On appeal from the Supreme Court.
For the appellant, McDermott, Enright & Carpenter (James D. Carpenter, Jr., or counsel).
For the respondent, John W. McGeenhan, Jr.
The opinion of the court was delivered by
PERSKIE, J. The basic question involved in this cause is whether, under the proofs, the insurer who, under its policy of indemnity with its assured defended the latter (in a suit brought by a third party against the assured for resultant damages for personal injuries sustained while not employed by assured) unconditionally, without obtaining from its assured either an agreement of non-waiver, or without serving a notice of disclaimer upon assured, or without making a reservation of its rights in the premises, waived its right, and is estopped thereafter, to deny liability in a suit against it for the payment of the judgment recovered by the third party against the assured or whether the insurer, under the stated circumstances and after the third party has recovered a verdict against the assured, may still, for the first time, serve a notice of disclaimer upon its assured and thus escape the payment of the judgment based on the verdict so recovered.
The pertinent facts are not in dispute. Respondent, who was the plaintiff below, was employed by Halback & Company. The latter had a contract for the construction of the stairways in the National-Newark and Essex Bank Building, Newark, New Jersey, with Karl W. Koch, Incorporated (hereafter referred to as Koch) who had the contract for the steel work for said building. On February 7th, 1930, respondent was on the thirteenth floor of said building, and while
"assisting in moving iron parts for such stairways from an elevator on the floor of said building" was struck by a drift pin negligently dropped by an employe of Koch. The latter reported the accident to appellant on March 12th, 1930; report form is dated March 13th, 1930. On November 14th, 1930, respondent sued Koch and Starret Brothers, Incorporated (general contractors), for the resultant damages for the personal injuries which he thus sustained.
Appellant covered Koch on this and other buildings with a contract of indemnity (not exceeding $20,000 for each person) in which it agreed "to settle and defend * * * all claims resulting from liability imposed upon the assured by law, for damages on account of bodily injuries * * * accidentally suffered by any person * * * other than employes of the assured."
This contract or policy, which was in full force and effect, also contained, inter alia, the following provisions: "Agreements." "Defense." "II. To defend in the name and on behalf of the Assured any suit brought against the Assured to enforce a claim, whether groundless or not, for damages on account of bodily injuries including death at any time resulting therefrom accidentally suffered or alleged to have been suffered by any person or persons other than employes of the Assured." "Exclusions." "This policy does not cover loss * * * Condition A. * * * (3) Suffered by any person while in or on any elevator or hoisting device, or in any elevator well or hoistway, or while entering upon or alighting from any elevator or hoisting device."
Koch forwarded the summons and complaint to appellant. The latter accepted same and took charge and control of the suit. Counsel for appellant undertook and did, in fact, direct the preparation of the defense thereto and actually tried the case. It is interesting to observe, in the light of appellant's claims that it did not know prior to trial that the accident happened at a place excluded under paragraph 3 aforesaid, that appellant demanded and received additional particulars to amplify the allegation in the complaint that respondent was struck while "at work upon the thirteenth floor of said premises in and near said shaft."
Respondent's answer (7) to the demand for particulars disclosed that "Plaintiff was working at the inner edge of the elevator shaft, which would be practically in line with the outer wall of the center of said building on the Commerce street side, the said elevator shaft extending along said wall, the inner part being contiguous to the floors and the outer three sides extending outward from said wall. By the walls of the building is meant the point where the brick ...