Citizens Ins. Co. of New Jersey v. Kansas City Commercial Cartage, Inc., WD

• Decision Date: 30 December 1980
• Docket Number: No. WD,WD
• Citation: 611 S.W.2d 302
• Parties: CITIZENS INSURANCE COMPANY OF NEW JERSEY, a corporation, Respondent, v. KANSAS CITY COMMERCIAL CARTAGE, INC., a corporation, v. COMMERCIAL UNION INSURANCE COMPANY OF NEW YORK, a corporation, Appellants. 30720.
• Court: Missouri Court of Appeals

Page 302

611 S.W.2d 302

CITIZENS INSURANCE COMPANY OF NEW JERSEY, a corporation, Respondent, v. KANSAS CITY COMMERCIAL CARTAGE, INC., a corporation, v. COMMERCIAL UNION INSURANCE COMPANY OF NEW YORK, a

corporation, Appellants.

No. WD 30720.

Missouri Court of Appeals, Western District.

Dec. 30, 1980.

Motion for Rehearing and/or Transfer Denied Feb. 2, 1981.

Application to Transfer Denied March 9, 1981.

James H. Ensz and Arnold N. Shanberg, Kansas City, for appellant Kansas City Commercial Cartage, Inc.

R. Frederick Walters of Linde, Thomson, Fairchild, Langworthy & Kohn, Kansas City for appellant Commercial Union Insurance Co. of New York.

Robert M. Sommers of James, Odegard, Millert & Houdek, Kansas City, for respondent, Citizens Insurance Co. of New Jersey.

Before KENNEDY, P. J., and PRITCHARD and SWOFFORD, JJ.

PER CURIAM:

This is an insurors action, under a motor truck cargo insurance policy, for money had and received. Insured filed its answer and with leave, impleaded its employee fidelity insuror. Judgment was for plaintiff insuror against insured and for insured against the fidelity insuror. Insured and fidelity insuror appeal. The judgment is reversed with directions.

The matter was tried to the court upon pleadings, documents and stipulations with such evidence being supplemented by testimony of the parties. Neither party requested written findings of fact or conclusions of law, and absent such request, none are required of the trial court, see Skinner v. Henderson, 556 S.W.2d 730 (Mo.App. 1977).

Review of this matter is pursuant to Rule 73.01 as that rule has been interpreted by Murphy v. Carron, 536 S.W.2d 30 (Mo.banc 1976), and the judgment is to be affirmed unless said judgment is unsupported by substantial evidence, is against the weight of the evidence, erroneously declares the law or erroneously applies the law.

For purposes of this appeal, the parties herein are described and referred to as respondent (hereinafter referred to as Citizens), appellant insured (hereinafter referred to as Cartage) and appellant fidelity insuror (hereinafter referred to as Commercial).

On appeal, Cartage presents four points of error which, in summary, allege the trial court erred in finding (1) there was substantial evidence that Donald LaCore was an employee of the insured, thereby excluding coverage at the time of the theft; (2) as a matter of law, that coverage is excluded when a loss is caused by a casual employee; (3) as a matter of law, that coverage was excluded when a loss is caused by a dishonest employee not receiving compensation for and is not actively engaged in the insured's employment at the time of the theft; and (4) that the loss was not caused by or did not result from persons to whom property may be entrusted or caused by any dishonesty of any attendant or attendants.

Commercial presents five points of error, which in summary allege (1) the trial court erred in finding that Donald LaCore was an employee within the exclusionary clause of the Citizens policy; (2) the trial court erred by finding that the word employee within the exclusionary clause of the policy applied to the status and activity of Donald LaCore; (3) the trial court erred in finding there was substantial evidence to conclude that Donald LaCore was an employee whether this word is construed to mean a casual, regular or an otherwise employee; (4) the trial court erred in granting judgment against Commercial because the policy issued by Commercial covered only losses caused by employees as the term employees is defined within its policy, and under the evidence, Donald LaCore was not within the definition of the term employee ; and (5) the trial court erred in entering judgment against Commercial and to the favor of Cartage because the latter failed to comply with a condition precedent under the policy of Commercial upon failure of Cartage to file a verified proof of loss.

As can be observed from the alleged errors of Cartage and Commercial, some of these alleged errors are concurrent regarding the interests of appellants relative to respondent's position. Where such points are concurrent, they will be disposed of conjunctively and where errors appear inapposite to the interests of appellants, they will be disposed of separately.

