Leonard v. Maryland Cas. Co.

• Court: Kansas Supreme Court
• Writing for the Court: WEDELL, Justice.
• Citation: Leonard v. Maryland Cas. Co., 158 Kan. 263, 146 P.2d 378 (Kan. 1944)
• Decision Date: 04 March 1944
• Docket Number: 36068.
• Parties: LEONARD v. MARYLAND CASUALTY CO.

146 P.2d 378

158 Kan. 263

LEONARD v. MARYLAND CASUALTY CO.

No. 36068.

Supreme Court of Kansas

March 4, 1944

Rehearing Denied April 17, 1944.

Syllabus by the Court.

The obligation of insurer under automobile liability policy to defend an action for damages against insured is to be determined when action is brought, and not by its outcome.

The duty of insurer under automobile liability policy to defend action for damages against insured is measured by allegations of petition in the action and by terms of the policy,

Where action of injured person against insured is based upon various grounds which are not within terms of automobile liability policy and on another which is within terms of policy, insurer is not justified in declining to defend the action.

Under automobile guest statute, an occupant is not a "guest" though he pays no fare, where motorist receives direct benefit from occupant. Gen.St.1935, 8-122b.

Where both original and amended petitions in wrongful death action brought against insured under automobile liability policy contained averment that decedent was an employee of insured engaged in insured's business when fatally injured in automobile collision while riding in insured's automobile, action was outside coverage provisions of policy which relieved insurer of liability for injuries suffered by an employee of insured while engaged in insured's business, although amended petition alleged gross and wanton negligence of insured, and hence insurer was under no duty to reimburse insured for attorney's fees sustained in defending wrongful death action.

The phrase "while engaged in business of insured", in automobile liability policy relieving insurer of liability for injuries suffered by employee of insured while engaged in insured's business, means any business in which insured may be engaged, and is not limited to insured's regular and customary occupation.

1. The obligation of an insurer, under an automobile liability policy, to defend an action for damages against the insured is to be determined when action is brought, and not by its outcome.

2. The duty of an insurer under an automobile liability policy to defend an action for damages against its insured is not measured by proof which may be adduced at the trial or by outcome of the litigation but by the allegations of the petition in the action and by the terms and provisions of the insurance contract.

3. "Under a statute denying recovery for injuries sustained while one is being transported as a guest without payment of fare, held, that where the driver receives a direct benefit from a third party, the transportation is not gratuitous and there is no guest relationship." Following Elliott v. Behner, 146 Kan. 827, Syl. 3, 73 P.2d 1116.

4. The record in an action by insured to recover attorneys' fees from insurer upon ground insurer refused to defend an automobile collision action against the insured examined, and held: The action against the insured, under the averments of both the original and amended petitions, was outside the coverage provisions of the policy and insurer was under no duty to defend.

Appeal from District Court, Rice County; Robert Garvin, Judge.

Action by Randolph Leonard against Maryland Casualty Company to recover under automobile liability policy the amount that plaintiff was compelled to pay as attorneys' fees in defending an action growing out of an automobile accident. From a judgment for plaintiff, the defendant appeals.

Reversed and judgment rendered for defendant.

HARVEY SMITH, and PARKER, JJ., dissenting.

Where both original and amended petitions in wrongful death action brought against insured under automobile liability policy contained averment that decedent was an employee of insured engaged in insured's business when fatally injured in automobile collision while riding in insured's automobile, action was outside coverage provisions of policy which relieved insurer of liability for injuries suffered by an employee of insured while engaged in insured's business, although amended petition alleged gross and wanton negligence of insured, and hence insurer was under no duty to reimburse insured for attorney's fees sustained in defending wrongful death action.

J. B. Patterson, of Wichita (A. W. Hershberger, Enos E. Hook, R. E. Kirkpatrick, and Richard Jones, all of Wichita, on the brief), for appellant.

Edward Wahl, of Lyons, for appellee.

WEDELL Justice.

This was an action by the insured under an automobile liability policy to recover attorneys' fees from the insurer. Plaintiff, Randolph Leonard, prevailed and the defendant, Maryland Casualty Company appeals.

