Aetna Ins. Co. v. Pete Wilson Roofing & Heating Co., Inc.

• Decision Date: 30 November 1972
• Parties: AETNA INSURANCE COMPANY v. PETE WILSON ROOFING & HEATING CO., INC. SC 62.
• Court: Alabama Supreme Court

Page 232

272 So.2d 232

289 Ala. 719

AETNA INSURANCE COMPANY v. PETE WILSON ROOFING & HEATING CO., INC.

SC 62.

Supreme Court of Alabama.

Nov. 30, 1972.

Rehearing Denied Feb. 8, 1973.

London, Yancey, Clark & Allen and Thomas R. Elliott, Jr., Birmingham, for appellant.

Whitmire, Morton & Coleman, Birmingham, for appellee Pete Wilson Roofing & Heating Co., Inc.

Huie, Fernambucq & Stewart, Birmingham, for appellee Glens Falls Insurance Co.

SOMERVILLE, Justice.

This is an appeal from a final decree rendered in a declaratory judgment action in the Circuit Court of Jefferson County, in Equity. The decree declared the appellant, Aetna Insurance Company (Aetna), liable under a contractual liability policy of insurance issued to the appellee, Pete Wilson Roofing & Heating Company (Pete Wilson).

In June, 1967, Pete Wilson as subcontractor entered into a written contract with Dunn Construction Company (Dunn) to furnish materials and labor and complete the roofing and sheet metal work on an office building at Pine Hill, Alabama. The specifications incorporated into the contract provided that all roofing, including application, was unconditionally guaranteed by Pete Wilson for a period of two years from the date of completion and acceptance. The roof was completed and accepted on December 14, 1967.

On January 1, 1967, Pete Wilson had obtained a standard form contractual liability policy of insurance from the Glens Falls Insurance Company (Glens Falls) which provided that the insurer would pay on behalf of Pete Wilson all sums which the insured by reason of contractual liability should become legally obligated to pay as damages and to defend any suit brought against the insured seeking such damages, subject to the specific exclusions enumerated in the policy. The Glens Falls policy was continued in force until January 1, 1969, when it expired and a similar policy was obtained from Aetna. This Aetna policy expired January 1, 1970 and a renewal policy, identical to the first Aetna policy for our purposes, was issued to Pete Wilson by Aetna covering the period from January 1, 1970 to January 1, 1971.

In June, 1969, while the first Aetna policy was in force, the owners of the office building complained to Dunn and Pete Wilson that the roof was leaking. Inspections were made and it was determined that the roof was defective but it was not determined which party was responsible for the defect. Eventually Dunn repaired or replaced the roof and on July 31, 1970, filed suit against Pete Wilson claiming damages and alleging that under the terms of their written contract Pete Wilson had unconditionally guaranteed the roof for a period of two years and that within said period the roof proved defective. Dunn's complaint further alleged that when called upon to remedy the defective roof, Pete Wilson failed and refused to do so and that Dunn was unjustly put to the expense of fixing the roof.

Upon being served with Dunn's complaint, Benton Baker, the president of Pete Wilson, notified representatives of Glens Falls and Aetna. Both insurance companies ultimately denied liability and refused to defend the suit (Aetna having investigated the claim under a reservation of rights). The actions of Glens Falls and Aetna caused the appellee Pete Wilson to file a bill for declaratory judgment seeking to determine which insurance company was liable under the facts presented. The trial court in its final decree, without any explanation and without stating its findings of fact, held that Glens Falls was not liable on its policy but that Aetna was liable and must defend the Dunn suit and pay any judgment returned against Pete Wilson as a result of said suit.

Appellant's Assignments of Error question both the findings and decree of the trial court. Each challenges the ruling of the court in finding coverage under the policy as alleged in the Bill of Complaint. The complaint filed by the appellee alleges that the claim stated in the lawsuit of Dunn is within the coverage of Aetna's policy or that, if not, Aetna waived any right it may have had to contest the lack of coverage by its action in taking over the defense of the case.

Appellant contends that the contractual coverage under Aetna's policies by definition does not include liability for an unconditional guarantee of the insured's product. Aetna's policy defines 'contractual liability' as follows:

'V. ADDITIONAL DEFINITIONS

'When used in reference to this insurance (including endorsements forming a part of the policy):

'contractual liability' means liability expressly assumed under a written contract or agreement; provided, however, that contractual liability shall not be construed as including Liability under a warranty of the fitness or quality of the named insured's products or a warranty that work performed by or on behalf of the named insured will be done in a workmanlike manner; * * *' (Emphasis supplied.)

We construe this definition as an effort to distinguish 'contractual liability' from 'product liability' and to make it clear that coverage under the policy is only for the former. Appellee insists that the roof installed by Pete Wilson was not Pete Wilson's product. We cannot agree. Our cases have stated that the word 'product' denotes the end result of one's labor. One product may be made from many other products...