*1 291 HARDWARE MUT. CASUALTY v. doing CO. pacity. ? What constitutes business HILDERBRANDT. question courts with the have wrestled many times2 no formula has been de but No. 1985. situations; duced fit and the deci all Appeals, Circuit Court of Tenth Circuit. necessarily hinge sion in each case must upon particular facts. As defined Sept. 16, 1940. leading case Von Baumbach Sar v. Rehearing 13, On Jan. 1941. 201, Co., 503, gent Land 242 37 S.Ct. U.S. 204, 460, 61 L.Ed. the word “business” Rehearing Second Petition Denied time, occupies at means “that which April 14, 1941. tention, purpose for the and labor of men profit.” livelihood a appellee The fact derived no loss, profit, but rather suffered net material, ultimate of all aim taxpayer ele profit; is not an it did was emosynary institution. It had under appear to did not taken and its stockholders contemplate liquidation assets or of its affairs; up nor had it winding of its disqualified legal sense from en itself in a permitted activities gaging contrary, milling its charter. On the its renewed business was resumed as soon as supply enterprise began in the district plant to con ores. Meanwhile it had its day keep in order serve demand, when the facilities would be in very liquid capital large and its amount kept employed way judged exigencies suitable to the of the times. In short, taxpayer pursuing corporate profit end of ultimate light particular circumstances which then con fronted it. do We not rest our decision particular activity corporation. Perhaps might each separate be examined ly separately discarded as not of character so substantial as to be called taxpayer’s But business. situation and aс judged tivities must be entirety, their Co., Copper supra, Edwards v. Chile note
2. doing We think it was business and subject held should be tax.
Reversed. 2 Sargent Co., Von Baumbach Copper v. Land Co., Edwards v. Chile 270 U.S. 503, 201, 242 452, U.S. 37 S.Ct. 345, 678; 61 L.Ed. 46 S.Ct. 70 L.Ed. Unit 460; Bird, Emery, United Peabody States Cir., ed Co., States v. 6 104 F. Realty Thayer 28, Lyon 267; 237 U.S. 35 S. 2d Harrison, Lumber Co. v. 7 825; 59 Cir., 443; Ct. L.Ed. Flint v. Stone 113 F.2d American Investment Tracy (Cedar Co. Street Co. v. Park Cir., Securities Co. States, v. United 1 Realty Co.), 220 231; Page U.S. 31 S.Ct. 112 F.2d v. M. Rich & Bros. 1312; Ann.Cas.1912B,
55 L.Ed.
Cir.,
607;
99 F.2d
United States
Minneapolis Syndicate,
Zonne v.
U.
Co., Cir.,
v. Atlantic Coast Line
99 F.
428;
S.
S.Ct.
55 L.Ed.
2d
Heiner,
Cir.,
Harmar Coal Co.
McCoach v. Minehill & S. H. R.
PHILLIPS,
Judge,
Circuit
Cheek,
City, Okl.,
C.
of Oklahoma
James
Colo.,
White,
Denver,
and Lowell
appellant.
Dudley,
City,
B.
Okl.
Oklahoma
J.
Dudley
Dudley, Hyde,
(Paul
Duvall
Okl.,
Dudley,
City,
&
all
Oklahoma
on
brief),
appellee.
PHILLIPS, BRATTON,
Before
WILLIAMS,
Judges.
Circuit
PHILLIPS,
Judge.
Circuit
Comp
The Hardware Mutual
*3brought
any1
this
W.
G.
Humphrey,
C. S.
C.
J.
Gilbert,
Thompson, and Mildred
adminis
tratrix of the estate
H.
C.
de
ceasеd, seeking
declaratory judgment
de
termining
an insurance
findings
facts
as disclosed
court,
of the trial
support
which are
evidence,
clearly
ed
substantial
are not
erroneous, and are
binding
therefore
court,2
these:
are
Cir.,
Cherry-Bur-
to as
Casu-
F.2d
Hereinafter
referred
alty
Thatcher,
Company.
Cir.,
rell Co. v.
107 F.2d
Inc.,
Camille,
See W. Fitch Co. v.
69.
F.
radiators,
was the
Hilderbrandt
removal
During
year
connection of
Oklaho-
the steam
lots located
of certain
the owner
hotel
Oklahoma,
apartment
stoves.
