U.S. Fire Ins. Co. v. McCormick

Decision Date23 December 1970
Docket Number6 Div. 481
Citation286 Ala. 531,243 So.2d 367
PartiesUNITED STATES FIRE INSURANCE COMPANY, a Corporation v. J. I. McCORMICK et al.
CourtAlabama Supreme Court

T. Eugene Burts, Florence, for appellant.

A. W. Jones, Victor H. Smith, Birmingham, Howell T. Heflin, Charles D. Rosser, guardians ad litem, Tuscumbia, for appellees.

MERRILL, Justice.

This appeal in a declaratory judgment proceeding is from a decree requiring appellant insurer to defend certain suits filed against named or additional insureds in a comprehensive general liability policy.

This case presents a question of first impression in Alabama. The first question may be stated thusly:

Can an injured employee, or his dependents in the case of death, proceed under Tit. 26, § 312, Code 1940, as amended, against third parties who are not his employer, when such third parties are co- employees and executive officers or management officials of the employer corporation?

The second question posed is:

Where a comprehensive general liability policy contains an exclusion as to claims for injuries made by an employee of the insured, and where said policy provides coverage for individuals as 'any executive officer, * * * while acting within the scope of his duties as such,' what is the effect of the exclusion?

No material factual controversy appears and only questions of law are presented for decision.

Mac's Contracting Company, Inc., a corporation, (hereinafter referred to as Mac's) was, on June 26, 1962, the contractor engaged in laying sewer pipe in the City of Muscle Shoals, Alabama. At that time, J. I. McCormick was the president of the corporation; John Baird was vice-president and acted as general superintendent on the job at Muscle Shoals, and Arthur Bodiford was the sewer foreman on that job, being in charge of some eight to ten men. Mac's and the three aforenamed individuals were respondents-cross complainants in the court below, appellees on this appeal.

Two employees of Mac's, L. Carl Campbell and Clayton Lee Terry, were also working on the Muscle Shoals job on June 26th. Both men were working in a deep trench when a cave-in occurred, causing injury to Campbell and the death of Terry. Both were covered under the Workmen's Compensation Act of the State of Alabama. Campbell and the personal representatives of the deceased, Terry, were respondents in the court below, appellees on this appeal.

After applying for and receiving workmen's compensation benefits, Campbell brought suit in the Colbert County Circuit Court (Case No. 12,614) against McCormick, Baird and Bodiford, individually, seeking damages in the amount of $50,000.00 for injuries arising out of the accident of June 26th. While receiving workmen's compensation benefits, the widow and minor heirs of Terry brought suit in said court (Case No. 12,955) against McCormick, Baird and Bodiford, individually, seeking damages in the amount of $100,000.00 for the wrongful death of Terry. Between the filing of these two suits, Campbell filed suit in the same court (Case No. 12,950) naming Mac's Contracting Company a defendant, seeking a final determination and adjudication of his claim for workmen's compensation benefits.

The original bill seeking a declaratory judgment arises out of a demand by Mac's, by letter through its attorneys, that a defense and coverage be afforded McCormick, Baird and Bodiford under Workmen's Compensation-Employer's Liability Policy No. WC 23 48 94, in the suit instituted against them, individually, by Campbell. Demand was subsequently made for the same defense and coverage in the suit instituted by the widow and minor heirs of Terry.

Demurrers filed to the original bill of complaint were overruled. All respondents then filed answers. The bill of complaint was amended and an amended answer was filed thereto by Mac's and J. I. McCormick, et al. The answer of Campbell and Terry, et al. to the original bill of complaint was refiled to the bill of complaint, as amended.

A cross bill filed on behalf of McCormick, Baird and Bodiford adopts the material allegations of the bill of complaint, as amended, and alleges that a separate policy, Comprehensive General-Automobile Liability Policy No. CAG 18 09 67, also issued by United States Fire Insurance Company, affords coverage and defense to the respective individuals in the event Workmen's Compensation-Employer's Liability Policy No. 23 48 94 does not afford such coverage and defense. Both policies list Mac's Contracting Company and J. I. McCormick as Named insureds.

