Summary
In City of Kimball v. St. Paul Fire & Marine Ins. Co., 190 Neb. 152, 206 N.W.2d 632 (1973), this court was asked to determine whether damages from seepage of a sewage lagoon system were covered as an accident.
Summary of this case from Dutton-Lainson Co. v. the Continental Insurance Co.Opinion
No. 38704.
Filed April 27, 1973.
1. Insurance: Words and Phrases. The word "accident" as used in liability insurance is a more comprehensive term than "negligence" and in its common signification the word means an unexpected happening without intention. 2. ___: ___. The word "accident" has many meanings, and when used in a contract of liability insurance, unless otherwise stipulated, it should be given the construction most favorable to the insured. 3. Insurance: Words and Phrases: Damages. Elements of unforeseen or unexpected damage or consequence as distinguished from normal or provable consequence from negligent act is important in describing causation by accident within a policy. 4. Insurance: Time. In the absence of any express policy provision in such respect, the inability to fix the exact time when and where an accident occurred does not preclude recovery under the policy. 5. Insurance: Time: Words and Phrases. The accident covered by the policy may be a process. Where the accident is a process how long then is not significant. It is the nature of the process which is important. 6. Insurance: Damages: Words and Phrases. In general, the element of an unforeseen or unexpected damage as distinguished from a normal and probable consequence from a negligent act is dominant in describing a causation by accident.
Appeal from the District Court for Kimball County: JOHN H. KUNS, Judge. Affirmed.
O'Brien Everson and Darrel J. Huenergardt, for appellants.
John D. Knapp, for appellee.
Heard before WHITE, C. J., SPENCER, BOSLAUGH, SMITH, McCOWN, NEWTON, and CLINTON, JJ.
St. Paul Fire and Marine Insurance Company, appellant, appeals from a judgment determining that it had wrongfully denied coverage under a liability policy issued to the city of Kimball. The city paid a judgment rendered against it in favor of Walter Strauch for $5,500. The city brought this action against the company and recovered a judgment for the amount paid, with interest and costs, including an attorney's fee. Appellant perfected this appeal. We affirm.
In 1958, the city of Kimball contracted to have a sewage lagoon system constructed on the Southeast Quarter of the Northwest Quarter of Section 28. Township 15 North, Range 55 West of the 6th P. M., Kimball County, Nebraska. This is the adjoining quarter to land owned by Walter Strauch. The system was completed on April 10, 1959.
In 1963, Strauch made a claim against the city alleging damages arising from seepage. Specifically, he alleged that for three growing seasons prior to 1964 the city continued to use its lagoon, and the discharge therefrom polluted and contaminated the underground water from which he obtained his irrigation water.
During this time, the city had an insurance policy with appellant which provided in part: "`To pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident.'" In addition, the policy provided that the insurance company would defend the city against actions alleging covered injury, sickness, disease, or destruction.
The city made demand on the appellant to assume coverage of the Strauch claim, as well as to defend the action itself. The appellant denied coverage and refused to defend the action.
In the Strauch action against the city the court specifically found: "* * * that the Defendant was negligent in not discovering and then filling the seismograph holes lying beneath the floor of the Defendant's sewage lagoon cells at the time the sewage lagoon was constructed by the Defendant thereby allowing sewage to flow and seep through the seismograph holes into the underground waters from which Plaintiff obtains his irrigation water and thereby polluting and contaminating the Plaintiff's irrigation well."
The parties in this action stipulated that the city's agents and employees inspected the premises upon which said sewage lagoon was constructed prior to the construction thereof, but failed to discover the existence thereon of the seismograph holes referred to in the judgment of the District Court for Kimball County, Nebraska. The question presented is whether this contamination was an accident within the coverage of the policy.
The word "accident" as used in liability insurance is a more comprehensive term than "negligence" and in its common signification the word means an unexpected happening without intention. 1 Long, The Law of Liability Insurance, 1.15, p. 1-33.
The word "accident" has many meanings, and when used in a contract of liability insurance, unless otherwise stipulated, it should be given the construction most favorable to the insured. Updike Investment Co. v. Employers Liability Assurance Corp. (1936), 131 Neb. 745, 270 N.W. 107. There is in the policy in question no attempt to define the term "accident." Consequently, the meaning of the word most favorable to the insured should be accepted.
The following language from Bennett v. Travelers Protective Assn. (1932), 123 Neb. 31, 241 N.W. 781, is very pertinent herein: "In the case of Lewis v. Ocean Accident Guarantee Corporation, 224 N.Y. 18, 7 A. L. R. 1129, we find a very interesting opinion by Judge Cardozo. In this case the insured had a pimple on his lip, which, when pricked, carried a germ known as staphylococcus aureus into the underlying tissues of his face, and, in spite of remedies applied by the physician, it spread toward the eye, and 12 days later his death ensued. The question arose whether the infection was the result of an accident, making the insurance company liable. Judge Cardozo says: `Unexpected consequences have resulted from an act which seemed trivial and innocent in the doing. Of itself, the scratch or the puncture was harmless. Unexpectedly it drove destructive germs beneath the skin, and thereby became lethal. To the scientist who traces the origin of disease there may seem to be no accident in all this. * * * But our point of view in fixing the meaning of this contract must not be that of the scientist. It must be that of the average man. * * * Such a man would say that the dire result, so tragically out of proportion to its trivial cause, was something unforeseen, unexpected, extraordinary, an unlooked-for mishap, and so an accident. This test — the one that is applied in the common speech of men — is also the test to be applied by courts'"
In Cutrell v. John Hancock Mutual Life Ins. Co. (1945), 145 Neb. 550, 17 N.W.2d 465, we held: "An accident within the meaning of contracts of insurance against accidents includes any event which takes place without the foresight or expectation of the person acted upon or affected thereby."