City,
ma
*3
operated
hotel was
thereon. The
situated
evening
On the
of December
month-to-month
Humphrey under a
Thompson
while
and Gilbert were examin-
lease.
ing
gas
a
in
pipes
leak
in a
one
13, 1937,
Casualty Com-
January
On
hotel,
room on the second floor of the
liаbility
insurance
pany issued its
of
explosion
resulting
occurred in the room
year
a
for
term of
Hilderbrandt
injuries
Thompson.
serious
and
Gilbert
Hilder-
insuring
January
from
9, 1937,
On December
Gilbert died
as
imposed
law for
brandt
injuries.
Gilbert,
result of the
Mildred
bodily
damages
injuries acci-
death or
for
surviving
of
appointed
wife
premises
dentally
hotel
sustained on the
administratrix of his estate
Decem-
and on
persons
than
person
other
or
23, 1937,
administratrix,
ber
such
as
she
Hilderbrandt.
commenced an action in the
Court
District
County, Oklahoma, seeking
Oklahoma
provided:
damages for the wrongful death
Gil-
* *
Company
agrees:
“II. The
further
bert,
pain
anguish
for
and
suffered
Gil-
in his
and behalf
2. To defend
name
during
period
bert
3 to.
December
seeking damages
Assured
suit
9, 1937,
December
hospital, medical,
and for
injury,
such
even if
suit
on account of
surgical
expenses.
orig-
and funeral
In her
*
false,
fraudulent;
groundless,
petition,
inal
the administratrix sued Hil-
1, 1937,
prior
and
to December
On
Humphrey
partners.
derbrandt and
as
She
equipped
heating
hotel
steam
with a
joined Thompson
also
and
Munson as
John
plant consisting
a
boiler
the base- partners.
alleged
She
that Gilbert was an
rooms,
ment, radiators
and steam employee of
Humphrey
Hilderbrandt and
pipes leading from the boiler to the radia-
Thompson
and that
explosion
caused the
tors. About December
became by lighting
gas-filled
a match in the
room.
necessary
install
for
new boiler
a
court,
With leave of
later
she
withdrew
Humphrey
plant.
steam
ascertained
petition
and filed a
substituted
take about a week to secure
a new in which shе sued Hilderbrandt and Hum-
Believing
gas heating system
boiler.
a
tenant,
phrey as landlord
respective-
and
quickly
be installed
than
new
could
more
ly, and
partners, did
join
as
Thompson
boiler, Humphrey sought
consent
Munson,
and
and
allegation
omitted the
as
system.
install
Hilderbrandt
such a
Hil-
lighting the match.
In her
agreed
Humphrey might
derbrandt
petition,
substituted
she
that at the
system,
gas heating
install the
advance the
accident,
time of the
employed
Gilbert was
and
cost thereof
deduct such cost from fu- by Hilderbrandt and Humphrey to assist
ture rentals. On December
Hum-
them in installing
gas system
and was.
into
phrey entered
an oral contract with acting subject
their
and
orders
direc-
Thompson,
whereby
a licensed plumber,
the tions;
pipes
the steam
long
had
been
agreed
system
gas
latter
install
at
use,
rusted,
crackеd and corroded
materials,
labor,
supplies
and
the cost
pipes,
and that such
joints,
their
fittings and
plus
per cent of
ten
After
cost thereof.
inadequate
connections were
and insufficient
Thompson,
talking
Humphrey
decided for
retaining
transporting
gas,
natural
pipes
gas
to use the old
instead
steam
and that Hilderbrandt and Humphrey knew,
pipes
expense
in order
save
and secure
by the exercise of ordinary
care might
quickly.
hotel
heat
more
Hum-
known,
pipes
condition of such
phrey
temporary permit
secured a
from the
and that
failed to furnish Gilbert a
city inspector
gas system,
to install
place
reasonably safe
in which to work.
using
pipes.
the old steam
Under the con-
18, 1938,
February
On
tract, Thompson
com-
towas
have full and com-
mencеd
the District Court of
charge
plete
method and manner County, Oklahoma, against
Oklahoma
work. He
Hil-
II.
Gilbert
C.
gas system.
