Ætna Life Ins. Co. v. El Paso Electric Ry. Co.

• Decision Date: 10 March 1916
• Docket Number: (No. 526.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 184 S.W. 628
• Parties: ÆTNA LIFE INS. CO. v. EL PASO ELECTRIC RY. CO.
• Court: Texas Court of Appeals

184 S.W. 628

ÆTNA LIFE INS. CO. v. EL PASO ELECTRIC RY. CO.

(No. 526.)^*

Court of Civil Appeals of Texas. El Paso.

March 10, 1916.

Rehearing Denied March 30, 1916.

Appeal from District Court, El Paso County; P. R. Price, Judge.

Action by the El Paso Electric Railway Company against the Ætna Life Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Beall & Kemp and C. W. Croom, all of El Paso, for appellant. Baker, Botts, Parker & Garwood, of Houston, and Davis & Goggin, of El Paso, for appellee.

HIGGINS, J.

Appellant issued an "employer's liability policy" of insurance, whereby, with certain exceptions not necessary here to mention, it agreed —

"to indemnify the assured described in the warranties hereof, within the amounts so expressed herein, against loss and/or expense arising or resulting from claims upon the assured for damages on account of bodily injuries and/or death accidentally suffered, or alleged to have been suffered, by an employé or employés of the assured as provided in said warranties, by reason of the business as described and conducted at the location named therein, whether said injuries and/or death are accidentally suffered, or alleged to have been suffered, at the locations named or elsewhere."

Warranties 1 and 4 read:

"1. Name of assured: Stone & Webster Engineering Corp. or El Paso Electric Railway Co."

"4. Classified description of the business: All operations incidental to the following business, in and during the continuance hereof. Track and overhead construction work including the operation of work cars."

The policy also contains these provisions:

"It is hereby understood and agreed that from noon, October 5, 1909, this policy, subject to its terms, conditions and agreements, covers the interests of the Stone & Webster Engineering Corporation and or El Paso Electric Railway Company and Petrolithic and Construction Company and El Paso & Juarez Traction Company.

"Upon the occurrence of an accident covered by this policy the assured shall give immediate written notice thereof, with the fullest information obtainable at the time, to the company or its duly authorized agent. If a claim is made on account of such accident the assured shall give like notice thereof in full particulars. The assured shall at all times render to the company all co-operation and assistance in his power.

"If suit is brought against the assured to enforce a claim for damages covered by this policy, he shall immediately forward to the company every summons or other process as soon as the same shall have been served on him, and the company will, at its own cost, defend such suit in the name and on behalf of the assured.

"The assured, whenever requested by the company, shall aid in effecting settlements, securing information and evidence, the attendance of witnesses and in prosecuting appeals, but the assured shall not voluntarily assume any liability or interfere in any negotiation for settlement, or in any legal proceeding, or incur any expense, or settle any claim, except at his own cost, without the written consent of the company previously given, except that the assured may provide at the company's expense such immediate surgical relief as is imperative at the time of the accident.

"N. The company's liability for loss on account of an accident resulting in bodily injuries to or in the death of one person is limited to ten thousand ($10,000.00) dollars, and, subject to the same limit for each person, the company's total liability for loss on account of any one accident resulting in bodily injuries to or in the death of more than one person is limited to twenty thousand ($20,000.00) dollars. The company, will, however, as provided in conditions `D' and `E' hereof, pay the expense of litigation in addition to the sum herein limited, provided that if the company shall elect to pay the assured the sum as herein limited, it shall not be liable for further expense of litigation after such payment shall have been made.

"D. No action shall lie against the company to recover for any loss and/or expense under this policy unless it shall be brought by the assured for loss and/or expense actually sustained and paid in money by him after actual trial of the issue, nor unless such action is brought within two years after payment of such loss and/or expense."

