New York Indem. Co. v. Fidelity & Deposit Co. of Maryland
| Decision Date | 17 April 1930 |
| Docket Number | 32. |
| Citation | 149 A. 855,159 Md. 73 |
| Parties | NEW YORK INDEMNITY CO. v. FIDELITY & DEPOSIT CO. OF MARYLAND. |
| Court | Maryland Court of Appeals |
Appeal from Superior Court of Baltimore City; George A. Solter Judge.
Suit by the Fidelity & Deposit Company of Maryland against the New York Indemnity Company. Judgment for plaintiff, and defendant appeals.
Reversed without new trial.
Argued before BOND, C.J., and URNER, ADKINS, OFFUTT, DIGGES, PARKE and SLOAN, JJ.
Walter L. Clark and Roszel C. Thomsen, both of Baltimore (Clater W Smith, of Baltimore, on the brief), for appellant.
Washington Bowie, Jr., and E. F. Barker, both of Baltimore (J. Stuart Galloway, of Baltimore, on the brief), for appellee.
In December, 1923, Lawrence W. Welp and Edward Zigrang, trading as Welp & Zigrang, entered into a contract with the city of Farmington, Mo., to construct a system of sewers and disposal works in said city. The contractors were to have entire charge of the work and be responsible for the entire work until its completion and acceptance by the city. The work involved blasting, and the contractors agreed to place proper guards upon and around the same, and to indemnify the city against all suits and damages on account of any real or alleged injury to the person or property of another resulting from the negligence or carelessness in the performance of the work or in guarding the same. It was also agreed that in the event the contractors should fail or neglect to pay for labor performed or materials purchased, the city should have power to pay for the same out of amounts that might be due said contractors; that the city should make monthly payments to the contractors based on estimates made by the city's engineer, deducting 15 per cent. from amounts found to be due as an agreed compensation to be forever retained by the city and forfeited by the contractors as agreed and liquidated damages in case the whole amount of work should not be done in accordance with the agreement and the plans and specifications; that the engineer should as soon as possible after the completion of the work make a final estimate of the amount of work done; and that the city within thirty days after such final estimate should pay the entire sum as found to be due including all retained percentages. The contractors filed with the city two bonds, one guaranteeing the performance of the contract and the other guaranteeing the payment of all bills for labor and materials; the Fidelity & Deposit Company of Maryland, the appellee, being the surety on both bonds. The New York Indemnity Company, the appellant, issued to the contractors a contract of insurance in which the insurer covenanted to indemnify the contractors "against loss by reason of liability imposed by law upon the assured" for damages on account of bodily injuries sustained by any person not employed by the contractors as a result of an accident occurring on or about the premises used or occupied by said contractors in the construction of the said sewer, or occurring elsewhere if the injuries were caused by the employees of said contractors while engaged in said work. The insurer agreed to investigate all accidents involving such bodily injuries and defend any suits that might be brought, unless or until it should elect to effect settlement thereof; to pay all costs taxed against the assured on any legal proceeding defended by the company, and interest accruing upon the judgment rendered in connection therewith. It was provided that the policy should not cover any liability of others assumed by the assured under any oral or written contract, and that the assured should not voluntarily assume any liability, nor settle any claim, except at the assured's own cost. There was also a provision that the insolvency or bankruptcy of the assured should not relieve the company from the payment of the indemnity provided by the policy, but that it should entitle the claimant to maintain an action against the indemnity company for the recovery of such indemnity. There was further provision that if the business of the assured should be placed in the hands of a receiver, assignee, or trustee, whether by the voluntary act of the assured or otherwise, the policy should immediately terminate, but such termination should not affect the liability of the company as to any accident theretofore occurring. The liability of the insurer was limited to the sum of $10,000 for any one accident.
An accident occurred from the blasting, and suit was instituted in Missouri against the contractors and the city of Farmington of which due notice was given to the indemnity company as provided in the policy, and the defense of the suit on behalf of the contractors was undertaken by the company. After the filing of certain pleadings in the suit and before trial, the company on behalf of the contractors made a settlement by the payment of $8,000, the company on behalf of said contractors taking an agreement, styled a covenant not to sue, signed by the plaintiff, and a release was duly executed. Thereafter on the day of the trial of the case against the city it was stipulated by the plaintiff and the attorneys of the company, representing the contractors, that the case be dismissed as to the contractors only, and not as to any other defendant, and with prejudice to the plaintiff, and pursuant to said stipulation an order was entered by the court that the case be dismissed as to the contractors. There was a verdict against the city for $2,500 on which a judgment was entered. It is agreed that in reaching its verdict the jury was instructed to, and did, take into consideration the payment made by the indemnity company to the contractors; and was also instructed that if they found that the city knew that the blasting of rock by the use of high explosives would be necessary, and if they further found that such blasting was inherently dangerous to persons who might be within reasonable vicinity thereof, and that the contractors negligently failed to...
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