Kansas City Structural Steel Co. v. Utilities Bldg. Corp.

• Decision Date: 30 June 1936
• Parties: Kansas City Structural Steel Company, a Corporation, Appellant, v. Utilities Building Corporation, a Corporation
• Court: Missouri Supreme Court

95 S.W.2d 1176

339 Mo. 68

Kansas City Structural Steel Company, a Corporation, Appellant, v. Utilities Building Corporation, a Corporation

Supreme Court of Missouri

June 30, 1936

Appeal from Jackson Circuit Court; Hon. Darius A. Brown Judge;

Affirmed.

Cooper Neel, Kemp & Sutherland and Frank J. Rogers for appellant.

The petition states a cause of action and the court erred in sustaining defendant's demurrer thereto. (a) This is an action ex contractu. 49 C. J. 169; Boehrer v Juergens Co., 133 Wis. 426, 113 N.W. 655; Harris v. Nichols Inv. Co., 25 S.W.2d 484. (b) The contract can only be construed as an absolute undertaking on the part of the defendant to maintain, at its own expense, such liability insurance as would adequately protest plaintiff from claims for damages to the extent of $ 50,000 for one claim and to the total extent of $ 250,000 for several claims. Webster's New International Dictionary; 38 C. J. 336; Com. v. Mathues, 210 Pa. 372; 1 C. J. 1193; Ward v. Haren, 139 Mo.App. 14. (c) Defendant was bound to comply with the terms of its contract and the fact that it used due care or the highest degree of care is not a defense. Davis v. Smith, 15 Mo. 467; Harrison v. Ry. Co., 74 Mo. 364; Roseberry v. Am. Benevolent Assn., 142 Mo.App. 552; Law & Co. v. Paxton, 117 Mo.App. 541; Natl. Surety Co. v. Long, 125 F. 887; 13 C. J. 635. (d) Defendant breached its contract in that it failed to maintain such liability insurance as agreed and is liable to plaintiff for any resulting damage. Harris v. Nichols Inv. Co., 25 S.W.2d 484; Cunningham v. Holzmark, 37 S.W.2d 956; Ford v. Stevens Motor Car Co., 220 S.W. 980.

Johnson, Lucas, Landon, Graves & Fane for respondent.

(1) The obligation of respondent as shown by the intention of the parties, as shown by the contract and the pleaded facts, was that of broker or agent. The respondent was not an insurer, a guarantor, or an indemnitor. The meaning of the term "maintain" must be determined by the intention of the parties and the context of the contract. 38 C. J. 336, secs. 3, 4; A. T. & S. F. Ry. Co. v. State, 176 P. 393, 11 A. L. R. 995. (2) The respondent is not liable to appellant on account of the judgment rendered against appellant. The respondent furnished a policy of insurance in an insurance company qualified to write liability insurance under the laws of Missouri, and generally considered solvent at the time of the making of the contract May 10, 1930, the respondent having no notice or knowledge of insolvency until January 14, 1933, after the judgment had been rendered, and appealed to the Supreme Court. 2 C. J., p. 731, sec. 394; Jones v. Horn, 104 Mo.App. 705, 78 S.W. 638; Beckman v. Edwards, 59 Wash. 411, 110 P. 6; Gettins v. Scudder, 71 Ill. 86.

Westhues, C. Cooley and Bohling, CC., concur.

OPINION

WESTHUES

Appellant filed this suit in the Circuit Court of Jackson County, Missouri, seeking a judgment against respondent in the sum of $ 11,000. Respondent filed a demurrer to the petition, which was sustained by the trial court. Appellant refused to plead further and judgment was entered. From this judgment appellant appealed.

We will state briefly the essential allegations of the petition. In this statement appellant will be referred to as plaintiff and respondent as defendant. Both parties were Missouri corporations. On May 10, 1930, defendant entered into a contract with plaintiff to furnish and erect the structural steel of an office building which was being built by the defendant. This agreement contained a provision that, as a part of the consideration, the defendant would furnish liability insurance for plaintiff's protection. It is this contract that was made the basis of this suit. The meaning and effect of the following provision thereof is the question for decision.

"'The owner will maintain, at his (its) expense, such Public Liability Insurance as will adequately protect himself (itself) and the Contractor (meaning plaintiff) from all claims for personal injuries, including death, sustained by employees or members of the public, their dependents, heirs administrators and assigns, and from all other claims for damage and/or injury to persons which may arise from operations under this contract and under any modifications, alterations, enlargements and supplements thereto, whether such operations be by the Contractor (meaning plaintiff) or anyone directly or indirectly employed by him (it). Public liability limits will be $ 50,000/$ 250,000.'"

Plaintiff complied with his part of the contract. During the course of construction one J. C. Montgomery was injured. He sued the plaintiff. The defendant had procured indemnity insurance for plaintiff in the Union Indemnity Company, which policy covered the injury suffered by Montgomery. The indemnity company was notified of the suit and assumed the defense. A trial resulted in a judgment in favor of Montgomery in the sum of $ 25,000. The case was duly appealed to the Supreme Court. An appeal bond, signed by the Union Indemnity Company as surety, was approved by the trial court. On January 14, 1933, while the case was pending on appeal, the plaintiff was notified that the Union Indemnity Company had been placed in receivership. The surety company refused to further prosecute the appeal. It was unable to pay any part of the judgment. On the application of Montgomery the Supreme Court ordered the plaintiff in this case, the defendant in that case, to file a new supersedeas bond. Plaintiff in this action notified the defendant in this case of all of the foregoing facts and requested the defendant to furnish such additional bond as required by this court and to save plaintiff harmless from the judgment, as plaintiff alleged defendant had agreed to do under the provision of the contract as above set forth. The defendant refused to comply with the request and denied that it was bound to do so under the terms of the contract. The plaintiff thereupon assumed the defense of the case and settled the Montgomery judgment of $ 25,000 for $ 10,000 and costs. This settlement was made with defendant's consent. Plaintiff demanded reimbursement from defendant, which was refused. It was further alleged in the petition that the Union Indemnity Company was, at the time the Montgomery judgment was entered and prior thereto, insolvent and unable to pay the judgment. It was alleged that, by reason of the facts stated, the defendant breached its contract because it did not maintain such liability insurance as would adequately protect plaintiff from the liability under the Montgomery judgment. It was also alleged that in reliance upon the contract, whereby defendant agreed to procure insurance that would adequately protect plaintiff during the progress of the construction of the building, the plaintiff canceled and abandoned applicable, adequate liability insurance on its own behalf.

As bearing upon the question of law to be presently discussed the defendant called attention to the fact that the petition did not charge that defendant had any notice or knowledge of the insolvency of the Union Indemnity Company until the receivership proceedings were instituted. It is also suggested that the building had been completed prior to the insolvency of the indemnity company.

Respondent contends that, under the contract pleaded, it was merely a broker or agent for the purpose of obtaining liability insurance for appellant and was not an insurer, a guarantor or indemnitor. It is further contended, by respondent, that the contract was fulfilled when it furnished and maintained a policy of insurance in a company qualified to do business in this State that was considered solvent at the time, and which policy covered the injury sustained by Montgomery.

Appellant on the other hand contends that respondent's obligation, under the contract, was an absolute undertaking to maintain at its own expense such liability insurance as would adequately protect plaintiff from claims for damages; that it did not discharge this duty by the exercise of due care; that in the event of the insolvency of the indemnity company, after a judgment against plaintiff had been obtained, arising out of the construction work, the defendant would have been liable to pay such judgment.

If appellant's contention be correct then the contract must be construed to mean that respondent individually undertook to hold appellant...