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Gene Autry Productions, Inc. v. Industrial Commission

Supreme Court of Arizona

June 24, 1948

GENE AUTRY PRODUCTIONS, Inc.
v.
INDUSTRIAL COMMISSION et al

Original mandamus proceeding by Gene Autry Productions, a California corporation, petitioner, against the Industrial Commission of Arizona, a public body, and its chairman and members, to compel respondents to issue the usual and regular policy of insurance to petitioner.

Alternative writ of mandamus quashed.

Frank W. Beer and Hess Seaman, both of Phoenix, for petitioner.

H. S. McCluskey, of Phoenix (Robert E. Yount, of Phoenix, of counsel), for respondents.

Stanford, Chief Justice. LaPrade and Udall, JJ., concurring.

OPINION

Stanford, Chief Justice.

Page 144

[67 Ariz. 291] Upon the petition of Gene Autry Productions, a California corporation, this court accepted original jurisdiction and issued an alternative writ of mandamus commanding the Industrial Commission of Arizona, respondents herein, to issue the usual and regular policy of insurance to petitioner in accordance with an application made by it to said Commission, or to appear and show cause why it should not do so. If a peremptory writ of mandamus be denied, then both petitioner and respondent join in asking for a declaratory judgment determining a controversy that exists between the Commission, petitioner, and the moving picture industry as a class, as to whether a policy of insurance containing certain limited conditions of coverage set forth in an order of the Commission may be lawfully and validly issued by it and whether such policy, so issued and so conditioned, would cover the entire liability of petitioner, and the moving picture industry as a class, to its employees working in the regular course of their employment within the State of Arizona.

The Commission, in response to the writ, submitted a voluminous record showing the method and manner in which insurance in the motion picture industry had previously been carried in the State Compensation [67 Ariz. 292] Fund. The record indicates there had been gross evasion of the law by this industry; the assumption of liabilities for the payment of workmen's compensation by the Industrial Commission for nominal premiums, and at a loss to the State Compensation Fund during the years 1942 to 1947 inclusive in excess of $ 47,000; that the Commission had written this insurance at an actual rate of $ 2.76 per $ 100, whereas the premium rate on the basis of payroll reported and the pure loss rate should have been in excess of $ 10 per $ 100 of payroll; that the employing corporations had not complied with the incorporating statutes of the state to subject them to due process in the courts of Arizona. The findings are fully supported by the evidence.

Although the pleadings in the case are attendant with many propositions of law setting forth the contentions of the litigants, one of the questions for us to determine is whether it is mandatory that the Commission issue a policy of insurance without reservations to the petitioner for the purpose of its needs, the losses, irrespective of their amount, to be paid from the State Compensation Fund.

Section 56-904, A.C.A. 1939, reads in part:

"* * * The commission may adopt rules of procedure, rules for the fixing of rates, for the presenting of claims, and such other rules and regulations as are necessary for its business, and change the same from time to time. * * *"

Section 56-920, A.C.A. 1939, is:

"State compensation fund. -- There is hereby created a fund, to be known as The State Compensation Fund, for the purpose of insuring employers against liability for compensation, and of assuring to the persons entitled thereto the compensation herein provided. Such fund shall consist of all premiums and penalties received and paid into the fund, or property and securities acquired by and through the use of money belonging to the fund, and of interest earned upon money belonging to the

Page 145

fund. Such fund shall be administered by the commission without liability of the state beyond the payment of losses sustained on account of such fund, and shall be applied to insurance to the payment of compensation and of expenses as herein provided. The commission shall have full authority over the fund, and may do all things necessary or convenient in the administration thereof, or in connection with the compensation business to be carried on by it hereunder, and shall adopt rules and regulations for the collection, maintenance and disbursement of the fund."

Also Section 56-921, A.C.A.1939, reads:

"Contracts of insurance to employers -- Reinsurance. -- The commission may, in its name, make contracts of insurance to include and cover the [ILLEGIBLE WORD] underlying liability of employers insured in the state [67 Ariz. 293] compensation fund so that such employers may be fully protected, not only for all compensation claims, but for all liability claims whatsoever by employees or their dependents or heirs, including the cost of defense of an action. The commission may also ...


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