Humphrey,
other workmen
install the
derbrandt
individually,
as
contemplated
tenant,
The contract
respectively,
the disconnect-
owner
as part-
ing
pipes
steam
from the boiler
recover
in ners to
account of the
basement, repair
of any
leaks in
himby
suffered
as
result
pipes,
gas
their connection with
supply, explosion.
petition,
In his
Thompson al-
the installation
rooms,
employed by
leged
stoves
he
that was
Hilderbrandt
attorneys’
installing
aggregating
cases
$181.50
them
Humphrey
assist
aggregating
the work
fees
$750.
system;
a gas
Humphrey;
direction
done
the steam
17, 1938,
On October
use, were
long
attorneys,
through
alty
advised the Casu-
corroded,
that such
rusted, craсked and
cases
settlement of the
connections
fittings and
pipes,
joints,
their
demanded reimbursement
retain-
insufficient
inadequate
expended.
amounts
and that
gas,
natural
ing
transporting
Hil-
existing between
relationship
knew,
Humphrey
Hilderbrandt
the exercise of
Humphrey at the time of
derbrandt and
diligence
ordinary care and
tenant
landlord and
accident
*4
known,
such
of
the condition'
might have
install-
copartnership.
In
not that of
and
to
failed
they negligently
that
pipes and
acting
Thompson was
system,
ing
reasonably safe
awith
provide Thompson
was
independent contractor. Gilbert
an
as
place in which work.
Thompson. Neither Gilbert
employee
an
of
in use in
pipes had been
steam
The
Thompson
employee or servant
an
nor
was
years and were
a
corroded,
number of
hotel
compromise settle-
The
of Hilderbrandt.
in
broken
worn,
defective and
good faith and
in
ments were entered into
knew,
by the
many
Hilderbrandt
places.
reasonable,
fair,
prudent. Hil-
and
were
have
care could
reasonable
exercise of
en-
he
solvent at the time
derbrandt was
pipes and
known,
condition
of
settlements.
tered into such
of
the transmission
of
same
the use
natural
Thompson
The trial
concluded
dangerous situ-
gas would create a
independent
not the
contractor and
anwas
in the hotel.
ation
Hilderbrandt;
employee
Gilbert
of
by Hil-
given
of the accident
Notice
em-
employee
and not an
Thompson
of
an
ployee
making
Casualty Company
and
derbrandt
Hilderbrandt;
in
Humphrey,
of
investigation
the accident
caused
Thompson,
acted
the contract with
January 10 and
between
to made
Jan-
agent or
as the
for Hilderbrandt
latter’s
inclusive,
13, 1938,
uary
ascertained the
time of
and
Thompson and Gilbert
principal;
vice
existing
ac-
true relation
at
and that he
Hilderbrandt
were invitees of
Hum-
Hilderbrandt and
cident between
duty
furnishing and
owed them
and Thomp-
Hilderbrandt
between
phrey,
reasonably
place for
maintaining a
safe
Thompson
son,
and
and
Gilbert.
between
perform
in which
them to
the work
copies
delivered
Hilderbrandt
per-
engaged
that the failure
were
and
pleadings
brought
the actions
summonses
and
liable,
duty
not-
form that
rendered him
Thomp-
the administratrix and
employees;
withstanding they were not
Casualty Company
demanded
son
Casualty
duty
Com-
that it
defend the actions.
that it
brought by
pany to defend
actions
liability
Casualty Company denied
Thompson
administratrix
and advised Hilderbrandt
policy
liability
refusal to defend was
denial
defend the
actions unless
it would
policy;
of the terms
a breach
nonwaiver
would execute a
Hilderbrandt
refusal,
Hilderbrandt had the
such
Hilderbrandt
to ex-
agreement.
refused
com-
right
defend such actions
'agreement
ecute
provided
good
promise them
he acted
the actions.
counsel
faith;
compromise
that the
settlements
reasonable,
fair,
prudent
and that Hil-
September
Hilderbrandt
On
entitled to recover from the
compromise
of derbrandt
into
entered
settlement.