The facts herein are not in dispute, so a brief summary of those facts suffices. Cartage is a local firm which transports merchandise for its customers. Citizens is the insuror of Cartage upon the latter's loss of property under Citizens' motor truck cargo policy. Commercial is the insuror of Cartage against loss experienced by Cartage as a result of any fraudulent or dishonest act of any employee of Cartage.

Between March 22 and March 24, 1968, a truck used by Cartage and containing merchandise was stolen from the business premises of Cartage. Cartage applied to Citizens for reimbursement for the loss and Citizens paid the full amount of the loss in the sum of $13,279.29, along with an agreement that if, as a result of the pending policy investigation, it was established that an exclusion in the policy of Citizens applied, the amount of the loss would be repaid by Cartage.

On October 31, 1969, an indictment was handed down against one Donald LaCore. Subsequent to this incident, LaCore confessed to having committed the theft. Following these events, Citizens made demand for repayment from Cartage upon the premise that LaCore was an employee of Cartage and by reason thereof, coverage of the loss was excluded under Citizens' policy. When demands for repayment were refused, this action followed.

This cause was initially disposed of by the trial court upon a partial summary judgment from which an appeal was taken. The appeal was ruled premature and the cause was remanded, see Citizens Insurance Company of New Jersey v. Kansas City Commercial Cartage, Inc., 543 S.W.2d 532 (Mo.App. 1976). Upon remand, trial upon the merits followed from which this appeal issued.

In its memorandum judgment, the trial court found that LaCore was an employee of Cartage and therefore, the loss was excluded under the terms of the Citizens' policy. The trial court further found that the loss was covered under the employee fidelity policy of Commercial.

The only issue which lies before this court is whether or not LaCore was an employee of Cartage. Once that issue is determined, the applicable insurance coverage then attaches. Neither insuror denies coverage on the grounds that the policies were not issued or that the policies were not in full force and effect. Coverage is disclaimed by each insuror asserting responsibility to the other, and both disclaimers turn upon the definition ascribed to employee as it relates to LaCore.

At this juncture, Commercial's fifth point of error is taken up and ruled against it. The trial court correctly found that Commercial's denial of coverage was not because of Cartage's failure to file a proof of loss; rather, coverage was denied upon the terms of the policy. The trial court was correct in finding that the defense on the failure to file a proof of loss was waived by Commercial, see Otto v. Farmers Insurance Company, 558 S.W.2d 713, 720 (Mo.App. 1977) and Asel v. Order of United Commercial Travelers of America, 193 S.W.2d 74 (Mo.App. 1946).

Citizens had issued a motor truck cargo policy to Cartage, providing for "loss or damage to shipments of property in the possession of Cartage". The same policy contained an exclusionary clause which excluded coverage from loss "caused by or resulting from infidelity of the insured's employees or persons to whom the property may be entrusted ... and for loss or damage caused by the dishonesty of any attendant or attendants."

Commercial had issued an employee fidelity policy to Cartage which provided coverage to Cartage by agreeing "... to indemnify the insured against any loss of money or other property which the insured shall sustain through any fraudulent or dishonest act or acts committed by any of the employees, acting alone or in collusion with others." Within the Commercial policy, the term employee was defined as "... any natural person ... while in the regular service of the insured in the ordinary course of the insured's business during the bond period ..."

LaCore, the thief herein, worked for Cartage on August 19, 1967 and September 6, 7, 8, 12, 13, 15, 22, 26 and 29 of 1967. He then worked for Cartage on March 15, 18, 19, 22 and 25 of 1968. He was paid $3.56 per hour and was paid at the conclusion of each working day. Social Security taxes were withheld from LaCore's pay.

Through the course of pretrial proceedings by way of an affidavit dated 2-20-74, the general manager of Cartage explained the employment practice surrounding the hiring of LaCore and LaCore's status as a casual worker. This explanation, in summary, was as follows:

"... Among my responsibilities at Kansas City Commercial Cartage Company, Inc., was the hiring of various individuals to work on a day-to-day, as-needed basis. During those times when business was very heavy and our normal crew could not handle the work load, we would employ various individuals to assist us in such work as would be required that day. Usually, a man would either call us between 7 to 9 a. m., or stop by our office and ask whether or not there was work for that day. If there was work, we would hire him. At the time we hired him, he would be informed that this was only for the day and that he would be paid at the end of the day and that there would be no guarantee that he would be used for more than just a few hours or a complete day but just until we overcame the work load. At the end of each day, the man would be paid and told that we did not know whether we needed him until the next day and, if he was interested in working, to call us between 7 and 9 a. m. Each man knew these facts because I told him at the end of each day that he was terminated and not to expect continuing...