Empire State Sur. Co. v. Pacific Nat. Lumber Co.
| Decision Date | 07 October 1912 |
| Docket Number | 2,115. |
| Citation | 200 F. 224 |
| Parties | EMPIRE STATE SURETY CO. v. PACIFIC NAT. LUMBER CO. |
| Court | U.S. Court of Appeals — Ninth Circuit |
John P Hartman, of Seattle, Wash., for plaintiff in error.
H. G. & Dix H. Rowland, of Tacoma, Wash., for defendant in error.
Before GILBERT, ROSS, and HUNT, Circuit Judges.
About June, 1909, the Empire State Surety Company, plaintiff in error here, made its policy of insurance to the Pacific National Lumber Company, a lumber corporation, defendant in error herein, wherein the Surety Company, for the period of a year from June 15, 1909, insured the Lumber Company against loss resulting from all liability imposed by law upon the Lumber Company for damages on account of bodily injuries caused by accident occurring to any employe while employed in the lumber mills owned and operated by the Lumber Company and also against the cost of defense in any suit brought against the Lumber Company, and based upon bodily injury suffered by any of its employes. About October 6, 1909, while the policy referred to was in force, one Charles H. Anderson an employe of the Lumber Company, was injured by an accident in the sawmill, whereupon the Lumber Company, acting under the provisions of the policy, notified the Surety Company of the accident. Thereafter, on November 24, 1909, Anderson commenced suit in the state court of Pierce county, Wash., against the Lumber Company, to recover damages which resulted from his accident. He relied upon the failure of the Lumber Company to guard a certain saw and pulley. The Lumber Company answered, and tendered the defense of the action to the Surety Company, though the case was carried on in the name of the Lumber Company. Anderson recovered judgment. The Surety Company, acting by its counsel, Mr. Hartman and Messrs. Hayden & Langhorne, appealed the case in the name of the Lumber Company to the Supreme Court of the state of Washington. That court, on December 1, 1910, affirmed the judgment of the superior court. Anderson v. Pacific National Lumber Company, 60 Wash. 415, 111 P. 337. Thereafter the Lumber Company paid the judgment, and then demanded payment of the amount from the Surety Company. The Surety Company refused payment. This suit was then brought, in January, 1911, by the Lumber Company against the Surety Company, to recover the amount of the judgment and costs. The Surety Company answered, and pleaded affirmatively that before assuming the defense of the cause in the superior court of the state it was agreed in writing between the Surety Company and the Lumber Company that the Surety Company should not waive any of its rights under the policy because of failure on the part of the Lumber Company to comply with the terms thereof, but that all rights on behalf of the Surety Company were reserved, to be enforced at any time, and that in accordance with such understanding the defense of the suit was made by counsel for the Surety Company, and that in this action it is seeking to enforce its rights under the said policy. The answer then pleads a provision in the policy which reads as follows:
-- and sets up that Anderson's action for damages and his recovery were based solely upon the failure of the Lumber Company to comply with the laws of the state of Washington providing for the guarding of dangerous machinery. Replication was filed, trial before a jury was had, and evidence was heard. It was admitted that the Surety Company assumed the defense in the case of Anderson v. Lumber Company in the courts of the state; but it is now contended that the defense to the action in the state court was subject to a notice hereinafter referred to, alleged to have been inclosed in a letter sent to the Lumber Company before the pleadings were served upon the Lumber Company. The notice purported to be a reservation of all rights under the policy of insurance, and under which the Surety Company assumed the defense of the action begun in the state court by Anderson against the Lumber Company. In due course, as the trial proceeded, it became material to determine as a fact whether the Surety Company had sent to the Lumber Company the notice referred to, which the Surety Company claimed it mailed on or about December 27, 1909.
To support its allegations, the Surety Company offered testimony to the effect that on November 23, 1909, it had telegraphed from New York to its agent in Seattle to notify the Lumber Company, in Washington, that it 'accepted notice under reservation of rights'; that a letter to the Lumber Company, dated December 27, 1909, containing a notice of reservation of rights, dated December 4, 1909, had been sent by Mr. Hartman, of counsel for the Surety Company, to the office of Messrs. Hayden & Langhorne, also counsel for the Surety Company; that such letter, with the notice, was received at the office of Messrs. Hayden & Langhorne and mailed by some one there to the Lumber Company. The witness, who identified the copy of the letter which purported to contain the notice referred to, said that he could not positively say whether or not he mailed the letter; nor could he swear that there was an inclosure of a notice of reservation in any letter which he had mailed, inasmuch as he sometimes left such things to the stenographer in the office. The Surety Company also offered a United States registry return receipt, showing that on December 30, 1909, a registered letter had been delivered to the Lumber Company at Tacoma, for which receipt had been signed by I. A. Willis, as agent.
To meet the foregoing evidence, the Lumber Company offered testimony tending to show that no such notice or letter was ever seen by the persons who opened the mail, or by the officer of the Lumber Company who attended to anything of importance, and that no notice of reservation of any rights or denial of liability by the Surety Company had ever been received, with the exception of a letter containing such a notice, dated November 19, 1910, which was many months after verdict was rendered in the case of Anderson v. Lumber Company, and after the case had been appealed to the Supreme Court of the state. The stenographer for the Lumber Company testified that she usually had charge of filing the correspondence; that she had no recollection of ever having seen any letters or papers like the copy of a notice dated December 4, 1909, offered by the Surety Company; and that, although she had made search of the office files, she could find no such papers, but that she did find the notice of reservation of rights dated November 19, 1910.
Upon the issue as thus substantially presented, the court instructed the jury, and...
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