Canadian Radium & Uranium Corp. v. Indemnity Ins. Co. of North America
| Decision Date | 31 January 1951 |
| Docket Number | Gen. No. 45124 |
| Citation | 342 Ill.App. 456,97 N.E.2d 132 |
| Court | United States Appellate Court of Illinois |
| Parties | CANADIAN RADIUM & URANIUM CORP. v. INDEMNITY INS. CO. OF NORTH AMERICA. |
Hinshaw & Culbertson, Chicago (Oswell G. Treadway, Chicago, of counsel), for appellant.
Vogel & Bunge, Chicago (L. H. Vogel, George C. Bunge and Kenneth H. Hanson, all of Chicago, of counsel), for appellee.
Canadian Radium & Uranium Corporation, through extensive research, perfected a process for the production of radon ointment, and developed, perfected and patented certain necessary equipment. It wished to maintain a laboratory in the middle west for the production and distribution of radon ointment and, accordingly, on or about June 1, 1944, entered into an agreement with the Radium Luminous Industries, Inc., an Illinois corporation, the name of which was afterwards changed to Radium Industries, Inc., whose plant was located at 712 South Federal Street, Chicago by which it gave and granted to the Radium Industries, Inc., a license to produce and distribute radon ointment in accordance with the specifications of the licensor. The licensor agreed, among other things, to deliver to the licensee, a sufficient amount of radium in solution for the production of the ointment together with a satisfactory emanator and other necessary equipment and supplies, including boxes, tubes, containers, stationery and other items, title to which was to remain in the licensor. The licensee agreed to furnish and maintain suitable space, heat light and telephone in Chicago, and to furnish all necessary labor to produce and distribute the ointment, to invoice purchasers of the ointment in the name of the licensor at prices and upon terms to be determined by the licensor, and to be responsible for the collection of the invoices.
On February 3, 1945, the Indemnity Insurance Company of North America issued its comprehensive general liability policy to the Canadian Radium & Uranium Corporation, by the terms of which it undertook, among other things, to insure the latter against bodily injury liability in the sum of $100,000 for each person, and in the sum of $200,000 for each accident for the policy period from February 3, 1945, to February 3, 1946, in accordance with the insuring agreement, exclusions and conditions therein contained. The insurer agreed to pay on behalf of the insured all sums which it should become obligated to pay by reason of the liability imposed upon it by law for damages 'because of bodily injury, sickness or disease * * * sustained by any person or persons and caused by accident,' and to defend in its name and behalf any suit against it alleging such injury, sickness or disease, and seeking damages on account thereof 'even if such suit is groundless, false or fraudulent.'
Canadian Radium & Uranium Corporation entered upon the performance of the agreement and furnished to the licensee quantities of radium in solution for the production of the ointment, emanators and other necessary equipment for the production thereof. The licensee proceeded to produce and distribute the ointment in accordance with the terms of the agreement. During the period of approximately seven months ending June 20, 1945, Mary Moore was continuously employed by Radium Industries, Inc., and was working in and about the manufacture of the ointment at the premises mentioned. She claimed the have sustained bodily injuries by reason of the radioactivity of the radium, its compounds and decay products, and the manner in which it was required to be handled in the production of the ointment. On November 8, 1945, she filed a complaint for damages of $200,000 in the United Stated District Court for the Northern District of Illinois, Eastern Division, against Canadian Radium & Uranium Corporation. The latter gave to the insurance company immediate notice of the claim of Mary Moore as required by the policy of insurance, and forwarded to it the summons and the complaint in the suit, demanding that the insurer defend the suit in the name and on behalf of the insured in accordence with the provisions of the policy. The insurer refused to defend the insured in the suit, contending that there was no coverage under the policy on the purported ground that the injury claimed by Mary Moore did not arise out of an accident.
