Summary
In Maryland Cas. Co. v. Waumbec, 102 N.H. 200, 152 A.2d 619 (1959), relied on by the plaintiff, the insured had contracted to maintain insurance to protect the third party Waumbec from claims arising from its work on that party's premises.
Summary of this case from Merchants Mut. Ins. Co. v. Transformer Serv. Inc.Opinion
No. 4705.
Argued April 7, 1959.
Decided July 10, 1959.
1. The ruling by the Trial Court that a petition for declaratory judgment by a liability insurer, to determine the extent of coverage afforded its insured, should be heard in advance of further proceeding in a law action against the insured to recover sums for which it was claimed that the insurer would be liable under its policy was a proper exercise of the Court's discretion.
2. The liability of a contractor for breach of written contract under which it agreed that it would maintain, and should be liable to its customer for failure to maintain, insurance protecting both of them against claims for damages for personal injuries resulting from performance of the work was held within the meaning of a provision in a comprehensive general liability policy issued to the contractor which excluded "liability assumed by the insured under . . . contract or agreement."
PETITION, for declaratory judgment. RSA 491:22. The facts and claims of the parties are set forth in the following reserved case transferred by Leahy, C.J.
"Petition for declaratory judgment brought by Maryland Casualty Company to determine whether a comprehensive general liability policy issued to The Bahnson Service Company insured said The Bahnson Service Company against liability for an accident which occurred on September 25, 1951 in which Edward D. Perry and John L. Walsh were injured. Walsh and Perry, both employees of The Bahnson Service Company were on the premises of Waumbec Mills, Inc., in Manchester, where The Bahnson Service Company was installing a heating and air conditioning system. Each sued Waumbec Mills, Inc. claiming that while on Waumbec's premises as business invitees they were injured by reason of Waumbec's negligence in the maintenance of certain electric wiring, in consequence of which the plaintiffs received injuries in the form of electrical shock and other injuries. The jury returned a verdict in favor of John L. Walsh in the sum of Five Thousand Dollars ($5,000.00) and in favor of Edward D. Perry in the sum of Seventeen Thousand Five Hundred Dollars ($17,500.00).
"By writ dated March 29, 1956 Waumbec Mills, Inc. instituted an action of assumpsit against The Bahnson Service Company to recover the amounts paid to Walsh and Perry individually and to Maryland Casualty Company for Workmen's compensation benefits paid to Walsh and Perry and for attorneys' fees and expenses in defending the original negligence actions. This action was based upon Bahnson's alleged failure to maintain insurance in compliance with Paragraph 42 of the General Conditions of the contract under which the heating and air conditioning installation was being made. On July 3, 1957, The Bahnson Service Company filed a motion to cite in Employers' Mutual Liability Insurance Company of Wisconsin as a party plaintiff and that Maryland Casualty Company be joined as a party defendant. With respect to Employers' Mutual Liability Insurance Company, it was alleged in the motion that on April 20, 1951 said Insurance Company insured Waumbec Mills, Inc. under public liability policy; that said Insurance Company had in fact defended the actions of Walsh and Perry v. Waumbec Mills, Inc., and paid the several sums set forth in plaintiffs' declaration; and that said Insurance Company should be joined as plaintiff as a real party in interest. With respect to Maryland Casualty Company, it was averted that if judgment were rendered against The Bahnson Service Company in the assumpsit action, Maryland Casualty Company would be lawfully obligated to pay the same by virtue of a comprehensive general liability policy which was then in force. A citation on this motion was issued and served upon said Insurance Companies. Each filed a special appearance and motion in support thereof claiming that it should not be so joined.
"In addition, Maryland Casualty Company filed the within petition for declaratory judgment claiming its comprehensive general liability policy did not cover The Bahnson Service Company for liability to Waumbec Mills or Employers' Mutual Liability Insurance Company of Wisconsin for damages or expenses growing out of the Walsh-Perry accident.
"In its petition Maryland Casualty Company alleged, `That because of the conflicting claims of the parties hereto, irreparable damage may be done unless the rights of the parties existing by reason of the comprehensive general liability policy issued by the petitioner, Maryland Casualty Company, to the defendant, The Bahnson Service Company, and by reason of the general or public liability policy issued by the defendant, Employers' Mutual Liability Insurance Company of Wisconsin, to defendant, Waumbec Mills, Inc., are determined in advance of the trial of said breach of contract action brought by the defendant, Waumbec Mills, Inc. against the defendant, The Bahnson Service Company, and in advance of any hearing on and decision in connection with the "Motion to Cite in Additional Parties" filed in said breach of contract action by the defendant, The Bahnson Service Company.'
