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Textileather Corp. v. American Mutual Liability Insurance Co.

Decided: April 28, 1933.

TEXTILEATHER CORPORATION, PLAINTIFF-RESPONDENT,
v.
AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, DEFENDANT-APPELLANT



For the plaintiff-respondent, McDermott, Enright & Carpenter (James D. Carpenter, Jr., of counsel).

For the defendant-appellant, McCarter & English.

Case

The opinion of the court was delivered by

CASE, J. This case follows in the train of Textileather Corporation v. Great American, &c., Co. et al., 108 N.J.L. 121, and Textileather Corp. v. Sun Indemnity Co. et al.,

Ibid. 207. Those litigations terminated adversely to the present appellant who was one of the parties defendant therein.

The present action is to recover counsel fees and minor disbursements paid out by the plaintiff in the course of the earlier suits. Defendant answered, setting up amongst the defenses that it was not liable under the allegations of the complaint and reserving the point of law that the complaint was insufficient in that it did not state a cause of action under defendant's contract of insurance or otherwise. There was a motion to strike the answer and a counter-motion to strike the complaint. The first motion was granted, the second was denied and judgment final was entered against defendant. The appeal goes to the denial of defendant's motion to strike the complaint as well as to the striking of the answer and the awarding of judgment final.

In brief review of the preliminary facts it may be said that two of plaintiff's employes, Iannazzo and Mooney, died of chronic benzol poisoning, a compensable disease under the Workmen's Compensation act. Defendant was plaintiff's liability insurance carrier at the time of the deaths, but during the preceding period of employment plaintiff had been consecutively insured by Great American Indemnity Company and Sun Indemnity Company. Actions were brought against plaintiff for the recovery of death compensation under the statute, and these actions were defended by the appellant company, which, however, declined to pay the amount of the compensation awarded, contending that the causative poisons had been absorbed in the course of the employment prior to appellant's coverage. On the determination by this court, in the cited decisions, that the time fixed for compensation for disability or death occurring by reason of occupational diseases is when incapacity or death occurs and not when the poison specified makes its first appearance, the appellant company at once assumed payment of the award made by the compensation bureau. The sums sued for in the instant case are the amounts paid by plaintiff for counsel fees, and two items of $85.97 and $71.07, respectively, paid to the Great American

Indemnity Company for its taxed costs in the litigations against the three mentioned insurance companies that resulted in the fastening of liability upon the present appellant.

Plaintiff bases its right to recover upon the terms of defendant's policy. The only provisions in the policy that bear resemblance to such an obligation are the general provisions to pay plaintiff's workmen's compensation obligations; paragraph I (b): "To indemnify this employer against loss by reason of the liability imposed upon him by law for damages on account of such injuries to such of said employes as are legally employed * * *;" and paragraph IV: "To pay all costs taxed against this employer in any legal proceeding defended by the company, all interest accruing after entry of judgment and all expenses incurred by the company for investigation, negotiation or defense." The first two policy obligations to which we have referred convey no rights to the plaintiff applicable to the present controversy beyond those that would apply to any party to a breached contract. The word "company" as used in paragraph IV, supra, is defined by other portions of the policy to be the defendant insurance company; and that company has paid all costs taxed against the employer in the suits on behalf of the workmen, to which we think the paragraph relates, and has paid all expenses incurred by the insurance company for investigation, negotiation or defense. The phase "all expenses incurred by the company for investigation, negotiation or defense" cannot, under any reasonable interpretation of the policy, be construed to refer to expenses incurred by the insured in paying the items sued for.

The respondent cites no authorities to sustain its contention that it may hold the appellant to liability for these disbursements. We find no indemnification within the policy against such expenditures. The simple question, as we understand it, is whether a party to a contract who has breached its obligation and has been held by the courts of law liable therefor may be held responsible to the successful party for that party's counsel ...


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