Dryden v. Ocean Accident & Guarantee Corp., Ltd.

• Decision Date: 26 October 1943
• Docket Number: No. 8310.,8310.
• Citation: 138 F.2d 291
• Parties: DRYDEN et al. v. OCEAN ACCIDENT & GUARANTEE CORPORATION, LIMITED.
• Court: U.S. Court of Appeals — Seventh Circuit

138 F.2d 291 (1943)

DRYDEN et al. v. OCEAN ACCIDENT & GUARANTEE CORPORATION, LIMITED.

No. 8310.

Circuit Court of Appeals, Seventh Circuit.

October 26, 1943.

Louis H. Strasser, of St. Louis, Mo., and Henry A. Converse, of Springfield, Ill., for plaintiff-appellee.

Verlie Eastman & Schlafly and Emerson Baetz, all of Alton, Ill., for Hugh C. Blaske, defendant and third party plaintiff-appellee.

Joseph N. Hassett, of St. Louis, Mo., and Marks Alexander, of Springfield, Ill., for Ocean Accident & Guarantee Corp., third party defendant-appellant.

Emerson Baetz and Verlie, Eastman & Schlafly, all of Alton, Illinois, for third party plaintiff-appellee (insured).

Before SPARKS, MAJOR, and KERNER, Circuit Judges.

KERNER, Circuit Judge.

A seaman sues his employer for money expended in obtaining a cure and maintaining himself while unable to work as a result of injuries incurred in the destruction of his employer's boat by fire. The defendant-employer seeks to have its insurer defend the cause and pay such judgment as might be rendered. The insurer resists such liability on the ground that the recovery sought was for "maintenance and cure" — damages which arise from an employer-employee contract relation, and which are therefore not consequent upon a "liability imposed by law" which was the coverage provided for by the insurance policy. But the trial court concluded, on cross-motions by insured and insurer for summary judgment, that the insurer had a duty under its policy to defend the instant suit, it is from this ruling that the insurer appeals.

The issue here presented is simply one of construction of the insurance policy involved. A more detailed statement of the pleadings is set forth below.¹

Appellant's argument stems from a strict and technical construction of the policy's phrase "liability imposed by law." It argues that the seaman's right to maintenance and cure being incident to the contract relation of employment, there is here sought to be enforced a pure contract right, not a right correlative to a "liability imposed by law," or an action ex delicto due to negligence. With this argument we are unable to agree.

Concededly an employee-employer relationship is a contractual one. Probably many of the details of that relationship — wages, hours, etc., are fixed by specific contract provisions and are express contractual rights. But the right here sought to be enforced by the seaman was not founded on a "meeting of the minds" — it was inexorably attached by ancient and established maritime law to every seaman's contract of employment. The parties had no choice in the matter. It was a duty superimposed by law coincidental with the formation of the contractual relation. The seaman could not contract against it — his or his employer's will is powerless to destroy it. This aspect alone reflects the true nature of the right here sought to be enforced. It is a right which the maritime law, in the wisdom of experience, found necessary and just, for the complete protection of seamen, whom maritime law has treated as "wards of admiralty."

Both parties have cited the clarifying and exhaustive opinion of Justice Cardozo in Cortes v. Baltimore Insular Line, 287 U.S. 367, 53 S.Ct. 173, 174, 77 L. Ed. 368, for support of their respective positions. We feel the discussion² there forecloses any doubt as to the source of the employer's duty to the seaman for "maintenance and cure" as being a right whose source arises in law, although applicable only to persons standing in the contractual relation of seaman and employer.

Justice Cardozo stated: "The duty * * * to provide the seaman with maintenance and cure is imposed by the law itself as one annexed to the employment." The later case of Calmar Steamship Corp. v. Taylor, 303 U.S. 525, 527, 58 S.Ct. 651, 653, 82 L.Ed. 993, calls the liability for maintenance and cure the "ancient duty of a vessel," and the case of O'Donnell v. Great Lakes Dredge & Dock Co., 318 U.S. 36, 41, 63 S.Ct. 488, 491, 87 L.Ed. ___, states, "From its dawn, the maritime law has recognized the seaman's right to maintenance and cure for injuries suffered in the course of his service to his vessel, * * *." See also Loverich v. Warner Co., 3 Cir., 118 F.2d 690, 692, for a statement similar to that in the Cortes case.

Since we conclude that the coverage of the policy was sufficiently broad to comprehend the liability here sought to be enforced, the only questions which remain are (a) was that coverage lost by express exception appearing later in the policy, or (b) through contemporaneous construction of the parties. We think such coverage was not abrogated by either circumstances.

The insuring clause is a very broad one — "To Indemnify this Employer against loss by reason of the liability imposed upon him by law for damages * * *." This coverage appears in the main body of the policy. At the close of the policy (in addition to many endorsements) there are "Declarations" containing many paragraphs. In one of these paragraphs is set forth a table containing the item "Classification of Operations," subsection "1(a) Tugboats — all kinds. No. 7020." It is this figure of No. 7020 which constitutes the alleged exception. The affidavit of John McBain sets forth what "Code 7020" is, i.e.: "Code 7020. A Standard Workmen's Compensation and Employers' Liability policy shall be used with limitation of the liability for damages to specified amounts. This form of policy provides coverage for the following obligations: (1) Such legal liability as may exist to pay workmen's compensation. * * * (2) Liability to pay damages under the various laws of negligence * * *, excluding any liability imposed upon the employer arising from any obligation to provide transportation, wages, maintenance and cure."

It would be a harsh conclusion to hold that a broad and general coverage against loss, contained in the main body of the insurance policy should be whittled down to a liability for workmen's compensation liability simply by the use of the figure 7020 appearing in a table annexed to some declarations, themselves annexed to the policy. Perhaps insured knew what "7020" meant, perhaps not. But even the document "7020" is not an agreement; it seems to be a statement of policy, and contemplates future action, not present. Public policy requires that exceptions nullifying liability be more patent to an insured than the vague embodiment in a numeral appearing in a remote place in an appendage to the policy.

(b) Insurer contends that insured's letter³ of January 6, 1940, in regard to other claims, is a contemporaneous...