Meyers v. Continental Casualty Co.

• Decision Date: 06 March 1926
• Docket Number: No. 6988.,6988.
• Citation: 12 F.2d 52
• Parties: MEYERS v. CONTINENTAL CASUALTY CO.
• Court: U.S. Court of Appeals — Eighth Circuit

12 F.2d 52 (1926)

MEYERS v. CONTINENTAL CASUALTY CO.^*

No. 6988.

Circuit Court of Appeals, Eighth Circuit.

March 6, 1926.

George T. Priest, of St. Louis, Mo., for appellant.

William R. Gentry, of St. Louis, Mo. (M. F. Watts, of St. Louis, Mo., on the brief), for appellee.

Before STONE and VAN VALKENBURGH, Circuit Judges, and PHILLIPS, District Judge.

PHILLIPS, District Judge.

This is a suit for specific performance of a contract of indemnity insurance, brought by William H. Meyers (hereinafter called plaintiff) against Continental Casualty Company, a corporation (hereinafter called defendant).

The plaintiff was engaged in the manufacture of wooden boxes and crates in the city of St. Louis, Mo. On November 2, 1921, he purchased from the defendant the policy of insurance on which this suit is predicated. The portions of the policy material to this inquiry read as follows:

"Period of policy shall be from November 2, 1921, to November 2, 1922.

"The Continental Casualty Company hereby agrees:

"(A) To indemnify the herein named assured against loss from the liability imposed by law upon the assured for damages on account of bodily injuries, including death resulting therefrom, accidentally suffered within the policy period by any employee or employees of the assured, while within or upon the premises described in the schedule or the ways immediately adjacent thereto, by reason of the operation of the trade or business described in the schedule. * * *

"(B) To make a thorough investigation of all accidents reported to the company to which this policy applies.

"(C) To defend in the name and on behalf of the assured any suits, even if groundless, brought against the assured to recover damages on account of such bodily injuries as are described above, unless the company shall elect to effect settlement thereof. * * *

"2. The company shall have the exclusive right to contest or settle any of said suits or claims, and the assured shall not incur any expense * * * or settle any claim or suit without the written authority of the company. Except as requested by the company, the assured shall not interfere in any way respecting any negotiations for the settlement of any claim or suit or in the conduct of any legal proceedings. * * *

"3. This policy does not cover loss on account of injuries or death caused or suffered by any * * * employee * * * employed in violation of law as to age. * * *

"7. No action shall be maintained against the company under this policy, unless it be for the recovery of money actually paid by the assured in full satisfaction of a judgment against the assured after trial of the issue. * * *"

Theodore Hadaller was employed by plaintiff at his manufacturing establishment in St. Louis. On September 23, 1922, Hadaller suffered injuries while operating, in the course of his employment by plaintiff, a circular saw driven by mechanical power. On November 14, 1922, Hadaller brought an action against the plaintiff in the circuit court of the city of St. Louis to recover damages on account of such injuries. Hadaller's petition contained two causes of action. In his first cause of action, Hadaller alleged, among other things, that plaintiff was negligent in failing to properly guard the saw, in failing to furnish Hadaller a safe place in which to work, in failing to warn him of the danger incident to his work, and in failing to instruct him how to use the saw, and that such negligence was the direct and proximate cause of his injuries. In his second cause of action Hadaller alleged, in addition to the matters set up in his first cause of action, that he was under the age of 16 years to wit, of the age of 14 years, at the time of the accident, and that his employment by plaintiff to work at such saw was prohibited by the statutes of the state of Missouri. On November 17, 1922, plaintiff was served with a summons and copy of the petition in the Hadaller suit. He immediately delivered the same to the defendant.

At the time plaintiff employed Hadaller, the latter furnished plaintiff with a certificate indicating he was then 16 years of age. On November 16, 1922, E. L. Frohardt, superintendent of the board of education at Granite City, Ill., furnished a certificate to the defendant to the effect that, according to the records of such board of education, Hadaller was born February 3, 1906. On November 14, 1922, Hadaller filed a petition in the circuit court of the city of St. Louis for the appointment of a guardian ad litem, setting up therein that he was "fourteen and eleven-twelfths" years of age. This petition was sworn to by his mother, Maria Hadaller.

