Opinion
No. 5274.
March 14, 1935. Rehearing Denied June 11, 1935.
Appeal from the District Court of the United States for the Southern District of Indiana, Indianapolis Division; Robert C. Baltzell, Judge.
Action by George W. Deer Son, corporation, against the Employers Indemnity Corporation and another. Judgment for defendants, and plaintiff appeals.
Reversed with directions.
Appellant brought this action to recover upon an insurance contract issued to it by appellees on December 13, 1928. The contract was called an "Oil Products Public Liability and Property Damage Policy."
Appellant was engaged in the business of selling oil, gasoline, and other petroleum products. In November, 1928, it sold and delivered a petroleum product to one Orpha M. Smith who used it on December 13, 1928, the date of the issuance of the policy in suit, with the result that an explosion occurred and she was so badly burned that she died on December 30, 1928. The product which was delivered was kerosene to which a petroleum product lighter and far more inflammable than kerosene had been added by mistake. Her administrator and her husband both brought actions which appellant defended after appellees had denied all liability. Judgments totaling $3,500 were recovered and were paid by appellant.
It now seeks to recover the amount of said judgments and also the cost of defending the litigation. The policy obligated the insurer to defend litigation growing out of liability covered by it. The Employers Reinsurance Corporation was made a party because it assumed the obligations of the Employers Indemnity Corporation.
Chase Harding and Robert B. Harding, both of Crawfordsville, Ind., for appellant.
James L. Murray, of Indianapolis, Ind., for appellees.
Before EVANS and FITZHENRY, Circuit Judges, and LINDLEY, District Judge.
The explosion occurred a few hours after the policy became effective. Appellant delivered the kerosene, with the explosive material added to the kerosene, a few days earlier. The liability asserted by appellant, if it exists, must be traceable to the policy which contained the following provisions.
"1. To Indemnify the Assured named in the Schedule against loss resulting from damages assessed by law against the Assured on account of bodily injuries, including death at any time resulting therefrom, whether instantaneous or not, suffered or alleged to have been suffered by any person or persons (except persons in the employ of the assured at the time of the injury) from accidents or errors occurring while this policy is in force as provided in such of the following clauses as are designated in Statement 3 of the Schedule to be covered hereby and for which a premium is expressly stipulated therein;
"A — Oil Products Public Liability.
"Caused by error or mistake, or alleged error or mistake, of the Assured, or of any Employe or representative of the Assured, or of any substitute acting for any such Employe or Representative of the Assured, whereby gasoline or benzine, or any mixture of gasoline or benzine with any other petroleum product or products, is delivered to any customer, wholesale or retail, in the place of and instead of any other commodity.
"B — Public Liability at Stations.
"Within or upon the premises of Assured described in Statement 3 of the Schedule, or upon the sidewalks or other ways adjacent thereto; excluding accidents caused by Teams, Automobiles or Elevators, belonging to or operated by Assured or his Employes."
Liability turns on the meaning of the word "accidents" as used in paragraph 1, which is set forth in the margin. Appellees argue that the words "accidents or errors occurring while this policy is in force" should be construed so as to restrict the meaning of the word "accidents" to a meaning synonymous with mistake. Inasmuch as the mistake was made before the policy was issued, no liability under the policy arose. This is appellees' argument.
We perceive no sufficient reason for so restricting the meaning of this word. The insurance company selected its terminology. It should not repudiate the fair or usual meaning of the word it employs. If the language it adopts in its contract is capable of two constructions, it cannot be permitted to adopt one meaning in selling the policy and another in avoiding liability. Mutual Life Ins. Co. v. Hurni Packing Co., 263 U.S. 167, 44 S. Ct. 90, 68 L. Ed. 235, 31 A.L.R. 102.
Moreover, in the policy in question this word "accidents" is used several times. In all other places it is used in its usual sense as meaning mishap. In paragraph B, entitled "Public Liability at Stations," the word "accidents" is twice used. It first appears in the phrase "excluding accidents caused by Teams, Automobiles or Elevators," etc. Its second use appears in the clause "as a result of accidents occurring while this policy is in force," etc. Thus used, it negatives the construction which appellees place upon it. If we were otherwise in doubt as to the proper meaning to be given it in paragraph 1, the doubt was removed when appellees chose to give to the word when used elsewhere in the policy a meaning inconsistent with the meaning now advanced by them.
This conclusion makes it unnecessary for us to consider the additional ground advanced by appellant in favor of its contention that it should recover the expenses incurred in defending the litigation brought by the husband and the administrator against appellant.
The judgment is reversed with directions to grant a new trial.