Maryland Casualty Co. v. Tindall

• Decision Date: 18 February 1941
• Docket Number: No. 11790.,11790.
• Citation: 117 F.2d 905
• Parties: MARYLAND CASUALTY CO. v. TINDALL et al.
• Court: U.S. Court of Appeals — Eighth Circuit

117 F.2d 905 (1941)

MARYLAND CASUALTY CO. v. TINDALL et al.

No. 11790.

Circuit Court of Appeals, Eighth Circuit.

February 18, 1941.

Paul G. Koontz, of Kansas City, Mo. (Solbert M. Wasserstrom and Warrick, Koontz & Hazard, all of Kansas City, Mo., on the brief), for appellant.

Charles M. Miller, of Kansas City, Mo. (Fred Bellemere, of Kansas City, Mo., on the brief), for appellee, Marshall's U. S. Auto Supply, Inc.

Before STONE, GARDNER, and THOMAS, Circuit Judges.

THOMAS, Circuit Judge.

This is an appeal from a judgment finding the issues for the defendants and dismissing appellant's petition in a suit under the Federal Declaratory Judgment Act, 28 U.S.C.A. ß 400. The case was tried to the court without a jury.

The transcript of the record contains no findings of fact nor conclusions of law required in trials to the court by Rule 52(a) of the Rules of Civil Procedure, 28 U.S.C.A. following ß 723c. From an examination of the entire record we find the following issues, facts and contentions of the parties:

The appellant, plaintiff in the district court, is an insurance company engaged in writing liability, surety, and workmen's compensation insurance. The defendant Marshall's U. S. Auto Supply, Inc., herein called the Supply Company, is a Missouri corporation engaged in operating stores for sales and service and installation of equipment upon automobiles. From August 1, 1938, until December 27, 1938, the defendant Tindall worked for the Supply Company in one of its branch stores in Kansas City, Missouri. The defendants Herbert Calkins and Wallace P. Cowan are employed by the Supply Company as managers of its store in Kansas City.

On August 5, 1938, the appellant issued its Standard Workmen's Compensation and Employer's Liability Policy by the terms of which it insured the Supply Company, "as respects personal injuries sustained by employees", as follows:

"1. (a) To pay promptly to any person entitled thereto under the Workmen's Compensation Law and in the manner therein provided, the entire amount of any sum due * * *

"1. (b) To Indemnify this Employer against loss by reason of the liability imposed upon him by law for damages on account of such injuries to such of said employees as are legally employed wherever such injuries may be sustained within the territorial limits of the United States of America or the Dominion of Canada. * *

"III. To Defend, in the name and on the behalf of this Employer, 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, allegations or demands are wholly groundless, false or fraudulent."

An endorsement attached to the policy reads as follows: "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). This policy is issued with the understanding that the employer has not heretofore elected and/or will not elect during the term of this policy to bring himself with respect to occupational disease within the provisions of the said Workmen's Compensation Act unless he shall give the Company notice of his election ten days before filing with the Commission the written notice required by sub-section (b) of Section 3305 of the Compensation Act of Missouri Mo.St.Ann. ß 3305, p. 8238, and the employer agrees that in the event of his failure to give such previous notice of his election the employer will reimburse the company for loss and expense resulting from or on account of occupational disease, and shall indemnify and hold harmless the company for all such losses and expenses."

The Missouri Statutes Annotated, provide:

"ß 3301. If both employer and employe have elected to accept the provisions of this chapter, the employer shall be liable irrespective of negligence, to furnish compensation under the provisions of this chapter for personal injury or death of the employe by accident arising out of and in the course of his employment, and shall be released from all other liability therefor whatsoever * * *." Mo.St.Ann. ß 3301, p. 8232.

