Arrowhead Highlands Mutual Service Co. v. Industrial Accident Commission

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:

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:

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.

We believe that the exclusion…