During the life of the policy, one Shaklee and a fellow workman named Judia, while engaged in overhead construction work upon appellees' electric railway line in the city of El Paso, sustained severe bodily injuries. Shaklee filed suit against appellee to recover damages resulting from such injuries. A judgment in his favor was rendered on September 26, 1910, in sum of $12,500, which, upon appeal, was affirmed. On November 6, 1911, appellee paid the sum of $13,345 in settlement of the principal and interest due on such judgment, and the further sum of $72.35 costs of court. Appellant, having failed to indemnify appellee for any loss and expense incurred incident to the injuries sustained by Shaklee, filed this suit to recover upon aforementioned policy of insurance.

Under the view which we have of this case, it becomes unnecessary to discuss in detail appellant's assignments, and for the same reason it is unnecessary to in detail state the issues raised by the pleadings and findings of the jury upon the special issues submitted to them. The facts, only, will be stated pertinent to what is considered to be the controlling issue in the case.

The evidence shows that, upon the happening of the accident, written notice was immediately given the insurance company of the accident, with all the information obtainable at the time, and, upon the filing of the suit by Shaklee, the street railway company gave notice of that fact with full particulars, sending the citation to the representatives of the insurance company as soon as the same was served, and demanded of the insurance company that it perform its obligations under the policy, and defend at its own cost, the suit which had been instituted against the assured. Some time after the receipt of these notices, the insurance company denied its liability, claiming the policy did not cover accidents of this character, because the accident was not one incident to or arising out of "overhead construction and reconstruction work," but arose from a distinct and independent cause, that is, from the negligence of the street car company's motorman, operating a street car, which accident was not contemplated or covered by the policy, not being in any way due to the work being carried on. In reply to this contention, the street car company insisted the policy did in fact cover the accident, and that the insurance company should comply with its terms. The insurance company thereafter sent its representative from Dallas to El Paso, who, on reaching El Paso, made investigation, consulted with the attorneys for the insurance company, and also with the officials of the street railway company, and the Stone & Webster Engineering Corporation, and, while at El Paso, compromised and settled with Judia his claim growing out of the same accident. Thereafter, the papers in the Shaklee case were placed in the hands of the attorneys for the insurance company, who took charge of the case, carried on negotiations with Shaklee and his attorneys, seeking a compromise and settlement for $6,000. This proposed settlement, however, was rejected by the home office of the insurance company, and later, some time in June or July, 1910, the insurance company took the position that the policy did not cover, and the papers were returned. The street car company, though still insisting that the policy covered and the insurance company was liable, had its attorneys take charge of and defend the Shaklee case.

It appears that the El Paso Electric Railway Company and Stone & Webster Engineering Corporation are separate corporate entities, but with close business relations. The former owns and operates an electric street railway line in El Paso. The latter is a repairing and construction company. The Stone & Webster Corporation did all, or nearly all, of the construction work for the railway company. Shaklee was a regular employé of the railway company, but at the time of the injury to him was on the pay roll of the construction company. His status at such time towards the two corporations is disclosed by the testimony which we now quote. Mr. Potter, the general manager of appellee, testified:

"I know how this overhead construction work is done, and how we pay our men. The men engaged in overhead construction work are paid by Stone & Webster Engineering Corporation. Whenever our employés work for the Stone & Webster Engineering Corporation, they are paid by them and it is charged up to us in the whole charge, charged up plus a percentage for doing the work. They pay the men, then we repay them for the work done. We pay them the whole charge plus a percentage, which includes the wages of the men. That was the method of doing business at the time Shaklee was injured, and is still. * * * Shaklee was working for the Stone & Webster Engineering Corporation at that time. He was sent out by the Stone & Webster Corporation to do certain repair work on the El Paso Electric Railway Company's trolley, and he was mounted up there on a wagon doing repair work when a passenger car of the El Paso Electric Railway Company struck the wagon. * * * We would pay the Stone & Webster Engineering Corporation for doing any work the cost of the job plus a certain percentage as profit. * * * So far as the work that Shaklee and Judia were doing at that time, they were serving Stone & Webster people and were being paid by them. They were working for the Stone & Webster Engineering Corporation at the time of the accident and on its pay roll. At that time Mr. Shaklee was not drawing double pay from the Stone & Webster Engineering Corporation and the El...