On December 6, 1922, Watts & Gentry, attorneys for the defendant, filed an answer and a motion to elect in behalf of Meyers in the Hadaller case. On December 7, 1922, the defendant, by its attorneys, addressed and forwarded to the plaintiff the following letter:

"We are attorneys for the Continental Casualty Company of Chicago, with which you carry a liability policy covering the operation of your factory in this city. A boy named Hadaller was injured in your plant on the 25th day of September, 1922, and has brought suit to recover damages for such injuries. There is a slight error in the name under which he has sued you, but that error is so slight that it can easily be corrected by leave of court.

"The Continental Casualty Company has called our attention to the fact that a controversy exists as to the exact age of this boy at the time of his injury. It is claimed by the boy that he was under 16 years of age. A certificate from the superintendent of the board of education at Granite City, Ill., says that the records of the board show that the boy was born on February 3, 1906. If that record is correct, the boy was over 16 years of age when he was injured. If the plaintiff's contention is correct, then he was employed contrary to law, and since the insurance company policy issued to you provides in substance that it shall not be liable for injury to an employee employed by you contrary to the law relating to age of minors who may be employed in this state, the insurance company will not be liable if it is established at the trial that the boy was unlawfully employed by you.

"In view of these facts, the Continental Casualty Company, through us, as its attorneys, hereby notifies you that, if investigation discloses the fact that the boy was employed by you at the time of his injury in violation of the law of this state as to age, then his case is not covered by the policy of insurance issued to you by the Continental Casualty Company, and that company will decline to pay any judgment rendered against you in favor of the plaintiff.

"In the meantime, until such controversy is settled, the company tenders you the service of its claim department for investigation and its attorneys for the defense of the case without charge to you up to the time that the question of age is determined. In so tendering you the services of its claim department and legal department, it must be distinctly understood that the insurance company does not thereby waive any of the provisions of the policy above referred to. If you are not willing to accept the services of the claim department and the law department of the insurance company during the making of such investigation on the terms herein stated, then please notify us at once, for we do not want to be put into the position of waiving any provision of the policy."

Plaintiff received the above letter in due course of mail, but made no reply thereto. On December 22, 1922, plaintiff called at the office of Watts & Gentry, attorneys for the defendant, and there discussed with William R. Gentry the contents of the above letter and the subject of the nonliability of the defendant if Hadaller was under the age of 16 years at the time he was injured. Gentry advised plaintiff that, if it should be determined that Hadaller was under 16 years of age at the time of the injury, the defendant would disclaim liability and would decline to go on with the defense of the action. Plaintiff stated to Gentry that, should the defendant decide not to continue with the defense on account of Hadaller's age, he would want to employ Gentry to continue the defense of the case for him. Gentry advised plaintiff that he would be glad to do so, unless there was some conflict between the plaintiff and defendant, but in event of such conflict, being counsel for the defendant, he would have to represent it.

On April 10, 1924, the Hadaller case came on for trial. The evidence showed conclusively that Hadaller was under 16 years of age at the time he was injured. After the evidence had been completed at the trial, and prior to the argument of the case, the defendant, through its counsel, addressed and delivered to the plaintiff the following letter:

"April 11, 1924.

"In re Theodore George Hadaller, by Next Friend, v. Wm. H. Meyers, Doing Business as Sterling Box Co.

"Evidence offered by the plaintiff this morning having clearly established without contradiction for the first time that the plaintiff, Theodore George Hadaller, was under the age of 16 years at the time when he was injured in your factory, and that contrary to the provisions of the statutes of this state the said Theodore George Hadaller was engaged in the operation of a power driven machine known as a jointer, this is to advise you that the Continental Casualty Company now hereby finally disclaims all liability under its insurance policy carried by you for damages resulting from such injuries to said Theodore George Hadaller, and will decline to pay any judgment that may be rendered against you on account of such injuries having been sustained by said Theodore George Hadaller.

"The Continental Casualty Company will, of course, pay its attorneys for their services rendered in the handling of said case up to this time and throughout the present trial, which is now going on in the...