Opinion
No. 71-281 No. 71-320
Decided August 15, 1972. Rehearing denied September 6, 1972. Certiorari denied November 13, 1972.
Action for indemnity under terms of certain insurance contracts allegedly issued to plaintiff. Jury verdicts were returned for plaintiffs, but judgment notwithstanding the verdict was entered, and plaintiffs appealed.
Affirmed
1. INSURANCE — Indemnity — Prerequisite — Employer-Employee Relationship — Established — Earlier Action — Not Exist — Plaintiffs' Verdict — Could Not Stand. In action for indemnity, under contract of insurance allegedly issued to plaintiffs, a prerequisite to defendant's liability under the policy was the existence of an employee-employer relationship between one plaintiff and the injured party; and, since binding and final factual determination in earlier negligence action had established that no such relationship existed, plaintiffs would not be entitled to indemnity even if the policy had been issued; thus, jury verdict for plaintiffs could not stand and entry of judgment notwithstanding the verdict is affirmed.
Appeal from the District Court of the City and County of Denver, Honorable Neil Horan, Judge.
Berge, Martin and Clark, Bruce D. Pringle, for plaintiffs-appellants.
Duke W. Dunbar, Attorney General, John P. Moore, Deputy, Peter L. Dye, Assistant, Alious Rockett, William J. Baum, R. S. Ferguson, for defendant-appellee.
This suit was instituted by Continental Sales Corporation and Western Plywood and Lumber, Inc., against the Travelers Indemnity Company and the Industrial Commission of Colorado for indemnity under the terms of certain contracts of insurance allegedly issued by defendants to plaintiffs. The complaint was dismissed as to Travelers Indemnity Company at the close of plaintiffs' evidence. Trial was to a jury which found in favor of plaintiffs. The trial court then granted defendant's motion for a judgment notwithstanding the verdict on the ground that all matters litigated in the instant case had been determined in an earlier case, which case was affirmed by the Supreme Court. Continental Sales Corp. v. Stookesberry, 170 Colo. 16, 495 P.2d 566. Two appeals initiated by plaintiffs have been consolidated. We affirm the judgment of the trial court.
The factual background of this action is as follows: After suffering an industrial accident, one Dennison Stookesberry filed a claim for workmen's compensation as an employee of Western Plywood and Lumber, Inc., and Western's insurer, the State Compensation Fund, paid him $2,439.60 in disability benefits and medical benefits.
Stookesberry and the Industrial Commission of Colorado brought the original action ( Continental Sales Corp. v. Stookesberry, supra) against Continental Sales Corporation, alleging that Stookesberry's injury was sustained as a result of Continental's negligence. Trial was to a jury which returned verdicts in the original action in favor of Stookesberry for $5,000 and in favor of the Industrial Commission for $2,439.60. Continental Sales then filed a motion for new trial on the ground that it had workmen's compensation coverage with the state fund and thus could not be held liable in a common law negligence action. The trial court in that trial denied the motion on two alternative grounds:
1. No policy of workmen's compensation insurance had been issued by the state fund covering Continental Sales Corporation at the time of the accident; and
2. As a matter of law, even if Continental Sales Corporation had workmen's compensation insurance, this would not prevent Stookesberry, a loaned employee, from maintaining an action for negligence against Continental Sales Corporation.
Continental Sales Corporation appealed, and the Supreme Court affirmed the judgment of the trial court upon the second ground above. Continental Sales Corp. v. Stookesberry, supra.
In the present suit, Continental Sales Corporation alleges that it had insurance coverage with the state fund and seeks indemnification under the policy. The Industrial Commission, as a defense, contends that the issue of whether Continental Sales was insured by the state fund has already been litigated in the prior trial and is res judicata, and that, even if the issue were not res judicata, the state fund did not insure Continental Sales Corporation at the time of the accident.
As previously indicated, the trial court granted the Industrial Commission's motion for a judgment notwithstanding the verdict on the ground that all the issues in the present case had already been litigated in the previous action.
Plaintiffs contend that the determination by the trial court in the first suit that Continental Sales Corporation was not insured by the state fund at the time of the accident does not preclude plaintiffs from presenting evidence and proving the existence of an insurance contract in the present suit. We do not find this question dispositive of this appeal.
[1] Plaintiffs concede that all other factual determinations in the first case are final and binding. Among the factual issues so determined in the prior case was that Stookesberry was an employee of Western and a loaned employee as to Continental Sales Corporation and that the loaning did not constitute a new contract of hire between Stookesberry and Continental. This determination is fatal to Continental's claim in the present case. C.R.S. 1963, 81-13-1, provides that the loaning employer shall be liable for workmen's compensation "unless it shall from the evidence in said case that said loaning constitutes a new contract of hire, express or implied, between the employee whose services were loaned and the person to whom he was loaned." As stated in Continental Sales Corp. v. Stookesberry, supra:
"The foregoing statutory provisions make it clear that as applied to a situation wherein an employee is loaned to another by his covered employer, he does not become a covered employee of the other, nor does the other become a covered employer unless a new contract of hire is made between the employee and the borrowing employer." (Emphasis added.)
Under both coverages of the insurance policy allegedly issued to plaintiff, Continental Sales Corporation, a prerequisite of defendant's liability is an existing employee-employer relationship between the injured person and Continental Sales. As no such relationship existed, plaintiffs would not be entitled to indemnity even if the policy had been issued.
In light of our ruling on the merits, it becomes unnecessary to consider the procedural errors alleged by plaintiffs.
Judgment affirmed.
JUDGE DWYER and JUDGE SMITH concur.