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Hartford Accident & Indemnity Co. v. Major

APRIL 19, 1967.

HARTFORD ACCIDENT AND INDEMNITY COMPANY, PLAINTIFF-APPELLEE,

v.

HUGH MAJOR, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Madison County; the Hon. AUSTIN LEWIS, Judge, presiding. Affirmed in part, reversed in part, and remanded.

MORAN, P.J.

Defendant appeals from a judgment for the plaintiff in its suit against the defendant for unpaid insurance premiums and against the defendant on his counterclaim for the return of overpayments. The case was heard by the court without a jury.

The plaintiff, Hartford Accident and Indemnity Company, hereinafter referred to as Hartford, is engaged in the general insurance business. Its complaint alleged that it had issued four insurance policies to the defendant, Hugh Major, hereinafter referred to as Major, the sole proprietor of a trucking business: A workmen's compensation policy, which remained in effect for one year (WH 257042); a renewal workmen's compensation policy, which was cancelled by Hartford five months after its issuance (WH 105593); a general automobile liability policy, which was cancelled by Major (C 244534); and a general liability policy, which covered Major's business premises and which was also cancelled by Major (C 224755).

Concerning the two workmen's compensation policies, the evidence indicates that no claim for premiums was made until June, 1962, fifteen months after the first policy had been issued and three months after the renewal policy had been issued. At that time, Major received a premium statement, which was based upon an audit by Atwell, Vogel & Sterling, insurance auditors. Major immediately objected to the statement, contending that he was not liable for the premiums claimed under the workmen's compensation policies because these premiums were based on the earnings of drivers of leased equipment who were not, as a matter of law, his employees and therefore were not intended to be included within the coverage of the policies.

Major is licensed by the Interstate Commerce Commission to transport goods for hire in interstate commerce and is also licensed by the Illinois Commerce Commission. All of the tractors he used in his business were owned by other individuals or companies and were used by him under the terms of written lease agreements entered into between him and the respective owners. The trucks in each case were leased with the drivers. In some instances, the drivers operated their own equipment; in other instances, they operated equipment owned by the lessors. When they operated equipment owned by the lessors, they were paid by the lessors.

The evidence on behalf of Major disclosed that the drivers could make deliveries by any route they chose; that they could hire other persons to drive their trucks without any objection by Major; that they could trip lease to other carriers whenever Major could not arrange jobs for them; that the leased drivers were also required to pay for repairs, gasoline, oil, tires, equipment, and licenses; that they were paid by the job, not on a time basis; that they did not receive a payroll check from Major, but that the money "received from Major was on truck lease statements"; that they paid the collision insurance on their vehicles; and that Major did not withhold any income tax from the money which he paid to them.

Major argues that the foregoing evidence proves that the drivers in question were, as a matter of law, not his employees, but were independent contractors if they drove their own equipment, and employees of independent contractors if the equipment was owned by the lessors of Major.

Hartford contends that one or more of the following furnish an evidentiary basis for finding that the drivers in question were employees of Major:

The last sentence of paragraph 13 of the lease contract reads: "LESSEE reserves the right to cancel this agreement forthwith if equipment is not maintained and operated to the satisfaction of LESSEE."

Plaintiff's Exhibit No. 276 is a Truck Lease Statement issued by Major to which the following note was attached: "If your logs are not up to date within 3 days or have not been corrected, your paycheck will be held."

Plaintiff's Exhibit 271 is also a Truck Lease Statement issued by Major to which the following note was attached:

"On your logs you must show in Line 4, on duty not driving, all time spent loading and unloading, when you are required to remain with the vehicle. Your logs will be checked against ...


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