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EMPLOYERS LIABILITY ASSUR. CORPORATION v. FISCHER & PORTER CO. (08/07/50)

August 7, 1950

EMPLOYERS LIABILITY ASSUR. CORPORATION, LIMITED
v.
FISCHER & PORTER CO.



COUNSEL

Albert M. Hoyt, Jr., Charles J. Biddle, Drinker, Biddle & Reath, all of Philadelphia, for appellant.

Webster S. Achey, Doylestown, for appellee.

Before Rhodes, P. J., and Hirt, Reno, Dithrich, Ross and Arnold, JJ.

Author: Hirt

[ 167 Pa. Super. Page 449]

HIRT, Judge.

Defendant corporation is an extensive manufacturer of scientific instruments in Philadelphia. Since 1937 it has been insured by the plaintiff company by separate policies in two types of liability contracts. In one of them the plaintiff, as workmen's compensation insurance carrier for the defendant, assumed the conventional risks incident to that relationship. The other was public liability insurance on a form known as a Manufacturer's and Contractor's Liability Policy. This policy

[ 167 Pa. Super. Page 450]

    insured the defendant against liability for damages from injury suffered by others than employes, resulting from the operation of defendant's business. The policies were written on an annual basis and all of them were negotiated with the defendant, as to premium charges and other terms, by Harold Glover, on behalf of the plaintiff insurance company. On delivery of each policy the defendant made a deposit to apply on the current premium. The premiums on the policies were at specified rates based on defendant's annual payroll and the actual total premium due from the defendant on either policy could be determined only from a payroll audit at the end of the insurance year.

In this action the plaintiff insurer sought to collect a balance of $1,799.13, alleged to be owing it from the defendant on the combined premiums applicable to the two policies for the year May 1, 1945 to April 30, 1946. The premium on the workmen's compensation policy was at a fixed rate established by law, It is agreed that a computation, based upon an audit at the termination of that policy, indicated that the initial premium deposit made by defendant had overpaid the required premium for the year by $534 and that defendant was entitled to a credit in that amount. The dispute relates to the premium charges on the Manufacturer's and Contractor's Liability Policy. This policy was issued at a premium rate of .277 cents per $100 of payroll for manufacturing coverage and on the same basis at .272 cents for other phases of the insurance. Computed at these rates on the payroll audit at the end of the insurance year as of April 30, 1946, the balance of premium then due, after deducting the advance deposit, amounted to $2,333.13. The jury in this case concluded that defendant was liable in that amount and, deducting the credit of $534, admittedly due defendant as a refund on the workmen's compensation policy, found for the plaintiff in the sum

[ 167 Pa. Super. Page 451]

    of $1,799.13, the full amount of its claim, with interest. Defendant had filed a counterclaim against the plaintiff to recover $4,095.14, alleged to have been illegally collected from it in premiums on the two public liability policies issued by plaintiff in 1944 and 1945. On this issue, the jury found in favor of the plaintiff. The court entered judgments on both verdicts. Defendant has appealed from the refusal of the court to enter judgment in its favor, notwithstanding the verdict for plaintiff in the sum of $1,797.13 with interest. And in the same appeal argues for a reversal of the judgment refusing a new trial on defendant's counterclaim.

It is defendant's contention that the public liability policy entered into with plaintiff insurer, was an illegal contract because of excessive premiums exacted, and that plaintiff therefore cannot recover for the breach of it. It is settled beyond question that the law will not aid one to recover on a contract expressly prohibited by law. Landy v. Phila. Life Ins. Co., 78 Pa. Super. 47. A party to an illegal bargain cannot recover damages for the breach thereof (Restatement, Contracts, § 598) and a bargain is illegal if either the formation or performance of it are prohibited by statute. Ibid. § 580; 17 C.J.S., Contracts, § 272. Courts will not lend their aid to the enforcement of unlawful contracts 'founded upon transactions in violation of a public policy declared by the legislature'. F. F. Bollinger Co. v. Widmann B. Corp., 339 Pa. 289, 14 A.2d 81, 83. The principle has application to 'an illegal contract, especially one made in violation of a penal statute'. Hazle Drug Co., Inc., v. Wilner, 284 Pa. 361, 131 A. 286, 288. Appellant argues that the Manufacturer's and Contractor's ...


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