Compton Heights L. Co. v. General A., F. & L. Assur. Corp.

• Decision Date: 16 December 1916
• Docket Number: No. 1797.,1797.
• Citation: 190 S.W. 382,195 Mo. App. 313
• Parties: COMPTON HEIGHTS LAUNDRY CO. v. GENERAL ACCIDENT, FIRE & LIFE ASSUR. CORP., LIMITED, OF PERTH, SCOTLAND.
• Court: Missouri Court of Appeals

190 S.W. 382

195 Mo. App. 313

COMPTON HEIGHTS LAUNDRY CO. v. GENERAL ACCIDENT, FIRE & LIFE ASSUR. CORP., LIMITED, OF PERTH, SCOTLAND.

No. 1797.

Springfield Court of Appeals. Missouri.

December 16, 1916.

On Motion for Rehearing, January 1, 1917.

Appeal from Circuit Court, Butler County; J. P. Foard, Judge.

Action by Compton Heights Laundry Company against the General Accident, Fire & Life Assurance Corporation, Limited, of Perth, Scotland. Judgment for plaintiff, and defendant appeals. Reversed, and cause remanded.

Holland, Rutledge & Lashly and Ernest A. Green, all of St. Louis, for appellant. Merritt U. Hayden, of St. Louis, and Mozley & Green, of Poplar Bluff, for respondent.

ROBERTSON, P. J.

This is an action on an employer's liability policy. The suit was brought in Iron county, and by agreement the venue was changed to Butler county. By the terms of the policy defendant agreed to protect the insured for one year from May 18, 1914, against loss by reason of liability for damages on account of the injuries of its employés suffered through the assured's negligence. On December 1, 1914, an employé in the laundry was injured, afterwards sued the plaintiff, obtained a judgment for $3,750 which the plaintiff paid, and then brought this suit to recover said amount, together with the costs therein and their attorney's fees, also 10 per cent. as damages and attorney's fees in this case for vexatious refusal to pay. The father of the employé made a claim against plaintiff for loss of the services of said employé, and that was settled by plaintiff paying him $250, and that is included in this suit. A jury trial was had and resulted in a verdict for plaintiff for $4,225.25 and an attorney's fee for this case at the sum of $200. The defendant has appealed.

The defenses are that the policy was not issued, or assigned with the consent of the defendant, to the plaintiff, and that there is no liability on the part of the defendant by reason of the following rider attached to and made a part of the policy:

"It is hereby understood and agreed, that all the mangling machines owned or operated by the assured shall be provided with fixed guards or safety feed tables adjusted at the point of contact of the rolls so as to prevent the fingers or hands of the employés from being drawn into the rolls, and that such guards shall be maintained during the term of this policy. Any failure on the part of the assured to provide and maintain such guards shall relieve the General Accident Fire & Life Assurance Corporation, Limited, from liability on account of personal accident due to such neglect, and this policy is accepted by the assured accordingly."

The policy limited the defendant's liability to $5,000 for any one person injured. In the suit brought by the injured party involved in this litigation damages in the sum of $10,000 were sought to be recovered.

The policy was issued to John F. Winter, Louis M. Winter, and Joseph N. Barthelmass doing business in St. Louis as Compton Heights Laundry. In the latter part of June, 1914, these parties, being desirous of organizing a corporation under the laws of Missouri, informed the general manager of defendant for the state of Missouri, and a portion of Illinois, that they were going to incorporate and requested him to see that the insurance properly covered the corporation, and this the manager agreed to do. The incorporation was perfected and the certificate issued on June 30, 1914, and thereafter the business was continued at the same place by the same individuals and under the same management, although there were no changes or notations made upon the policy. The premium was based upon and regulated by the amount of wages paid the employés and called the pay roll. An auditor for the defendant examined the pay roll from the week ending May 23, 1914, to the week ending February 27, 1915. He also made an audit of the pay roll up to March 1, 1915, when the policy was canceled. So far as the record discloses the premium was paid up to the date of the cancellation. After the accident happened and after the suit was brought by the injured person against the plaintiff here as a corporation, the defendants denied liability therefor solely upon the ground that by reason of the rider it was not liable to plaintiffs on account of any claim made by the injured person.