"Waumbec Mills, Inc. and The Bahnson Service Company joined in the position that the petition for declaratory judgment and the action of assumpsit should be consolidated and the issues therein tried at the same time. At a preliminary hearing the trial court ruled that the Maryland Casualty Company was entitled to have the issues in its petition for declaratory judgment decided in advance of the trial of the action of assumpsit, to which ruling The Bahnson Service Company and Employers' Mutual Liability Insurance Company of Wisconsin excepted.
"At a hearing on the petition for declaratory judgment certain facts were agreed upon by counsel and certain exhibits were admitted and others excluded subject to exception. All questions appearing in the record are transferred. All issues of law presented thereby are hereby transferred to the Supreme Court without ruling."
Sheehan, Phinney, Bass, Green Bergevin and Richard A. Morse (Mr. Phinney orally), for the plaintiff.
Wiggin, Nourie, Sundeen, Nassikas Pingree and Peter J. Bourque (Mr. Bourque orally), for the defendants Waumbec Mills, Inc. and its insurance carrier, Employers' Mutual Liability Insurance Company of Wisconsin.
Booth, Wadleigh, Langdell, Starr Peters (Mr. Booth orally), for the defendant, The Bahnson Service Company.
Waumbec Mills, Inc. by written contract dated April 20, 1951, employed a contractor, The Bahnson Service Company, to install a heating and air conditioning system on Waumbec's premises. In the course of the work, two of Bahnson's employees were injured on September 25, 1951, and workmen's compensation was thereafter paid to them by the plaintiff, Maryland Casualty Company, under a policy of "workmen's compensation and employers liability" insurance which it had issued to Bahnson.
Subsequently, in 1955, the same employees recovered judgments against Waumbec in actions for negligence in the installation and maintenance of certain electrical wiring. These judgments were satisfied by Waumbec from funds advanced to it under a "loan receipt agreement" by Employers Mutual Liability Insurance Company of Wisconsin, its insurer under a policy referred to in certain of the pleadings as a policy of public liability insurance. A portion of these funds was paid to the plaintiff Maryland Casualty Company, as reimbursement for the workmen's compensation previously paid by it. This reimbursement was secured by a lien in favor of its insured, the employer Bahnson. See RSA 281:14.
By writ dated March 29, 1956, Waumbec sued Bahnson in assumpsit to recover the amounts paid on account of the judgments in favor of the employees, declaring upon the contract of April 20, 1951, and in particular the following "general condition" thereof: "This Contractor [The Bahnson Service Company] shall maintain such accident and liability insurance as will adequately protect him and the Owner [Waumbec Mills, Inc.] from claims for damage for personal injuries arising directly or indirectly from operations under this contract, as to all persons, both employees and the public, complying with all laws covering this subject, and he shall be liable to the Owner for failure to maintain such insurance."
On July 3, 1957, Bahnson moved that Employers Mutual Liability Insurance Company be joined as a party plaintiff in the law action, and the plaintiff Maryland Casualty Company as a party defendant. Maryland thereupon filed this petition for declaratory judgment, alleging that the policy in question did not provide coverage against the liability sued upon by Waumbec and the petition was tried by the Court.
The exceptions to the ruling of the Trial Court that the petition for declaratory judgment should be heard in advance of further proceedings in the law action (see Merchants Mut. c. Co. v. Kennett, 90 N.H. 253) presents no question of law, since there was evidence upon which the Court could properly so rule. Whether Maryland should or could be cited in as a party defendant in the action at law depended upon whether it insured Bahnson against liability for the alleged breach of its contract with Waumbec. The argument on behalf of Bahnson that the ruling was made as a matter of law is not supported by the record. We find nothing to indicate that the ruling was not made in the Court's discretion, and the presumption is that it was. Vallee v. Company, 89 N.H. 285, 291; Perkins v. Associates, 100 N.H. 247. The exceptions to the ruling are accordingly overruled.
The remaining and principal issue concerns Maryland's alleged obligation to defend Bahnson in the assumpsit action and to satisfy any judgment which Waumbec may recover on account of Bahnson's alleged breach of contract. The policy issued by Maryland to Bahnson, styled a "comprehensive general liability policy," provides in part that the insurer "agrees . . . subject to the limits of liability, exclusions, conditions and other terms of this policy . . . . I Coverage A — Bodily Injury Liability. 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."
Under the head of "Exclusions" the policy contains the following provisions material to this case: "This policy does not apply: (a) to liability assumed by the insured under any contract or agreement . . . (c) under coverage A . . . to bodily injury to . . . any employee of the insured while engaged in the employment of the insured, or any obligation for which the insured or any company as his insurer may be held liable under any workmen's compensation law."