"ß 3305. * * *(b) The word `accident' * * * shall * * * be construed to mean an unexpected or unforeseen event happening suddenly and violently, with or without human fault and producing at the time objective symptoms of an injury. The term `injury' and `personal injuries' shall mean only violence to the physical structure of the body and such disease or infection as naturally results therefrom. The said terms shall in no case except as hereinafter provided be construed to include occupational disease in any form. * * *

"Provided, that nothing in this chapter contained shall be construed to deprive employees of their rights under the laws of this state pertaining to occupational diseases, unless the employer shall file with the commission a written notice that he elects to bring himself with respect to occupational disease within the provisions of this act * * *." Mo.St.Ann. ß 3305 (b), p. 8238.

The Supply Company has not elected to bring itself within the provisions of the statute with respect to occupational diseases.

In March, 1939, Tindall commenced a suit in the state court against the Supply Company and defendants Calkins and Wallace praying for $25,000 damages. As grounds for recovery he alleged that as a result of specified negligent acts of the defendants he "did contract a severe form of occupational disease incident and peculiar to" his employment.

Upon the filing of Tindall's suit the Supply Company demanded that appellant defend the case and assume liability. The appellant in response to this demand wrote to the Supply Company advising it that Tindall's petition alleges a cause of action not covered by the policy, and saying that it "is willing, if such be your desire, to undertake the investigation and defense of said cause at its own expense, under a full and complete reservation of all its rights," and with the privilege of withdrawing from the defense upon reasonable notice. Thereafter counsel for appellant and counsel for the Supply Company entered their appearance and filed a pleading on behalf of the Supply Company.

On June 15, 1939, appellant filed its petition for a declaratory judgment in the district court. After alleging jurisdictional facts and the substantive facts set out above it alleged that by reason of the endorsement, supra, upon the policy issued by it no liability was imposed upon it with respect to any occupational disease sustained or alleged to be sustained by an employee of the insured and that the claim of Tindall alleged in his petition in the case pending in the state court was excluded from the coverage of the policy. It is then alleged that an actual controversy exists between plaintiff and defendants as to plaintiff's liability, and it prays that a judgment be entered declaring the rights of the parties under the policy; that the "policy of insurance does not cover the casualty alleged in said petition to have been sustained by the said Tindall, and that no obligation under said policy of insurance exists on the part of the plaintiff to defend said suit, or to pay any judgment rendered therein, or to expend any costs incurred in the defense thereof."

On December 12, 1939, counsel for the Supply Company advised counsel for appellant that the filing of the suit for a declaratory judgment raised a situation rendering it disagreeable to the Supply Company for the appellant to defend the Tindall suit under a reservation of rights, and that the Supply Company would take charge of the defense in that case and would hold appellant liable for any sums paid for attorneys' fees and for the payment of any judgment rendered therein.

In its answer the Supply Company admits the issuance of the policy and the elements of the controversy alleged in the petition and denies all other material allegations of the petition.

As pointed out above the court below entered no findings of fact nor conclusions of law which might enable this court to appreciate the grounds upon which the judgment dismissing the petition was entered. We infer from the remarks of the court at the conclusion of the trial that the conclusion was reached (1) that no controversy exists on the law of the case; (2) that the suit calls only for an interpretation of the petition filed by Tindall in the state court; and (3) that, since the court in this case can only speculate as to whether the state court will hold that Tindall's suit is (a) an ordinary suit in tort and covered by the policy or (b) a suit for damages for an occupational disease and not covered by the policy, he should exercise his discretion and dismiss the case.

The appellant contends (1) that an actual controversy is presented; (2) that there is no procedure in the state court whereby the appellant can obtain an adjudication of the controversy here presented and that its obligations cannot be determined in the suit now pending in the state court; and (3) that the court in the exercise of its discretion should not have dismissed the proceeding.

The defendants Tindall, Calkins and Cowan have not appeared in this court to contest the appeal. The Supply Company contends (1) that appellant, having elected to defend the Tindall suit in the state court with reservation of its rights, is "in no position to invoke the aid of the Federal District Trial Court in the case at bar"; and (2) that there is no controversy, and can be none, as to liability of appellant for any judgment against the assured which may or may not be rendered in the state court because no judgment has yet been rendered therein.

The appellee's...