Coast Lumber Co. v. Aetna Life Insurance Co.

• Decision Date: 06 July 1912
• Citation: 22 Idaho 264,125 P. 185
• Parties: COAST LUMBER COMPANY, a Corporation, Appellant, v. AETNA LIFE INSURANCE COMPANY, a Corporation, Respondent
• Court: Idaho Supreme Court

125 P. 185

22 Idaho 264

COAST LUMBER COMPANY, a Corporation, Appellant, v. AETNA LIFE INSURANCE COMPANY, a Corporation, Respondent

Supreme Court of Idaho

July 6, 1912

INSURANCE CONTRACT-LOSS BY INJURY OR DEATH-LIABILITY FOR COSTS AND EXPENSES OF LITIGATION.

(Syllabus by the court.)

1. Where a contract for insurance against bodily injury and death, accidentally suffered, provides a limitation of $5,000 as the company's liability for loss on account of an accident resulting in bodily injury or death for each person, and likewise provides that the company will pay the expense of litigation in addition to the sum limited and also provides that if the company shall elect to pay the assured the sum limited it shall not be liable for further expense of litigation after payment shall have been made, and also further provides that in case suit is brought against the assured to enforce a claim for damages on account of accident the company will, at its own cost, defend such suit and such company exercises its option and defends a suit such company is liable for all costs and expenses in such action both in the trial and appellate courts.

2. The covenant "to pay the expense of litigation," and also "the company will, at its own cost, defend such suit in the name and on behalf of the assured," are clear and express promises and an agreement on the part of the insurance company that the company will pay the costs incurred in defending a suit for damages against the assured, where payment of the sum insured is refused by the insurance company.

3. "Costs and expenses," as used in the contract of insurance involved in this case, is the amount paid counsel and witnesses, and court costs, and all costs including the taxable costs recovered by the plaintiff in such suit.

4. Where an action is brought to recover damages sustained under a life insurance policy insuring against injuries and death, and a defense is made by the insurance company on behalf of the assured, and such action is contested and tried in the district court, and thereafter appealed to the supreme court where such judgment is affirmed, the assured cannot recover from the insurance company interest on the amount of insurance for the period during which said judgment is being contested through the appellate court, and until such judgment is paid by the insurance company upon affirmance, as part of the costs and expenses of such litigation.

APPEAL from the District Court of the Third Judicial District for Ada County. Hon. John F. MacLane, Judge.

Action to recover costs and expenses recovered under an insurance policy against injuries and death. Reversed.

Judgment reversed; costs awarded to appellant.

Alfred A. Fraser and Robert R. Wedekind, for Appellant.

The liability of the insurance company is fixed by its policy of insurance, and the terms of that contract, in the absence of ambiguity, must control. (Rumford Falls Paper Co. v. Fidelity & Casualty Co., 92 Me. 574, 43 A. 503.)

The company is liable for costs. (New Amsterdam Casualty Co. v. Cumberland Tel. Co., 152 F. 961, 82 C. C. A. 315, 12 L. R. A., N. S., 478; Brewster v. Empire State Co., 145 A.D. 678, 130 N.Y.S. 439.)

The company is liable for interest. (Saratoga Traprock Co. v. Standard Ins. Co., 143 A.D. 852, 128 N.Y.S. 827; Cudahy Pkg. Co. v. New Amsterdam Casualty Co., 132 F. 623; Frye v. Bath Gas and Electric Co., 97 Me. 241, 94 Am. St. 500, 54 A. 395, 59 L. R. A. 444; Sanders v. Frankfort Marine etc. Ins. Co., 72 N.H. 485, 101 Am. St. 688, 57 A. 655.)

In any event, the court should have entered judgment in its favor in this action for the costs expended and paid by it in defense of the suit in the trial court and on appeal. (Conqueror Zinc & Lead Co. v. Aetna Life Ins. Co., 152 Mo.App. 332, 133 S.W. 156; Puget Sound Imp. Co. v. Frankfort Marine etc. Ins. Co., 52 Wash. 124, 100 P. 190; Maryland Casualty Co. etc. v. Omaha Electric Light & Power Co., 157 F. 514, 85 C. C. A. 106.)

Richards & Haga, for Respondent.

The employer's liability policy involved in this action insures only against loss actually sustained and paid, and not against liability. The difference between a contract of indemnity against loss and one to pay legal liabilities is that under a contract indemnifying a party against loss, the cause of action does not accrue until the loss has been paid by the party indemnified, whereas under a policy insuring against liabilities, the cause of action accrues when the liability of the party indemnified attaches. (Frye v. Bath Gas & Elec. Co., 97 Me. 241, 94 Am. St. 500, 54 A. 395, 59 L. R. A. 444; Finley v. United States Casualty Co., 113 Tenn. 592, 83 S.W. 2, 3 Ann. Cas. 962; Cayard v. Robertson, 123 Tenn. 382, 131 S.W. 864, 30 L. R. A., N. S., 1224, Ann. Cas. 1912C, 152; Cushman v. Carbondale Fuel Co., 122 Iowa 656, 98 N.W. 509; Kennedy v. Fidelity Casualty Co., 100 Minn. 1, 117 Am. St. 658, 110 N.W. 97, 9 L. R. A., N. S., 478, 10 Ann. Cas. 673; Bain v. Atkins, 181 Mass. 240, 92 Am. St. 411, 63 N.E. 414, 57 L. R. A. 791; Allen v. Aetna Life Ins. Co., 145 F. 881, 76 C. C. A. 265; Allen v. Gilman, McNeil & Co., 137 F. 136; Conqueror Zinc & Lead Co. v. Aetna Life Ins. Co., 152 Mo.App. 332, 133 S.W. 156; Carter v. Aetna Life Ins. Co., 76 Kan. 275, 91 P. 178, 11 L. R. A., N. S., 1155.)

