Battery Co. v. Accident Ins. Co.

• Decision Date: 04 May 1931
• Docket Number: No. 17055.,17055.
• Citation: 41 S.W.2d 599
• Parties: NATIONAL BATTERY CO. RESPONDENT, v. STANDARD ACCIDENT INS. CO., APPELLANT.
• Court: Missouri Court of Appeals

41 S.W.2d 599

NATIONAL BATTERY CO. RESPONDENT, v. STANDARD ACCIDENT INS. CO., APPELLANT.

No. 17055.

Kansas City Court of Appeals. Missouri.

May 4, 1931.

Appeal from the Circuit Court of Daviess County. — Hon. Ira D. Beals, Judge.

AFFIRMED.

Mosman, Rogers & Buzard for respondent.

Langworthy, Spencer & Terrell for appellant.

BOYER, C.

Action on employer's liability policy. Plaintiff filed two suits against defendant in each of which recovery was sought for the amount of money and expenses required to be paid by plaintiff in settlement of a damage suit against it by each of two employees. Plaintiff's suits were based upon the neglect and refusal of defendant to assume the defense of said suits, defend same, and pay the amount required under the terms of the policy.

The two suits were consolidated and tried as one action in which each petition was treated as a separate count of the consolidated case. The trial resulted in a verdict and judgment on the first count for $890.80 damages, $89.08, for vexations refusal to pay and $150 attorneys fees; and on the second count for $475 damages, $47.50, for vexations refusal to pay, and $150 attorneys' fees. The defendant duly appealed.

The petitions filed by plaintiff in the two suits are identical with the exception of the name of the employee who had sued plaintiff. The two employees were named Hymer and Green. The petition in each case among other matters alleges that plaintiff was engaged in the business of manufacturing and selling lead storage and other batteries; that it maintained and operated a manufacturing plant in Kansas City. Missouri at which place it had various employees; that on June 19, 1925, defendant issued to plaintiff its policy of insurance by the terms of which it agreed to indemnify the plaintiff against loss from liability imposed by law for damages on account of bodily injuries accidently sustained by any employee of the assured while at its factory and by reason of the business of the assured; that defendant agreed to defend on behalf of the assured any suit or suits which might be brought against assured on account of such injuries and to pay all costs. The policy was to be effective for a period of one year. A copy was attached to each petition.

In the petition designated as the first count of the consolidated case it is alleged that one Hymer was in the employ of the plaintiff from December 29, 1925, until February 11, 1926, engaged in the factory of said company, and while in the course of his employment and while the policy of insurance was in effect he suffered and sustained bodily injuries by accidently breathing and inhaling poisonous lead and lead substances on account of which said Hymer instituted suit against plaintiff for damages on October 29, 1927; that plaintiff immediately upon notice of said claim notified the insurance company and transmitted to it notice and summons, and thereafter defendant company undertook to and did appear in the defense of said case and did investigate said case and represented to plaintiff that it would defend said suit and would pay the liability therein; that after defendant, thru its attorneys, had appeared in said cause and after it had been pending for a long period, defendant disclaimed liability and refused to defend and to comply with the conditions of the policy in respect to defending said suits or indemnifying plaintiff for any loss; that after the refusal of defendant to defend and to assume legal liability plaintiff took up the defense of said action, and that after defendant had been notified many times that the case would be reached for trial and was about to be tried, plaintiff was compelled to and did pay Hymer the sum of $600, to settle and compromise his suit, which was the reasonable value of his claim and which defendant had admitted was a fair and reasonable sum to pay in compromise; that plaintiff was required to pay costs and expenses and attorneys' fees to the amount of $310.80; that the refusal of defendant to defend said action and to meet the liability was vexatious and without reasonable cause and plaintiff demanded the sum of $910.80, the amount expended by it, together with interest, penalty, and attorneys' fees.

Similar allegations were made in the other suit, designated in the consolidated case as the second count, and which was based upon the suit for damages filed against plaintiff by Green, which said suit is alleged to have been compromised by plaintiff for the sum of $200, and costs and expenses amounting to $275.05. Judgment was sought against defendant for $475.05, together with interest, penalty, and attorneys' fees. It was alleged that Green was employed during the months of November and December, 1925, and filed his suit October 29, 1927.

