The complaint in this matter seeks a judgment rescinding a workmen's compensation insurance policy written by plaintiff insuring defendant Conrose Construction Corp. (Conrose) and a declaratory judgment that plaintiff is not responsible under the policy for any workmen's compensation award that may be recovered by defendant Frank A. Ambrosio (Ambrosio) against Conrose under a claim petition presently pending in the Division of Workmen's Compensation. Ambrosio counterclaimed for a declaratory judgment that plaintiff was obligated for such workmen's compensation benefits as the Division might determine to be due to him either under a policy issued to Conrose or under a policy of workmen's compensation insurance issued by plaintiff to defendant Carnell Construction Corp. (Carnell). The matter is before the court on final hearing.
Conrose was a subcontractor on a construction job in Asbury Park; Carnell was the general contractor. Workmen's compensation insurance for Conrose and certain other subcontractors on the job was arranged for by the controller of Carnell, a Mr. Blackwell. Policy No. 35378 was issued by plaintiff to Conrose covering the period August 24, 1964 to August 24, 1965. The policy was originally written to cover only the particular Asbury Park job. As a result of a request received from the broker, defendant F.J. Wilkes Co.,
Inc. (Wilkes), through its agent defendant Allen Zane (Zane), the company cancelled that policy effective July 30, 1965. The reason given for the request for cancellation was that Conrose had finished its work on the job. A proper notice of cancellation was sent to the insured and to the Compensation Rating Bureau. On August 30, 1965 Ambrosio, an employee of Conrose, sustained an accident alleged to have been work-connected, resulting in serious injuries. On September 9, 1965 plaintiff received a communication from Zane requesting the reinstatement of policy No. 35378 as of July 30, 1965 and a renewal as of the expiration date, August 24, 1965. In his communication to the company Zane stated that the request for cancellation had been in error and that there had been no known claims under the policy between July 30, 1965, the date of the cancellation, and September 9, 1965, the date of the request for reinstatement. Zane had received the request for the reinstatement from Blackwell. Blackwell told Zane that the request for cancellation had been made in error; that Conrose was actually still working on the job, and that there had been no known accidents or claims between the date of the cancellation and the request for reinstatement.
In accordance with the request the initial policy was reinstated and the renewal was issued. The renewal policy was subsequently cancelled January 8, 1966 for non-payment of premium.
Plaintiff had not only written a policy for Conrose but also had written a workmen's compensation policy for Carnell which was in force at the time Ambrosio sustained his accident.
Ambrosio's connection with Conrose and Carnell is not entirely clear. He testified that at the time of the accident he was employed by Conrose as foreman and "part supervisor" with authority to sign checks. He had been an officer of Conrose a few years before the date of the accident but did not remember if he was a stockholder in 1965. He was
not at the time of the accident an officer of Carnell but later became one. He had been instrumental in obtaining financing for Carnell. His testimony as to his exact status with Conrose and Carnell at the time of the accident was vague, which is understandable in light of the passage of time and the severity of his injuries sustained in the August 30, 1965 accident. Following the accident he was in intensive care for two months. He did not appear to be a well man at the trial. It is clear to the court that Ambrosio was more than an employee of Conrose but his exact participation cannot be determined.
The contention of plaintiff is that it is entitled to rescission because at the time of the request for the reinstatement and renewal of the policy the insured knew that the accident had occurred and did not reveal such fact. There is no doubt that Blackwell, when he made the request for reinstatement, was fully aware of the accident and did not reveal the accident to Zane at that time. It is equally clear that had he revealed the accident, plaintiff would not have acceded to the request for reinstatement and renewal. There is, however, no proof that Ambrosio had anything to do with the request for the reinstatement and renewal. The request came nine days after his accident, at a time when he was in intensive care at the hospital.
In Matlock v. Hollis , 153 Kan. 227, 109 P. 2d 119 (Sup. Ct. Kan. 1941), dealt with a very similar situation. The court held that the policy was void. During the course of its opinion the court stated:
While the propriety of permitting the antedating of insurance policies may be debatable, the legality of the practice is well established, provided, of course, that good faith on both sides is present. Parties to the contract have a right to agree on the beginning as well as the ending of the term covered by the policy. We have found no authority, however, either textbook writer or decided case, where the validity of such a contract is not dependent upon an uncertain and unknown loss. There must be mutuality of risk. There must be no ...