Hase v. Aetna Casualty and Surety Company

• Decision Date: 17 February 1967
• Docket Number: No. 65 C 275(1).,65 C 275(1).
• Citation: Hase v. Aetna Casualty and Surety Company, 266 F.Supp. 952 (E.D. Mo. 1967)
• Parties: Herbert H. HASE, Plaintiff, v. The AETNA CASUALTY AND SURETY COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

266 F. Supp. 952

Herbert H. HASE, Plaintiff, v. The AETNA CASUALTY AND SURETY COMPANY, Defendant.

No. 65 C 275(1).

United States District Court E. D. Missouri, E. D.

February 17, 1967.

COPYRIGHT MATERIAL OMITTED

Charles E. Gray, Gray & Sommers, St. Louis, Mo., for plaintiff.

M. E. Stokes, Associate Counsel, Moser, Marsalek, Carpenter, Cleary & Jaeckel, St. Louis, Mo., for defendant.

HARPER, Chief Judge.

MEMORANDUM OPINION

On December 19, 1963, in the Circuit Court of the City of St. Louis (Cause No. 50684-E) the plaintiff, Herbert H. Hase, obtained a judgment of $45,000.00 against the Wright City Display Manufacturing Company (hereinafter referred to as Display) for injuries he had received while working on a building project which was under the supervision of Display. Subsequently, said judgment remaining unsettled, the plaintiff, a citizen of Missouri, brought this action against the defendant, Aetna Casualty and Surety Company (hereinafter referred to as Aetna), a Connecticut corporation, to recover the sum of $45,000.00, plus interest from December 19, 1963, under Aetna's comprehensive liability insurance policy No. 51 AL 5048.

The jurisdiction of this court exists and is based upon diversity of citizenship and amount.

The facts are before this court by way of oral testimony and numerous exhibits, including the files of the cases of Herbert H. Hase v. Missouri Edison Company (Cause No. 2092, Circuit Court of the County of St. Charles) and Herbert H. Hase v. Laclede Gateway Co., et al. (Cause No. 50684-E, Circuit Court of the City of St. Louis).

On September 21, 1946, the Wright City Manufacturing Company received a certificate of authority to do business in the State of Missouri. On October 2, 1959, the W C Display Manufacturing Company received its certificate of authority to do business in the State of Missouri. W C Display Manufacturing Company purchased all of the assets of the Wright City Manufacturing Company, except its real estate. On October 9, 1959, W C Display Manufacturing Company and Wright City Manufacturing Company filed amendments to their certificates of incorporation whereby W C Display Manufacturing Company became Wright City Display Manufacturing Company (referred to above and hereinafter as Display) and Wright City Manufacturing Company became G & S Manufacturing Company.

Thereafter, the defendant Aetna issued through its agent, Paul Portnoy, its policy No. 51 AL 5048 (the policy in suit), said policy to be effective from July 7, 1960, to July 29, 1961. This policy was a "Comprehensive Liability Policy" covering various companies in which one Allen Portnoy had interests. One of these companies was designated in the policy as the Wright City Manufacturing Company, although extrinsic facts conclusively show that the policy was intended to insure Display (e. g., premiums were determined by an audit of Display's books) and not Wright City Manufacturing Company, which was non-existent under this name at the time the policy was issued.

On April 15, 1961, Display entered into a contract with the Laclede Gateway Company and the O'Fallon Investment Company (hereinafter referred to as Laclede and O'Fallon), whereby Display agreed, in part, as follows:

"It is agreed that Wright City Display Mfg. Company will supervise and erect a building * * * on the property * * * owned by O'Fallon Investment Company and Laclede Gateway Company * * *.

"* * *

"Wright City Display Mfg. Company shall have complete charge of erecting the building according to plans and intends to use J. B. Riggle Construction Company as contractor for this purpose. All bills for construction materials and labor are to be presented to Wright City Display Mfg. Company for approval before payment by O'Fallon Investment Company & Laclede Gateway Company.

"Wright City Display Mfg. Company agrees to indemnify and hold harmless O'Fallon Investment Company & Laclede Gateway Company from and against the claims of anyone on account of the furnishing of labor and materials to the premises for erection of said building, and also agrees to indemnify and hold O'Fallon Investment Company & Laclede Gateway Company harmless from and against claims of any person who may be injured during the construction period and agrees to carry or require the contractor workmen's compensation, public liability and property damage insurance and also agrees to carry public liability insurance to protect O'Fallon Investment Company & Laclede Gateway Company."

