J. S. Stearns Lumber Co. v. Travelers' Ins. Co.

• Decision Date: 09 February 1915
• Citation: 159 Wis. 627,150 N.W. 991
• Parties: J. S. STEARNS LUMBER CO. v. TRAVELERS' INS. CO.
• Court: Wisconsin Supreme Court

159 Wis. 627

150 N.W. 991

J. S. STEARNS LUMBER CO.

v.TRAVELERS' INS. CO.

Supreme Court of Wisconsin.

Feb. 9, 1915.

Appeal from a Judgment of the Circuit Court for Ashland County; G. N. Risjord, Judge. Reversed.

Action on a policy of indemnity accident insurance. Plaintiff, a manufacturing company, purchased of defendant a policy of insurance against loss by accidents which might happen to its servants in the course of their employment. Thereby defendant, in case of such an accident, agreed:

1. Upon notice to investigate or settle the claim for damages in its discretion.

2. In the insured's name to defend against such claims if deemed best.

3. To pay specified expenses and a stipulated percentage of the award of damages.

4. Injuries caused or sustained by persons employed in violation of law or the contract as to age not to be within the risk insured against.

5. The foregoing conditioned upon, in case of an accident, immediate notice being given to the assurer, in manner indicated, with full information and particulars of any resulting claim and, in case of suit, all papers served being promptly forwarded to the assurer, and, upon its request, plaintiff aiding in settling the matter or contesting it.

6. No provision of the policy to be subject to waiver except by an endorsement on the policy signed by some one of specified persons.

June 21, 1911, while the policy was in force, defendant employed John Pikus, who, later while performing his duties, was fatally injured through negligence of a co-employé who was under the age of 16 years and, so, not legally employed unless he had a permit pursuant to the provisions of Chapter 338, Laws of 1909. He did not have such permit. Defendant was notified of the accident; but not of the facts as to the alleged employment of the minor, nor of any matter in respect thereto. Defendant's adjuster made an investigation and was informed by the minor and also by plaintiff's representative that he was over 16 years old when hired. Defendant relied thereon and the fact that no information to the contrary was furnished by plaintiff. Action was brought against the latter to recover damages on several grounds, including that of knowingly employing or retaining in service an incompetent employé whose conduct produced the death of the intestate. The complaint did not disclose the age of the employé. In due course, defendant performed its agreement as to carrying on the litigation in the name of the employer, and the latter assisted, as agreed; but did not bring to the former's attention the facts as to the illegal employment.

There was conflicting evidence on the trial of the first action as to the minor's age. His mother testified that he was under 16 years of age at the time of the accident, and he testified he was over that age. That was not regarded as important except as bearing on the question of incompetency. Nothing was said as to whether the boy was not legally employed by reason of not having the statutory permit. That had nothing to do with the issue tried. Plaintiff recovered. In due course, with approval of the employer, the cause was appealed to this court. Defendant continued to perform its contract. The judgment was affirmed. O'Sullivan v. J. S. Stearns Lumber Co., 154 Wis. 467, 143 N. W. 160. In the opinion the court, by mistake, supposing subdivision 2, § 1728a, Stats., forbidding, absolutely, employment of minors of the age of the particular one in doing the kind of work he was engaged in when the accident occurred, referred thereto as if it applied to the case. It did not apply because of not being in existence until after the accident. The judgment was affirmed because the verdict as to negligent retention of the incompetent employé was sustained by the evidence. In due course, this action was brought for indemnity. The insurance company defended because of the accident having been caused by a person who was unlawfully employed.

The action was tried without a jury. Evidence was produced establishing facts substantially as stated, and this: During the investigation by defendant prior to the first action, it became informed of the facts, except as to the boy's age and his not having had a legal permit. The mother was not asked in respect thereto. It was informed by the employer that he was over sixteen years old and had a permit to work. It did not know the age of the boy until the mother testified on the trial of the first action. It had no knowledge, then, of the illegal employment. It continued to the end in control of the litigation on behalf of defendant.

It was agreed that judgment should go for defendant unless it waived, or was estopped from defending upon the ground of, the illegal employment.

The trial court concluded that by continuing to defend the first action after notice of the age of the incompetent employé, without claiming indemnity from the risk, defendant was estopped from invoking the benefit of the policy exception in its favor.

Judgment was rendered accordingly, and defendant appealed.

A. W. MacLeod, of Washburn, for appellant.

Geo. F. Merrill, of Ashland, for respondent.

MARSHALL, J.

[1] The conclusion of the trial court that appellant became informed of the illegal employment by the mere suggestion of the boy's age by the mother on the trial of the first action, cannot be approved. The age of the minor was not an issue before. At best, the fact was then involved in conflicting evidence. The mother testified one way and the boy another. But conceding that the mother's testimony was the best, and should have been believed, it did not settle the question of whether he was illegally employed. The vital fact of whether he had a legal permit, was not touched upon by the evidence. So the court was not warranted in finding the illegal employment was established and brought to appellant's attention on the first trial.

Employment of the minor without the proper permit, was a serious misdemeanor. It was punishable by fine or imprisonment. The presumption, from appellant's standpoint, was in favor of innocence. The mere evidence of the minor's age did not overcome that presumption, or very much affect it. So the basic feature of the recovery is wanting.

Again, assuming that the evidence of the boy's age was sufficient to put appellant upon inquiry, if the particular matter was vital to its interest, it was not in this case because the grounds of negligence were four in number. Had the claimant prevailed upon either of three, it would have been within the risks insured against. So, appellant was not, in any event, obliged to change its attitude toward respondent in the former action until judgment was rendered in the circuit court, grounded on the particular...