U.S. Fid. & Guaranty Co. v. Dawson Produce Co.

• Decision Date: 18 May 1937
• Docket Number: Case Number: 26071
• Citation: 68 P.2d 105,180 Okla. 119,1937 OK 317
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. DAWSON PRODUCE CO.
• Court: Oklahoma Supreme Court

1937 OK 317

68 P.2d 105

180 Okla. 119

UNITED STATES FIDELITY & GUARANTY CO. v. DAWSON PRODUCE CO.

Case Number: 26071

Supreme Court of Oklahoma

Decided: May 18, 1937

Syllabus

¶0 1. INDEMNITY - Action Against Indemnitor by Party Indemnified - Conclusiveness of Judgment Against Party Indemnified in Favor of Third Party.

One who is required either by law or contract to protect another from liability is bound by the result of the litigation to which such other is a party, provided the former had notice of such litigation and an opportunity to control its proceedings; but a judgment against a party indemnified is conclusive in a suit against his indemnitor only as to the material facts therein established.

2. SAME - Indemnitor Sued on Employer's Liability Feature of Insurance Policy Held not Precluded From Defending on Ground Party Recovering Judgment Against Indemnitee Was not "Employee" of Indemnitee.

Record examined, and held, that defendant, the indemnitor of plaintiff, was not precluded from asserting as a defense in an action against it upon a standard workmen's compensation and employer's liability insurance policy that one who had previously recovered judgment against plaintiff, the indemnitee, was not an employee of plaintiff within the meaning of the policy.

Appeal from District Court, Oklahoma County; George A. Henshaw, Judge.

Action by the Dawson Produce Company against the United States Fidelity & Guaranty Company to recover money judgment on the employer's liability feature of an insurance policy. Judgment for the plaintiff, and defendant appeals. Reversed and remanded.

Thos. H. Owen and Paul N. Lindsey, for plaintiff in error.

Ned Looney and F.C. Love, for defendant in error.

BUSBY, J.

¶1 On January 6, 1933, Prama Singhrs sustained a personal injury when he fell into an elevator shaft in one of the buildings operated, controlled, and used by the Dawson Produce Company. On the second day of June, 1933, he instituted an action in the district court of Oklahoma county seeking to recover damages from the Dawson Produce Company on the theory that the personal injury sustained by him was occasioned by the alleged negligent manner in which the company maintained its premises.

¶2 On the 7th day of December, 1933, the case was tried to the court and resulted in a judgment in favor of Singhrs for the sum of $2,200. This judgment was paid by the Dawson Produce Company.

¶3 On March 5, 1934, the Dawson Produce Company, a corporation, as plaintiff, commenced this action in the district court of Oklahoma county against the United States Fidelity & Guaranty Company, as defendant, to obtain reimbursement, including costs of defense, under the indemnity features of an employer's liability contract of insurance, asserted to have been issued by the defendant and in effect when the personal injury was sustained by Singhrs.

¶4 The policy upon which the action is predicated is what is known as a "standard workmen's compensation and employer's liability policy" and contains the following provisions which are pertinent to the action:

"One (b) to Indemnify this Employer against loss by reason of the liability imposed upon him by law for damages on account of such injuries to such of said employees as are legally employed wherever such injuries may be sustained within the territorial limits of the United States of America or the Dominion of Canada. * * *

"Three - to Defend, in the name and on behalf of this Employer, any suits or other proceedings which may at any time be instituted against him on account of such injuries, including suits or other proceedings alleging such injuries and demanding damages or compensation therefor, although such suits, other proceedings, allegations or demands are wholly groundless, false or fraudulent."

¶5 The plaintiff asserted in its petition that when it was sued by Singhrs it notified the defendant insurance company of the fact and called upon it to defend the action, which the defendant refused to do. The plaintiff also asserted in its petition that Singhrs was one of its employees at the time the personal injury was sustained and that in the previous action he was adjudicated to be such an employee. As a part of the assertion of adjudication of this point a copy of the journal entry of judgment rendered in the prior action was attached to the petition which contained a special finding so reciting.

¶6 In its answer the defendant insurance company, among other alleged defenses, asserted that Singhrs was not in fact an employee of the Dawson Produce Company and that the alleged adjudication of that relationship was not a conclusive determination of that relationship as to the defendant insurance company. The defendant did not deny the execution of the insurance policy.

¶7 The trial court sustained a demurrer to the defendant's answer (which was its third amended answer). The defendant elected to stand upon its answer, whereupon judgment was entered for the plaintiff. The defendant appeals. We shall continue to refer to the parties by their trial court designation.

¶8 The only real and meritorious point in this appeal is whether the insurance company, having been notified of the pendency of the prior action and called upon to defend the same and having failed to do so, is now conclusively bound by the adjudication or attempted adjudication therein made whereby it is asserted to have been determined that Singhrs was an employee of the Dawson Produce Company at the time of his injury.

¶9 Section 9648, O. S. 1931, provides:

"Indemnity is a contract by which one engages to save another from a legal consequence of the conduct of one of the parties, or of some other person."

¶10 Section 9654, O. S. 1931, provides in part as follows:

"In the interpretation of a contract of indemnity, the following rules are to be applied, unless a contrary intention appears: * * *

"Fifth. If, after request, the person indemnifying neglects to defend the person indemnified, a recovery against the latter, suffered by him in good faith, is conclusive in his favor against the former."

¶11 This statute, in the absence of a contractual provision to the contrary, makes the recovery against the person indemnified conclusive against the indemnitor. But note should be taken that it is the recovery which is conclusive, if the person is in fact indemnified, and the recovery does not in itself conclusively establish that the person claiming to be indemnified is in fact indemnified. In other words, the question of whether the party against whom recovery is had is indemnified is still open to dispute, notwithstanding the recovery. See, generally, in this connection Saxon v. National Surety Co., 129 Okla. 300, 264 P. 885; Missouri, K. & T. R. Co. v. Ellis, 78 Okla. 150, 189 P. 363; Washington Gas Light Co. v. District of Columbia, 161 U.S. 316, 16 S.C. 564, 40 L.Ed. 712.

¶12 However, it is generally agreed that any question determined in the action against the party claiming to be indemnified which was actually an issue and necessary or material to a determination of the action cannot be asserted to have been improperly determined by an indemnitor who was notified of the pendency of the action. Columbia Casualty Co. v. Hare (Fla.) 156 So. 370; Tondi v. Fidelity & Casualty Co. of N.Y. (Md.) 145 A. 182.

¶13 The rule is stated in 31 C. J. 460-462:

"Where the indemnitor is notified of the pendency of an action against the indemnitee in reference to the subject matter of the indemnity and is given an opportunity to defend such action, the judgment in

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