American Cereal Co. v. London Guarantee & Acc. Co.

• Decision Date: 06 January 1914
• Docket Number: 2029.
• Parties: AMERICAN CEREAL CO. v. LONDON GUARANTEE & ACCIDENT CO.
• Court: U.S. Court of Appeals — Seventh Circuit

211 F. 96

AMERICAN CEREAL CO. v. LONDON GUARANTEE & ACCIDENT CO.

No. 2029.

United States Court of Appeals, Seventh Circuit.

January 6, 1914

Jones Addington, Ames & Seibold, of Chicago, Ill. (Keene H Addington and Walter Hamilton, both of Chicago, Ill., of counsel), for plaintiff in error.

Robert J. Folonie, of Chicago, Ill. (F. J. Canty, of Chicago, Ill of counsel), for defendant in error.

Before BAKER, SEAMAN, and KOHLSAAT, Circuit Judges.

BAKER Circuit Judge.

Plaintiff in error filed a declaration in three counts against defendant to recover on an indemnity contract. A demurrer to each count was sustained, plaintiff declined to plead further, and the judgment to which this writ of error is addressed was thereupon entered.

In the third count the contract is set out in haec verba. For the sum of $50 defendant agreed to indemnify plaintiff for one year 'against loss arising solely from its contingent liability as general contractor or owner from common law or any statute for damages on account of bodily injuries, fatal or nonfatal, accidentally suffered by any person or persons during the construction of the building described in the schedule hereinafter given, and resulting from the negligence of any contractor or subcontractor engaged in the construction of said building, subject to the following special and general agreements, which are to be construed as coordinate, as conditions.'

The schedule showed that plaintiff was the owner of the building.

Special agreement B reads:

'If the assured is the owner of the building mentioned in the schedule, it is agreed that all the work of constructing the same is to be done by contract at the risk of the contractor or subcontractors and that the assured has not and will not by contract or otherwise voluntarily assume any liability for loss on account of bodily injuries suffered by any person or persons by reason of the negligence of any contractor or subcontractor.'

General agreement 2 is as follows:

'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 head office of the company for the United States of America 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 the special agreements as limited therein.'

From the explicit terms of this contract it is clear that there could be no obligation on the part of defendant to indemnify plaintiff unless during the construction of the building by an independent contractor some one accidentally suffered bodily injury through the negligence of the contractor or a subcontractor, for which negligence plaintiff was nowise directly liable as doer or causer of the negligent act, but only 'contingently' liable as owner of the building. Compare London Guarantee Co. v. Cereal Co., 251 Ill. 123, 95 N.E. 1064, where this very form of indemnity contract was under consideration. See, also, Allen v. Gilman, McNeil & Co., 145 F. 881, 76 C.C.A. 265, 7 L.R.A. (N.S.) 958; Connolly v. Bolster, 187 Mass. 266, 72 N.E. 981; Frye v. Bath, Gas & Electric Co., 97 Me. 241, 54 A. 395, 59 L.R.A. 444, 94 Am.St.Rep. 500; Cushman v. Carbondale, 122 Iowa, 656, 98 N.W. 509; Carter v. Aetna Life Insurance Co., 76 Kan. 275, 91 P. 178, 11 L.R.A. (N.S.) 1155.

A 'contingent' liability is one that depends upon an uncertain event, as the liability of an indorser to respond for the default of the maker. 2 Words and Phrases, 1501; State ex rel. Breeden v. Sheets, 26 Utah, 105, 72 P. 334; Rosenbloom v. Travelers' Insurance Co., 38 Misc.Rep. 744, 78 N.Y.Supp. 1135. Plaintiff bargained to be saved from loss, not through its own negligence, but only through its contingent liability as owner of the building for negligent acts of the independent contractor or of those under him.

Plaintiff's only allegations tending to show a 'contingent liability' on its part were the following:

'That during the month of November, 1899, and within the period covered by said contract of indemnity, one W. L. Overhouser, a resident of said city of Cedar Rapids, did accidentally suffer bodily injuries during and by reason of the construction of said buildings mentioned and described in said contract of indemnity; that thereafter and during, to wit, the said month of November, 1899, said W. L. Overhouser died as the result of such injuries; that thereafter one Henry Overhouser, as administrator of the estate of said W. L. Overhouser, did institute a

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