Appellant had refused to defend a wrongful death action brought by Maggie Garrett, widow of John W. Garrett, the deceased, against Leonard, the insured. That action grew out of an automobile collision between Leonard's car and the car of another party. John W. Garrett, the deceased, was alleged to have been making a trip with Leonard, and as Leonard's employee, at the time of the collision. Appellant refused to defend the wrongful death action against the insured on the ground the petition and the amended petition both affirmatively alleged the existence of a relationship of employee and employer between the deceased and the insured at the time of the collision resulting in Garrett's death and that liability of appellant in an action growing out of the described relationship was expressly excluded from coverage by the insurance contract. The insured successfully defended the action and now sues to recover attorneys' fees incurred in its defense.

The question now is whether appellant was required to defend the former action. The answer, of course, requires that we determine the nature of the particular action which appellant was requested to defend and that we examine the terms of the insurance contract in order to ascertain whether the parties thereby agreed the insurer was not required to defend such an action.

The averments contained in the original and amended petitions relative to the relationship mentioned are identical and read:

"7. That John W. Garrett, prior to the accident hereinafter described, had been working for Ralph Leonard and Randolph Leonard and that on the day of the accident the harvesting operations which had been in progress were shut down due to weather conditions, but that John W. Garrett was staying at the Ralph Leonard home and was receiving his meals as a part of his wages, and that immediately prior to the time of the accident hereinafter set out that John W. Garrett was employed by the defendant, Randolph Leonard, and was assisting in the harvesting of wheat belonging to Randolph Leonard and as such was the employee of Randolph Leonard.

"8. That on or about the afternoon of July 9, 1940, and while harvesting was held up on account of wet weather, the defendant, Randolph Leonard, asked John W. Garrett to go with him to assist in picking sandhill plums, and at the direction of Randolph Leonard said John W. Garrett did go with Randolph Leonard and did assist in picking a considerable quantity of sandhill plums and that while picking said plums John W. Garrett was the employee of said defendant and was acting by reason of his employment."

Pertinent paragraphs of the insurance policy provide:

"The Company shall

"(a) Defend in his name and behalf any suit against the insured alleging such injury or destruction and seeking damages on account thereof, even if such suit is groundless, false and fraudulent, but the Company shall have the right to make such investigation, negotiation and settlement of any claim or suit as may be deemed expedient by the Company.

"Exclusions

"This policy does not apply

"(e) Under coverage A to body injury to or death of any employee of the insured while engaged in the business of the insured, other than domestic employment, or in the operation, maintenance or repair of the automobile, or to any obligation for which the insured may be held liable under any Workmen's Compensation law."

There can be no doubt the action, according to the averments of both petitions, clearly was grounded on the theory and contention the relation of employee and employer existed between the deceased and the insured at the time of the collision which resulted in Garrett's death. The terms of the policy in plain and unambiguous language expressly exclude liability of the insurer to the insured in an action such as that described in the portions of the petitions above quoted.

What is the test of the insurer's obligation to defend an action against the insured under these circumstances? In the case of Fessenden School v. American Mut. etc. Ins. Co., 289 Mass. 124, 193 N.E. 558, involving the same inquiry, it was said:

"It is plain that the insurance company would not have been bound under its policy to indemnify the plaintiff if the plaintiff Ada Gauthier had recovered judgment on her declaration against The Fessenden School, Incorporated, as amended. We think the contention of the defendant is sound, that the obligation of the defendant insurance company is to be determined by the allegations of the declaration and that it is not required to defend if it would not be held bound to indemnify the defendant in the action if the plaintiff prevailed upon the allegations of the declaration. [Italics ours.] Ocean Accident & Guarantee Corp., Ltd. of London v. Washington Brick & Terra Cotta Co., 148 Va. 829, 139 S.E. 513; Fulton Co. v. Massachusetts Bonding & Ins. Co., 138 Tenn. 278, 197 S.W. 866; Bloom-Rosenblum-Kline Co. v. Union Indemnity Co., 121 Ohio St. 220, 167 N.E. 884; United States Fidelity & Guaranty Co. v. Yazoo Cooperage Co., 157 Miss. 27, 127 So. 579; United States Fidelity

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