Travelers Ins. Co. v. Chicago Bridge & Iron Co., 15418

• Decision Date: 05 June 1969
• Docket Number: No. 15418,15418
• Citation: 442 S.W.2d 888
• Parties: TRAVELERS INSURANCE COMPANY et al., Appellants, v. CHICAGO BRIDGE & IRON COMPANY et al., Appellees. . Houston (1st Dist.)
• Court: Texas Court of Appeals

Page 888

442 S.W.2d 888

TRAVELERS INSURANCE COMPANY et al., Appellants, v. CHICAGO BRIDGE & IRON COMPANY et al., Appellees.

No. 15418.

Court of Civil Appeals of Texas Houston (1st Dist.).

June 5, 1969 On Third Motions for Rehearing.

Fourth Motions for Rehearing Denied June 26, 1969.

Ben G. Sewell, Thomas S. Terrell, Houston, Sewell, Junell & Riggs, Houston, of counsel, for appellant Travelers Ins. Co.

Kemper, Kemper & Ewing, T. M. Kemper, Houston, for appellant American Motorists Ins. Co. John L. McConn, Jr., Howard L. Nations, Houston, Butler, Binion, Rice, Cook & Knapp, Houston, of counsel, for appellee Chicago Bridge & Iron Co.

David Bland, Houston, Barrow, Bland & Rehmet, Houston, of counsel, for appellee J. T. Thorpe Co.

On Third Motions for Rehearing

COLEMAN, Justice.

The previous opinions of this Court are ordered withdrawn and this opinion is substituted.

This is a suit to determine the party or parties upon whom rests the duty to pay the workmen's compensation benefits received by Ulysses Harrison as a result of injuries received in the course of his employment by J. T. Thorpe Company on the 20th day of July, 1961, and the amount paid to him by the Chicago Bridge & Iron Company in settlement of his claim for damages for injuries suffered by him by reason of the negligence of an employee of that company.

At the time Harrison received his injuries he was engaged in the construction of a catalytic cracking unit at the American Oil Company Refinery in Texas City, Texas. M. W. Kellogg Company was the general contractor. Chicago and Thorpe were subcontractors under Kellogg. Travelers Insurance Company was Kellogg's insurer, having issued it both a general comprehensive liability policy and a comprehensive automobile liability policy which contained the standard automobile loading and unloading clauses. Thorpe was insured by American Motorists Insurance Company for both Workmen's Compensation coverage and Comprehensive General Liability coverage including a contractual liability endorsement.

Harrison first recovered medical and compensation payments from American Motorists, the compensation carrier for Thorpe, in the sum of $18,765.03. Then on July 10, 1963, he filed a third party action against Kellogg and Chicago Bridge. American Motorists and Travelers were brought into the suit. American Motorists intervened for the amount paid as Workmen's Compensation benefits. Eventually Chicago Bridge settled the case with Harrison for $62,500.00 and indemnified him against any compensation recoupment by American Motorists. Chicago Bridge then filed a cross-action and third party action against Thorpe, alleging an indemnification agreement, against American Motorists by reason of the contractual liability endorsement to the general liability policy issued by it to Thorpe, and against Travelers by reason of the loading and unloading clause in the automobile liability policy issued by it to Kellogg. Thorpe answered and sought recovery over against American Motorists and asserted that Travelers' policy indemnification of Chicago Bridge was primary over Thorpe's contractual indemnification of Chicago Bridge.

The case proceeded to trial before a jury in April, 1968, and at the conclusion of the testimony the trial court sustained Chicago Bridge's motions for instructed verdict and rendered judgment for Chicago Bridge against Thorpe, American Motorists, and Travelers. Thorpe's motion for instructed verdict over against American Motorists and Travelers was also sustained. Judgment was entered rendering American Motorists and Travelers jointly and severally liable to Chicago Bridge and Thorpe. Both American Motorists and Travelers appeal.

