Steel Erection Co. v. Travelers Indem. Co.
| Citation | 392 S.W.2d 713 |
| Decision Date | 13 January 1965 |
| Docket Number | No. 14347,14347 |
| Parties | STEEL ERECTION COMPANY, Inc., et al., Appellants, v. TRAVELERS INDEMNITY COMPANY, Appellee. |
| Court | Texas Court of Appeals |
Earle Cobb, Jr., San Antonio, for appellants.
Groce, Hebdon, Fahey & Smith, San Antonio, for appellee.
This is a suit for breach of an insurance policy wherein the insured contend that the insurer failed to discharge its duty of furnishing them with a defense of a damage suit filed against them, which presents a rather complicated situation, therefore, a full explanation of all the facts is necessary.
The names of the litigants herein involved, and the manner in which they will hereinafter be referred to, are as follows: H. H. Higdon-'Higdon,' Steel Erection Company, Inc.,-'Steel,' Travelers Indemnity Company-'Travelers,' Thomas P. Sullivan, d/b/a D. J. Sullivan Erection Company,-'Sullivan,' Judson H. Phelps-'Phelps,' Employers Mutual Fire Insurance Company of Wausau-' Employers.'
This controversy began when Sullivan, as plaintiff, instituted a suit in the 45th Judicial District Court of Bexar County, against Higdon, Steel, Phelps and Employers, alleging that on or about October 10, 1963, Higdon and Steel rented a Bay City Motor Crane from Sullivan, to be used on a project known as the LaSalle High School Phelps being the general contractor on the project; and while the crane was in the possession, control and under the direct supervision of the defendant Phelps and Higdon, acting through their agents, servants and employees, they negligently and carelessly operated such crane and thereby damaged it. Employers was made a party to this suit as the insurance carrier of Sullivan.
When Higdon and Steel were served with citation in this suit they called upon Travelers to defend them, which Travelers refused to do upon the ground that there was an exemption clause in the insurance policy issued by it, which exempted equipment which was in the possession and under the supervision and control of Higdon and Steel, and that the allegations of plaintiff's petition showed that the crane when damaged was under such exclusive control.
Higdon and Steel then employed Earle Cobb, Jr., Esq., to defend this lawsuit for them, which he at once undertook to do. After some maneuvering in court, Sullivan filed an amended petition in which he dropped Higdon and Steel as defendants, and Employers filed a third party action against Higdon, Steel and Travelers, seeking subrogation upon the theory that the crane at the time it was injured was being operated by Sullivan and his employee as an independent contractor. When this pleading was filed Travelers wrote a letter to Higdon and Steel, stating that due to the allegation of independent contractor, on the part of Sullivan, it was of the opinion that there might probably be coverage under its policy of insurance, and offered to defend the suit. In the meantime Higdon and Steel had filed a third party action bringing Travelers into the suit. After much negotiating, Higdon and Steel offered to permit Travelers to defend the lawsuit, provided Travelers would extend to them full coverage under its policy. This Travelers refused to do. On motion of Travelers, the judge of the 45th District Court severed from the damage suit the controversy between Travelers and Higdon and Steel, and further provided that the findings of the judge or jury in the original damage suit should not be binding in any way upon these parties.
However, it is apparent that there was a conflict of interest between Travelers, on the one hand, and Higdon and Steel, on the other, because should the trier of facts in the damage suit find that Sullivan was operating the crane at the time it was injured, as an independent contractor, there would be coverage under Travelers' policy. On the other hand, if the finding was that the crane was in the exclusive possession and control of Higdon and Steel at the time it was injured, there would be no coverage, due to the exemption clause (L) of the Travelers' insurance policy. While these conditions existed, the damage suit went to trial, with Earle Cobb, Jr., defending for Higdon and Steel, and resulted in the jury finding that the crane was not in possession and under control of Higdon and Steel at the time it was damaged, and that the damage was not caused by the neglect of Higdon and Steel. As a result of these findings, along with other findings, judgment was entered to the effect that Sullivan take nothing as against Higdon and Steel. Thus the question of liability for the damage to the crane became unimportant, so far as Higdon, Steel and Travelers were concerned. However, the question as to who should pay the attorney's fees of Cobb remained.
Higdon and Steel filed a motion for summary judgment against Travelers for the sum of $3,285.00, alleged to be the amount of attorney's fees they had been required to expend in defense of the Sullivan suit. At the same time,...
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