The answer to the consolidated case was a general denial, admitted the issuance of the policy as stated, but further alleged that "the said policy of insurance, among other things, contained the provision that the plaintiff should not voluntarily assume any liability, settle any claims, or incur any expense, except at its own cost, or interfere in any negotiation whether settlement or legal proceeding without the consent of the company previously given in writing." The answer further alleged that after the institution of suits by Hymer and Green that defendant did at the request of plaintiff agree to assume and take charge of the defense of said suits; that thereafter plaintiff, without lawful right or authority so to do, refused to permit defendant to take charge of said suits and ordered defendant to deliver all files and data in connection with said suit to the attorneys for plaintiff which it did; that defendant gave no written consent to plaintiff to assume liability or incur expenses or settle either of said suits, and that by reason thereof plaintiff breached said contract of insurance and released defendant from any and all liability. The reply was a general denial.

Evidence was offered by both parties, at the conclusion of which defendant offered a demurrer to the evidence and requested a directed verdict for defendant. These were denied. Appellant urges two points: (1) The demurrer should have been sustained, and (2) that plaintiff was not entitled to recover penalty and attorneys' fees.

The evidence consisting of admissions, express proof, and permissible inferences favorable to plaintiff shows the following state of facts: The policy of insurance was issued and was in effect as alleged, and while in force plaintiff's employees, Hymer and Green, accidentally sustained lead poisoning in the course of their employment during the latter part of 1925, or the early part of 1926. They were employed but a short period. The employer had no notice of their injuries or of any claim on their part for damages until suits were filed October 29, 1927, when plaintiff's manager received service of summons and petition in each case. The employees each sought recovery of $2999.

On October 31, 1927, plaintiff sent the petitions with summons attached to the adjuster of the insurance company at Kansas City, together with a letter informing the adjuster that this was the first notice that plaintiff had received of the claims and called upon the insurance company to defend the actions. Hearing nothing from the adjuster, plaintiff's manager on November 14, 1927, it being the return day of the suits, wrote the adjuster calling his attention to the cases; that it was the duty of the insurance company to defend, and that he assumed the insurance company had accepted the defense of the cases. The next morning the adjuster telephoned plaintiff's manager that the insurance company disclaimed liability in both cases. Whereupon, plaintiff employed attorneys on its own account to take proper action in the defense of the cases because immediate action was necessary to prevent default judgments. About December 10, 1927, plaintiff received a letter from the adjuster of defendant insurance company notifying plaintiff that the insurance company disclaimed any and all coverage or liability on account of the cases in question and stated that the disclaimer was made because the company had not received timely notice in accordance with the provisions of the policy, and further because the injuries complained of were not covered by the policy. On December 14, 1927, plaintiff acknowledged receipt of the written disclaimer and pointed out that notice had been given as soon as plaintiff was aware of the claims and that the company had construed its policy as covering lead poisoning; complained of the disadvantage to which plaintiff had been put by the delayed disclaimer, and insisted upon the duty of the insurance company to defend the cases and that plaintiff was looking to the insurance company for protection. Thereafter and about January 3, 1928, at the request of the adjuster, plaintiff furnished by letter certain information in reference to both employees. Prior to that time and before disclaimer there appears to have been no investigation made by the insurance company. Thereafter the adjuster informed the attorney for plaintiff that the insurance company would come in and defend the cases and informed said attorney that he was going to try to settle the cases, and requested that there be no change in the name of attorneys while he was negotiating settlement for the insurance company; that the insurance company would take over the defense of the cases and try to settle. About this time or later the attorneys for the plaintiff received copies of amended petitions with notice to take depositions. They were delivered to the adjuster who arranged with the attorney for the employees to continue the taking of said depositions, and conferred with the attorney of the employees at different times about a settlement of the claims. The adjuster endeavored to settle the cases with said attorney about the month of June and obtained a proposition...