Casualty
expended
Company
amounts
agreed
which he
case under
the Gilbert
paid
$16.75,
$2,500,plus
defending the actiоns and
com-
costs
pay
sum of
$2,500
of the claims.
promises
sum of
if and
additional
from
Cas-
when he recovered the same
judgment
in favor of Hilder-
From a
day
same
en-
Company. On
he
ualty
$13,469.70,
on his counterclaim
brandt
compromise
settlement
tered into a
cent,
per
from
at six
October
plus interest
agreed
pay
he
whereby
case
suit,
the costs
and for
Cas-
$10,000,plus
Thompson the sum of
costs
appealed.
ualty Company has
paid
agreed
amounts were
$21.45.
expressly
excluded
policy
were dis-
actions
Hilderbrandt
coverage,
by per-
accidents sustained
prejudice. Hilderbrandt also
missed with
employed by
Whether
Hilderbrandt.
preparation
sons
expenses
incurred
cause
reversed and the
of fhe
the claim is within
grant
allega- remanded
with instructions
frоm the
policy must be determined
brought
a new trial.
tions of
against the insured.3
Rehearing.
On
Casualty Company defended the
Had the
right to
without
reservation of
actions
deny liability,
PHILLIPS, BRATTON, and
Before
HUXMAN,
Judges.
Circuit
pay any judgments
recovered therein.4
BRATTON,
We conclude that
Com-
Judge.
Circuit
pany
did not breach the terms
by Hard-
was an action instituted
This
by refusing
the actions without
Casualty Company,
ware Mutual
herein-
agreement
a nonwaiver
part
on the
company, against
after
W.
G.
called
Hilderbrandt.
hereinafter
called
general
sured,
While Hilderbrandt
Humphrey,
took
releas-
hereinafter called
C. S.
from the
Thompson,
tenant,
others,
es
the
administratrix
the com-
payments
made
declaratory
him to the adminis- pany sought
judgment ad-
tratrix
settlement
judicating its
under a
discharge
and
actions
Thompson.
the claims asserted in
*5
indemnifying
of
the
public liability insurance
brought by
administratrix and
against loss
reason of
were not
These
claims
bodily injuries
at
sustained
for
Martinique
coverage
policy.
City,
but
Hotel
Oklahoma
not obligated
$15,000
or death
not to exceed
for
reimburse
expended
$30,000
Hilderbrandt for the
in-
person
amounts
in of
or a total of
juries
person
settlement of such claims.
or death of more than one
3
Corp.
School v.
Fessenden
American
In
Mut.
Ocean Accident &
v. Wash
G.
Liability
Co.,
ington
supra,
124,
Ins.
289 Mass.
193
N.
Brick & T. C.
560;
558,
Indemnity
829,
Brodek v.
517]:
E.
Ins.
court said [148 Va.
139 S.E.
America,
Ill.App.
363,
contended, however,
North
Co. of
292
“It
is
counsel
228,
238,
company,
11 N.E.2d
United
for the
States
brick
that
insurer
Fidelity
Guaranty
policy
&
v. Baldwin
Co.
Mo
bound
the terms of its
Co., Tex.Com.App.,
815,
actions,
pro-
tor
defend all
34 S.W.2d
suits and
or other
819; Morgan
ceedings,
against
employ-
v. New York
instituted
;
Ga.App. 620,
basing
581, 582;
argument
respect
54
188
er
upon
S.E.
in this
Corporation
policy
Ocean Accident &
the third
G.
v.
clause of the
above
Washington
agree
Brick &
transcribed.
T. C.
Va.
We cannot
with the
argument
513, 517;
respect.
139 S.E.
Commercial
this
It is true that
provisions
McKinney,
Ins.
Standard
Civ.App.,
Co. v.
Tex.
alluded to-
may
341, 342;
binding
S.W.2d
the effect of
the insurer
suits, although
suits,
Isaacson Iron Works v.
to defend all
Ocean Accident
‘such
Corp.,
proceedings, allegations,
& G.
or other
Wash.
70 P.2d
or de-
1026, 1031;
Mfg.
wholly groundless,
United
false,
Waste
mands are
fraudulent,’
Maryland Casualty Co.,
85 Misc.
as stated in the
It is--
Id.,
App.Div.
