Fairbanks Canning Co. v. London Guaranty and Accident Co.

• Citation: 133 S.W. 664,154 Mo.App. 327
• Parties: FAIRBANKS CANNING CO., Appellant, v. LONDON GUARANTY AND ACCIDENT CO., Respondent
• Decision Date: 02 January 1911
• Court: Kansas Court of Appeals

133 S.W. 664

154 Mo.App. 327

FAIRBANKS CANNING CO., Appellant, v. LONDON GUARANTY AND ACCIDENT CO., Respondent

Court of Appeals of Missouri, Kansas City

January 2, 1911

Appeal from Buchanan Circuit Court.--Hon. L. J. Eastin, Judge.

REVERSED AND REMANDED (with directions).

Judgment reversed and cause remanded.

Mytton & Parkinson and W. B. Norris for appellant.

(1) Where an employer's liability insurance company, under its policy, undertakes and controls the defense of a personal injury suit brought against the assured by one of its employees, the insurance company thereby waives the right to claim that the injured employee was not covered by the policy, and by its conduct in defending such suit is estopped from denying its liability under the policy. Mining Co v. Fidelity & Casualty Co., 126 Mo.App. 104; Myton v. Fidelity & Casualty Co., 117 Mo.App. 442; Tozer v. Ocean Accident & Guarantee Corporation, Limited, 94 Minn. 478; Portland Cement Co. v. Insurance Co., 11 A.D. 411; affirmed in 162 N.Y. 399; Employers Liability Assurance Corporation v. Coal & Coke Co., 141 F. 962; Navigation Co. v. Casualty Co., 81 P. 826; Casualty Co. v. Telephone Co., 139 F. 602. (2) This is the law in a case where the injured is a child employed in violation of the statute, notwithstanding the policy expressly provides that it does not cover a child employed contrary to law. Tozer v. Ocean Accident & Guarantee Corporation, Ltd., 94 Minn. 478; Cotton Mills v Insurance Co., 120 Ky. 218. (3) In such a case it is not necessary for the assured to show prejudice, as prejudice will be conclusively presumed. Boyle Mining Co. v Fidelity & Casualty Co., 126 Mo.App. 104; Myton v. Fidelity & Casualty Co., 117 Mo.App. 442; Portland Cement Co. v. Insurance Co., 11 A.D. 411; Tozer v. Ocean Accident & Guarantee Corporation, Ltd., 94 Minn. 478; Employers Liability Assurance Corporation v. Coal & Coke Co., 141 F. 962. (4) The theory underlying these decisions is that where the assured delivers the summons in the personal injury suit to the insurer, the insurer must then elect whether the case is one covered by the policy or not, and if the insurance company elects to defend it cannot afterwards be heard to say that the suit ws based on a claim not covered by the policy. Tozer v. Ocean Accident & Guarantee Corporation, Ltd., 94 Minn. 478; Portland Cement Co. v. Insurance Co., 11 A.D. 411. (5) Contracts of employers' liability insurance are to be construed in favor of the insured; and where there is doubt or uncertainty in their terms, or when they will be susceptible of two interpretations, that which will, without doing violence to the other parts of the policy, sustain the claim of the insured must be adopted. Casualty Co. v. Telegraph Co., 152 F. 961; Packing Co. v. Casualty Co., 132 F. 623; 15 Cyclopedia of Law and Procedure, 1037, Mining Co. v. Casualty Co., 128 S.W. 204.

Harkless, Crysler & Histed, F. J. Canty, Percy Werner, Everett Pattison and W. K. Amick for respondent.

