Citizens Mut. Ins. Co. v. Employers Mut. Liability Ins. Co. of Wisconsin, Docket No. 14689
| Decision Date | 26 September 1973 |
| Docket Number | No. 3,Docket No. 14689,3 |
| Citation | 212 N.W.2d 724,49 Mich.App. 694 |
| Parties | CITIZENS MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. EMPLOYERS MUTUAL LIABILITY INSURANCE COMPANY OF WISCONSIN, Defendant-Appellant |
| Court | Court of Appeal of Michigan — District of US |
Ralph B. Taylor, Egloff, Mainolfi, Taylor, McGraw & Collison, Saginaw, for defendant-appellant.
Fortino, Plaxton & Moskal, Alma, for plaintiff-appellee.
Before R. B. BURNS, P.J., and FITZGERALD and O'HARA*, JJ.
The City of Alma is a Michigan municipal corporation.
Citizens Mutual Insurance Company is its general liability insurer.
E. G. McDermott and Hertel-Deyo are construction contractors, who for purpose of this opinion were joint venturers, who contracted with Alma to install sewer lines in Alma. We will refer herein to the joint venturers as the contractor.
Employers Mutual Liability Insurance Company of Wisconsin is an insurance carrier duly admitted to do business in Michigan. It writes public liability insurance. It issued such a policy to the contractor.
Employers Reinsurance Corporation is not a party to this litigation but its role in the proceedings requires that we refer to it herein. To avoid misunderstanding or possible confusion we will refer to this company as the reinsurer. Citizens bought a policy from reinsurer to cover in part the payment of claims by Citizens on behalf of its various insureds.
All of the foregoing is clear. What follows is much less clear. The reason is expressed in 169 A.L.R. 387.
'The question of apportionment of loss between specific and blanket insurance policies with which this annotation is concerned enjoys the doubtful distinction of being universally recognized as constituting one of the most perplexing and troublesome problems in the whole law of insurance.'
The problem is troublesome enough in cases which go through to verdict and judgment, so that at least a trial judge or an appellate court can rely in total security upon findings of fact by the trier of questions of fact. 1 In this case the parties settled the original lawsuit out of which this litigation grew, so there are no specific findings of fact as to negligence and proximate cause. To add frosting to this litigious cake, Employers appeared and participated in the defense of the negligence action under a denial of liability and a reservation of rights.
So much for the identification of the parties and a general statement of the legal problems. We review now the factual problem.
When Alma decided to install the sewer system and engaged the contractor to do the work, it required that the contractor obtain a policy of liability insurance to protect Alma from claims arising out of what can be described as the 'sewer job'. The contractor obtained the policy from Employers. A workman was killed, either by suffocation or drowning, when a water main was ruptured in the trench for the new sewer line. The gushing water caused the collapse of the side walls of the trench. The shutoff valve required a wrench or hydrant key to cut off the flow. Co-workers of the deceased ran to the valve, but the wrench or key was not there. Their efforts to extricate the trapped worker failed. The administratrix of his estate sued Alma. The case went to trial. After several days it was settled for $45,000. Citizens paid $25,000. Reinsurer paid $20,000. Employers paid nothing but did offer $5,000 in exchange for a release of all claims against it.
Citizens sued Employers for the $45,000 paid to the estate. Citizens contended that Employers' policy covered an incident which caused the worker's death, and furthermore, that if the negligent act did not come within the terms of the policy, Employers was estopped to assert the policy defense, because Alma relied on Employers to issue a policy which would protect Alma against any claim growing out of the sewer job. The record supports the fact that Alma's then director of public works did not see or read the policy Employers issued but did receive and keep in his file a certificate of insurance attesting that the contractor had obtained insurance in the required amounts. He testified that it was not 'customary' to see or read the policy and that he relied upon the certificate to support his approval that Alma enter into the contract with the contractors. It may be worthy of more than passing notice that the policy Employers issued has a large rectangular space to the left of the designation of the named insured. It is set off by a thin red line of the same shade of ink in which the name of the issuing company is printed. It reads: 'PLEASE READ YOUR POLICY'. Perhaps other directors of public works of other municipal corporations might do well to consult with the city attorney or corporation counsel or whoever the city's legal advisor is before approving the execution of a contract calling for insurance protection when all the director has seen is a 'certificate of insurance.' Additionally, we suggest that a precise record be kept in something other than the memory of the city employee as to exactly what coverage is demanded by the municipality, and insistence upon no exclusions which limit the coverage written.
The able and experienced trial judge favored us with a 13-page written opinion. His discussion of the issue and his findings of fact have been extremely helpful. The rhetorical questions the opinion asks are much the same as occurred to us after oral argument and our post-argument conference. They arise out of the limiting effect of exclusion 'b' upon the insuring agreement. Alma is the named insured. It is designated as a municipality. The policy is a standard form with an insert specifying the 'Definition of Operations', which reads 'Operations performed for NAMED INSURED at the premises herein designated by Edward G. McDermott Co. and Hertel-Deyo'.
The insuring agreement which is relevant reads:
Exclusion 'b' reads:
'This policy does not apply:
'(b) To any act or omission of the named insured or any of his employees, other than general supervision of work performed for the named insured by independent contractors.'
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