scarcely logical
provi-
148 N.Y.S.
to hold that
this
concerning
right
obligation
that not new that the were should Seawell, independent 737, 76 Dolese Thompson 13 Okl. P. an hotel; was that system, Andrecopulas, Bros. Okl. changing the in contractor insured; Thomрson Gil- P. 844. into con- that entered employee of the an agent tract in- Thompson with the tenant working as for bert was insured; charge that sured. He was full employee of the not an insured and work. The insured not to have did from the company knew relationship all not have anything to do tenant with method through the work, known manner could have or and did not exer- parties; it knew or that attempt steam cise or inquiry exercise control over diligent that defective, corroded, worn, working him in re- those the hotel were Thompson spect to many places; that the manner in which it done. and broken insured; contractor, independent was an and Gilbert were invitees furnishing sub-contractor, employee in- duty he them the that owed place to reasonably sured. maintaining а safe they en- perform work in company But contends duty in perform gaged; failure to obligate did not it to defend the insured him liable regard render liability a suit in which asserted for notwithstanding law, as matter of them employee; sustained employees; not his the fact that determining question two whether the circumstances the facts and under all claims or causes action came within company duty it was the was warranted behalf and on the actions for looking only peti liability re- sured; its denial of insured; tions suits proposed upon the except fusal to defend petition expressly alleged that since each a breach agreement constituted nonwaiver employee, were sustained policy; provisions terms required was not reimburse and that it should defend; its de with paid in the a connection mounts did nial refusal to defend settlement. not constitute a breach of contract Judgment was rendered for obligation in resulting to reimburse the company appealed. and the We reversed paid compromise the sums judgment, question holding *7 is settlement of the The contention suits. in was whether the claim each instance held support. not bereft of has coverage policy must be the of the presented question that where facts the the allegations peti- determined from the kind, of this or one contain under brought against in the tion action pay requiring the provision ing a similar sured, relationship that since the com compensation, the ment of workmen’s employer employee alleged in each comрlaint exclusively may to the pany look case, claims fell outside against proceeding petition in or company de- is. the claim determine whether insured to pending re- fend. cause is now contract which terms hearing. defend; company required to is conflict, allegations con where two in It is well settled Oklahoma facts. Fessenden trol over the actual one, independent who, ex “an contractor Insurance Liability v. American Mutual School independent ercising employment, con an 558; 124, ., 193 N.E. 289 Mass. Co piece according of work tracts do a Co., Cal.App.2d 3 v. Belt Lamb methods, being his own without sub 624, And the rule 40 P.2d 311. except ject employer his control exclusively may look the com insurer Chicago, the result of the work.” as to against plaint petition or in the case Railway Island & Co. v. Ben Rock Pacific has been declared in other cases insurer 358, 678; nett, 705, 20 A.L.R. 36 Okl. 128 P. there no conflict in which between Butler, Co. v. Okl. Producers’ Lumber 87 facts, allegations and actual both tak 738; Webster, 172, Tankersley v. 209 P. of action ing the claim cause outside 745; 208, McGee, 243 116 Okl. P. White v. coverage. Fulton v. Massachu ; Beasley 204, Bond, 11 924 157 Okl. P.2d v. Co., Bonding & setts Insurance 138 Tenn. 355, 48 299. And a 173 Okl. P.2d sub-con 866; Fidelity 197 United States S.W. portion takes tractor is one who Co., Guaranty Co. v. Baldwin Motor principal & contractor or contract 815; v. Ryndak Tex.Com.App., 34 In from another sub-contractor. S.W.2d Texas 298 was, McLelland, 353, 355, Tex. 817), 176 A. Co. v. demnity Insurance 1101; consequence, liability Commercial relieved of Civ.App., 80 S.W.2d wholly McKinney, Tex. action on that score. This Co. v. Standard Insurance In 338; v. Brodek failed to do.” Civ.Aрp., S.W.2d Ill.App. Co., 292 demnity Insurance plainly was holding The effect of the & Guar 228; Accident 11 N.E.2d Ocean al- controlled, the actual not the facts Terra Washington Brick & Corp. antee legation against in the insured. suit 513; 829, 139 S.E. Co., Va. Cotta In Insurance Bonding Massachusetts & Morgan York v. New Roessler, Tex.Civ.App., 112 S.W.2d Waste United Ga.App. 188 S.E. 275, 279, injuries personal Griffin sustained Maryland Casual Manufacturing Co. v. employ while in the was en- Harper who N.Y.S. ty 85 Misc. gaged premises developing certain But Id., 1148. App.Div. 153 N.Y.S. died, surviving insured. heirs Griffin and his persuasion little here cases have these They sought damages from the insured. allegations contained of them the in each alleged that at the time of the accident Grif- in complaint petition against the employee fin was insured. attending the ac and the actual faсts sured employees certain excluded harmony, injuries both cidental were in company de- The insurance circumstances. in liability part of the disclosing on the clined to defend insured the action. 