Employees of Chicago Bridge and Thorpe were working on the tower at the same time. Thorpe's subcontract included insulating the upper level of the catalytic cracking unit by means of a gunniting process which produced a dry cement waste material called 'rebound.' Periodically this material was removed from the unit by loading it in a 55 gallon barrel. The barrel was then lowered to the ground and either emptied on the ground, or into a dump truck furnished by Kellogg. From time to time the truck was driven by a Kellogg driver from the work area and the rebound was disposed of as debris. There was an agreement between C. L. Thomas, Thorpe's superintendent, and Howard Stewart, Chicago Bridge's superintendent, that Thorpe could use certain equipment owned and erected on the job by Chicago Bridge on the condition that Thomas would execute on behalf of Thorpe a printed form equipment rental agreement furnished by Chicago Bridge. On June 29, 1961, such an agreement was executed so that Thorpe employees could use the Chicago Bridge scaffolding. Prior to the accident it was agreed between Thomas and Stewart that Thorpe employees could use Chicago Bridge equipment to remove the rebound. Included in the agreement was a boom and hoist to be operated by a Chicago Bridge employee. It was understood that the equipment rental agreement would be identical in terms, except for the description of the equipment, to the one previously executed. Prior to the accident the lease was prepared and signed by Stewart, but Thomas signed the lease about an hour after the accident.

There was evidence that, pursuant to the agreement between Thomas and Stewart, on the afternoon of July 20, 1961, George Cavitt, Chicago Bridge's hoist operator, was lowering the barrel partially filled with rebound from the top of the unit to the Kellogg truck at its base when, due to Cavitt's negligence, the drum came loose from the hook attached to the hoist line and fell, striking Harrison. As a result of the injuries he received, Harrison was rendered a paraplegic.

When Harrison filed his third party action against Kellogg and Chicago Bridge, Chicago Bridge tendered its defense to Thorpe in accordance with the indemnification clause in the equipment rental agreement. Thorpe then tendered the defense of Chicago Bridge to American Motorists pursuant to the contractual liability endorsement to their comprehensive liability policy. American Motorists accepted the defense of Chicago Bridge and employed a law firm, The Kempers, who filed an answer on behalf of Chicago Bridge on August 1, 1963. In February, 1964, Kellogg, who had answered on August 3, 1963, was dismissed from the suit by Harrison. On August 22, 1966, The Kempers withdrew from the defense of Chicago Bridge, and American Motorists denied liability under their policy of insurance with Thorpe and the contractual liability endorsement thereto, primarily on the ground that recently they had discovered that the equipment rental agreement had not been signed by Thomas until after the accident so that no written agreement contained the indemnity agreement when Harrison was injured.

Acting under protest Chicago Bridge then substituted John L. McConn, Jr. as its counsel of record and undertook its own defense. The Kempers, as attorneys for American Motorists, on January 6, 1967, filed a petition in intervention to recover the Workmen's Compensation previously paid to Harrison. Prior thereto on August 31, 1966, before American Motorists turned over the Harrison defense file to counsel for Chicago Bridge, the issue of possible coverage for George Cavitt and Chicago Bridge under the Travelers policy was brought to the attention of Chicago Bridge by The Kempers. Within a few days thereafter Chicago Bridge gave notice to Kellogg and Travelers that there was a possibility of coverage under the loading and unloading clause of the automobile policy issued to Kellogg by Travelers. After investigating the facts, on January 3, 1967, the attorney for Chicago Bridge notified Travelers that his investigation indicated that the dump truck in use at the scene of the accident was under the control of Kellogg and that, therefore, George Cavitt and Chicago Bridge were additional insureds under the loading and unloading clause. Travelers refused to accept the tender of Chicago Bridge's defense. Thereafter Chicago Bridge settled the case with Harrison and the further proceedings previously recited occurred.

American Motorists Insurance Company

By its first point American Motorists contends that the trial court erred in concluding as a matter of law that the 'Equipment Rental Agreement' between Thorpe and Chicago Bridge was a 'written contract' as contemplated by the Contractual Liability Coverage Endorsement to the policy of insurance issued to Thorpe by American Motorists, and in concluding as a matter of law that the accident in question occurred prior to the 'execution' of the Equipment Rental Agreement.

The Contractual Liability Coverage Endorsement contains these provisions:

'1. Coverage Y--Contractual Bodily Injury Liability.

To pay on behalf of the insured all sums which the insured, by reason of the liability assumed by him under any written contract designated in the schedule below, shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person and caused by accident.

'DESIGNATION OF CONTRACTS

Any written agreement to assume the legal liability of others, relating to the insured's business as described in Declaration 1 of the policy.

'It is agreed that the insurance afforded under this enforsement is subject to the following additional provisions:

'1. This endorsement does not apply:

'(j) to any accident occurring prior to the execution of any contract;

The last quoted paragraph was typewritten on a printed form, except the part beginning with the words 'It is agreed' were typed on a separate sheet of paper and attached to the printed form.

Our problem is to determine the meaning of this provision of the insurance policy, and then to determine whether the Equipment Rental Agreement is such a written contract as is required by the insurance policy. Words used in an...