Artukovich v. St. Paul-Mercury Indem. Co.
| Decision Date | 19 April 1957 |
| Docket Number | PAUL-MERCURY |
| Citation | 310 P.2d 461,150 Cal.App.2d 312 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Vido ARTUKOVICH and Artukovich Bros., Inc., Plaintiffs, v. ST.INDEMNITY COMPANY, Inc., a corporation, and Industrial Indemnity Company, a corporation, Defendants, ARTUKOVICH BROS,, Inc., Plaintiff, Respondent, v. ST.INDEMNITY COMPANY, Inc., a corporation, Defendant, Appellant. ARTUKOVICH BROS., Inc., Plaintiff, Appellant, v. INDUSTRIAL INDEMNITY COMPANY, a corporation, Defendant, Respondent. Civ. 21886. |
Spray, Gould & Bowers, Los Angeles, for appellant St. Paul-Mercury Indemnity Co., Inc.
Collins & McKenna and John F. McKenna, Jr., Los Angeles, for appellant and respondent Artukovich Bros., Inc.
Hunter & Liljestrom and Harold J. Hunter, Los Angeles, for respondent Industrial Indemnity Co.
The question to be decided is whether either or both of two casualty insurance policies cover a loss sustained by the insured, Artukovich Bros.
St. Paul-Mercury Indemnity Company, to be called St. Paul, issued its liability policy in which it agreed to pay on behalf of the insured all sums which insured ; except liability for bodily injury to 'any employee of the Insured * * * while engaged in the employment of the Insured, or to any obligation for which the Insured may be held liable under any workmen's compensation law.'
Industrial Indemnity Company, to be called Industrial, issued it standard 'Workmen's Compensation and Employers' Liability Policy' in which it agreed '[t]o pay promptly benefits as required by the Workmen's Compensation Laws of the State of California to any person entitled thereto' and '[t]o pay all sums which the Employer, as an Employer, shall become obligated to pay for damages * * * because of bodily injury, * * * sustained within California. * * *'
While these policies were in force and on March 19, 1951 Artukovich Bros. was engaged in a construction job in Kern County. Vido Artukovich, an employee, stockholder, and officer of Artukovich Bros., was job foreman. Vido was the superior of Orville Clark, also an employee of Artukovich Bros. On March 19, 1951 Clark was injured in an altercation with Vido.
On May 29, 1951 Clark brought an action in the Superior Court of the County of Los Angeles against Artukovich Bros. and Vido, titled Clark versus Artukovich and numbered 586886. The basis of the action was an alleged assault the battery committed March 19, 1951 by Vido on Clark. The cause of action against Artukovich Bros. was on the theory of respondeat superior. The complaint alleged that Clark was an invitee on the property on which the alleged assault took place and that Vido was the employee of Artukovich Bros., acting within the scope and course of his agency, authority, and employment at the time. St. Paul assumed and controlled the defense of that action.
On August 13, 1951 Clark instituted a proceeding before the Industrial Accident Commission against Artukovich Bros. for an award of compensation for injuries sustained in the altercation of March 19, 1951. Industrial defended the proceeding on behalf of Artukovich Bros. The commission found that on March 19, 1951 Clark was employed by Artukovich Bros. and that 'he did not sustain any injury or injuries arising out of and occurring in the course of said employment.' 1 The order of the commission became final.
Thereafter action 586886 came on for trial in the superior court before Judge Houser. As a second affirmative defense in that action the answer of Artukovich Bros., prepared by St. Paul's attorneys, alleged that Clark was in the employ of the defendants and acting in the course and scope of his employment at the time of the alleged assault; that the defendants were subject to the Workmen's Compensation Act, Labor Code, § 3201 et seq., as was Clark; that by the terms of the Workmen's Compensation Act Clark was barred from maintaining any action for damages by reason of the alleged assault and he was confined to proceedings under the Act. The attorneys for St. Paul moved for a separate trial of the issues raised by the second affirmative defense. The motion was granted. After the separate trial Judge Houser found that the order of the Industrial Accident Commission was res judicata on those issues; Clark was not barred from maintaining the action for damages; and the superior court had jurisdiction to try the issues made by the complaint and answer. Trial was then had of the other issues before a jury, resulting in a judgment in favor of Clark against Artukovich Bros. and Vido which became final. St. Paul and Industrial refused to pay the judgment. To avoid execution Artukovich Bros. paid it.
