Reed v. Industrial Accident Commission

10 Cal.2d 191 (1937) GEORGE REED et al., Petitioners,

v.

INDUSTRIAL ACCIDENT COMMISSION et al., Respondents.

L. A. No. 16258. Supreme Court of California. In Bank.

November 26, 1937. Jack J. Rimel and Harry C. Westover for Petitioners.

Everett A. Corten and F. Britton McConnell for Respondents.

LANGDON, J.

This is a petition to review an award of the Industrial Accident Commission. The facts are simple and undisputed.

On March 11, 1935, W. B. Mellott, a building contractor, obtained a policy of workmen's compensation insurance from Hartford Accident and Indemnity Company, for the period of one year. The insured was designated therein as "W. B. Mellott, ... Individual". Thereafter Mellott became associated with Irwin G. Gordon, another contractor, and they conducted the building contract business as "W. B. Mellott and Irwin G. Gordon, doing business as Gordon and Mellott". The policy remained unchanged. The record does not disclose whether the insurance company had knowledge of the association.

On March 5, 1936, while the policy was in force, George Reed, an employee, sustained a compensable injury, and filed his application with the commission. The commission first decided that the insurance company was liable, but on rehearing reversed itself and gave its award against the employers alone. The employee and employers petitioned, seeking to hold the insurance company liable. In its answer, the commission admits error in the decision, but the respondent insurance company maintains that the same was correct. The position of said respondent is, in brief, that the policy insured W. B. Mellott, an individual, and not the partnership of Gordon and Mellott; that Reed was employed by the firm of Gordon and Mellott; and not by W. B. Mellott; and that consequently, the policy did not cover the injury, because Reed's employer, the partnership, was not insured. This position is unsound on principle and contrary to prior decisions in this state.

[1] The underlying fallacy in respondent's argument is the assumption that the partnership is a distinct unit, separate from the members thereof. Occasional suggestions of this "entity" theory of partnership are found in statutes or decisions, but apart from exceptional situations, a partnership is not considered an entity, but an association of individuals.