Travelers' Ins. Co. v. Great Lakes Engineering Works Co.

• Decision Date: 03 January 1911
• Docket Number: 2,065.
• Citation: 184 F. 426
• Court: U.S. Court of Appeals — Sixth Circuit
• Parties: TRAVELERS' INS. CO. v. GREAT LAKES ENGINEERING WORKS CO.

184 F. 426

TRAVELERS' INS. CO. v. GREAT LAKES ENGINEERING WORKS CO.

No. 2,065.

United States Court of Appeals, Sixth Circuit.

January 3, 1911

Robertson & Buchwalter (C. D. Robertson, of counsel), for plaintiff in error.

Louis J. Dolle and James B. O'Donnell, for defendant in error.

Before WARRINGTON and KNAPPEN, Circuit Judges, and DENISON, District judge.

KNAPPEN Circuit Judge.

The writ of error in this case is brought to review the judgment of the Circuit Court sustaining a demurrer to plaintiff's petition and dismissing the same. The petition alleges, in substance, that through the negligence of the defendant engineering company with respect to the construction and installation of a refrigerating machine and steam engine which it was engaged in manufacturing, furnishing, and installing in the place of business of the Herancourt Brewing Company, and while the engine was being operated by the permission and direction of the engineering company, the cylinder head of the engine blew out, 'causing the almost instant death of Joseph Leinhart, an oiler in the employ of the Herancourt Brewing Company, and wounding and seriously injuring Edward Wund another employe of said brewing company, while said employes were in the discharge of their duty,' and without negligence or fault on their part; that the brewing company 'had no knowledge of, and in the exercise of ordinary care had no means of knowledge of, the said defects negligent construction, and assembling of said engine, or of the careless and negligent manner in which it was installed'; that by reason of said injuries, due to the negligence or fault of the engineering company, the brewing company became liable to the injured parties and their legal representatives by way of damages as compensation for such injuries; that the brewing company was at the time indemnified, under plaintiff's policy of employer's liability insurance, 'against loss by reason of liability imposed by law upon it for damages on account of bodily injuries, including death resulting therefrom, accidentally suffered by reason of the operation of its business, by any person employed by it at its place of business,' the policy containing a provision that plaintiff 'shall be subrogated in case of payment of loss under this policy to the extent of such payment to all rights of recovery for such loss by the assured, against persons, corporations or estates'; that plaintiff, in compliance with its insurance contract, 'as it was in duty bound,' 'was required, and did at great expense, appear for, defend, and settle the suit of Margaret Leinhart, administratrix,' against the brewing company on account of damages for such alleged wrongful death, 'having to pay in satisfaction thereof the sum of $2,750 and court costs in the sum of $15; and having to pay in satisfaction of the claim of Edward Wund, a minor, the sum of $75 and court costs, in the sum of $15.' The petition prayed judgment for these amounts, as well as for attorney's fees 'in the litigation and settlement of said claims,' and for the time and services of plaintiff's officers and employes 'in connection with and given to the said litigation and adjustment of said claims.'

The ground of demurrer to the petition generally, as well as specially to so much of it as seeks recovery on account of the Leinhart claim was that it failed to state facts sufficient to constitute a cause of action; it being also assigned that the cause of action is below the jurisdictional amount, this objection being directed to the fact that the claimed recovery aside from the Leinhart claim did not amount to $2,000. The court below held that the brewing company could have no right of action against the engineering company for damages which it had to pay growing out of the wrongful death of Leinhart, for the reason that only the administratrix of the deceased could have recovered against either or both wrongdoers, and, as the insurance company could recover against the engineering company only in the right of the brewing company, the action could not be sustained.

It is over the correctness of this ruling that the important question arises.

Before proceeding, however, to its discussion, reference must be made to certain objections urged against the sufficiency of the petition in other respects, but not passed upon by the court below. It must be admitted that if the petition were to be tested by the rules applicable to common-law pleadings, which require that they be construed most strongly against the pleader, it would be subject to some, at least, of the criticisms made against it. The Ohio statute, however (Rev. St. 1908, Sec. 5096), provides that:

'The allegations of a pleading shall be liberally construed, with a view to substantial justice between the parties.'

And under this statute it has been held that the rule of the common law above referred to has been abrogated (Hall v. Plaine, 14 Ohio St. 417, 422; Crooks v. Finney, 39 Ohio St. 57, 58); and that pleadings under the present system must be fairly and reasonably, not strictly, construed (McCurdy v. Baughman, 43 Ohio St. 78, 1 N.E. 93). By section 5088 provision is made for requiring pleadings to be made more definite and certain by amendment, and it has been held that defects f allegation which do not amount to such an absolute omission of fact as to constitute no ground of action or defense must be taken advantage of or objected to by motion. Trustees, etc., v. Odlin, 8 Ohio St. 293, 296. We think that under this liberal rule the petition may, for the purposes of demurrer, fairly be construed as intended to charge that the accident occurred through the negligence of the engineering company; that as between it and the brewing company the latter was not negligent; that the brewing company, however, became legally liable through its relations with the engineering company, which are not definitely alleged to be those of an independent contractor; that the injuries in question were accidentally suffered by reason of the operation (within the meaning of the indemnity contract) of the brewing company's business by persons employed by it thereat; that the brewing company, as between it and the injured employes or their representatives, was bound to make the payments here sued for, the plaintiff, as between it and the brewing company, being liable thereto.

It is to be remarked, in passing, that the question whether the relation of the engineering company toward the brewing company was or was not in fact that of independent contractor is, of course, open for determination upon the evidence as it shall appear upon the trial.

We are thus brought to the question whether the insurer, by reason of a contract of indemnity against employer's liability, such as exists here, can maintain an action against a third party whose negligence has caused liability to the insured employer for injuries resulting in the death of its employe.

The rule is well settled, in fire insurance as well as in marine insurance, that the insurer, upon paying to the assured the amount of a loss on the property insured, is subrogated in a corresponding amount to the assured's right of action against any other person responsible for the loss; this right of the insurer against such other person not resting upon any relation of contract or of privity between them, but arising out of the nature of the contract of insurance as a contract of indemnity derived from the assured alone, and enforceable in his right only. Hall v. Railroad Cos., 13 Wall. 367, 20 L.Ed. 594; Mobile & M. Ry. Co. v. Jurey, 11 U.S. 584, 4 Sup.Ct. 566, 28 L.Ed. 527; Phoenix Ins. Co. v. Erie Transp. Co., 117 U.S. 312, 320, 6 Sup.Ct. 1176, 29 L.Ed. 873; Liverpool, etc., Steam Co. v. Phoenix Ins. Co., 129 U.S. 397, 9 Sup.Ct. 469, 32 L.Ed. 788; St. Louis, etc., Ry. Co. v. Commercial Union Ins. Co., 139 U.S. 223, 235, 11 Sup.Ct. 554, 35 L.Ed. 154; Cooley's Briefs on the Law of Insurance, vol. 4, p. 3893; Newcomb v. Insurance Co., 22 Ohio St. 382, 387, 10 Am.Rep. 746. In United States Casualty Co. v. Bagley, 129 Mich. 70, 87 N.W. 1044, 55 L.R.A. 616, 95 Am.St.Rep. 424, the plaintiff, which had paid a damage resulting to the tenant by an accidental discharge or leakage of water from an automatic fire extinguishing apparatus, was permitted to recover against the landlord, as the one liable to the tenant therefor.

But it is insisted by defendant that the brewing company could have no right of action against the engineering company for causing the death of Leinhart, for the reason that there is no...