Ohio Casualty Ins. Co. v. Welfare Finance Co.

• Decision Date: 20 December 1934
• Docket Number: No. 9915.,9915.
• Citation: 75 F.2d 58
• Parties: OHIO CASUALTY INS. CO. v. WELFARE FINANCE CO.
• Court: U.S. Court of Appeals — Eighth Circuit

75 F.2d 58 (1934)

OHIO CASUALTY INS. CO. v. WELFARE FINANCE CO.^*

No. 9915.

Circuit Court of Appeals, Eighth Circuit.

December 20, 1934.

James R. Claiborne, of St. Louis, Mo. (John W. Joynt and Bishop & Claiborne, all of St. Louis, Mo., on the brief), for appellant.

George C. Wilson, of St. Louis, Mo. (Daniel G. Taylor, Jacob Chasnoff, Hugo Monnig, Jr., and James V. Frank, all of St. Louis, Mo., on the brief), for appellee.

Before STONE, GARDNER, and VAN VALKENBURGH, Circuit Judges.

STONE, Circuit Judge.

This is an appeal from a recovery on a policy of liability insurance.

The policy insured appellee "against loss by reason of liability imposed by law upon the assured for damages on account of bodily injuries * * * accidentally sustained * * * by any person or persons, other than employes of the assured. * * *"

During the life of the policy an action was brought against the assured by Florence Dauster for personal injuries arising from backing a truck, operated by a servant of the insured, out of a garage while she was standing on the running board without leaving sufficient clearance, and thereby throwing her to the ground. The negligence alleged was in this movement of the truck. In addition to a prayer of $25,000 for actual damages, punitive damages were sought in the same amount because "the aforesaid acts of defendants were unlawful, wrongful, wanton and done in a reckless disregard of plaintiff's rights and safety." There was a recovery of $5,500 actual damages and $10,000 punitive damages.

Appellant was promptly notified of the bringing of the above suit, and assumed entire defense thereof for appellee. Subsequent to the above recovery, appellant raised the question that it was not liable for more than $10,000 upon its policy and in no event liable for punitive damages. Subsequently the parties hereto ascertained that the above judgment could be settled for a total payment of $9,000 and costs. This they did through an arrangement which embodied the payment of costs and $3,000 by appellant and the payment of $6,000 by appellee; it being further agreed that, if the above policy should be held to cover punitive damages, there should be recovery by appellee of $5,000 (of the above $6,000 paid by it).

To recover the above $5,000, this action was brought on the policy. Jury was waived, the court made findings of fact, and stated, as a conclusion of law, that the policy did insure appellee "against loss by reason of liability imposed by law for exemplary damages, under the facts shown in evidence."

The position of appellant and its argument is along two lines, as follows: First, that the policy insured only against "accidentally sustained" injuries, and that this did not include anything but compensatory damages; and, second, that, if the policy should be held to include punitive damages, it would be against public policy. The argument of the appellee is that the appellant is foreclosed here to raise the first point under the above settlement agreement between the parties and the facts, and that, as to the second point, the law is not as stated by appellant, for the reason that the liability of appellate in the personal injury suit was purely one of respondeat superior in a matter where it had not authorized or known of the act causing the injury and had no knowledge of any propensities of its servant which would put it upon its guard against such actions.

It seems to us appellate is wrong in its contention that appellant cannot raise the point of the meaning of the policy. This contention is based upon the assertion that the agreement between the parties at the time of settlement of the Dauster judgment was that the only defense to a suit upon the policy would be that to allow recovery thereunder for punitive damages would be against public policy. While there is testimony to the above effect by Mr. Chasnoff, who was a witness for plaintiff, the transcript includes an agreement in open court as to what the above settlement agreement was. That statement is that liability for the $5,000 should depend upon whether the policy covered punitive damages, and was in no wise limited to any particular reason (such as being against public policy) why it should not be so regarded. We must take this statement as embodying the agreement and particularly so as the finding of the court on that point is that recovery should be had herein "unless defendant herein could defeat such recovery on the defense that defendant's policy did not cover or insure plaintiff against loss by reason of liability for exemplary damages in the Dauster suit" — the above quotation is from finding 4, and there is a similar expression in finding No. 6.

The contention of appellant that exemplary damages are outside of the language and meaning of the policy is not well taken. The policy insured "against loss by reason of liability imposed by law upon the assured for damages on account of bodily injuries * * * accidentally sustained. * * *" The basis of the Dauster action was negligence and nothing more than negligence. Obviously, negligence is covered in the term of the policy "accidentally sustained." The assessment of punitive damages was a "liability imposed by law upon the assured" in connection with and because of the bodily injuries and the aggravated conduct of the servant in causing such injuries. Under the Missouri law, where injuries are negligently caused and the negligence is of such an aggravated form or attended by...