(1) Inasmuch as the court below did not assign any specific reason for granting a new trial, if the record shows any valid ground for this action, it must be sustained. Fink v. McCue, 123 Mo.App. 313; Smart v. Kansas City, 208 Mo. 162, 183; James v. Oliver, 129 Mo.App. 86; Morelock v. Railroad, 112 Mo.App. 640; Crow v. Crow, 124 Mo.App. 120; Ottomeyer v. Pritchett, 178 Mo. 160. (2) Appellant, plaintiff below, not being the "assured" under the policy sued on, cannot maintain this action. The policy sued on is a personal contract with Nelson Morris & Co. as the assured. Kelly v. London Guarantee & Accident Co., 97 Mo.App. 623; St. Louis & Tennessee Packet Co. v. Railroad, 35 Mo.App. 272. (3) The "subject-matter" of the insurance in this case is "any employee or employees of the assured while within the factory, etc., during the operation of the trade or business described," etc., subject to the express exception that it shall not "cover loss from liability for injuries . . . to any child employed by the assured contrary to law, or any child employed under 14 years of age, where no statute restricts the age of employment." The unimpeachable record evidence shows that the "injured" in this case was not 13 years of age when employed, and not 14 when injured. Therefore this child was not included in the "subject-matter" covered by the policy. (4) Where the facts are known to both parties, or both have the same means of ascertaining the truth, there can be no estoppel. Bales v. Perry, 51 Mo. 449; Blodgett v. Perry, 97 Mo. 263; Brant v. Virginia Coal Co., 93 U.S. 326; Steel v. St. Louis Smelting Co., 146 U.S. 447; Fitzpatrick v. Flannigan, 106 U.S. 448; Sturm v. Boker, 150 U.S. 312; Holcomb v. Boynton, 151 Ill. 294, 300; 11 Am. and Eng. Ency. (2 Ed.), p. 434. (5) Respondent had a right to rely upon the statement of appellant, contained in its report of the accident in question, that the injured was about (i. e. substantially) 16 years of age, and had a right to deny its liability, as it did, as soon as it discovered that this statement was false. Hubbard v. Missouri Reserve Assn., 80 F. 681; Ins. Co. v. Wolfe, 95 U.S. 326, 333; Cabel v. Life Ins. Co., 111 F. 19, 31.

OPINION

ELLISON, J.

The defendant's business is to insure or indemnify employers for loss by reason of damages accruing to employees on account of injuries received by the latter for which the employer would be legally liable. This action is for the indemnity alleged to be due plaintiff by reason of damages paid to one of its employees for an injury received by him. The verdict in the trial court was for the plaintiff, but a motion for new trial was sustained, and plaintiff appealed from that order.

The contract of insurance named as the insured, Nelson Morris & Co., and others set forth in a schedule; the words of the policy being "Nelson Morris and Co., a co-partnership, et al. (See Schedule.)" The schedule named the plaintiff as one of the insured, it being one among a number of others, in which Nelson Morris & Co. , had an interest.

The policy contained the following among other conditions, viz:

"B. This policy does not cover loss from liability for injuries or death to or caused by any child employed by the assured contrary to law or any child employed under fourteen years of age where no statute restricts the age of employment.

"C. Upon the occurrence of an accident the assured shall give immediate written notice thereof, with the fullest information obtainable at the time, to the company's head office in Chicago, or to the company's authorized agent. If a claim is made on account of such accident the assured shall give like notice thereof with full particulars. The assured shall at all times render to the company all co-operation and assistance in his power.

"D. If thereafter any suit is brought against the assured to enforce a claim for damages on account of an accident covered by this policy, the assured shall immediately forward to the company's head office in Chicago, every summons or other process as soon as the same shall have been served on him, and the company will, at its own cost, defend such suit in the name and on behalf of the assured unless the company shall elect to settle the same or to pay the assured the indemnity provided for in condition A hereof.

"E. The assured shall not voluntarily assume any liability, nor shall the assured, without the written consent of the company previously given, incur any expense or settle any claim, except at its own cost, or interfere in any negotiation for settlement or in any legal proceeding; except that the assured may provide at the time of the accident such immediate surgical relief as is imperative. Whenever requested by the company, the assured shall aid in securing information and evidence and the attendance of witnesses and in effecting settlements and in prosecuting appeals."

Plaintiff operated a meat packing establishment in St. Joseph Missouri, and in June, 1906, employed one James Stamp in its service, the evidence tending to show that he represented himself to be sixteen years of age. In November following he was permanently injured while engaged in performing his duties, and plaintiff immediately telephoned the information to defendant's lawyer in St. Joseph, who had defendant's adjuster or agent who investigated claims, to look into the matter. Plaintiff also reported the injury to defendant's representatives in the city of Chicago, Ill. Defendant treated the matter as one for which it was ultimately liable. In the following April, 1907, James Stamp, through his next friend, brought suit against plaintiff, in the state court, for $ 25,000 damages, and his father brought his action, for loss of services of his son, in the sum of $ 2000. The writ and other papers were immediately turned over to defendant who took charge and control and assumed the expense of the defense. Among other things, it had the case of James Stamp transferred to the Federal court under the provision of the federal law. As time approached for trial defendant began negotiations for a settlement of the cases and obtained an offer of $ 7000 from the attorney of the Stamps. That sum being two thousand dollars more than defendant's maximum liability under the policy, it made necessary to confer with plaintiff as to the proportion each should pay. They did confer, and in the meantime it was, in some way, ascertained that the cases could be adjusted for $ 6000. Defendant was willing to pay $ 3500 of this sum and plaintiff $ 1500. This was only $ 1000 of being sufficient to meet the terms of the Stamps. About ten months of time had expired from the date of the injury and the cases were approaching trial. Defendant then, without notice to plaintiff of its intentions, took depositions...