While the Updike case, 131 Neb. 745, 270 N.W. 107, involved an accident within the terms of a standard workmen's compensation and employer's liability policy, the facts indicate the range of interpretation herein. The plaintiff alleged that she was required to work in a place which subjected her to cold drafts of air that impaired her health and caused the injuries of which she complained. The insurance carrier denied liability on the theory that the claim made by the claimant did not arise out of an accident. Updike then brought an action under the provisions of the Uniform Declaratory Judgments Act for construction of the policy. This court said: "We think the decision in the instant case must be controlled to a great extent by well-settled principles of insurance law. One of these is that, where the language employed in a policy of insurance is susceptible of more than one construction, that most favorable to the insured will be adopted. * * * `As used in an indemnity policy such as this, we are of the opinion that the word "accident" means an undesigned and unforeseen occurrence of an afflictive or unfortunate character resulting in bodily injury to a person other than the insured.' Since this is the ordinary meaning of the word and is more favorable to the insured, under the principles above quoted such definition must be accepted as the meaning of the term, as used in paragraph seven of the policy in question."
In Railway Officials Employees Accident Assn. v. Drummond (1898), 56 Neb. 235, 76 N.W. 562, this court adopted the following language from American Accident Co. v. Carson, 99 Ky. 441, 59 Am. S. R. 473: "`While our preconceived notions of the term "accident" would hardly lead us to speak of the intentional killing of a person as an "accidental" killing, yet no doubt can now remain, in view of the precedents established by all the courts, that the word "intentional" refers alone to the person inflicting the injury, and if as to the person injured the injury was unforeseen, unexpected, not brought about through his agency designedly, or was without his foresight or was a casualty or mishap not intended to befall him, then the occurrence was accidental, and the injury one inflicted by accidental means within the meaning of such policies.'"
The case of Taylor v. Imperial Casualty Indemnity Co. (1966), 82 S.D. 298, 144 N.W.2d 856, involved the seepage of gasoline from a gasoline storage tank. That action was against the liability insurers for damages sustained in their refusal to defend an action for injunctive relief and damages. Plaintiff sought damages for amounts expended in protecting adjoining property from seepage on the grounds that the property injury was caused by accident within the terms of the policy. The South Dakota Supreme Court said: "We affirm the trial court's judgment of coverage based upon the findings that the leaks in the underground tank and the escape and seepage of gasoline were the result of negligence and the unintended consequences were caused by accident. Injuries are caused by accident according to the quality of the causes."
A case of similar import is The Travelers v. Humming Bird Coal Co. (Ky. App.), 371 S.W.2d 35. In October 1956, the company began surface or strip mining on a mountainside in Leslie County, Kentucky. It bulldozed the surface until a bench or shelf was established 30 or 40 feet wide and about 600 feet above the highway at the base of the steep mountain slope. The earth and debris removed was pushed over upon the slope of the mountain with a depth of about 10 feet, and with a width of 30 or 40 feet. Prior to December 1956, the earth mass on the slope began to move or slip, not all at once but gradually and slowly, until it reached the borderline of a farm below, overrunning the water supply and damaging the farm. The exact time this earth mass passed over the boundary of the farm is not known. When a claim was asserted against Humming Bird, it contacted The Travelers, who refused the defense on the theory that it was not an accident within the terms of the policy. That court said: "The leading defense of defendant Travelers is that the injury to the Melton property was not an accident within the meaning of the policy. Here lies a misconception. The accident mentioned in the policy need not be a blow but may be a process. It is not required that the injury be the result of some contact with the bulldozer or the shelf or a rock hurled over from the shelf. It is not required to be sudden like an Alpine avalanche that upon a shout roars down with an overwhelming rapidity. A glacier moves slowly but inevitably. Where the accident is a process, how long is then not significant whether it takes three hours, three weeks, or months.
"It was unforeseen that the earth removed from the shelf would not secure a firm foothold. Heavy rock and earth do not flow like water. * * *
"This policy should not be interpreted so narrowly or rigidly as to destroy a recovery for a loss clearly traceable to the operation of plaintiff's Coal Company's business. * * *
"`No rule, in the interpretation of a policy, is more fully established, or more imperative and controlling, than that which declares, in all cases, it must be liberally construed in favor of the insured, so as not to defeat without a plain necessity his claim to indemnity, which, in making the insurance, it was his object to secure.'"
