Smith v. United States Fidelity & Guaranty Co.

• Decision Date: 30 October 1942
• Docket Number: 31408.
• Citation: 6 N.W.2d 81,142 Neb. 321
• Court: Nebraska Supreme Court
• Parties: SMITH et al. v. UNITED STATES FIDELITY & GUARANTY CO.

6 N.W.2d 81

142 Neb. 321

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

No. 31408.

Supreme Court of Nebraska

October 30, 1942

Syllabus by the Court.

1. An insurance policy is a contract, and where there is no uncertainty as to its meaning and the same is legal and not opposed to public policy, it will be enforced as it is made.

2. "In construing terms used in a policy of insurance, they are to be taken in their plain and popular sense." Hamilton v. Mutual Benefit Health & Accident Ass'n 133 Neb. 464, 275 N.W. 863.

3. In construing a written instrument for the purpose of ascertaining the intention of the parties, resort must be had to the instrument as a whole and, if possible, effect must be given to every part thereof.

4. The parties to a contract of insurance may contract for any lawful coverage. An insurance company has the right to limit its liability and to impose restrictions and conditions upon its contractual obligations not inconsistent with public policy or statute.

5. The policy in suit construed, and held, that the language of this contract, considered as an entirety and taken in its plain, ordinary sense, clearly expressed the agreement of the parties thereto, that the insurance provided therein including the duty of the insurer to defend against a claim "whether groundless or not," does not contemplate or require the defense by the insurer of a claim against the assured, "resulting from liability imposed upon the assured by law for damages on account of bodily injuries including death at any time resulting therefrom, accidentally suffered or alleged to have been suffered within the policy period," when such causative accident did not occur or is not claimed to have occurred "during the progress of the work."

6. "Where a contractual relation exists by virtue of a written contract expressed in clear and unambiguous language, the court will not look further to construe it." Farmers Educational and Cooperative Union v. Farmers Educational and Cooperative State Union, 133 Neb. 397, 275 N.W. 464.

7. A preponderance of evidence sufficient to justify reformation of a contract in writing on the ground of mutual mistake requires proof that is clear, convincing and satisfactory, and must establish that the mutual mistake involved is common to both parties, each laboring under the same misconception.

Baylor, TouVelle & Healey, of Lincoln, for appellants.

Cline, Williams & Wright, of Lincoln, for appellee.

Heard before SIMMONS, C. J., and EBERLY, CARTER, MESSMORE, and YEAGER, JJ.

EBERLY Justice.

This is an action by the Glenn E. Smith Company, a copartnership, as plaintiffs, to recover from the United States Fidelity & Guaranty Company expenses of litigation, including attorney's fees, incurred in defending a civil action brought against such Smith company and others in the district court for Burt county, Nebraska, by one Dollie Spielman. This present suit is based upon a contractors' public liability policy issued by the defendant insurance company to plaintiffs, and the determining question is whether the cause of action set forth in plaintiffs' petition is within the coverage of this policy as defined by its terms. The judgment of the district court was adverse to the contention of plaintiffs, and they appeal.

The applicable provisions of the instrument in suit, so far as relate to the present controversy, include the following:

"No. PC 13279. United States Fidelity And Guaranty Company, Baltimore, Maryland. A stock company (hereinafter called the company).

"In consideration of the premium and of the statements which are set forth in the Schedule of Statements, does hereby agree with the Assured named in the Schedule of Statements as follows:

"Agreements. Insurance Provided. I. To settle and/or defend in the manner hereinafter set forth all claims resulting from liability imposed upon the Assured by law for damages on account of bodily injuries, including death at any time resulting therefrom, accidentally suffered or alleged to have been suffered within the policy period defined in Statement 2 by any person or persons other than employees of the Assured, by reason of and during the progress of the work described in Statement 4 at the places named therein and elsewhere, if caused by employees of the Assured engaged as such in said operations at said place; but who are required in the discharge of their duties to be from time to time at other places, except driving or using any vehicle or automobile or any draught animal or loading or unloading any such vehicle.

