Morrill v. Gallagher
| Decision Date | 17 July 1963 |
| Docket Number | No. 63,63 |
| Citation | 122 N.W.2d 687,370 Mich. 578 |
| Parties | Gaylord MORRILL, Plaintiff and Appellee, v. James GALLAGHER and Noah Canfield, Principal Defendants, and United States Fidelity & Guaranty Co., Garnishee Defendant and Appellant. |
| Court | Michigan Supreme Court |
Parks, Church & Wyble, Lansing, for appellant.
Fraser, Trebilcock, Davis & Foster, Lansing, Eugene F. Townsend, Jr., Lansing, of counsel, for appellee.
Before the Entire Bench.
This case involves the interpretation of a policy of liability insurance, commonly known as a 'home owner's policy', issued by the corporate defendant to defendant Gallagher and wife. The facts are not materially in dispute. On January 17, 1957, defendant Gallagher was sole stockholder and manager of two corporations carrying on separate businesses on the same premises. Said corporations are referred to as the Lansing Pfeiffer Distributing Company and the Novi Sales and Service. Plaintiff Morrill was an employee of the first named corporation.
On the date in question it appears that defendants Gallagher and Canfield having in their possession a firecracker referred to as a 'cherry bomb' lighted it and threw it into a room in which plaintiff was working. This was done for the apparent purpose of frightening plaintiff but the result was more serious than anticipated, causing, as plaintiff claimed, serious impairment of his hearing and also a nervous disorder. In January, 1958, suit was brought against the defendants, the declaration filed alleging in the 1st count liability for ordinary negligence on the part of defendants Gallagher and Canfield. The 2nd count was predicated on the theory of assault and battery, and the 3rd charged willful and wanton negligence.
The United States Fidelity & Guaranty Company was notified of the suit and caused an appearance to be entered on behalf of Gallagher. Subsequently this appearance was withdrawn. In a letter to Gallagher written by the insurer under date of May 8, 1958, it was stated by the superintendent of claims of said company that the withdrawal was due to the alleged fact that the policy did not afford Gallagher coverage because of the injury sustained by Morrill. Attention was directed to certain exclusions from liability provisions as set forth in the policy, which will be hereinafter quoted.
Following the withdrawal from the case of the attorneys retained by the insurer, Gallagher procured counsel to represent him. At the pretrial hearing of the case in August, 1958, counts 2 and 3 of the declaration were stricken. Shortly thereafter counsel for for Gallagher moved for summary judgment, basing such motion, in part at least, on the provisions of the workmen's compensation act 1 of the State, and particularly on C.L.S.1956, § 413.15 (Stat. Ann.1960 Rev. § 17.189). It may be noted in passing that said motion alleged that plaintiff at the time of his injury was an employee of the Lansing Pfeiffer Distributing Company and was engaged in performing his duties as such. It further set forth that defendant Gallagher was also an employee of said company and the sole stockholder therein. It did not, however, allege that defendant was at the time of the firecracker incident engaged in the business of the company. Following the filing of the motion for summary judgment plaintiff sought and obtained an order amending the declaration by restoring counts 2 and 3, previously withdrawn. The motion of defendant Gallagher was granted on December 9, 1958, and thereupon plaintiff appealed to this Court from the order of dismissal.
Under date of July 23, 1959, the parties to the case by their respective attorneys stipulated for a dismissal of the appeal to the Supreme Court by plaintiff Morrill, and for the entry of an order setting aside and vacating the order of dismissal as to defendant Gallagher. It was also stipulated that the motion for summary judgment might be stricken and the case placed on the jury calendar for trial during the fall term of 1959. An order was entered in accordance with the said stipulation and the case was subsequently brought on for trial before a jury at the September, 1959, term of the circuit court. At the conclusion of the proofs counsel for plaintiff moved that counts 2 and 3 be deleted from the declaration. There was no objection to said motion and it was granted. Accordingly the case was submitted to the jury under the 1st count which, as before noted, was based on the theory of negligence on the part of defendants Gallasher and Canfield. Verdict was returned in the sum of $35,000 and judgment was entered accordingly.
Garnishment proceedings were instituted against defendant United States Fidelity & Guaranty Company on the basis of the claim that it was indebted to Gallagher under the terms of the liability insurance policy. A disclosure was filed, in substance denying liability under specified exclusions contained in the contract. The exclusions so invoked read as follows:
'(a) to any business pursuits of an Insured, other than activities therein which are ordinarily incident to nonbusiness pursuits, or to the rendering of any professional service or the omission thereof, except with respect to voluntary civilian defense activities; or to any act or omission in connection with premises, other than as defined, which are owned, rented or controlled by an Insured;
'(b) * * *
'(c) to injury, sickness, disease, death or destruction caused intentionally by or at the direction of the Insured;
'(d) to bodily injury to or sickness, disease or death of (1) any employee of the insured while engaged in the employment of the Insured, if benefits therefor are either payable or required to be provided under any workmen's compensation law; or (2) any residence employee of the Insured while engaged in the employment of the Insured if the Insured has in effect on the date of the occurrence a policy providing workmen's compensation benefits for such employee;'
The disclosure further relied on the claims advanced in counts 2 and 3 of the declaration and on the granting of defendant Gallagher's motion for summary judgment by way of dismissal of the suit against him, asserting in effect that the order of dismissal constituted an adjudication that plaintiff's remedy was under the workmen's compensation act. As before noted, the order granting the motion was subsequently set aside and counts 2 and 3 were deleted from the declaration before the case was submitted to the jury. The verdict returned must, in consequence, have been based on a finding of fact that the defendants were guilty of negligence, rather than on the basis of an assault and battery or willful and wanton conduct.
Following the filing of the disclosure counsel for plaintiff moved to strike claims on behalf of garnishee defendant other than those based on the exclusion provisions of the insurance policy. Garnishee defendant moved to dismiss the case. Plaintiff's motion was granted, and defendant's motion was denied. In the order entered by the circuit judge it was directed:
'* * * that the garnishee defendant defend the pending action on the basis of the three exclusions set forth in its letter to James P. Gallagher of May 8, 1958, and that the garnishee defendant may defend the pending action on the basis of alleged fraud and conspiracy as contained in its affidavit denying liability.'
The controversy was submitted to the trial judge in accordance with the understanding of the parties and an opinion was subsequently filed in the case in which the conclusion was expressed that defendant had not sustained the burden of proof with reference to the exclusion clauses of the policy of insurance and that, in consequence, it was liable to the plaintiff on the theory on which the garnishment proceeding was based. Judgment was accordingly entered in the sum of $29,597.80, with costs. The said sum included the maximum liability under the policy, which was fixed at $25,000, together with interest and the court costs incurred in the case brought by plaintiff...
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