Because of the refusal to defend, the insured was required to defend the suit, to employ attorneys to represent it, to investigate the facts and to prepare for the trial. On April 6, 1946, Mary Moore offered the settle her claim for $2,500, which the insured considered, in view of the claimed seriousness of her alleged injuries, the probability that she would be able to produce evidence tending to prove her charged and the expense which it would incur in a proper defense, to be advantageous. Thereupon, the insured served notice on the insurer to pay Mary Moore $2,500, or otherwise settle the cause, or that it would do so and hold the insurer for reimbursement. The insurer failed to pay the $2,500 or otherwise settle the cause. On April 8, 1946, the insured paid $2,500 to Mary Moore, took her quittances therefor and the suit was dismissed. On July 3, 1946, the Canadian Radium & Uranium Corporation filed its complaint in the Superior Court of Cook County against the Indemnity Insurance Company of North America for breach of the defense provisions of the policy. Plaintiff asked, in addition to the $2,500 paid to Mary Moore in settlement of her suit, further sums necessarily paid out in attorneys' fees in the defense of and in preparation for the trial of that cause and in investigating the facts surrounding the occurrence and alleged injuries; also sums to physicians and surgeons in and about making physical examinations of Mary Moore; the sums for taking depositions of witnesses; for the advice and services of scientists trained in the handling of radioactive substances, and in arranging for witnesses to be present at the trial of that cause, making a total of $6,963.96, which plaintiff declared it would not have been obliged to pay if the defendant had not violated the provisions of the insurance policy. Plaintiff asked judgment for $6,963.96, together with interest thereon from April 8, 1946, also its reasonable attorneys' fees, as a part of its taxable costs, and the sum of $500 as provided by Sec. 155 of the Illinois Insurance Code (Par. 767, Ch. 73, Ill.Rev.Stat.1949). The court sustained defendant's motion for judgment on plaintiff's complaint and entered judgment accordingly, from which plaintiff prosecutes this appeal.
It is well settled that where the cause of action stated is within the coverage provided by the policy, it is the insurer's duty to defend. Brodek v. Indemnity Ins. Co., 292 Ill.App. 363, 384, 11 N.E.2d 228. Where the complaint states different causes of action or theories of recovery, one of which is within the coverage and others which may not be, the insurer is bound to defend with respect to those which, if proven, would be within the coverage. Christian v. Royal Insurance Co., 185 Minn. 180, 182, 240 N.W. 365. Plaintiff maintains that the complaint filed in the Federal Court suit states a cause of action within the coverage provided by the policy in that the claim of Mary Moore is for 'damages, * * * because of bodily injury, sickness or disease * * * sustained * * * and caused by accident.' Plaintiff asserts that the defendant having breached its contract to defend, is liable to it for its costs and expenses paid out in disposing of the litigation, that the judgment should be reversed and that it should have judgment for the aggregate of these items. Defendant insists that the complaint filed by Mary Moore does not allege a claim for damages because of bodily injuries, sickness or disease 'caused by accident' within the coverage of the policy. To understand the issue thus presented, it is necessary to closely examine the complaint of Mary Moore against the Canadian Radium & Uranium Corporation, which reads as follows:
'1. Plaintiff is a citizen and resident of the State of Illinois. The defendant is a corporation organized and existing under the laws of the State of New York. The matter in controversy in this action exceeds, exclusive of interest and costs, the sum of $3,000.00.
'2. On or about June 20, 1945 and for a long period, to wit, about four years, prior thereto the defendant was in the business of buying and selling radium and substances containing radium; of manufacturing and selling products containing radium; of manufacturing the selling radioactive products.
'3. Radium, radium compounds, and radioactive substances are inherently and imminently dangerous and ultrahazardous substances, in that they are the source of certain radiations or emanations that cause burns and other morbid conditions in the tissues of the human body. The dangerous character of said substances is enhanced by the fact that the harmful effects are brought about insidiously.
'4. During the period of approximately seven months ending on or about June 20, 1945 a certain contract was in existence between the defendant and Radium Industries, Inc., an Illinois corporation; under the terms of said contract Radium Industries, Inc., was manufacturing an ointment known as, to wit, radon ointment and also known as, to wit, alphatron; defendant furnished the equipment and materials for such manufacture and the plans and methods thereof; the product was sold by, and the sale thereof was promoted by the defendant. Radium Industries, Inc., furnished the labor for carrying on such manufacture.
'5. The manufacture of said ointment was carried on in a building on premises commonly known as, to wit, No. 712 South Federal Street, in the City of Chicago, County of Cook and State of Illinois.
'6. During said period of approximately seven...
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