City of Burns v. Northwestern Mut. Ins. Co.
| Citation | 248 Or. 364,434 P.2d 465 |
| Parties | CITY OF BURNS, Oregon, a Municipal Corporation, Appellant, v. NORTHWESTERN MUTUAL INSURANCE CO., Respondent. |
| Decision Date | 29 November 1967 |
| Court | Supreme Court of Oregon |
Milo Pope, Milton-Freewater, and Wendell Gronso, Burns, argued the cause for appellant. With them on the briefs were Cramer & Gronso, Burns.
Gerald R. Pullen, Portland, argued the cause for respondent. With him on the brief were Hershiser, Mitchell & Smith, Portland.
Before PERRY, C.J., and O'CONNELL, GOODWIN, DENECKE, HOLMAN and WOODRICH, JJ.
Plaintiff brought an action upon a policy of liability insurance issued to it by defendant. The trial court sustained a demurrer to plaintiff's complaint on the ground that the complaint did not state facts sufficient to constitute a cause of action. Plaintiff appealed from an order dismissing its complaint when it failed to plead further.
The present controversy arises out of litigation previously before this court. Hovis v. City of Burns, 243 Or. 607, 415 P.2d 29 (1966). In that case Mrs. Hovis received a judgment against plaintiff for emotional injury caused to her, when, without her authorization, plaintiff moved the body of her deceased husband from one grave to another in a cemetery operated by it. Plaintiff tendered to defendant the defense of Mrs. Hovis's action and demanded that defendant pay the judgment Mrs. Hovis received. Defendant refused to do either.
The first issue tendered by the complaint is whether there was a duty upon defendant to defend the action filed against the city by Mrs. Hovis. The provisions of the policy relating to the payment by the insurer of claims against the insured were as follows:
'Coverage A--Bodily Injury Liability: To pay on behalf of the Insured, all sums which the Insured shall become obligated to pay by reason of the liability (1) imposed upon him by law, * * * for damages because of bodily injury, sickness or disease, * * * sustained by any person or persons caused by an occurrence.'
The provisions relating to defense were as follows:
'With respect to such insurance as is afforded by this policy for bodily injury liability and for property damage liability, the Company shall:
'(a) defend any suit against the Insured Alleging such injury, sickness, disease or destruction and seeking damages on account thereof, * * *.' (Emphasis ours.)
The policy contained the following exclusion to its coverage:
'This policy does not apply:
'(g) to injury, sickness, death or destruction caused intentionally by or at the direction of the insured;'
Plaintiff's complaint discloses that the allegations of Mrs. Hovis's complaint against plaintiff contained the following:
'V
'That thereafter the defendant did cause the body of the said Gerald Dale Gray, Sr., to be moved or disinterned (sic) without having previously or ever having obtained the permission of the Plaintiff causing her shock, indignation, dismay, mental anguish and upsetting her physically and emotionally to her damage in the sum of $10,000.00.
'VI
'That the said disinternment (sic) was done willfuly (sic), wantonly, and maliciously entitling plaintiff to punative (sic) damages in the sum of $10,000.00.'
Under the policy the company engaged to defend only actions that alleged an insured risk. The duty of defendant to defend the action against plaintiff depended upon whether Mrs. Hovis's complaint stated a claim within the policy coverage. McKee v. Allstate Ins. Co., 84 Or.Adv.Sh. 673, 426 P.2d 456 (1967); Isenhart v. General Casualty Co. of America, 233 Or. 49, 54, 377 P.2d 26 (1962); Blohm v. Glens Falls Ins. Co., 231 Or. 410, 417--418, 373 P.2d 412 (1962); MacDonald v. United Pacific Ins. Co., 210 Or. 395, 410, 311 P.2d 425 (1957). The complaint upon which the Hovis case went to trial stated a cause of action for intentional harm and therefore alleged an excluded injury and not one within the policy coverage. The complaint alleged the removal of the body was malicious. This is an allegation that it was done with the intent to harm. Therefore, there was no duty upon defendant to defend Mrs. Hovis's claim against plaintiff at the trial court level.
The inquiry does not end here. Plaintiff pleaded that the judgment awarded by the jury was within the policy coverage because immediately prior to the submission of the case to the jury, paragraph VI of Mrs. Hovis's complaint containing the allegations of malicious disinterment, was stricken because there was no evidence to sustain it. The plaintiff argues that the duty to defend and the duty to pay the judgment are independent of each other and the defendant is responsible for the judgment even if it had no duty to defend.
The problem was anticipated in MacDonald v. United Pacific Ins. Co., supra, 210 Or. at page 410, 311 P.2d at page 431 where the following is found:
'It may be that cases will arise under our procedure in which there was no duty to defend but in which the ultimate proof shows a duty to pay, * * *.'
It seems clear from the terms of the policy that the duty to pay the obligation of the insured for damages and the duty to defend insured are independent of each other. At the time the case went to trial the complaint did not allege a covered injury and this is the prerequisite to a defense by the insurer. If, however, at the time of adjudication it had been converted into a claim for a covered injury, there appears to be no bar in the policy to the obligation of defendant to pay any resulting judgment. The allegations of the complaint At the time of the commencement of the trial are only relevant to a defense of the claim.
Having decided that there was no duty to defend at the trial level and that the insurer's duty to pay the claim is not necessarily precluded by the failure of the complaint to state a covered claim at the time of the commencement of the trial, it remains to be determined whether the complaint upon which the judgment was ultimately returned, as disclosed in the present pleading, stated a covered claim.
At the time Mrs. Hovis's claim was presented to the jury it no longer contained any allegation of maliciousness. It was a claim for damages because the city moved the body of her husband without securing her consent as required by statute. Defendant contends that the claim still came within the previously set forth policy exclusion because the moving of the body was an intentional act. While the moving of the body was an intentional act, it does not necessarily follow that the injury was intended. The policy exclusion relates to Injury caused intentionally. It is not...
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