Blanton v. The Kansas City Cotton Mills Company and (The Kansas City Casualty Company

• Decision Date: 11 May 1918
• Docket Number: 21,538,21,539,21,537
• Citation: 103 Kan. 118,172 P. 987
• Parties: CHARLES E. BLANTON, a Minor, by WILLIAM H. BLANTON, His Next Friend, Appellee, v. THE KANSAS CITY COTTON MILLS COMPANY and (THE KANSAS CITY CASUALTY COMPANY, Garnishee, Appellant.); WILLIAM LUBEK, Appellee, v. THE KANSAS CITY COTTON MILLS COMPANY and (THE KANSAS CITY CASUALTY COMPANY, Garnishee, Appellant.); ERNEST MYERS, a Minor, by LYDIA MYERS, His Next Friend, Appellee, v. SIMON A. GARDNER and (THE KANSAS CITY CASUALTY COMPANY, Garnishee, Appellant.)
• Court: Kansas Supreme Court

172 P. 987

103 Kan. 118

CHARLES E. BLANTON, a Minor, by WILLIAM H. BLANTON, His Next Friend, Appellee, v. THE KANSAS CITY COTTON MILLS COMPANY and (THE KANSAS CITY CASUALTY COMPANY, Garnishee, Appellant.);

WILLIAM LUBEK, Appellee, v. THE KANSAS CITY COTTON MILLS COMPANY and (THE KANSAS CITY CASUALTY COMPANY, Garnishee, Appellant.);

ERNEST MYERS, a Minor, by LYDIA MYERS, His Next Friend, Appellee, v. SIMON A. GARDNER and (THE KANSAS CITY CASUALTY COMPANY, Garnishee, Appellant.)

Nos. 21,537, 21,538, 21,539

Supreme Court of Kansas

May 11, 1918

Decided January, 1918.

Appeals from Wyandotte district court, division No. 1; EDWARD L. FISCHER, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. INDEMNITY INSURANCE--Indemnity Bond--Judgment against Insolvent Employer--Casualty Company as Garnishee. Where a casualty company in an employers' insurance contract agrees to indemnify the insured against loss, including expenses arising or resulting from claims upon the insured for damages on account of bodily injuries to employees, and wherein it is provided that the company shall have notice of accidents and shall not be responsible for settlements made by the employer unless authority in writing is given to the insured, excepting expenses of emergency relief, and wherein it is stipulated that the company shall investigate all accidents and defend all suits for damages unless it elects to settle the claims or suits, and the company, acting under the policy, investigates accidents and adjusts and pays claims for losses, and assumes exclusive control of the defense of suits upon the claims of employees of the insured, the contract should be regarded as one to indemnify the insured against liability, and the casualty company is therefore subject to garnishment at the suit of the employees when the insured is insolvent.

2. SAME--Case Distinguished. Carter v. Insurance Co., 76 Kan. 275, 91 P. 178, distinguished.

3. SAME--Indemnity Bond--Subsequent Modification of Agreement. The insured employers were not operating under the workmen's compensation law when the policies were issued, and attached to them were riders excepting the insurer from claims for compensation under that law. Before the end of the insurance period the insured came under the compensation law. Held, that it was competent for the parties to detach the rider and modify the contract by an agreement that the unearned premium should stand as insurance for compensation injuries for the remainder of the insurance year; and also held, that the evidence in the case supports the theory that such an agreement was made.

E. S. McAnany, M. L. Alden, Thomas M. Van Cleave, all of Kansas City, and D. A. Murphy, of Kansas City, Mo., for the appellant; Samuel Maher, of Kansas City, of counsel.

J. O. Emerson, David J. Smith, T. F. Railsback, T. A. Pollock, and K. P. Snyder, all of Kansas City, for the appellees.

OPINION

JOHNSTON, C. J.:

These are appeals by the Kansas City Casualty Company from judgments rendered against it in garnishment proceedings.

Three actions are involved, each brought by an employee against his employer to recover damages for personal injuries, in which judgments against their employers were obtained. The defendants in those actions held policies of insurance issued by the casualty company, and in the actions mentioned it took complete charge of the litigation for the defendants. The plaintiffs were unable to enforce payment of the judgments, and they garnished the casualty company, which answered, in each case denying liability to the defendant. Plaintiffs contested the answers, and the evidence upon the issues thus raised was submitted at one hearing to the court without a jury. No findings of fact were made, and the court rendered judgments against the casualty company for the amounts of the claims established.

The issues were the same in the three actions, except that in those against the Cotton Mills Company there is an added feature by reason of the fact that at the time of the injuries it was operating under the provisions of the workmen's compensation law, and it is claimed by the casualty company that under the policy it is not liable on account of injuries within the scope of that act. It also claims that the policies issued are contracts of indemnity against loss sustained, and that the obtaining of judgments against the employers, which had not been paid, was not sufficient to render it liable as garnishee. The policies in question were designated as "employers' liability policies," and in them the casualty company agreed "to indemnify the assured, described in the warranties hereof, within the amounts as expressed herein, against loss, including expense arising or resulting from claims upon the assured for damages on account of bodily injuries," etc., to an employee. It was stipulated that the assured should give the casualty company immediate notice of any accident to an employee and of any suit resulting therefrom, and it was further stipulated that--

"The company is not responsible for any settlements made or any expense incurred by the assured, unless such settlements or expenditures are first specifically authorized in writing by the company; except that the assured may provide at the time of the accident, at the expense of the company, such immediate surgical relief as is imperative."

There was also a provision limiting the amounts for which the casualty company would be liable, and also stating--

"In addition to these limits, the company will, at its own cost (court costs and all interest accruing after entry of judgment on such part thereof as shall not be in excess of the limits of the company's liability as hereinbefore expressed, being considered part thereof) investigate all accidents and defend all suits even if groundless, of which notices are given to it as hereinbefore required, unless the company shall elect to settle the claim or suit."

The provision usually contained in policies of this character, that no action could be maintained by reason of a judgment against the assured unless the latter had sustained a loss by satisfying the judgment, is not found in any of the policies involved here. It appeared from the evidence that the casualty company had in other instances adjusted claims and paid judgments that had not been already satisfied by the assured, and that it had advertised its business as including in its scope the adjustment of all claims, payment of all attorney's fees, defense of all suits, the payment of all judgments up to $ 5,000, and the payment of court costs.

The main question raised on these appeals is whether or not there can be a liability against the casualty company for accidental injuries to the employees of the insured, until the latter pays the claims for the injuries and losses sustained. The casualty company contends that under the rule of Carter v. Insurance Co., 76 Kan. 275, 91 P. 178, its contract was indemnity against loss, and that no loss was sustained by the insured until payment had been made. The contract in the Carter case differs materially from those involved herein. Aside from one stipulation there was the same ambiguity in that contract as in these in regard to whether liability was included in the term loss, and whether it was the intention of the parties that the insurance company should be substituted for the insured so far as liability for accidental injuries and death was concerned. While several of the provisions of that contract indicated a substitution of the insurer for the insured, and that it was insurance against liability, it contained the following positive stipulation:

"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...