The injury caused the employé, and upon which the action to recover damages therefor was based, was caused by the failure of plaintiff to equip its machinery as required in said rider. The defendant was duly notified of the accident, and upon the next day thereafter its representative was at the laundry taking the statements of witnesses who were working with the injured employé at the time of the accident. Two days later another employé of defendant in charge of its claim department in St. Louis was at the laundry investigating the accident, examined the machine where it occurred, and stated to plaintiff's manager that they would take care of the matter. Various employés of defendant were thereafter at the laundry at various times looking after the matter of this accident and made numerous visits to the injured employé endeavoring to effect a settlement and made an offer of compromise. The investigations and the negotiations with the injured party were continued in behalf of defendant until January 16, 1915, when a letter was written to the plaintiff quoting the contents of the rider and stating that the investigation of the case would be continued "under full reservation of rights under the terms of our policy, and if it should develop that this machine was not provided with a fixed guard or safety feed table such as is required by the terms of your policy, and if above injured attempts to and succeeds in predicating liability on the failure above mentioned, then in such event we would not be required to indemnify you for any judgment that might be obtained by above injured against you." This letter was written in behalf of defendant by said employé in charge of the defendant's claim department at St. Louis who had examined the machine and negotiated with the injured employé. Under date of February 13, 1915, the same employé of defendant in its behalf wrote another letter to the plaintiff stating that they had investigated the accident and discovered that the injury occurred on a machine that was not equipped as required by said rider and denied liability under its policy on account of the injury. The defendant alleges in its answer that the injury, if any, to plaintiff's employé, was due to the absence of the guard referred to in the rider, and the facts and circumstances tend to prove that during all the time its agents were investigating the accident, promising to take charge of the claim and endeavoring to settle it, they knew that there was but one ground of negligence relied upon, and this would justify the further conclusion that what they did was not for the purpose of ascertaining if the policy covered the accident, but for the purpose of treating it as a liability thereunder. On March 8, 1915, the injured party commenced suit against the plaintiff, and it caused a copy of the summons and petition to be sent to the defendant to which it replied, as above stated, denying any obligation to proceed with the defense solely because the accident involved was not covered by the policy. The plaintiff here, the defendant in that case, filed an answer in the case, and after some negotiations a settlement was agreed upon whereby the injured person was to obtain a judgment for $3,750. Testimony was introduced, and a judgment entered for the amount agreed upon. The injured person was a minor, and the father made a claim for loss of services which was compromised for $250 without litigation.

Plaintiff in its petition, after alleging the commencement of the suit against it by the injured party, the existence of an opportunity to compromise and settle the claim, and notice to the defendant of that fact, alleged that such proceedings were had in said suit that judgment was rendered therein as aforesaid. The defendant in its answer which contains a general denial alleges, besides the other defenses, the terms of its policy to the effect that it was liable to the assured only for loss actually sustained and paid in satisfaction of a judgment after trial of the issue, and alleged that while a judgment was entered in said case it was not after a trial, but that the judgment was rendered by consent of the parties and without any trial of the issues. This portion of the answer was stricken out. No exceptions thereto were saved, and no complaint was made of the court's action in this regard in the motion for a new trial.

The plaintiff, in order to meet the defense as to the effect of the rider, contends that it had as a matter of law and fact met the requirements of the provisions of the rider. This is based upon an argument concerning what could be done towards a literal compliance. We do not deem it necessary to go into the details of the construction and arrangement of the machine, but it is sufficient to say that we do not uphold plaintiff's contention. The plaintiff did not comply with this provision, and, if the effects thereof can be avoided, it must be done in this case on the theory of a waiver on the part of the defendant.

The contention made in behalf of defendant that it is not liable to the plaintiff because of the fact that the policy was issued to and indemnified a partnership cannot be upheld. The same agency that was its general manager for Missouri and portions of Illinois was also engaged in and had charge of the soliciting, collecting premiums, and issuing policies in the city of St. Louis. The policies did not become effective until after countersigned by the person in charge of that agency. This agency by its conduct which we have related foreclosed defendant's right to insist on a formal written assignment...