Guerdon Industries, Inc. v. Fidelity & Cas. Co. of New York

• Decision Date: 04 September 1963
• Docket Number: No. 22,22
• Citation: Guerdon Industries, Inc. v. Fidelity & Cas. Co. of New York, 123 N.W.2d 143, 371 Mich. 12 (Mich. 1963)
• Parties: GUERDON INDUSTRIES, INC., a Delaware corporation, Plaintiff and Appellant, v. FIDELITY & CASUALTY COMPANY OF NEW YORK, a New York corporation, Defendant and Appellee.
• Court: Michigan Supreme Court

Page 143

123 N.W.2d 143

371 Mich. 12

GUERDON INDUSTRIES, INC., a Delaware corporation, Plaintiff and Appellant, v. FIDELITY & CASUALTY COMPANY OF NEW YORK, a New York corporation, Defendant and Appellee.

No. 22.

Supreme Court of Michigan.

Sept. 4, 1963.

Goodman & Shifman, Southfield (Bernard L. Goodman, Southfield, of counsel), for plaintiff and appellant.

Sweeny, Dodd, Kerr, Wattles & Russell, Detroit (J. William Phillips, Detroit, of counsel), for defendant and appellee.

Before the Entire Bench.

SMITH, Justice.

By stipulation of the parties, the case was submitted on the following agreed statement of facts:

'On April 1, 1960, plaintiff, Guerdon Industries, purchased from defendant, Fidelity and Casualty Company of New York, a comprehensive general and automobile liability policy and paid to the defendant $19,866 as the premium on this policy.

'Under 'coverage A' of the insuring agreement, the defendant agreed 'to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person and caused by accident.' This coverage specifically applied to products liability up to $500,000. In addition, under 'coverage C' of the policy the defendant agreed 'to pay on behalf of he insured all sums which the insured shall become legall obligated to pay as damages because of injury to or destruction of property including the loss of the use thereof, caused by accident.' The limits of defendant's obligation under this provision for products liability was established at $100,000.

'The insuring agreement further provided:

"'With respect to such insurance as is afforded by this policy, the company shall: (a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; * * *''

'During the term of the policy, Mr. and Mrs. Richard F. Wallen purchased a house trailer manufactured by the plaintiff from one of plaintiff's dealers and thereafter instituted a suit against plaintiff and plaintiff's dealer John Trojan (Wayne county circuit court cause Number 319990).

"In paragraph 7 of count 1 of their declaration, Mr. and Mrs. Wallen alleged:

"'Said trailer was in fact not as represented, because:

"'A. It contained inferior plumbing

"'B. That the bathtub in said trailer was not connected to drainage pipe

"'C. That the said bathtub was connected by a faulty fitting and delivered with a broken fitting causing drainage of said bathtub to saturate the floor, outside covering, below the floor, and the insulation contained between them and by capilarity saturating and causing wet insulation between the inside and outside aluminum surfaces of said trailer causing said aluminum outside covering to warp and buskle ruining the appearance of said trailer, and greatly diminishing and ruining the insulation required in said side walls and flooring * * *'

"In paragraph 9 of count 1, it was alleged that:

"'Plaintiff, Richard F. Wallen's minor affiction of arthritis has been aggravated to an extreme case of rheumatoid arthritis accompanied with greatly increased pain and suffering and plaintiff, Lorain Wallen has developed a rheumatoid arthritic condition and suffers great pain and inconvenience because of the unhealthy conditions caused by the negligence of the defendants in fraudulently and negligently delivering a trailer not in accord with their representations.''

"In paragraph 4 of count 2 of the declaration it was alleged:

"'Defendants warranted said trailer to be new, free of broken, injured or defective parts, free from defects of manufacture upon its delivery at defendants lot and proper placement thereon by defendant. As a result of aforementioned defects plaintiffs have suffered great damage in excess of $15,500, because of pain and suffering up to the present time and will in the future suffer as a result of said breach of warranty. And that said trailer has rotted, and a large part of the insulation and other materials have been damaged and the floor buckling and the plywood composing same disintegrating beyond repair except for replacement.'

"In paragraph 6 of count 3 of the declaration it was alleged:

"'By reason of said breach of warranty of fitness plaintiffs were caused great discomfort and illness, their clothing and other property were damaged by fungus growths, the trailer greatly damaged, their peace of mind was disturbed and they suffered great mental anguish and physical pain, all to the plaintiff's damage in the amount of $15,500.'

"And in paragraph 3 through 5 of count 5 of the declaration the Wallens alleged:

"'Defendants knew, or with reasonable inquiry should have known, that failure to hook up the bathtub to the soil pipe would cause large amounts of water and moisture throughout said trailer creating a damp condition, unhealthy to human beings and conducive to decay, fungus growth, corrosion, and offensive odors.

"'Notwithstanding the knowledge and duties of defendants to manufacture and properly provide drainage and to inspect said trailer upon delivery. That said proper prainage was not provided, and failed, and defendants turned possession of said trailer over to your plaintiffs in an unfit and unsanitary condition due to its negligent construction necessarily resulting in the damages alleged.

"'As a direct, proximate and natural consequence of defendants negligent construction of said trailer, plaintiffs...