'The scope in falling without necessary sued made defense and then coverage. surance company expend- to recover the amount alleged em- American He that Griffin was University Mutual ed. Club In Pa.Super. Harper, facts ploy alleged additional Liability Insurance policy provided brought cov- which within the A. indemnify pleaded plain- insured erage, haec verba the company would petition suffered damages for tiffs’ in the heirs. suit employed, legally stipulated and parties set forth the facts who petition in its except con- obligated the lаw, all suits or other Judgment behalf clusions of were true. and on its name injured employee engaged rendered An insured. In course of proceedings. opinion in his suit affirming judgment, an elevator operating the time of the acci- damages that at said: years age. he was seventeen dent appellant to defend responsibility of “The company refused to defend the insurance depended whether suit disposition had been made and, after action petition presented the Griffin expenses recover it, sued to against appellee rea- a cause of making defense. incurred in it had maintenance, ownership, and use son of company rested its defense The insurance policy. The premises covered allegation .the claim upon the appellee charged that *8 employee was seventeen that the insured haul, spread gravel on dig, to Griffin ille- it was that old, contended years roadways particu- of this the drives operator under elevator employ an gal to appellant investigated the lar farm. denied age. insured years of eighteen surrounding these facts years of seventeen employee was the that employ- pertaining to Griffin’s found those eighteen. he over alleged that was age and untrue; by appellee were with this ment company offered no evidence insurance declined to defend the suit. knowledge, it * * * employee was the showing that at the provisions trial of the stat- Under the age. In sustain- years of eighteen under find those employing above cited we ute plaintiff, the judgment ing the servants and farm are laborers domestic said: general provisions in the included not compensation requiring law workmen’s on the defendant was “The burden alleged No facts are insurance. to sustain its relied prove the facts support petition to the statement em- Griffin that the minor defense
affirmative
exceptions
ap-
existed in favor of
employed
no
Cook,
illegally
at the that
ployee,
was
appellant
investigated
had
pellee. The
East-
(Bowers v. Great
of the accident
time
facts;
147, 148, 149,
appel-
out
are set
260 Pa.
knew
ern
case,
appellant
Loyal
petition in this
is
Protective
lee’s
Goldsboro
103 A.
appellee
pre-
Pa.Super.
by
It knew
Crahan
them.
Ins.
bound
Underwriters,
purposеs
premises for farm
Pa.Super.
paring
Automobile
determining
thereon
obligated
all
were either
that
whether
is
he was
or farm laborers and that
defend.
domestic
Compensa-
subject
not
Workmen’s
Here,
neither
nor Gilbert
art. 8306
tion
Ann.Civ.St.
Act [Vernon’s
employee
was an
neither was
seq.].
et
it could
Under these conditions
said,
sub-contractor, and,
a
as hereinafter
ignore
it con-
Griffin suit because
change
being
system
made
contrary, espe-
allegation
tained an
was not a structural alteration. The acci
cially
clearly
allegation
when that
dental
were sustained in circum
pleader
conclusion of the
both as to facts
stances
brought
which
law;
the in
such conclusions are not embraced
sured well
the coverage
policy,
stipulation
within the
аnd have no force
company
and the
knowledge
had
of the ma
appeal.”
effect
Fairly
terial facts.
construed, the insurance
Manufacturing
In United Waste
obligated
contract
the company to defend
Maryland Casualty
85 Misc.
148 in the name and on behalf of the insured
852, 859, supra,
policy provided
N.Y.S.
any suit or claim
sustained
it did not
cover
accident
to or
parties, and,
within the maximum
employed by
caused
child
in-
amount fixed
indemnify
contrary
law.
him
loss. The actual facts which
insured that
the suit
gave
obligation
rise to such
part
on the
jured employee Maloney—was
six-
—
brought
attention,
insured were
to its
age at the time of
ac-
years
teen
and the insured demanded that
it defend
cident,
legal age lim-
being below the
the actions.
right
It was his
protect
to be
it,
cоmpany declined to defend. The
purchased
right
ed. He
for a val
judgment
rendered
settled the
insured
consideration,
the insurance com- uable
and he demanded
sued
then
against it and
Testimony
company
amount.
fulfill
contract. He was
its
to recover
pany
age
relating to
obligated by
sign
adduced
the contract
he
was in
employee
disclosed
company
agreement. But
nonwaiver
allegation
and the
fact under sixteen.
eyes
the actual facts
its
to close
elected
contrary,
On the
not in conflict.
fact were
knowledge,
ex
and to look
it had
of which
employee
according
was ille-
to both the
allegation in
the ill-founded
clusively to
gally
company
and therefore the
injured
case that
in each
was not
defend. But the сourt
employee.