Of interest is a Court of Appeals of Louisiana case, Knight v. L. H. Bossier, Inc. (1960), 118 So.2d 700. That was an action to recover from a contractor for the loss of cattle and for the cost of replacing and repairing a fence, which contractor's employees had taken and left down, permitting the owner's cattle to escape. The court held that while it may have been perfectly foreseeable to contractor's employees that removal of the pasture fence without notifying the owner of the cattle would permit escape and possible loss or destruction of the cattle, the cause of the loss of the cattle was unforeseen, unexpected, and extraordinary from the standpoint of the owner of the cattle and that the loss was thus caused by accident for purposes of the policy, insuring the contractor against liability for loss caused by accident.
In Hauenstein v. St. Paul-Mercury Indemnity Co. (1954), 242 Minn. 354, 65 N.W.2d 122, the Supreme Court of Minnesota held: "Accident, as a source and cause of damage to property, within the terms of an accident policy, is an unexpected, unforeseen, or undesigned happening or consequence from either a known or unknown cause," and it embraced property damage to a building caused by the application of defective plaster sold by insured to consumers.
In Moffat v. Metropolitan Casualty Ins. Co. of New York (1964, Pa.), 238 F. Supp. 165, the federal court, applying Pennsylvania law, held that emanation of destructive gasses caused by oxidation of coal refuse piles called culm banks, were the result of an accident within a comprehensive liability policy.
In City of Myrtle Point v. Pacific Indemnity Co. (1963, Ore.), 233 F. Supp. 193, the city was sued by a householder alleging the city had for a period of 2 years negligently operated a sewage disposal plant causing property damage. The city's carrier denied coverage on the basis of no accident. That court, in allowing recovery, said: "In absence of intent by insured city to cause harm resulting in damage, its alleged negligence in using malfunctioning or inadequate apparatus in sewage disposal plant, with result that a home was damaged and depreciated, did not negate a causation by `accident' within policy obligating insurer to pay on behalf of insured for injury or destruction of property as result of accident." Also, from the same case: "Element of unforeseen or unexpected damage or consequence, as distinguished from normal and probable consequence, from negligent act is important in describing causation by `accident' within a policy."
Appellant calls our attention to Town of Tieton v. General Insurance Co. of America (1963), 61 Wn.2d 716, 380 P.2d 127, in which the Washington Supreme Court held that contamination of a property owner's well caused by seepage from a sewage lagoon which was located approximately 300 feet from the well, and which had been constructed by the town with knowledge of the potential hazard of pollution was not caused by accident within the town's liability policy covering injury to property caused by accident. We have no question about that case. It is readily distinguishable from the instant one. The Town of Tieton had several reports in writing that there was a possibility of contamination of the adjoining property owner's well because of the nature of the soil. Disregarding this possibility, it went ahead with construction without making a prior arrangement with the well owner. The court held when, under the facts of the case, the possibility of contamination which had been foreseen became a reality it could not be said that the result was unusual, unexpected, and unforeseen.
In Vappi Co., Inc. v. Aetna Casualty Surety Co. (1965), 348 Mass. 427, 204 N.E.2d 273, the allegations, among other things, referred to injuries to land, buildings, and property caused by a contractor's negligence in failing to take precautions to prevent the diversion of surface water and harmful results from vibrations. The Superior Court of Massachusetts considered these allegations sufficient under its decisions to permit recovery under a clause "`damages because of injury to * * * property * * * caused by accident.'" The Massachusetts court held unintended or unforeseen consequences of reckless or negligent acts, if not undertaken with malice or intent to injure the person or property hurt, may be within the definition of "accident."
Appellant argues because the date of the seepage could not be fixed with certainty it lacked a distinguishing characteristic feature of an accident. The general rule is expressed by 2 Richards on Insurance (5th Ed.), 219, p. 747: "In the absence of any express policy provision in such respect, the inability to fix the exact time when and where an accident occurred does not preclude recovery under the policy." We agree with the Kentucky court in The Travelers v. Humming Bird Coal Co. (Ky. App.), 371 S.W.2d 35. The accident covered by the policy may be a process. When the accident is a process, how long then is not significant. It is the nature of the process which is important.
A rather extensive research indicates that the courts have not found it possible to give the word "accident" a precise legal definition. In general, the element of an unforeseen or unexpected damage, as distinguished from a normal and probable consequence from a negligent act, is dominant in describing a causation by accident. In most all jurisdictions the courts hold the word has no technical meaning in law, but should be interpreted in its ordinary and popular sense.
We reaffirm what we said in Updike Investment Co. v. Employers Liability Assurance Corp., 131 Neb. 745, 270 N.W. 107: "The term `accident' has many meanings, and when used in a contract of indemnity insurance, unless otherwise stipulated, it should be given the construction most favorable to the insured." This the trial court did. The parties stipulated that the site had been inspected before the construction of the sewage lagoon, but the seismograph holes were not discovered. On this record, the damage to the Strauch property was something unforeseen, unexpected, extraordinary, an unlooked-for mishap, and so an accident. The judgment rendered by the trial court is correct.
The judgment is affirmed.
AFFIRMED.