The issue presented by the petition for declaratory judgment is thus seen to consist of the following question: Is Bahnson's liability by reason of its alleged breach of agreement to insure Waumbec against "claims for damage for personal injuries arising . . . from operations" in the installation of the heating and air conditioning system, a liability, within the meaning of Maryland's policy, for "sums which [Bahnson is] legally obligated to pay as damages because of bodily injury . . . caused by accident"; or is it on the contrary a liability within the meaning of the provisions of the policy which exclude "liability assumed by the insured under. . . contract or agreement," and liability "under any workmen's compensation law?"
It seems plain to us that the alleged liability is expressly excluded from coverage by the terms of the policy. Waumbec seeks by its action at law to establish liability for breach of contract by Bahnson, upon which contract it has expressly declared. By the contract Bahnson specifically agreed that it should be "liable" to Waumbec "for failure to maintain . . . insurance" for Waumbec against "claims for damage for personal injuries arising . . . from" the work.
If Bahnson is liable for such a failure, and is adjudged liable in the law action, its liability will be one to pay damages for breach of contract arising out of its failure to insure the owner, and not one to pay "sums . . . as damages because of bodily injury." The liability, if it exists, is one which Bahnson expressly "assumed" by its contract of April 20, 1951.
The nature of Bahnson's liability will not be altered even if the rule of damages in the action at law is properly to be held to permit recovery of sums paid by Waumbec on account of bodily injuries suffered by Bahnson's employees. Cf. Dufton v. Bank, 95 N.H. 299; Mansfield v. Finance Corp., 99 N.H. 352. Bahnson's liability, if any, to Waumbec will remain a liability which it "assumed" or took onto itself, by contract.
Bahnson, as the insured under the Maryland policy, places substantial reliance upon an amendment to the policy, made by endorsement, by which the words "and caused by accident" modifying the words "bodily injuries" were stricken out of the insuring clause under coverage A, and the word "occurrence" was substituted for the word "accident" "whenever used in the policy." It is not perceived how this amendment can alter the conclusions heretofore expressed. Whether the effect of the endorsement was to make coverage A applicable to "bodily injury . . . sustained by any person and caused by occurrence" or simply to "bodily injury . . . sustained by any person," the coverage afforded was against liability to pay money "as damages because of bodily injury," which is a liability in tort and not a "liability assumed . . . under any contract" expressly excluded by the policy.
Waumbec seeks to recover sums which it paid out on account of its common-law liability to Bahnson's employees, for negligence Bahnson agreed to insure but not to indemnify Waumbec against such liability. Bahnson satisfied its own liability to the injured employees by paying them workmen's compensation. It could be under no responsibility to them in a common-law action for negligence. RSA 281:12. Satisfaction of the judgments by Waumbec was payment of damages arising out of its own negligence and not on account of any vicarious liability for Bahnson's conduct. No question of primary and secondary liability as between Bahnson and Waumbec is involved. Hence the only cause for which Bahnson can be liable to Waumbec is its alleged breach of an obligation assumed by contract.
For such liability no coverage is afforded by the Maryland policy. Larsen v. General Casualty Co., 99 F. Supp. 300 (D.C. Minn., 1951) aff'd in General Cas. Co. of Wise. v. Larson 196 F.2d 170 (8th Cir. 1952). See Union Paving Co. v. Thomas, 186 F.2d 172 (3d Cir. 1951); Wells Labberton v. Gen'l Cas. Co. of Am., 332 P.2d 250; Cf. United States F. G. Co. v. Virginia Eng. Co., 213 F.2d 109 (4th Cir. 1954). See also, anno. 63 A.L.R. (2d) 1122; comment, 25 Fordham L. Rev. 714.
It follows that a declaratory judgment should be entered adjudging that the plaintiff Maryland Casualty Company is not obligated by virtue of its policy of insurance to defend the action at law against Bahnson Service Company or to satisfy any judgment which may be returned against the latter in that action.
Other issues which have been briefed and argued by the parties are not presently before us, but arise out of the pending law action and the motions to join the insurers as parties to that action. There is no occasion for us to pass upon them unless and until they are transferred in the orderly course of disposing of the action at law. It is apparent, however, that there is no occasion to join Maryland Casualty Company as a party defendant in that action on account of the "comprehensive general liability policy" which it issued to The Bahnson Service Company.
The evidentiary rulings to which exceptions were taken do not require consideration in view of the conclusions reached. There should be
Judgment for the plaintiff.
All concurred.