Marshall's U.S. Auto Supply v. Maryland Casualty Co.

• Decision Date: 04 June 1945
• Docket Number: No. 39170.,39170.
• Citation: 189 S.W.2d 529
• Parties: MARSHALL'S U.S. AUTO SUPPLY, INC., Appellant, v. MARYLAND CASUALTY COMPANY.
• Court: Missouri Supreme Court

189 S.W.2d 529

MARSHALL'S U.S. AUTO SUPPLY, INC., Appellant, v. MARYLAND CASUALTY COMPANY.

No. 39170.

Supreme Court of Missouri.

Division One, June 4, 1945.

Rehearing Denied, September 4, 1945.

Motion For Leave to File Motion to Set Aside Order Overruling Motion For Rehearing Overruled, October 1, 1945.

Appeal from Jackson Circuit Court. — Hon. Paul A. Buzard, Judge.

AFFIRMED.

Maurice O'Sullivan and Charles M. Miller for appellant.

(1) The trial court erred in refusing plaintiff's motion for directed verdict for the reason that upon the pleadings and evidence, plaintiff, under the law, was entitled to recover because defendant breached Clause III of the policy of insurance in refusing to defend the Tindall case, 348 Mo. 1189, 159 S.W. (2d) 302. Hardware Mut. Co. v. Hildebrandt, 119 F. (2d) 291; Caroline Veneer Co. v. Am. Mut. Liab. Co., 24 S.E. (2d) 153; Union Ind. Co. v. Mostov, 41 Ohio App. 518, 181 N.E. 495; South Knoxville Brick Co. v. Empire State Sec. Co., 126 Tenn. 402, 150 S.W. 92; City Poultry & Egg Co. v. Hawkeye Cas. Co., 297 Mich. 509, 298 N.W. 114; Doff v. Maryland Cas. Co., 303 Mo. 534, 261 S.W. 330; State ex rel. v. Hughes, 349 Mo. 1142, 164 S.W. (2d) 274; Miller v. U.S. Fid. & Cas. Co., 197 N.E. 75. (2) The trial court erred in holding the allegation in the petition of an occupational disease, controlled or relieved defendant of its obligation to defend the Tindall case, for reasons as follows: (3) In the light of the decision of this court in the Tindall case, and the knowledge by the insurance company of the actual facts of the injury to Tindall, as found by the trial court, the defendant was liable under Sec. 6040 of R.S. 1939, for vexatious delay in denying liability and refusing payment, after plaintiff had made demand on it for reimbursement. Bank v. Turner, 321 Mo. 1104, 14 S.W. (2d) 425. (4) The trial court erred in refusing plaintiff's conclusion of law, No. 2, that the allegation in Tindall's petition of an "occupational disease," was a conclusion and not a statement of substantive fact, for the reason such is true as a matter of law. Travelers Ins. Co. v. Bluestein, 149 S.W. (2d) 241. (5) The trial court erred in refusing plaintiff's declarations of law, Nos. 1, 3, and 4, to the effect that a failure of Tindall to prove an occupational disease, did not constitute a failure of proof under the petition, for the reason such is the law. Row v. Cape Girardeau Foundry Co., 141 S.W. (2d) 113; Gentry v. Swan, 174 Ala. 530; Soukop v. Emp. Liab. Co., 341 Mo. 614, 108 S.W. (2d) 86; Smith v. Harbison-Walker Co., 100 S.W. (2d) 909, 918; Pevesdorf v. L. & P. Co., 64 S.W. (2d) 939. (6) The trial court erred in refusing plaintiff's declarations of law, Nos. 5 and 6, that the opinion and judgment in the Tindall case (159 S.W. (2d) 302) is conclusive on defendant, Maryland Casualty Company for the reason such is the law, as applicable to this case. Doff v. Maryland Cas. Co., 303 Mo. 534, 261 S.W. 330; State ex rel. v. Hughes, 349 Mo. 1142, 164 S.W. (2d) 274; Miller v. U.S. Fed. & Cas. Co., 197 N.E. 75. (7) The trial court erred in refusing plaintiff's declaration of law, No. 7, that clause 3 of the policy of insurance required defendant to defend the Tindall case and that the alleged exclusion clause did not excuse or relieve it from so doing, for the reason that such is the law as applicable to this case. See cases cited under Point (1).

Paul G. Koontz, Solbert M. Wasserstrom and Warrick, Koontz & Hazard for respondent.

(1) Respondent had no obligation to defend the Tindall action. The insurance contract expressly excluded any insurance or obligation to defend with respect to occupational disease. Daniel v. State Farm Mut. Ins. Co., 130 S.W. (2d) 244; Interstate Oil Co. v. Equity Mut. Ins. Co., 183 S.W. (2d) 328; Pickens v. Maryland Casualty Co., 141 Neb. 105, 2 N.W. (2d) 593. (2) Whether or not Tindall's suit was for an "occupational disease" is to be determined from the allegations of his petition. Fessenden School, Inc., v. American Mut. Liability Co., 289 Mass. 124, 193 N.E. 558; Leonard v. Maryland Casualty Co., 158 Kan. 263, 146 Pac. (2d) 378; Interstate Oil Co. v. Equity Mut. Ins. Co., 183 S.W. (2d) 328. (3) Tindall's petition presented a claim for "occupational disease." Interstate Oil Co. v. Equity Mut. Ins. Co., 183 S.W. (2d) 328. (4) Respondent was not guilty of any vexatious refusal to pay the claim asserted by appellant. State ex rel. v. U.S.F. & G. Co., 163 S.W. (2d) 86.