Appellant cannot recover interest in this case, for there was no liability on the part of the respondent until the judgment was paid by appellant. (Saratoga Traprock Co. v. Standard Acc. Ins. Co., 143 A.D. 852, 128 N.Y.S. 822; Conqueror Zinc & Lead Co. v. Aetna Life Ins. Co., supra; National Providence Worsted Mills v. Frankfort Marine Acc. & Plate Glass Ins. Co., 28 R. I. 126, 66 A. 58; Maryland Casualty Co. v. Omaha Elec. L. & P. Co., 157 F. 514, 85 C. C. A. 106; Munroe v. Maryland Casualty Co., 48 Misc. 183, 96 N.Y.S. 705.)

The provision in the policy that the insurer will at its own cost defend any action brought against the assured by an employee, unless the insurer elects to settle the same or pay the assured the face of the policy, refers only to the cost of defending the action, and does not refer to the taxable costs which the employee may recover as part of his judgment against the assured. (Allen v. Aetna Life Ins. Co., supra; Munroe v. Maryland Casualty Co., supra; Connolly v. Bolster, 187 Mass. 266, 72 N.E. 981; Davison v. Maryland Casualty Co., 197 Mass. 167, 83 N.E. 407; Munson v. Standard Marine Ins. Co., 145 F. 957; affirmed in 156 F. 44, 84 C. C. A. 210; Cornell v. Travelers' Ins. Co., 175 N.Y. 239, 67 N.E. 578; Nesson v. United States Casualty Co., 201 Mass. 71, 131 Am. St. 390, 87 N.E. 191; Henderson Lighting & P. Co. v. Maryland Casualty Co., 153 N.C. 275, 69 S.E. 234, 30 L. R. A., N. S., 1105.)

STEWART, C. J. Ailshie and Sullivan, JJ., concur.

OPINION

STEWART, C. J.

On the 14th day of April, 1909, Charles N. Maw recovered a judgment against the appellant for personal injuries for the sum of $ 12,500, with interest thereon at the rate of seven per cent per annum until paid, together with costs and disbursements incurred in said action, amounting to the sum of $ 96.40. An appeal was taken from said judgment to the supreme court of this state and said judgment was affirmed, on the 18th day of March, 1911, and the costs on the appeal were assessed at the sum of $ 46.25. On the 18th day of May, 1911, plaintiff paid such judgment in full, amounting to the sum of $ 14,489.95.

This action was thereafter commenced by the appellant against the respondent for the purpose of recovering the sum of $ 856, the interest accruing upon the sum of $ 5,000 for two years, one month and four days, the period expiring between the date the judgment was entered on the 14th of April, 1909, in the foregoing case, and the payment of said judgment on the 18th of May, 1911, and also for the sum of $ 96.40, the costs upon said trial, and the further sum of $ 46.25, the costs of appellant in said action.

The cause was tried to the court, findings of fact made and judgment was rendered in favor of the defendant that the plaintiff take nothing by its complaint. This appeal is from the judgment.

This action is based upon an insurance policy issued by the respondent to the appellant, which among other things contains the following provision: "In consideration of the warranties of the assured hereinafter set forth and of Fifty-six and no/100 dollars ($ 56.00) estimated premium, the Aetna Life Insurance Company of Hartford, Connecticut (called the company), does hereby insure the Coast Lumber Co. of Boise, County of Ada, State of Idaho (called the assured), against loss or expense arising or resulting from claims upon the assured for damages on account of bodily injuries or death accidentally suffered, by reason of the operation of the trade or business described herein, by any employee or employees of the assured while within the factory, shop, or yards described herein, etc."

This insurance is subject to the following conditions:

"A. The Company's liability for loss on account of an accident resulting in bodily injuries to or in the death of one person is limited to Five Thousand Dollars ($ 5,000.00) and, subject to the same limit for each person, the Company's total liability for loss on account of any one accident resulting in bodily injuries to or in the death of more than one person, is limited to Ten Thousand Dollars ($ 10,000.00). The Company will however as provided in conditions D. and E., hereof, pay the expense of litigation in addition to the sum herein limited, provided that if the Company shall elect to pay the Assured the sum as herein limited, it shall not be liable for further expenses of litigation after such payment shall have been made.

"B. This Policy does not cover loss or...