements of an agent which are alleged to vary the terms of its policies, is well settled. (Fidelity Casualty Co. v. Fresno Flume & Irr. Co., 161 Cal. 466 [ 37 L. R. A. (N. S.) 322 , 119 Pac. 646 ].) “Where the policy of insurance, as in this case, contains an express limitation upon the power of the agent, such agent has no legal right to contract as agent of the com

The contention that section 602b of the Political Code, which prohibits an insurance carrier from issuing a policy at rates less than those approved by the insurance commissioner is unconstitutional is without merit. In German Alliance Ins. Co. v. Lewis, 233 U. S. 389 [L. R. A. 1915C, 1189, 58 L. Ed. 1011 , 34 Sup. Ct. Rep. 612 ], the Supreme Court of the United States, reviewing numerous eases, held that the state of Kansas had power to authorize its superintendent to direct an insurance company to establish a higher rate or a lower rate, whenever he might determine that any rate was excessive or inadequate to the safety or soundness of the company. It was there said: “The underlying principle is that business of certain kinds holds such a peculiar relation to the public interest that there is superinduced upon it the right of public regulation.” Citing many instances of legislative control for public welfare, the court continued: ‘ ‘ Those regulations exhibit it to be the conception of the law making bodies of the country without exception that the' business of ■ insurance so far affects the public welfare as to invoke and require governmental regulation. A conception so general cannot be without cause. . . . Contracts of insurance, therefore, have greater public consequence than contracts between individuals to do or not to do a particular thing whose effect stops with the individuals. .... The scope of judicial inquiry in deciding the question of power is not to be confused with the scope of legislative considerations in dealing with the matter of policy.” It follows that the statute is not in that respect unconstitutional.

From what has been observed it becomes unnecessary to consider remaining questions raised by the parties.

The judgment is affirmed.

Thompson (Ira F.), J., and Archbald, J., pro tem., concurred.