Carolina Veneer & Lumber Co. v. American Mut. Liability Ins. Co.

• Decision Date: 21 January 1943
• Docket Number: 15491.
• Citation: 24 S.E.2d 153,202 S.C. 103
• Parties: CAROLINA VENEER & LUMBER CO. v. AMERICAN MUT. LIABILITY INS. CO.
• Court: South Carolina Supreme Court

24 S.E.2d 153

202 S.C. 103

CAROLINA VENEER & LUMBER CO. v. AMERICAN MUT. LIABILITY INS. CO.

No. 15491.

Supreme Court of South Carolina

January 21, 1943

Appeal from Common Pleas Court, of Florence County; R. W. Sharkey, County Judge.

Action by the Carolina Veneer and Lumber Company against American Mutual Liability Insurance Company to recover on a policy indemnifying plaintiff against common law liability for injuries received by plaintiff's employees to recover amount of an employee's judgment against plaintiff and expense of defending litigation. From a judgment for plaintiff, defendant appeals.

Order of Judge Sharkey follows:

The above entitled action was tried at the December, 1941, term of this Court, and at the conclusion of all the testimony it was agreed that there was no issue of fact for the jury to pass upon, with the possible exception of the amount to be allowed as an attorney's fee for counsel for plaintiff in the event it should be held that plaintiff's cause of action should be sustained. On this point I ruled that the evidence as to the nature and extent of the services rendered by plaintiff's attorney being undisputed, that question became one of law for decision by the Court. The case was then withdrawn from the jury and, following full arguments on both sides on the controversial issues made by the pleadings and the evidence, it was taken under advisement.

The questions at issue have been fairly raised and clearly stated in the grounds of the defendant's motion for a direction of the verdict in its favor, to-wit:

"1. That the evidence is susceptible of only one inference, in fact there is no controversy or dispute on the fact that L. H. Hyman, the alleged injured employee, assuming that he was an employee of Carolina Veneer & Lumber Company, was not covered by the policy of insurance involved for the reason that no premium was agreed to be paid on him or for him and in fact no premium was paid on or for him under the provisions of the policy.

"2. That the alleged employee, L. H. Hyman, was not at the time he received the injury engaged in an activity covered by the policy.

"3. That L. H. Hyman was not an employee of Carolina Veneer &amp Lumber Company at the time he received his injury but assuming that he was an employee he was not employed or at work in the business of the Carolina Veneer & Lumber Company covered by the provisions of the policy."

These in substance, are the material allegations of the complaint:

The issuing by the defendant of the insurance policy, whereby it agreed with plaintiff to indemnify it against loss by reason of liability for damages on account of personal injuries received by employees of plaintiff sustained within the territorial limits of the United States or the Dominion of Canada. An injury while said contract was in force, sustained by one L. H. Hyman while employed by the plaintiff, caused by the negligent operation by plaintiff of a skidder. The prosecution by Hyman of an action against plaintiff for personal injury damages resulting from plaintiff's negligence. The refusal of defendant, upon demand, to defend said action on behalf of plaintiff, in accordance with the provisions of the insurance contract. The recovery by Hyman of a verdict against plaintiff in the sum of $2,000. The entry of judgment against plaintiff for the amount of the aforesaid verdict and costs, and, by reason of the refusal of defendant to defend the action, the incurring by plaintiff of expense amounting to $1,000 in the defense thereof.

By its answer the defendant admits the issuing of the insurance contract and the recovery of judgment by Hyman against plaintiff as alleged in the complaint. Its defense and denial of liability are grounded upon the affirmative allegation that under the terms of the contract it had no responsibility or liability to defend the Hyman suit or to indemnify plaintiff against loss by reason thereof for the following reasons: That at the time of his injury Hyman was not an employee of plaintiff. That if he was in plaintiff's employ, the operations then engaged in by him were not those declared under the provisions of the policy; and also, that assuming that Hyman was an employee of plaintiff, he was not one whose remuneration was considered in any respect either at the inception of the contract or in the later adjustment of the premium.

The inquiry resulting from the foregoing analysis of the pleadings, and from a consideration of the undisputed evidence, is entirely a legal one. Under other circumstances the question of the status of Hyman at the time of his injury might be a question of fact, but even this question becomes one of law, because of its previous adjudication in the original action between Hyman and Carolina Veneer & Lumber Company. In that action the relationship of master and servant, between Hyman and plaintiff, was one of the chief questions at issue. That question, along with the issues of negligence and the amount of Hyman's damage, was prosecuted to a final determination in the Court of Common Pleas and was resolved against plaintiff. The record of the former action, which is in evidence in this case, must be held to import absolute verity of the facts which it shows have been adjudicated, and the defendant cannot now be heard to contend to the contrary, in the face of the record, and in the face also of its refusal, upon demand to defend that action. Blue Bird Cab Co. v. American F. & C. Co., 219 N.C. 788, 15 S.E.2d 295; Aetna Life Insurance Co. v. Maxwell, 4 Cir., 89 F.2d 988. I therefore find and hold that at the time of his injury Hyman was an employee of plaintiff.

A careful consideration of the entire policy can lead to no other conclusion but that the plaintiff is entitled to recover in this action. The contract, being one prepared by the defendant company, must be construed liberally in favor of the plaintiff. Lane v. New York Life Ins. Co., 198 S.C. 250, 17 S.E.2d 539. That construction should be reached from a consideration of the entire contract. Patterson v. Courtenay Mfg. Co., 196 S.C. 515, 14 S.E.2d 16. Under Section I, Subdivision (a), the contract makes the defendant liable for any injuries resulting to an employee covered by the Workmen's Compensation Act, Act July 17, 1935, 39 St. at Large, p. 1231, and under Section I (b) it agrees "to indemnify this employer against loss by reason of the liability imposed upon him by law for damages on account of such injuries to such of said employees as are legally employed wherever such injuries may be sustained within the territorial limits of the United States of America or the Dominion of Canada." The term, "legally employed," as used in this provision, does not mean whether or not there was a contract of employment but whether or not a legal contract of employment could be made. Ocean Accident G. Cooperation v. Washington Brick & T. C. Company, 148 Va. 829, 139 S.E. 513. The claim of Hyman was not made against the plaintiff under the Workmen's Compensation Act of South Carolina, but the terms of that provision are quite persuasive that the liability of the defendant extended to the case at bar. In the opening paragraph of the policy the defendant "does hereby agree with the employer, named and described as such in the declarations, forming a part hereof, as respects personal injuries sustained by employees, including death at any time resulting therefrom as follows:

" I. (a) To pay promptly to any person entitled thereto under the workmen's compensation law and in the manner therein provided, the entire amount of any sum due, and all installments thereof as they become due."

By the terms of the provision last cited, it will be seen that had Hyman claimed against Carolina Veneer & Lumber Company under the Workmen's Compensation Act, the question of whether or not he was an employee of that company would necessarily have had to be decided by the trial commissioner and on review by the full commission as one of the questions of fact in the claim. This would be the initial question of fact because, if Hyman was not an employee, he, of course could not recover. Had the issue been tried out before the Workmen's Compensation Commission and this question of fact decided in favor of...