Pennsylvania National Mutual Casualty Insurance Co. v. Hannah

701 S.W.2d 67, 1985 Tex. App. LEXIS 12670
CourtCourt of Appeals of Texas
DecidedDecember 5, 1985
DocketNo. 09-84-336-CV
StatusPublished
Cited by3 cases

This text of 701 S.W.2d 67 (Pennsylvania National Mutual Casualty Insurance Co. v. Hannah) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pennsylvania National Mutual Casualty Insurance Co. v. Hannah, 701 S.W.2d 67, 1985 Tex. App. LEXIS 12670 (Tex. Ct. App. 1985).

Opinion

OPINION

BROOKSHIRE, Justice.

Workers’ compensation case. The jury found that Appellee received an injury on January 2, 1981, which was a producing cause of permanent, total incapacity. Appellant carrier contends that Special Issue No. 2 was an incorrect submission of the “dual capacity doctrine” under the law and facts of the case subjudice. See Harris v. Casualty Reciprocal Exchange, 632 S.W.2d 714 (Tex.1982). Special Issue No. 2 read:

“Do you find from a preponderance of the evidence that, at the time of the injury, Plaintiff was performing the tasks of an ordinary workman in the course and scope of employment for FEH Construction, as distinguished from his usual activities as a Corporate officer for FEH Construction?”

The jury answered “Yes”. The main thrust of the objection was that under Harris, supra, the test was whether an individual was hired to perform both executive and employee-related duties. Issue No. 2 obviously inquired only as to the tasks performed at the time of the injury as distinguished from the tasks to be performed at the time of hiring.

Appellee had personally done construction work, physically, for a number of years. In 1978 or 1979, he started a sole proprietorship called “Hannah Construction Company”, doing contracting and subcontracting work. In 1980, he incorporated into a company called “F.E.H., Inc.”. He was the President and Vice-President. His then wife was the Secretary-Treasurer. Frank Hannah owned all the stock in the corporation. When F.E.H., Inc., wasn’t “running” a construction job, there were 2 or 3 people on the payroll. When F.E.H., Inc., was working and performing a contract or subcontract, it was not unusual to have 15 or 20 persons on the payroll. Ruby Hannah, as Secretary-Treasurer, did virtually all of the office work, record keeping and accounting duties until a divorce from Frank, granted in May of 1982. In the last part of 1980 and in January of 1981, the corporation was doing construction work for several different larger contractors.

During the first part of January, 1981, there was a cleanup job in a subdivision in Beaumont. Appellee went to this jobsite but did not see his workers there. He stayed until about 10:00 A.M. No workers from F.E.H. Corporation reported on that job for work, although some should have. There were workers of other contractors present. A request was made to Appellee that cleanup work around a catch basin be expedited. Hannah said he would take care of that job. He testified that normally that was not a job that he would perform personally. Hannah said:

“A My normal job is taking care of the work. I also had to work, but I did all my bidding, all my estimating; I had to go see the contractors, pre-job meetings and all this stuff. I always have to do that, too.”

He further characterized his job as an officer of the company as generally doing the bidding and public relations work rather than digging ditches or doing back-breaking work but he testified that some days he had to “wear both hats”. He said this was true of all “little companies”.

The estimated annual premiums for the workers’ compensation policy was based on concrete work and concrete construction as well as street and road construction and some iron and steel erection. It was stipulated, in the contract of workers’ compensation insurance, that the declarations (of coverage) did not apply to any type of injury, including death, sustained by any executive officer, partner or sole proprietor. While attempting to finish up the cleanup work around the catch basis, Ap-pellee personally sustained the injury upon which the suit was brought.

[69]*69In Harris, supra, the jury found that the worker involved was employed or hired in two capacities and that he was performing the duties of a substitute manager of an Austin discotheque when he was fatally shot, the court determining, at page 714:

“... The sole issue on appeal to this court is whether Stone’s status as an officer in the corporation precluded recovery of benefits accruing under the corporation’s workers’ compensation policy.”

After reviewing the legislative history of present TEX.REV.CIV.STAT.ANN. art. 8309, sec. la (Vernon Supp.1985), the court, in Harris, supra, wrote at page 718:

“The court of appeals held in the instant case that the present ‘unambiguous’ wording of section la of article 8309 indicates an intention on the part of the legislature to preclude application of the ‘dual capacity’ doctrine in Texas. We do not adopt this construction. Rather, we believe that section la more likely manifests an intention to make available by way of a specific endorsement optional coverage of officers who are hired only in an executive capacity or who are injured while performing purely executive duties. Under this interpretation, persons who are hired to fill both executive and ‘employee’ positions, and who are injured while performing the latter type of activity, fall squarely within the ‘employee’ definition in section 1 and are thereby covered by the provisions of the act without a specific endorsement. Section la has no application in such situations. We adopt this construction because it is consistent with the general purpose of the workers’ compensation statute. In short, persons who are ‘employees’ as defined by the act should be allowed to recover employee benefits.
“We have repeatedly held that the workers’ compensation act should be given a liberal construction to carry out the legislative plan of compensating injured workers and their dependents. [Citing cases]”

We find that the carrier’s objections to Special Issue No. 2 were correct and remand the case for new trial.

The carrier also argues that there is no evidence that Hannah was an “employee” for the purpose of the Texas Workers’ Compensation Act. TEX.REV.CIV.STAT. ANN. art. 8309, sec. 1 (Vernon 1967) defines “Employer” as meaning “any ... corporations ... that makes contracts of hire.” Section 1 provides:

“ ‘Employee’ shall mean every person in the service of another under any contract of hire, expressed or implied, oral or written....”

TEX.REV.CIV.STAT.ANN. art. 8309, sec. la (Vernon Supp.1985) provides:

“(a) Notwithstanding any other provision of this law, a subscriber may cover in its insurance contract a partner, a sole proprietor, or a corporate executive officer, except an officer of a state educational institution. The insurance contract shall specifically include the partner, sole proprietor, or corporate executive officer; and the elected coverage shall continue while the policy is in effect and while the named individual is endorsed thereon by a subscriber.” (Effective September 1, 1975)

Appellee, Hannah, concedes that he had no such specific inclusion for a corporate executive officer by way of the statutorily required endorsement. We disagree with the carrier’s position that there was “no evidence” that Frank Hannah was an “employee” for the purposes of the compensation act.

There is a phase or string or strain of evidence which is more than a scintilla that Hannah did actual physical labor prior to the date of incorporation of F.E.H., Inc., and continued, at least in some instances, to do the same type of work after incorporation.

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Bluebook (online)
701 S.W.2d 67, 1985 Tex. App. LEXIS 12670, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pennsylvania-national-mutual-casualty-insurance-co-v-hannah-texapp-1985.