McDowell v. U.S. Fidelity & Guaranty Co.

• Decision Date: 04 March 1954
• Docket Number: 4 Div. 760
• Citation: 260 Ala. 412,71 So.2d 64
• Parties: McDOWELL et al. v. UNITED STATES FIDELITY & GUARANTY CO. et al.
• Court: Alabama Supreme Court

Page 64

71 So.2d 64

260 Ala. 412

McDOWELL et al. v. UNITED STATES FIDELITY & GUARANTY CO. et al.

4 Div. 760.

Supreme Court of Alabama.

March 4, 1954.

Jackson W. Stokes, C. L. Rowe, Elba, for appellants.

Rushton, Stakely & Johnston, Montgomery, for appellees.

MERRILL, Justice.

This is an appeal from an interlocutory decree sustaining a demurrer to an amended bill against the appellee and one Meek, who does not join in the appeal, to reach and apply the proceeds of a public liability insurance policy issued by the appellee to G. T. Key, an individual doing business as G. T. Key Construction Company.

The original bill alleged in effect that complainants are the widow and minor child of Robert McDowell, deceased; that Robert McDowell and respondent Meek had been employees of Key, who had a contract with Covington Electric Cooperative, Inc., for the construction of certain electric distribution lines and respondent insurer had issued a certain automobile insurance policy covering Key and any person while using a motor vehicle described in the policy, provided the actual use was by the named insured or with his permission. On June 30, 1949, Robert McDowell was killed as a result of the negligence of his fellow employee, respondent Meek, in the operation of an insured automobile of Key's while both McDowell and Meek were using the automobile in the line and scope of their employment. His death came within the provisions of the Alabama Workmen's Compensation Laws and on application of his widow and minor child, regular compensation payments have been and are being paid to them by appellee under the terms of its policy issued to Key.

Thereafter in January 1950 Mrs. McDowell and her minor son brought suit for damages in Coffee County against Meek, the fellow employee of Robert McDowell, deceased, pursuant to § 312, Title 26, Code of 1940 as amended. Meek did not appear to defend the suit; a judgment was rendered in the sum of $35,000 and the return on the execution was 'nulla bona'.

Complainants further alleged that they were entitled to the rights and remedies under §§ 11 and 12, Title 28, Code of 1940, to the end that the insurance money be reached and applied to the satisfaction of said judgment. They included interrogatories in their bill and prayed for discovery and for an application of the insurance money to their judgment.

The respondent Meek took no action. The appellee answered the interrogatories and filed a demurrer to the bill which was overruled. Appellee then filed an answer, setting out the requirements of the contract as to insurance, which included Workmen's Compensation and Public Liability, the certificate made by it to the Rural Electrification Administration, which contained a statement that the policies issued were standard policies, and pleaded Division III of the policy a part of which follows:

'III Definition of Insured----

'The insurance with respect to any person or organization other than the Named Insured does not apply under division (2) of this insuring agreement:

* * *

* * *

'(c) To any employe with respect to injury to or sickness, disease or death of another employe of the same employer injured in the course of such employment in an accident arising out of the maintenance or use of an automobile in the business of such employer; * * *.'

Respondent also pleaded Exclusion (c) of the policy which is in part:

'Exclusions

'This policy does not apply:

* * *

* * *

'(c) Under coverage A, except with respect to liability assumed under contract covered by this policy, to bodily injury to or sickness, disease or death of an employe of the Insured while engaged in the employment of the Insured, other than a domestic employe whose injury arises out of an automobile covered by this policy and for whose injury benefits are not payable or required to be provided under any workmen's compensation law; or to any obligation for which the Insured or any company as his insurer may be held liable under any workmen's compensation law; * * *.'

Thereupon appellants amended their bill incorporating the provisions of the construction contract, the requirement of a certificate that a public liability policy had been furnished and the requirement that a contractor's performance bond be furnished. The following is quoted from appellants' brief:

'The amended complaint then pleaded, in view of the requirements of the construction contract for insurance, and in view of the fact that the public liability carrier was the same corporation (the appellee United States Fidelity and Guaranty Company) as the surety on the performance bond, and in view of the certificate of contractor insurance certifying compliance by the insurance carrier of the contractor with requirement of the construction contract relating to such insurance, alternative reasons why appellee U S F & G ought not to defeat appellants' suit to reach and apply the proceeds of the insurance by reason of the exclusions pleaded by said appellee, viz:

'(1) That in view of the fact that these provisions of the construction contract required such insurance and in view of the insurer certificate of compliance as to said provisions (neither of which spells out the exclusions pleaded by the insurer) the appellee United States Fidelity and Guaranty Company was estopped to assert such exclusions;

'(2) Or that, in view of said facts stated in paragraph 1, next above, the insurance contract ought to be read and construed in connection with the pleaded provisions of the construction contract and said pleaded certificate of contractor insurance; and that, when so construed, the insurance policy and its coverages are ambiguous as to the effectiveness of the exclusions pleaded.'

Appellee refiled demurrer interposed to the original bill. The trial court entered a decree sustaining the demurrer on grounds A, E, F, G and H and the appeal is from this decree. The grounds of demurrer held good were:

'(A) It affirmatively appears that under the terms of neither the Master Construction Contract, the surety bond, the certificate of contractor's insurance, REA borrowers, nor any other document pleaded, did the Covington Electric Cooperative, Inc. or the Administrator of the REA, nor the contractor G. T. Key, nor this respondent undertake to furnish insurance for any person, firm or corporation other than the contractor, G. T. Key Company. There is no requirement anywhere that the individual liability of Howard Meek or anyone in his category be covered by insurance.

'E. It affirmatively appears that under the terms of neither the Master Construction Contract, the surety bond, the certificate of contractor's insurance, REA borrowers, nor any other document pleaded did the Covington Electric Cooperative, Inc. or the Administrator of the REA, nor the contractor G. T. Key, nor this respondent undertake to furnish insurance for any person, firm or corporation other than the contractor, G. T. Key Company. There is no requirement anywhere that the individual liability of Howard Meek or anyone in his category be covered by insurance.

'F. It affirmatively appears that at most the documents made the basis of this suit require only the taking out and maintenance of insurance 'satisfactory to the administrator' and it is not alleged that the insurance furnished in Policy Number CGA-23993 of this respondent was not so satisfactory.

'G. For ought that appears in the complaint Policy Number CGA-23993 containing the Definition of Insurance which excluded (in Division 3) coverage for additional assureds with respect to injury or death of another employee, was satisfactory to and approved by REA Administrator.

'H. It affirmatively appears that when the contractor G. T. Key took out adequate Workmen's Compensation Insurance, he discharged every duty which he, or by reference this respondent, contracted with reference to his employee, Robert Lamar McDowell.'

Counsel for appellants make this candid statement in their brief: 'The instant case is based squarely on United States Fidelity & Guaranty Company v. Doheny, [9 Cir.], 123 F.2d 746, 747. In the majority opinion, the Circuit Court of Appeals based its reasoning on estoppel; whereas, the concurring opinion was based on ambiguity arising out of construction of all the related documents. In the instant case the bill of complaint as amended undertakes, by use of the alternative to lay the foundation for the claim on each of said principles and theories.'

We think attention need be directed to only one feature of the Doheny case, which differentiates it from the case at bar. We quote the first paragraph of the opinion.

'In December, 1934, Roberta and Marguerite Doheny were killed in a highway accident in Montana while riding as guests in an automobile operated for the partnership of...