In the brief
person was
say:
took occasion
said:
it is
protected
company had
its
“If the waste
will demonstrate
simple illustration
“A
case,
Maloney
by defending the
interests
position
taken
the unsoundness
adjudication
resulted
it had
automobiles,
two
A owns
opposing counsel:
Maloney
was over
boy
that the
the effect
Ford is covered
Nash. The
Ford and
was liable
waste
company but
Nash
negligence in its relations with
because
Ford,
A,
negli-
driving while
not.
Maryland
boy,
Maloney
party
party and this
injures a third
gently
liable under
been
Company would
damages alleging
brings an
recovered,
only for
policy, not
driving
Nash. A notifies the
wasA
fees to which
counsel
costs
for the
but
accident, furnishes it a
company of
obliged to
being
itself
put
it had
explains
рetition,
copy
* *
case;
Maloney
after
look
actually involved in the
car
accident
*9
present-
question
Nash. The com-
while the
not the
And
Ford and
Transport
Ameri-
v.
Breeding
eyes
giv-
its
information
Hugh
pany
ed in
shuts
508,
Co.,
actually
175 Okl.
Fidelity
the car
&
A as
by
can
en to it
upon
emphasis
accident,
laid
156,
solely upon
relies
in the
P.2d
54
volved
insured,
petition,
insurer
no
allegations
of the
makes
letter
circumstances,
pol-
covered
the facts and
investigation of
the truck
stating
in the acci-
involved
ex-
and refuses
defend
not the
icy was
denies
implying
indicating and
that an
which A
nonwaiver
declines
dent,
cept upon a
thus
the defense
into
A undertakes
may
give.
should take
consid-
insurer
nego-
facts,
own. and
counsel
his
not confine
with
the actual
eration
stipulat-
for a
prudent
allegations
settlement
contained
tiates
itself
de-
pays, and then makes
which he
complaint
ed sum
300
him
reimburse
The
remaining
is
mand
contention
position the
do, taking
good
settlements
were not made
which it declines
by faith,
improvident,
reflected
coverage as
were
there is
and were not bind
no
ing upon
company. Thompson
petition.”
of the
Gilbert
premises.
were invitees on the
illus-
appropriately
hypothetical case
The
duty
was the
of the
insured to furnish
effect
scope and
emphasis the
trates with
reasonably
place
per
maintain a
safe
Upon
company.
of the
contention
form the
they
engaged,
work in which
were
consideration,
conten-
we think the
further
perform
duty
and failure to
re
tion
fail.
must
spect would
negligence.
constitute actionable
change in the
urged
It is
pipes throughout
The
building
were
al
a structural
heating system constituted
worn, corroded, defective, and broken in
meaning
teration
many places. Gilbert
in
died from the
with
injuries were
therefore- the
juries
sustained,
which he
policy.
alteration of a
A structural
seriously
permanently injured.
equipment is
af
building or
one which
Damages aggregating
ninety
more than
in a vital and
portion thereof
fects some
thousand dollars
sought,
were
maximum
manner,
changes its char
substantial
only
thirty
thousand dol
change
appearance.
It denotes‘a
acteristic
lars,
solvent,
the insured was
and the com
particular.
substantial
in a
or substitution
pany had declined to
suits
Hayden,
296,
211 Mass.
Commonwealth v.
indemnify
justified
insured. He was
Roth
Plaza Amusement Co. v.
N.E.
97
making
circumstances in
fair and
800,
350; May
enberg,
So.
159 Miss.
reasonable settlements.
& Knuth
Jahns
Co.,
& Rubber
Tex.Civ.
er
Texas Tire
v.
Co. v.
Indemnity
American
182 Wis.
874; Pross
App., 223
v. Excelsior
S.W.
