Fenton v. Fidelity & Casualty Co.

Mr. Justice Bean,

after stating the facts, delivered the opinion of the court.

1. There are several assignments of error in the notice of appeal, but they are practically all based on the contention that the contract of the defendant with the mill company is one of indemnity against damages, and therefore no recovery can be had thereon unless actual damage is shown. There is a distinction made by the authorities between a contract of indemnity against liability for damages, and a simple contract of indemnity against damages. In the former case it has very generally been held that an action may be brought, and a recovery had, as soon as the liability is legally imposed, while in the latter there is no cause of action until there is actual damage : Jones v. Childs, 8 Nev. 121; 10 Am. & Eng. Enc. Law (1 ed.), 413; Smith v. Chicago & N. W. Ry. Co. 18 Wis. 21; Thompson v. Taylor, 30 Wis. 73 ; Locke v. Homer, 131 Mass. 93 (41 Am. Rep. 199); Rector of Trinity Church v. Higgins, 48 N. Y. 532; Weller v. Eames, 15 Minn. 461 (Gil. 376). If, therefore, the policy upon which *289this action is based is a mere contract of indemnity, the payment by the mill company of the liability incurred by it for the services of the plaintiff is a condition precedent to the right of recovery. If, on the other hand, the contract is one of indemnity against liability, a cause of action accrued thereunder as soon as the liability of the mill company to the plaintiff attached. Upon this question the policy must speak for itself ; and its several provisions, in our opinion, indicate quite clearly that it is not merely an agreement to indemnify the mill company against such damage as it may suffer on account of injury to its employees, but that, in case of an accident to an employee whereby a cause of action arises against it, the insurance company will assume the liability on account thereof. By the express terms of the contract, it agrees to indemnify the mill company, not only against actual damage, but against liability for such damage. The policy provides that the defendant shall be immediately notified of an accident, and shall thereafter have exclusive right and power to settle and adjust any claim therefor, and control all legal proceedings in connection therewith. And the mill company is prohibited from settling any claim or incurring any expense without the written consent of the insurance company, except that in case of an accident it may provide such immediate surgical relief as may be imperative. It would, in our opinion, be inconsistent with the terms and provisions, as well as the object and purpose, of the policy, to hold that the assured must actually pay and discharge the claim or demand made against it on account of an injury to one of its employees, as a condition precedent to the maintenance of an action on the policy.

This is the interpretation given to a similar contract by the Supreme Court of Minnesota in the case of Anoka *290Lumber Co. v. Fidelity & Cas. Co. 63 Minn. 286 (65 N. W. 353, 30 L. R. A. 689), and is in harmony with the construction of policies substantially the same by the courts of other states: Hoven v. Employer’s Liability Assur. Corp. 93 Wis. 201 (67 N. W. 46); Ross v. American Employ. Liability Ins. Co. 56 N. J. Eq. 41 (38 Atl. 22); American Employ. Liability Ins. Co. v. Fordyce, 62 Ark. 562 (54 Am. St. Rep. 305, 36 S. W. 1051): Fidelity & Cas. Co. v. Fordyce, 64 Ark. 174 (41 S. W. 420). It is claimed by defendant’s counsel that the policy under consideration in the Minnesota case was an indemnity against liability only, and therefore differs materially from the one now under consideration. The provisions of the policy are not quoted in the report of the case, but Mr. Justice Buck begins his opinion by saying that the action is brought on a policy “insuring the company, for twelve months, against liability for damages;” and, although he subsequently states that it was a case of insurance against liability, it seems reasonably certain, from the entire opinion, that the policy was the same as the one before us, andvm regard the case as directly in point.

2. If, however, the meaning of the policy is in doubt, and its language is fairly and reasonably susceptible of two constructions, — one favorable to the assured, and the other to the defendant, — the one is to be adopted which is the most favorable to the assured. This is the universal ruling in the construction of insurance policies, because they are drawn by the attorneys, officers, and agents of the company ; and it is but fair that, if there should be any ambiguity or uncertainty in the language used, it should be construed most strongly against the company : American Sur. Co. v. Pauly, 170 U. S. 133 (18 Sup. Ct. 552); Utter v. Traveler’s Ins. Co. 65 Mich. 545 (8 Am. St. Rep. 913, 32 N. W. 812); Grand Rapids Elec. Light Co. v. Fidelity & Cas. Co. 111 Mich. 148 (69 N. W. 249).

*2913. It is also contended that the mill company is prohibited from assigning its rights uuder the policy prior to the rendition of a judgment against it on account of some liability covered thereby. The contention is based on the provision that the insurance company shall have the right to defend any action, at its own cost, in the. name and on behalf of the assured. But this provision has, in our opinion, reference to an undetermined claim for damages, and not to liabilities incurred under what may be determined the emergency clause in the policy, which authorizes the assured, in case of an accident, to provide such immediate relief as may be imperative. In the case of a claim for damages on account of an accident, the question of liability is unsettled so long as the matter is being contested in the courts ; but for imperative surgical relief furnished the liability of the mill company, and its corresponding right of action against the insurance company, are fixed and determined as soon as such surgical relief is provided, and therefore there can be no reason for the insurance company defending any action brought thereon in the name and on behalf of the assured. Judgment affirmed. Affirmed.