Plaintiffs Artukovich Bros., Inc., and Vido then brought this action against St. Paul and Industrial for a declaration of their rights under the policies. 2 The complaint alleged the foregoing facts, prayed that the rights of the parties under the policies be declared and that each insurer be ordered to pay the judgment in action 586886. St. Paul answered, pleading: it was not required to pay when injury was sustained by 'any employee of the Insured * * * while engaged in the employment of the Insured'; it assumed the defense of action 586886 under a reservation of rights in the event Clark was determined to be an employee; it thereafter came to the conclusion Clark was an employee and it tendered the defense to Industrial; Industrial failed to accept the defense and St. Paul continued with it, keeping its reservation of rights in effect. Industrial answered, pleading: the award of the Industrial Accident Commission is res judicata; the defense of action 586886 was not tendered to it; its policy did not insure against the judgment in that action. St. Paul filed a cross-complaint in which it alleged Clark was an employee of Artukovich Bros. and was working as such employee during the altercation; on June 22, 1951 it tendered the defense of action 586886 to Industrial; it paid the expense of defending that action; Artukovich Bros. had refused to reimburse it. The prayer was for judgment against Artukovich Bros. for such expense.
This action was tried before Judge Herndon who found the facts as we have stated them and that on June 15, 1951 St. Paul delivered a letter to Artukovich Bros. stating, 'We are pleased to be able to defend you and we expect that you will shortly receive a communication from our attorneys requesting your signature to an answer or possible [sic] some other pleading' and that ; at the time the letter was dispatched St. Paul had established by its preliminary investigation that Clark was an employee of Artukovich Bros. on March 19, 1951; at no time did St. Paul make any reservation of its rights under its policy other, or broader in scope, than the reservations contained in the letter to Artukovich Bros.; the application to the Industrial Accident Commission and action 586886 referred to one and the same altercation.
Judge Herndon concluded: 1. The finding of the Industrial Accident Commission that Clark did not sustain any injury arising out of and occurring in the course of his employment is binding on Artukovich Bros. and on its privies, who include St. Paul and Industrial. 2. The findings and judgment in action 586886 that Clark did not sustain and injury arising out of and occurring in the course of his employment are binding on Artukovich Bros. and on St. Paul as its privy and indemnitor. 3. The acts and conduct of St. Paul in controlling the defense as action 586886 and procuring a finding that Clark sustained no injury arising out of and occurring in the course of his employment estop it from attacking said finding and from urging a different finding or set of facts in the case at bar. 4. By restricting its notice of reservation of rights under its policy to the ground of a contested exclusion applicable by reason of Clark's employment, and by failing to allege any other policy defenses, St. Paul waived and is estopped not from claiming any other different or additional defenses to this action. 5. St. Paul's policy is a general liability policy and includes coverage for all liabilities of the insured except those specifically excepted. The language of the exclusion of coverage for employees 'while engaged in the employment of the insured' excludes coverage in a case where a claimed injury arises out of and occurs in the course of an injured employee's employment, and does not exclude coverage in a case where the injuries do not arise out of and occur in the course of the injured person's employment and in which liability is imposed solely on the theory of respondent superior. 6. Industrial's policy obligates it to pay sums which Artukovich Bros. becomes obligated to pay for injuries which arise out of and occur in the course of an injured employee's employment, and does not include coverage for injuries which do not so arise and in which liability is imposed on the insurer solely on the theory or respondeat superior. 7. Liability in action 586886 was imposed on Artukovich Bros. solely on the theory of respondeat superior. Clark's injuries did not arise out of and occur in the course of his employment, nor was he at the time the injuries were sustained engaged in the employment of Artukovich Bros within the meaning of any exclusion contained in St. Paul's...
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