HYDE, P.J.

This is an action to recover $7561.78 as costs of defending an action (brought against plaintiff by an employee) which plaintiff claims defendant was obligated to defend under an insurance policy issued by defendant to plaintiff. (Plaintiff successfully defended the case, which was Tindall v. Marshall's U.S. Auto Supply, Inc., 348 Mo. 1189, 159 S.W. (2d) 302.) Judgment for defendant and plaintiff appeals.

The policy of insurance was a "Standard Workmen's Compensation and Employers' Liability Policy." It was substantially the same as the policy described in Soukop v. Employers' Liability Co., 341 Mo. 614, 108 S.W. (2d) 86, to which we make reference for provisions not hereinafter stated. Paragraph One (a) thereof insured plaintiff's liability under the Workmen's Compensation Act. Paragraph One (b) provided for indemnity against loss by reason of liability imposed upon plaintiff on account of personal injuries to its employees.

Paragraph Three required the Insurance Company to defend in the name of the insured "any suits or other proceedings which may at any time, be instituted against him on account of such injuries, including suits or other proceedings alleging such injuries and demanding damages or compensation therefor, although such suits, other proceedings, obligations or demands are wholly groundless, false or fraudulent."

The policy, however, was subject to the following endorsement:

"The policy to which this endorsement is attached does not cover occupational disease. It is agreed that the policy of which this endorsement forms a part does not afford insurance under paragraph One (b) with respect to occupational disease. The provisions of paragraphs Two, Three and Four shall not apply with respect to occupational disease, insurance for which is herein excluded under paragraph One (b)."

Plaintiff's employee, Tindall, claimed injury from the effect of carbon monoxide poisoning. On February 24, 1939, he filed a claim for compensation before the Missouri Workmen's Compensation Commission in which he alleged that he had suffered an accidental injury on December 28, 1938. Defendant was notified, took charge of the case, and made payments to him under the Compensation Act. On March 9, 1939, however, Tindall's attorneys withdrew the compensation claim by a letter to the Commission in which it was stated:

"The reason for this action is that it is our belief that, under the facts in this case, the claimant is suffering from an occupational disease, and your office has advised me that the above employer has not elected to come under the occupational disease section of the compensation act."

Tindall then brought suit against appellant in the Circuit Court, alleging in his petition that he had entered the employment of the plaintiff in July 1938, and had continued in such employment until December 1938; that "during the entire time of his employment" he was the sole employee in the service department and devoted his time exclusively to the servicing of automobiles; that automobiles were "continuously" passing in and out of the service department where he worked; that motors of the automobiles would be caused and permitted to run while the said automobiles were in the service department "as a necessary incident to being serviced and tested" by him; that the automobile motors emitted poisonous gases, vapors and fumes and contaminated and poisoned the air of his place of work; that said condition was present and did exist during the entire time of his employment; that he inhaled such poisonous gases, vapors and fumes while so employed; that he "did contract a severe form of occupational disease incident and peculiar to plaintiff's employment aforesaid"; that plaintiff was negligent in permitting the aforesaid condition to exist "as a direct result of which he had contracted and is now suffering from a severe form of occupational disease"; and that this disease was incident and peculiar to his employment. [Grounds of negligence, based on insufficient ventilation, are summarized in our opinion in the Tindall case, 159 S.W. (2d) l.c. 303.]

Due notice of the suit was given defendant but it refused to assume the defense thereof because "recovery was sought on the ground that Tindall contracted an ocupational disease", the coverage of which was excluded by the policy and endorsements, unless the Marshall Company would give it "full and complete reservation of all its rights." Plaintiff and defendant attempted to work together in the defense under reservations, until defendant brought a declaratory judgment action in the United States District Court to determine its liability. [Maryland Casualty Co. v. Tindall (U.S.C.C.A.-8). 117 Fed. (2d) 905.] Thereafter, plaintiff's attorneys notified defendant that owing to the conflicting interests plaintiff was not agreeable to it defending with reservations, and this ended defendant's participation in the Tindall case.

Defendant contends that it had no obligation under the policy to defend an action for occupational disease and that the question of whether or not Tindall's suit was for an occupational disease was to be determined from the allegations of his petition, citing Fessenden School, Inc. v. American Mutual Liability Co., 289 Mass. 124, 193 N.E. 558 and cases following it. [Leonard v. Maryland Casualty Co., 158 Kan. 263, 146 Pac. (2d) 378; Bloom-Rosenblum-Kline Co. v. Union Indemnity Co., 121 Ohio St. 220, 167 N.E. 884; Brodek v. Indemnity Ins. Co., ...