Arrowhead Highlands Mutual Service Co. v. Industrial Accident Commission

BROWN (Gerald), J. On January 20, 1963, John L. Ries, president of the petitioner, a small mutual water company located in the San Bernardino Mountains, sustained a compensable injury while defrosting a company pipe. Ries received $2.50 per hour for manual labor while working for the company.

Since 1938 the respondent State Compensation Insurance Fund has insured the employer. After the injury the employer was informed by the insurer that the president was excluded from coverage under an exclusion clause providing:

“Unless specifically stated in the Schedule or covered by endorsement hereon, this Policy does not cover the following risks, persons, operations, work or employments: 6 i

“If the Insured be a corporation, any work or duties performed by any person having the title of President, . . . Secretary, . . . Treasurer, ...” and the “Schedule—Description of Principal Work Covered” clause:

“Waterworks, Operations, All Employees, Including Construction or Extension of Lines . . .

“Executive Officers Covered:

“Secretary (8810)

“Treasurer (8810)”

The matter was submitted to a referee who held that Ries was covered by the policy. He reasoned that the phrase “all employees,” as used in the “Description of Principal Work Covered,” was:

“. . . a sufficiently specific statement of coverage to extend the benefits of the policy to the applicant [Ries], even though he bore the title of president.” or

“. . . even if . . . the phrase ‘all employees’ is not sufficiently specific to extend coverage to a president-employee, [543]the phrase ‘all employees’ creates ... an ambiguity when construed . . . with the . . . exclusion. ...”

The Industrial Accident Commission reversed the decision of the referee, and held that the plain language of the policy excluded the president. Observing that the “Secretary” and “Treasurer” were expressly given coverage in the “Description of Principal Work Covered,” but the “President” was not, the Commission reasoned that to construe the phrase “all employees” as including the president would make the exclusion clause meaningless. This petition for review followed.