The decree of the lower court, in pertinent part, is as follows:

'Accordingly, it is CONSIDERED, ORDERED, ADJUDGED and DECREED as follows:

'ONE: The Court declares that Complainant insurance company is bound to defend the three actions brought against J. I. McCormick, John Baird and Arthur Bodiford in the Circuit Court of Colbert County, Alabama, and attached as exhibits in this cause and described therein as Exhibits B, C and E and numbered 12,614, 12,950 and 12,955, being the three actions at law in said court heretofore referred to in the preamble to this decree and throughout the pleadings and proof in this cause; and Complainant is bound and ordered to pay any judgment that may be rendered against the said J. I. McCormick, John Baird and Arthur Bodiford in said actions at law.'

Also pertinent to our consideration on this appeal are the following excerpts from Comprehensive General-Automobile Liability Policy No. CAG 18 09 67:

'COMPREHENSIVE GENERAL-AUTOMOBILE LIABILITY POLICY

%'DECLARATIONS POLICY NUMBER/ CAG 18 09 67

'Name of Insured Mac's Contracting Co., Inc. and J. I. McCormick.

'The named insured is Corporation

'Insuring Agreements

'I Coverage A--Bodily Injury Liability--Automobile. To pay * * *

'Coverage B--Bodily Injury Liability--Except Automobile. To pay on behalf of the insured all sums which the insured 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.

'II Defense, Settlement, * * * With respect to such insurance as is afforded by this policy, the company shall: (a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent, * * *

'III Definition of Insured. The unqualified word 'insured' includes the named insured and also includes (1) under coverages B and D, any executive officer, director or stockholder thereof while acting within the scope of his duties as such, * *

'Exclusions

'This policy does not apply:

'(a) to liability assumed by the insured under any contract or agreement except under coverages B and D, (1) a contract as defined herein * * *

'(f) under coverages A and B, to any obligation for which the insured or any carrier as his insurer may be held liable under any workmen's compensation, unemployment compensation or disability benefits law, or under any similar law;

'(h) under coverage B, except with respect to liability assumed by the insured under a contract as defined herein, to bodily injury to or sickness, disease or death of any employee of the insured arising out of and in the course of his employment by the insured;'

Prior to 1947, Tit. 26, § 311, Code 1940, stated in effect that the injured employee or his representative could 'proceed either at law against such (third) party to recover damages, or against the employer for compensation under this article, but not against both.' Section 311 was repealed in 1947. Several cases decided prior to that time held that the employee could not sue the employer and the third party and that he had to elect between one or the other. See Western Union Tel. Co. v. George, 239 Ala. 80, 194 So. 183. Section 312, also amended in 1947, provides that where the employee's injury or death was caused by 'any party other than the employer,' that the employee or his representative 'may proceed against the employer to recover compensation under article 2 of this chapter, or may agree with the employer upon the compensation payable under article 2 of this chapter and at the same time may bring an action against such other party to recover damages for such injury or death, * * *.'

The parties agree in brief that there is no Alabama authority which construes the words 'any party other than the employer,' in § 312, as amended. 1 We note here that the references to Alabama as being among the states which exclude co-employees from the category of 'third persons' under the statute in Larson's Workmen's Compensation Law, Vol. 2, § 72.20, note 23; Frantz v. McBee Co., Fla., 77 So.2d 796, and Allman v. Hanley, 5th Cir., 302 F.2d 559, are not apt since Tit. 26, § 311 was repealed and § 312 was amended in 1947.

The general rule is where there is no expressed legislative mandate to the contrary, that a co-employee or fellow servant is a third party tortfeasor within the meaning of the Workmen's Compensation Act. Frantz v. McBee Co., Fla., 77 So.2d 796; 58 Am.Jur., Workmen's Compensation, § 61, p. 617, Annotation 21 A.L.R.3d 850; § 3; 101 C.J.S. Workmen's Compensation § 985e, p. 481; Larson's Workmen's Compensation Law, Vol. 2, §§ 72 and 72.10, p. 174.

The statutory definition of 'employer' in Iowa is practically the same as in our statute, and in Price v. King, 259 Iowa 921, 146 N.W.2d 328, the court said:

'To hold a co-employee is not a person other than an employer would be the equivalent of saying an employee is an employer, and this we cannot do.'

In Queen City Furniture Co. v. Hinds, 274 Ala. 584, 150 So.2d 756, we held that the president and principal stockholder of a corporation was covered by workmen's compensation insurance. It would hardly be rational to hold that an officer of a corporation was an employee in that case, but hold him to be an employer when an employee sues him for negligence.

We hold that the...

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