Allen v. Gilman, McNeil & Co.

• Decision Date: 26 April 1905
• Docket Number: 65.
• Citation: 137 F. 136
• Parties: ALLEN v. GILMAN, McNEIL & CO. (AETNA LIFE INS. CO., Garnishee).
• Court: U.S. District Court — Eastern District of Pennsylvania

137 F. 136

ALLEN v. GILMAN, McNEIL & CO. (AETNA LIFE INS. CO., Garnishee).

No. 65.

United States Circuit Court, E.D. Pennsylvania.

April 26, 1905

Francis Fisher Kane, for plaintiff.

R. W Archbald, Jr., and Simpson & Brown, for garnishee.

J. B McPHERSON, District Judge.

The facts upon which this controversy arises have been agreed upon by the parties in the following case stated:

'On the 13th day of December, 1902, the AEtna Life Insurance Co. entered into a certain contract or policy of insurance with the defendant, Gilman, McNeil & Co. (a true copy of which, marked 'Exhibit A,' is hereto attached). The said Gilman, McNeil & Co. is a corporation duly organized under the laws of the state of West Virginia.

'On May 5, 1903, the circuit court of Kanawha county, in the state of West Virginia, having jurisdiction in the premises, in a suit in equity brought by George C. McNeil against the said Gilman, McNeil & Co. and others, appointed Walter F. Trotter receiver of all the property of the said Gilman, McNeil Company, Incorporated, and security was on the same date duly entered by the said receiver, as ordered by the court, he entering upon his duties as such. A true copy of the decree of the court, marked 'Exhibit B,' is attached hereto and made part thereof. The said decree has been in all respects duly complied with.

'On May 8, 1903, court of common pleas No. 4, Philadelphia county, having jurisdiction in the premises, in a suit in equity brought by George S. McNeil against Gilman, McNeil Co. et al., of March Term, 1903, No. 3,827, appointed Walter F. Trotter ancillary receiver of all assets of the said Gilman, McNeil Co., and security was on June 5, 1903, duly entered by the said receiver as ordered by the court, and he entered upon his duties as such. A true copy of the decree of the court, marked 'Exhibit C,' is attached hereto and made part hereof.

'On the 25th day of June, 1903, suit was brought by Charles Allen v. Gilman, McNeil & Co. as of April term, 1903, No. 65, United States Circuit Court, for damages on account of bodily injuries accidentally suffered by him on February 27, 1903, within the period of the policy marked 'Exhibit A,' while an employe' of the assured, and while on duty at one of the places and in one of the occupations mentioned in the aforesaid policy of insurance marked 'Exhibit A,' and in and during the continuance of the work described in the policy. The above-described accident was such as were included in the terms of said policy of insurance, and said Gilman, McNeil & Co., Incorporated, has fully complied with all the conditions of the said policy of insurance and has completely fulfilled all the covenants therein contained. On the 26th day of January, 1904, judgment was entered in the above suit last above mentioned in favor of the plaintiff, Charles Allen, against the defendant, the said Gilman, McNeil & Co., in the sum of $5,000. No part of the said judgment has been paid.

'On the 6th day of February, 1904, an attachment execution was issued by the plaintiff in the case last mentioned directed against Gilman, McNeil & Co., defendant, and the AEtna Life Insurance Co., garnishee, return whereof was made nihil habet as to the defendant and served as to the garnishee. On the 20th day of February, 1904, the plaintiff filed interrogatories and rule to answer directed to the said AEtna Life Insurance Co., garnishee, and on the 14th day of March, 1904, said AEtna Life Insurance Co. filed answers thereto, admitting the facts.

'The following question is submitted for the determination of your honorable court: Whether the said AEtna Life Insurance Co. is or is not indebted to Gilman, McNeil & Co. under the aforesaid policy of insurance marked 'Exhibit A,' by reason of the entry of the aforesaid judgment against Gilman, McNeil & Co. in favor of the said Charles Allen in such manner as that the said indebtedness should be attachable by virtue of the above-recited attachment execution. If the court shall be of the opinion that the AEtna Life Insurance Co. is indebted to Gilman, McNeil & Co. in the manner aforesaid under the aforesaid policy and by reason of the judgment entered against Gilman, McNeil & Co. in favor of the said Charles Allen, then the court is requested to enter judgment in favor of the said plaintiff, Charles Allen, in the sum of $5,000. If the court shall be of the opinion that the AEtna Life Insurance Co. is not indebted to Gilman, McNeil & Co. in the manner aforesaid under the aforesaid policy of insurance by reason of the entry of judgment against Gilman, McNeil & Co. in favor of the said Charles Allen, then the court is respectfully requested to enter judgment in favor of the AEtna Life Insurance Co., garnishee.

