CY Thomason Co. v. Lumbermens Mutual Casualty Co., 6087.
| Decision Date | 03 August 1950 |
| Docket Number | No. 6087.,6087. |
| Citation | 183 F.2d 729 |
| Parties | C. Y. THOMASON CO. et al. v. LUMBERMENS MUTUAL CASUALTY CO. |
| Court | U.S. Court of Appeals — Fourth Circuit |
C. A. Mays, Greenwood, S. C., and Marshall T. Mays, Greenwood, S. C. (J. W. Bradford, Jr., and Mays, Featherstone & Bradford, all of Greenwood, S. C., on the brief), for appellants.
F. B. Grier, Jr., Columbia, S. C. (Nelson, Mullins & Grier, Columbia, S. C., on the brief), for appellee.
Before PARKER, Chief Judge, and SOPER, Circuit Judge, and MOORE, District Judge.
Lumbermens Mutual Casualty Company, an Illinois Corporation, brought this action in the District Court for the Western District of South Carolina against the C. Y. Thomason Company of Greenwood, South Carolina, and others seeking a declaratory decree under 28 U.S.C.A. § 2201 that a certain accident policy issued by it to Thomason does not cover the action brought by Rueben E. Turner against Thomason and others in the Court of Common Pleas for Florence County, South Carolina, and that, consequently, the insurer was under no obligation to defend and indemnify the assured against any loss arising out of said action.
On December 11, 1944 the City of Florence and the State Highway Department of South Carolina, having in contemplation the building of an underpass in the City of Florence under the tracks of the Atlantic Coast Line Railway Company, entered into an agreement under which the City of Florence agreed to relieve the State Highway Department of all responsibility and liability on account of any property damage incident to said construction. On July 14, 1945 the State Highway Department let the contract for the project to the Thomason Company. The contract contained the following provision:
"The Contractor shall indemnify and save harmless the County, the State, the Party of the First Part (State Highway Department) and all of their officers, agents, and employees, from all suits or claims of any character brought by reason of injuries received, or damages sustained, at the hands of the Contractor or his agents in consequence of any act of omission or commission, neglect or misconduct, on the part of the aforesaid Contractor or his agents in: (1) Safeguarding the work, (2) using unacceptable materials in constructing the roadway, (3) infringing on any patent, trade mark, or copyright, (4) violating any law, ordinance, order, or decree, and (5) any and all other acts causing injuries or damages to person or property."
Thomason was required to furnish and did furnish a bond with the United States Guarantee Company of New York as the security in the sum of $246,680.25, conditioned upon the performance of all terms and conditions of the contract and the payment and discharge of all responsibilities for injuries which might be incurred in and about the construction.
On September 1, 1945 Thomason procured the policy in suit, which covered the area of the operation of the construction contract, but did not cover the entire field of the obligation of Thomason in the construction contract to indemnify the State Highway Department from all suits or claims by reason of any injuries received or damages sustained at its hands in the course of the work. The Lumbermen's policy expressly provided that the insurance afforded was only in respect to accidents in consequence of such hazards as were indicated by specific premium charges. It was limited to operations of Thomason in South Carolina, North Carolina and Georgia, and to the South Carolina State Highway project with respect to the full limit of the liability specified. It obligated the insured to pay all sums within the limits specified which the insured might be obligated to pay by reason of liability imposed by law because of bodily injury caused by accident, or because of injury to property caused by accident, arising out of the operations of the insured at the designated locality.
The policy also obligated the insurer to defend in the name of the insured any suit against it, alleging such an injury and seeking damages on account thereof, even if such suit should be groundless, false or fraudulent.
In August, 1947 Reuben E. Turner, a garage owner in the City of Florence, brought suit in the Court of Common Pleas of Florence County, South Carolina, against the city of Florence and the State Highway Department for damages in the amount of $10,000 which resulted, according to his allegations, from the construction of the underpass adjacent to his property. On motion of the City of Florence and the State Highway Department the Thomason Company and the United States Guarantee Company were joined as parties defendant to the action, and Turner filed an amended complaint in which he charged in effect that the City and State, through their contractor, had committed the following wrongful acts:
The contractor made an excavation at the intersection of Palmetto and Church Streets in the City of Florence so as to enable a state highway, which follows Palmetto Street, to pass under the railroad tracks. The Turner garage is situate on the south side of Palmetto Street, adjacent to an open lot at the southeast corner of Palmetto and Church Streets. The contractor dug a ditch across this lot close to the garage and piled up the earth near the northwest corner of the building and left the lot in this condition from the beginning until the end of the work during a period of more than a year. The result was that during periods of heavy rain earth was washed into the garage to the depth of two inches and water to the depth of one foot and the garage remained wet and damp during the winter and spring and in wet periods throughout the year. The excavation on Palmetto Street was almost directly in front of the garage so that entrance from Palmetto Street was precluded and there was no ingress or egress for automobiles except over the sidewalk. When Palmetto Street was finished and repaved, the contractor raised the sidewalk three or four inches above the level of the garage floor which did damage to automobiles using the entrance. As the result of these acts the business of the garage was reduced in approximately the sum of $8,000 from that done in the preceding year and this occured during a period of great activity in the business of automobile repairs. This loss could have been obviated because the excavation in the streets and...
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