International Paper Co. v. Continental Cas. Co.

• Court: New York Court of Appeals
• Writing for the Court: GABRIELLI; BREITEL
• Citation: 35 N.Y.2d 322,361 N.Y.S.2d 873,320 N.E.2d 619
• Decision Date: 20 November 1974
• Parties: , 320 N.E.2d 619 INTERNATIONAL PAPER COMPANY, Appellant, v. CONTINENTAL CASUALTY COMPANY, Respondent.

Page 873

361 N.Y.S.2d 873 35 N.Y.2d 322, 320 N.E.2d 619 INTERNATIONAL PAPER COMPANY, Appellant,
v.
CONTINENTAL CASUALTY COMPANY, Respondent. Court of Appeals of New York. Nov. 20, 1974.

[35 N.Y.2d 323]

Page 874

[320 N.E.2d 620] Alfred E. Schretter, Henry L. King and Allan J. Mayer, New York City, for appellant.

Richard J. Burke and John E. Morris, New York City, for respondent.

[35 N.Y.2d 324] GABRIELLI, Judge.

Plaintiff seeks to recover from its insurer the legal fees and disbursements incurred in defending an action brought by an employee in which damages were sought for personal injuries sustained on January 28, 1966 by reason of plaintiff's alleged negligence. Because of defendant's disclaimer of liability and refusal to defend the negligence action, plaintiff was required to retain counsel to represent it in the litigation which resulted in a dismissal of the action since it was ultimately determined that the injuries arose out of the employment relationship.

In January, 1965, the defendant insurance company issued a general liability policy insuring plaintiff from January 1, 1965 to January 1, 1968. The policy dealt with the defendant's duty to pay all sums for which the plaintiff insured might become liable as well as with its duty to defend suits brought against the insured. As to the first, the defendant agreed to pay such obligations for personal injuries 'sustained by any person'. As to the duty to defend, the defendant agreed to 'Defend any suit against the insured alleging such injury * * * and seeking damages on account thereof, even if such suit is groundless, false or fraudulent'.

Sometime after the January 28, 1966 incident, Evelyn McDermott, an employee of plaintiff, commenced an action against the plaintiff for bodily injuries in which she alleged, Inter alia, that plaintiff negligently employed one John Crowther, having knowledge of his propensity and instability, he having molested her, and that there was a failure to protect her from such molestations and, further, by paragraph 'SEVENTH' of the complaint that '(o)n or about January

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28, 1966, the said John Crowther, an employee of the defendant, threatened plaintiff with a weapon and forced her to accompany him from the premises of the defendant to another place where by force and threats and the use of weapons and physical force on her body he held her captive, forced her to disrobe and attempted to rape her.'

[35 N.Y.2d 325] Following service of the papers in the negligence action, the defendant advised plaintiff it would not accept liability and refused to defend, and rested its determination on those other provisions of the policy which provided that it did not apply to injuries sustained by an employee 'if benefits therefor are in whole or in part either payable or required to be provided under any workmen's compensation law' or 'To any obligation for which the insured * * * may be held liable under any workmen's compensation * * * or disability benefits law, or under any similar law'.

It is manifestly clear that the negligence...