"Defense. II. To defend in the name and on behalf of the Assured any suit brought against the Assured to enforce a claim, whether groundless or not, for damages on account of bodily injuries, including death at any time resulting therefrom, accidentally suffered or alleged to have been suffered by any person or persons other than employees of the Assured. ***

"The foregoing agreements are subject to the following conditions:

"Exclusions. Condition A. This policy shall not cover loss from liability for, or any suit based on, injuries or death: *** (4) Caused by accidents occurring after the final completion of the work performed by the Assured at the place of occurrence of such accidents."

"The policy period" defined in "Statement 2" as referred to in "Agreements I" above set forth, expressly refers to Item 2 of the "Schedule of Statements" contained in the policy in suit, which expressly provides:

"Item 2. The policy period (unless sooner terminated by cancelation) shall be from June 20, 1934, to June 20, 1935, at twelve and one minute o'clock a. m. standard time at the Assured's address."

The evidence in the record discloses that Glenn E. Smith and Phil K. Smith, plaintiffs, were and are copartners engaged in the contracting business in Lincoln, Nebraska, in the name of the Glenn E. Smith Company, and that neither of such Smiths is a resident of Burt county in this state. The United States Fidelity & Guaranty Company is a foreign corporation, legally engaged in the insurance business in the state of Nebraska. For several years prior to June 20, 1934, the defendant company had issued to the plaintiffs annually a policy of insurance, commonly known as a "Contractors' Public Liability Policy." On June 20, 1934, the defendant company issued to the plaintiffs, as copartners, the policy here in suit. From this policy we have quoted, as applicable to this controversy, the provisions hereinbefore set forth.

It appears that plaintiffs Smith and E. J. Wilson & Sons entered into separate, independent, and unrelated contracts with the department of roads and irrigation of the state of Nebraska on October 1, 1934, in connection with a public road project in Burt county, Nebraska. Under the terms of these contracts plaintiffs Smith were to install culverts and Wilson & Sons were to do the grading. Plaintiffs Smith entered upon the work specified in their contract with the state on October 8, 1934, completed it, and moved all equipment owned or used by them from this job before December 31, 1934, and the work performed by them was duly approved and accepted by the state, and they received the final payment for the work performed and completed by them on April 18, 1935. On May 1, 1935, Dollie Spielman, riding in an automobile over the road grade in the public highway and across and over a culvert therein situated, all of which being within the "project" to which the several contracts of the parties hereinbefore set forth related, claimed to have received injuries by reason of the dangerous construction thereof, and sued the plaintiffs Smith, copartners doing business as the Glenn E. Smith Company, and Wilson & Sons, jointly, in the district court for Burt county. The only service of process upon the Smiths attempted was made outside of Burt county, and in Lancaster county, Nebraska. The validity of this service was challenged by the Smiths by special appearance, based on the claim of improper joinder, and alleging that there was no joint liability with the other defendants in the case. The special appearance thus made was first overruled by the trial court. It was preserved in their answer, however, and upon a later hearing on the merits it was determined by the district court for Burt county in favor of the Glenn E. Smith Company; that court finally adjudging, "that the motion of the defendants Glenn E. Smith Company should be and the same hereby is sustained, finds that service on the defendants Glenn E. Smith and Company in Lancaster county, Nebraska is void and without jurisdiction, and that the court has no jurisdiction." The court's final determination being that it was without jurisdiction, its first or interlocutory judgment overruling the challenge thereto by special appearance may not be made the basis of a claim of res judicata. It is only the final judgment of a court of competent jurisdiction that affords a just basis for that contention. "It is essential to the operation of the rule of res judicata that a competent tribunal possessing the requisite jurisdiction has, by final judgment between the same parties or their privies, adjudicated the identical point or question in issue." 23 Standard Ency. of Procedure, 11.

The plaintiffs Smith, after the institution of the Spielman suit against them in Burt county, Nebraska, in which they were named as defendants, made due demand upon the United States Fidelity & Guaranty Company that it defend them as required by the terms of policy No. P. C. 13279 theretofore issued to them. This the insurance company refused to do claiming that there was no coverage due to the fact that the Spielman accident which happened on May 1, 1935, had not occurred during the "progress of the...