556,
had worn to in made with a good lack of faith. boiler or stall a new substitute another providing method of heat. The contract is affirmed. pipes contemplated the disconnection and from the radiators and from the boiler PHILLIPS, Circuit Court (dissenting). radiators, the installation removal of think adhere to I we should the views stoves, connecting and the gas opin- in our and the conclusion reached first basement and piрes with the ion herein. rooms. No new the stoves Gilbert, The claims asserted adminis- installed, physical and no change to be tratrix, Thompson in the actions building, made in the was to be either as brought by them Hilderbrandt were use, appearance, otherwise. policy. clearly without the change made the manner did indicated sought duty for breach of They an alteration of not constitute the build employer, Thomp- as meaning Kin ing within the Gilbert, employees. and H. son C. as his Liability Assurance v. Mills Cotton ston policy expressly excluded claims Kresge S.E. Corp., N.C. impos- of Hilderbrandt. It was 154 Wis. Maryland v. Casualty Company sible for the to deter- Rhoads, 668; Klumpp 362 Ill. 143 N.W. certainty mine with whether the true facts cases of Home 153. The N.E. as stated to it Hilderbrandt and Ocean Accident & Guano Mixture Gilbert, Humphrey, allеged by or as admin- C.C., Corp., 176 F. United Guarantee istratrix, respective in their Guaranty Fidelity Co. South & States petitions. Co., Cir., F.2d cer Life Ins. land denied, 279 U.S. 49 S.Ct. tiorari Casualty Company offered 991, and Robinson v. Globe In L.Ed. brought by the actions administra- *10 App.Div. demnity trix, N.Y.S. Thompson, provided Hilderbrandt places 257, upon re right by would consent to a reservation of liance, contrary respect Casualty Company not deny liability. are to They clearly Casualty are principle. distinguish Company Had the defended the facts. right able on decisive actions a reservation of without to re- Company to Casualty part of the con- impliedly expressly or liability, deny him have imburse therefor. would to sented recov- pay University Amer- holding in Club been Hilderbrandt Hilderbrandt. against Liability Pa.Super. ered ican Ins. Mutual reser- to such to consent 534, 535, refused expressly does not seem to me 189 A. obligat- policy as To construe ex- vation. to the views herein contrary be ac- defend an Company to Casualty case, ing coverage pressed. In that clearly without a claim on predicated employees legally tion em- policy was limited without the policy, coverage of the against ployed. In the claim asserted of its reservation consenting to a plaintiffs alleged em- produce liability, would deny right ployee at the time the accident de- By the covenant result: anomalous allegation true, years age. If that were Company would be ob- fend, the employment was unlawful. But not obli- it was a claim defend ligated against asserted the insured not claim clearly with- it was pay because employment gated predicated on the unlawful and, by policy, vir- coverage of employee. predicated upon out it, would then be defended having elevator tue defective and was within the cov- established,1 claim if pay obligated to erage policy. allegation age insuring clause terms of the although merely incidental or collateral and was coverage. from the Such excluded not on as a basis for it was the claim. In relied meaningless render would opinion a construction said: coverage into the written limitations plaintiffs “It will noted that clause. personal injury action [the insured], against the in their statement of reached in the first the conclusion I think claim, right based their of recovery on the supported by the cases herein is opinion elevator, defective condition of the and did My associates 3 thereto. are in Note cited aver, specifically on, rely not ille- inapplicable those cases are opinion that the because, employment gal plaintiff.” of the minor facts, grow- the true claims same accident could have out Had the claim ing been based on il- administratrix, employment, legal I think the court asserted been coverage of the held Thompson, duty within was no there to defend. could have Conceding policy. that.claims think incidental or collateral I do coverage of the asserted allegation fact the action asserted. Un- claims were no policy, not essential to the claim assert- asserted, there was no ob- ed, anywise constituting were basis and not til thereof, duty either the insurer from relieves on ligation Certainly, is whether defend. The test claim the claims. pay coverage the insured is within within the claim of a asserted existence Here, policy. the claims Casualty coverage obligate the did not upon the relation of mas- predicated pay a claim Company either duty by a breach of and servant ter coverage policy. clearly without predicated master, claims on that opinion refusal de- amI expressly relationship excluded from pol- a breach of the constitute did fend coverage of the Hilderbrandt elected to that when icy and indicated, respectfully reasons I clearly without For pay claims obligation was no there dissent. opinion herein. See cases cited in the first Note