Display also agreed to occupy the building as tenant upon its completion.

Pursuant to the above contract, Display hired the J. B. Riggle Construction Company (hereinafter referred to as Riggle) to furnish carpentry labor on the building. Although the contract refers to Riggle as the "contractor", the evidence shows that Display was the prime contractor and that Riggle was merely one of several sub-contractors along with the plumbing and heating contractor, the electrical contractor, the grading contractor, the concrete contractor, etc. Display's employees Shade and Early were frequently at the job site and were completely in charge of the erection of the building, arranging for the various subcontractors and the furnishing of material including the lumber. The subcontractors and materialmen submitted their bills to Display, and Shade and Early would approve these bills before forwarding them to Laclede and O'Fallon for payment. Riggle's bills principally consisted of breakdowns of the number of hours each of its employees worked and the amount due therefor. In October, 1961, the carpentry labor bill was submitted by Hase Construction Company (Hase Construction Company apparently taking over for Riggle towards the completion of the building).

The plaintiff Hase was the immediate employee of Riggle. On July 5, 1961, while working on the said building the plaintiff came into contact with an overhead high voltage line belonging to the Missouri Edison Company, and as a result he was seriously burned.

Following the accident the plaintiff received workmen's compensation benefits from Riggle's insurance carrier, the Standard Accident Insurance Company. Display also had a workmen's compensation policy with the defendant Aetna, but Hase did not seek payments under that policy. On October 21, 1961, in the Circuit Court of St. Charles County, the plaintiff filed a petition based on negligence against the Missouri Edison Company, being Cause No. 2092. The plaintiff dismissed this action without prejudice on March 4, 1963.

On October 30, 1962, in the Circuit Court of the City of St. Louis, the plaintiff filed a petition based upon alleged negligence against Laclede, O'Fallon and the Missouri Edison Company.

Thereafter, between November 8, 1962, and December 31, 1962, a disputation through a series of letters and meetings was carried on between representatives of Display and representatives of Aetna concerning Aetna's liability to defend Laclede and O'Fallon in the plaintiff Hase's action then pending in the Circuit Court of the City of St. Louis. Display took the position that Aetna should defend the action under its policy No. 51 AL 5048 since Display would be liable to O'Fallon and Laclede under the indemnification clause in the contract to erect the building. Further, Display asserted that the policy was meant to cover Display even though it named the Wright City Manufacturing Company as the named insured (among others). Aetna's position is best summed up by the following excerpt from a letter dated December 31, 1962, written by Mr. Scott of Aetna's claims department to Mr. Stone, Display's attorney:

"You wanted to know whether or not we would defend Wright City Display Company in the event they became defendants in the suit. We told you that they were not named as an insured under our policy and that, even if they had been so named, there was a violation of the provision of the policy which requires notice of accident as soon as practicable as a result of which we might have been prejudiced.

"We further told you that in view of the statements made concerning the Wright City Mfg. Co. and the Wright City Display Mfg. Co., we would be willing to make an investigation in order to give you a definite answer to your question, provided Wright City Display Mfg. Co. is willing to execute an agreement that all of our rights under the policy would be preserved and that our investigation would not constitute a waiver of any such rights."

Display refused to execute the requested non-waiver agreement even though a time limit of sixty days was to be placed thereon.

On March 5, 1963, Hase filed an amended petition in his suit then pending in the Circuit Court of the City of St. Louis, joining Display as a defendant. Thereafter Display again requested Aetna to defend the action and Aetna again refused.

On April 15, 1963, Display filed an answer to Hase's amended petition. Paragraph 4 of this answer contained an affirmative allegation that Display was not liable for Hase's injuries because Hase was a statutory employee of Display under Section 287.040, Revised Statutes of Missouri, and since Display was a major employer under the workmen's compensation laws of Missouri, Hase's sole remedy against Display was under workmen's compensation.

On December 19, 1963, Hase dismissed the action without prejudice against O'Fallon, Laclede and Missouri Edison Company, receiving $22,500.00 in settlement from the Missouri Edison Company, $3,000.00 of which was subsequently paid to Riggle and its insurer, Standard Accident Insurance Company, for benefits they had paid to Hase. On the same day, Hase, pursuant to the provisions of 537.065 of the Revised Statutes of Missouri, and for and in consideration of $1.00, entered into an agreement with Display whereby Display recognized that plaintiff had an unliquidated claim for damages against it, but in the event that judgment was obtained on said claim, the plaintiff agreed not to...