Opinion
Argued June 10, 1937
Decided July 13, 1937
Appeal from the Supreme Court, Appellate Division, First Department.
William Dike Reed for appellant. Jeremiah T. Mahoney for respondent.
Brooklyn Edison Company, Inc., let out the construction of an addition to one of its buildings to a number of contractors, including M.H. Treadwell Company, Inc. The work was done under the supervision of engineers employed by the Edison Company. In the course thereof, Valentine Wohlfron, an employee of the Treadwell Company, while passing in dim light along a concrete slab set by another contractor, stepped into an adjacent hole made by still another contractor and was injured. The Treadwell Company was insured against liability to Wohlfron by the United States Guaranty and Fidelity Company. Pursuant to section 29 of the Workmen's Compensation Law (Cons. Laws, ch. 67), Wohlfron elected to pursue his remedy against the Edison Company for its failure to furnish a safe place to work. Judgment against it for his damages was affirmed ( Wohlfron v. Brooklyn Edison Co., 238 App. Div. 463; 263 N.Y. 547).
The Edison Company then brought an action against the Treadwell Company, alleging that the injuries sustained by Wohlfron occurred by reason of the failure of the Treadwell Company to comply with provisions of its contract with the Edison Company whereby it undertook that it "would keep the job safe at all times for its own employees." In that action the Edison Company sought reimbursement for the expenses incurred by it in its litigation with Wolhfron and restoration of its payment of the judgment recovered against it by him. Demand by the Treadwell Company that the Fidelity and Guaranty Company defend that action was refused. Thereafter that action was voluntarily discontinued. Counsel who had represented the Treadwell Company therein was paid by it a fee conceded to have been the reasonable value of his services.
This is an action by the Treadwell Company to recover that item from the Fidelity and Guaranty Company. It has been held below that such a recovery was warranted by the terms of the "Standard Workmen's Compensation and Employer's Liability Policy" which defined the respective engagements of the parties. We have reached a different conclusion.
The policy issued by the Fidelity and Guaranty Company (named as the "Company") to the Treadwell Company (named as the "Employer") was a contract whereby the Company agreed "with this Employer, named and described as such in the Declarations forming a part hereof, as respects personal injuries sustained by employees, including death at any time resulting therefrom, as follows: One ( a) To Pay Promptly to any person entitled thereto, under the Workmen's Compensation Law and in the manner therein provided, the entire amount of any sum due, and all installments thereof as they become due. (1) To such person because of the obligation for compensation for any such injury imposed upon or accepted by this Employer under such of certain statutes, as may be applicable thereto, cited and described in an endorsement attached to this Policy, each of which statutes is herein referred to as the Workmen's Compensation Law. * * * One ( 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 employees as are legally employed wherever such injuries may be sustained within the territorial limits of the United States of America or the Dominion of Canada. * * * Three, To Defend, in the name and on behalf of this Employer, any suits or other proceedings which may at any time be instituted against him on account of such injuries, including suits or other proceedings alleging such injuries and demanding damages or compensation therefor, although such suits, other proceedings, allegations or demands are wholly groundless, false or fraudulent. * * *" We think that by no sound construction was an obligation to defend the Treadwell Company in the action instituted against it by the Edison Company to be reckoned among the undertakings so assumed by the Fidelity and Guaranty Company.
The whole position of the Treadwell Company is tied to the foregoing stipulation "Three." This is read by it in inverse order as requiring (1) the defense of claims for injuries by employees as such, and (2) the defense of any other suit or proceeding "on account of" such injuries. This interpretation, so it is contended, is not capriciously to be dismissed and requires that the covenant to defend be construed as extending to suits or proceedings by third parties against the employer occasioned by injuries received by an employee in the course of his employment. In our judgment this is an inadmissible view of the provisions that have been quoted.
These provisions reveal to us as the dominant purpose of the parties the protection of the Treadwell Company against its liability as an employer to its employees as such. (See Workmen's Compensation Law, § 54; O'Brien v. Lodi, 246 N.Y. 46.) The meaning and effect of the foregoing covenant to defend are to be resolved accordingly. As we so read it, that undertaking did not go beyond the length of obligating the Fidelity and Guaranty Company to defend all suits and proceedings instituted against the Treadwell Company by any of its employees for injuries in the course of the employment, including, however, all groundless, false or fraudulent suits or proceedings of that character. In that view, there was here no breach by the Fidelity and Guaranty Company of its policy.
The judgments should be reversed and the complaint dismissed, with costs in all courts.
CRANE, Ch. J., LEHMAN, HUBBS, FINCH and RIPPEY, JJ., concur; O'BRIEN, J., taking no part.
Judgments reversed, etc.