Frye v. Bath Gas & Electric Co. , 59 L.R.A. 444 ( 1903 )

Wiswell, C. J.

At the December term 1898 of this court for Sagadahoc County, the plaintiff’s intestate, entered an action against the Bath Gas and Electric Company to recover damages for personal injuries sustained by him on March 10, 1898, while in the employ of that company, and by reason of its alleged negligence. After a trial before a jury, in which a verdict was rendered for the plaintiff, the case was taken to the law court upon the defendant’s motion for a new trial, and finally, at the April term, 1900, judgment was rendered against the Gas and Electric Company in favor of the complainant as administrator of the plaintiff in that action, the latter having previously died, for the sum of $4416.65 and costs.

At the time of the accident, wherein the plaintiff’s intestate received the injuries complained of in the suit above referred to, the defendant in that suit had a contract of indemnity with the Fidelity and Casualty Company, one of the present respondents, wherein the latter, for a valuable consideration, had agreed to indemnify the Bath Gas and Electric Company, for the term of twelve months from December 1, 1897: “Against loss from common law or statutory liability for damages on account of bodily injuries, fatal or non-fatal, accidentally suffered by any employee or employees of the assured while on duty at the places and in the occupations mentioned in the schedule hereinafter given, caused by the' negligence of the assured, and resulting from the work described in the said schedule, subject to the following special and general agreements, which are to be construed as co-ordinate, as conditions.” One of these conditions was as follows: “No action shall lie against the company (the insurer) as respects any loss under this policy unless it shall be brought by the assured himself to re-imburse him for loss actually sustained and paid by him in satisfaction of a judgment after trial of the issue.”

The defense of the original suit was partially assumed by the Casualty Company, and was conducted by its counsel in conjunction with that of the Gas Company, under a clause in the contract of insurance which gave the insurer the right to defend such suits.

In August, 1898, the Bath Gas and Electric Company, being insolvent, made a common law assignment for the benefit of such of its creditors as became parties to the assignment Avithin the time limited therein, of all its property of every description. The assignees subsequently sold and conveyed all of such property to George F. West, one of the respondents; and on September 6, 1898, this contract of insurance Avith the Casualty Company Avas transferred by the assignees to West, Avith the consent of the insurer.

. Execution a vas duly issued upon the judgment recovered by the complainant and was placed in an officer’s hands for enforcement, but he was unable to find any property of the judgment debtor, and the judgment has remained wholly unsatisfied; this judgment, as against the Gas Company, is entirely worthless.

The complainant has commenced this bill in equity against the defendant in the original suit, its assignees under the common laAV assignment, the transferee of the property, the trustee of a mortgage given by the Gas Company to secure its bonds, and the Fidelity and Casualty Company, alleging, in addition to some of the facts above stated, that the Fidelity and Casualty Company refuses to pay the judgment above referred to, that the Gas Company, its assignees, and the transferee of its property, neglect to enforce the contract of the Casualty Company, or to pay the amount of the judgment, and praying that the Casualty Company be compelled to pay to the complainant the amount of such judgment.

We are unable to perceive any ground upon which the bill can be sustained and the relief prayed for granted. The contract of the insurer Avas with the Gas Company to indemnify that company “ against loss ” ' from liability for damages on account of bodily injuries accidentally suffered by an employee and caused by the negligence of the assured. The use of the word “indemnify” shows the object and nature of the contract, it was to re-imburse, or make Avhole, the assured against loss on account of such liability. There can be no re-imbursement when there has been no loss. The contract of insurance contains nothing to show that it was the object or intention of the contracting parties that the insurer should guarantee the Gas Company’s liability for negligence to its employees. It was not a contract of insurance against liability, but of indemnity against loss by reason of liability.

This distinction was clearly recognized in the case of Anoka Lumber Company v. Fidelity and Casualty Company, 63 Minn. 286, 30 L. R. A. 689. There is no stipulation in this contract that the insurer shall pay to the employer, “all sums for which it shall become liable to its employees,” as in Hoven v. West Superior Iron & Steel Co., 93 Wis. 201. Nor did the insurer contract to pay “all damages with which the insured might be legally charged, or required to pay or for which it might become liable,” as in American Employers’ Liability Insurance Company v. Fordyce, 62 Ark. 562, 54 Am. St. Rep. 305, in which this distinction is noticed in this language: “The difference between a contract of indemnity and one to pay legal liabilities is, that upon the former an action cannot be brought and a recovery had until the liability is discharged, whereas, upon the latter, the cause of action is complete when the liability attaches.”

In this case, as we have seen, the contract was one of indemnity only. It was not obtained by the Gas Gompany for the benefit of its employees, but for its own benefit' exclusively, to re-imburse it for any sum that the company might be obliged to pay, and had paid, on account of injuries sustained by an employee through its negligence. Independently of the condition in the contract of insurance above quoted, we should be compelled to construe this contract as one of indemnity only.

But this pi’ovision puts an end to all questions or doubt, if any there could be. The parties have expressly provided in the contract which they chose to make, that: “No action shall lie against the company as respects any loss under this policy unless it shall be brought by the assured himself to re-imburse him for loss actually sustained and paid by him in satisfaction of a judgment after trial of the issue.” By reason of the unequivocal language of this provision, the undertaking of the insurer was expressly limited to liability in an action brought by the insured “to re-imburse him for loss actually sustained and paid by him.” There can be no doubt about the meaning of this language and no question about the right of the contracting parties to insert such a provision in their contract for the purpose of making clear the nature and limit of the liability of the parties or of either of them.

Precisely similar language in a contract of this nature was construed by the court in Moses v. Travelers’ Insurance Company, (N. J.) 49 Atl. Pep. 720, wherein it was held: “That not the amount of the employee’s judgment, but the amount paid by the employer thereon, was the sum for which the insurer was responsible.” In this case the court decided that the transfer of the employer’s property to a trustee in bankruptcy, by operation of the United States Bankrupt Act, was payment, within the requirement of this clause, and perfected the liability of the insurer for so much as the employee was entitled to receive out of the bankrupt’s estate, that this liability of the insurer passed to the trustee in bankruptcy and that the amount for which the insurer was liable would be determined by ascertaining what percentage all the assets of the bankrupt, outside of the insurance policy, would pay on all the debts proved against the estate, outside of the employee’s judgment.

But this doctrine is not applicable to the case under consideration for various reasons; the common law assignment of the Gas Company was for the benefit of such of its creditors as became parties thereto within the time limited, long since elapsed, and neither the complainant, nor his intestate during his lifetime, became a party to this assignment. Again, it does not appear that any dividend has ever or will ever be paid; upon the contrary it is said in argument that there were no assets to be divided.

For these reasons the bill cannot be sustained against any of the respondents. A decree will be made below dismissing the bill, at which time such order will be made in regard to costs as seems proper to the justice who makes the decree.

So ordered.