'Each party reserves the right to appeal.'

The policy of insurance need not be quoted in full. The relevant parts of that instrument are these: The insurance company agrees thereby--

'To indemnify Gilman & McNeil, of Chicago, county of Cook, state of Illinois, hereinafter called 'the assured,' for the period of twelve months, beginning on the 13th day of December, 1903, at noon, standard time, at the place where this policy has been countersigned, subject to the following special and general agreements which are to be construed as co-ordinate, as conditions:

'Against loss from common law or statutory liability for damages on account of bodily injuries, fatal or non-fatal, accidentally suffered within the period of this policy by any employee or employees of the assured while on duty at the places and in the occupations mentioned in the schedule hereinafter given, in and during the continuance of the work described in the said schedule.'

The special agreements contain nothing now of importance, but paragraphs 1, 2, 3, and 7 of the general agreements are relied upon by both parties as decisive of one branch of the dispute, and require, therefore, to be carefully considered. They are as follows:

'1. The assured upon the occurrence of an accident shall give immediate written notice thereof, with the fullest information obtainable at the time, to the home office of the company at Hartford, Conn., or to its duly authorized local agent. He shall give like notice with full particulars of any claim that may be made on account of such accident, and shall at all times render to the company all co-operation and assistance in his power.

'2. If thereafter any suit is brought against the assured to enforce a claim for damages on account of an accident covered by this policy the assured 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 against such proceedings in the name and on behalf of the assured, or settle the same, unless it shall elect to pay to the assured the indemnity provided for in clause A of special agreements as limited therein.

'3. The assured shall not settle any claim except at his or its own cost, nor incur any expense, nor interfere in any negotiation for settlement or in any legal proceedings, without the consent of the company, previously given in writing; but he may provide at the time of the accident such immediate surgical relief as is imperative. The assured when requested by the company shall aid in securing information, evidence, and the attendance of witnesses and in effecting settlements and in prosecuting appeals.

'7. No action shall lie against the company as respects any loss under this policy unless it shall be brought by the assured himself to reimburse him for loss actually sustained and paid by him in satisfaction of a judgment within sixty days from the date of such judgment and after trial of the issue. No such action shall lie unless brought within the period within which a claimant might sue the assured for damages unless at the expiry of such period there is such an action pending against the assured, in which case an action may be brought against the company by the assured within sixty days after final judgment has been rendered and satisfied as above. The company does not prejudice by this clause any defences to such action which it may be entitled to make under this policy.'

It is first to be noted that the plaintiff, being an attaching creditor, stands precisely in the shoes of his debtor, and must recover, if at all, upon such right as the debtor may possess against the garnishee. If the insured, therefore, upon the true construction of the policy, has a right to recover from the insurance company the amount of the judgment for $5,000 that was entered against the insured by the plaintiff in January, 1904, the insurance company may be compelled to pay that sum directly to the plaintiff; while, upon the other hand, if the insured has no right of action against the insurance company because the plaintiff's judgment has not yet been paid, the present suit must fail. Or the question may be stated more concisely in another form: Is the policy an agreement to indemnify against liability or to indemnify against loss? If the indemnity is against liability, the insured corporation had a right of action not later than the date when its liability was determined by the entry of the plaintiff's judgment, and the plaintiff may recover against the insurance company; if the indemnity is against loss, the insured has no right of recovery upon the policy, since no loss has yet been sustained.

The construction of this class of contracts has engaged the attention of several state courts, and an examination of the principal decisions will be useful. One of the earliest cases is Anoka Lumber Co. v. Fidelity, etc., Co., 63 Minn 286, 65 N.W. 354, 30 L.R.A. 689, where the policy was construed to be an agreement...