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WARNER v. EMPLOYERS' LIABILITY ASSURANCE CORPORATION. (06/28/57)

June 28, 1957

WARNER, APPELLANT,
v.
EMPLOYERS' LIABILITY ASSURANCE CORPORATION.



Appeals, Nos. 214 and 215, Jan. T., 1957, from judgment of Court of Common Pleas of Franklin County, Oct. T., 1952, No. 240, in case of A. Carl Warner et al. v. The Employers' Liability Assurance Corporation, Limited. Judgment affirmed.

COUNSEL

Edwin D. Strite, with him John R. Lashley, Jr., for appellants.

John McD. Sharpe, with him John McD. Sharpe, Jr., for appellee.

Before Jones, C.j., Bell, Chidsey, Musmanno, Arnold, Jones and Cohen, JJ.

Author: Arnold

[ 390 Pa. Page 63]

OPINION BY MR. JUSTICE ARNOLD

The United States of America brought suit in the Federal Court against the plaintiffs (appellants herein). This was for a negligent fire by which the United States of America lost the value of certain stored goods. The defendant (appellee herein) was bound under a liability insurance policy to the plaintiffs herein to defend certain actions, and was notified to appear and defend the action brought by the United States of America. The insurance company declined, alleging

[ 390 Pa. Page 64]

    that the loss was not covered by the indemnity policy. The verdict in the Federal Court was in favor of these plaintiffs and against the United States of America. The plaintiffs then brought this suit against the defendant in the state courts under the policy, to recover the cost of defending the action brought by the United States of America against them. Plaintiffs appeal from judgment on the pleadings entered by the court below in favor of defendant.

The pleadings in the instant case include the complaint of the United States, together with the contracts for storage, in the suit filed against appellants; and the complaint of appellants in this action; as well as responsive pleadings denying appellee's liability herein.

When notified by appellants of the action brought by the United States, appellee disclaimed duty to defend that action. Thereupon appellants proceeded to defend successfully, and expended the costs sued for here. The question raised in this case is whether appellee assumed such duty, i.e. whether judgment was properly entered upon the pleadings.

The policy provided, inter alia, that: (1) "As respects insurance afforded by this policy the Company shall (a) defend ... any suit against the Insured alleging such injury, ... or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the Company shall have the right to make such investigation, negotiation and settlement of any claim or suit as may be deemed expedient by the Company"; and (2) "This policy does not apply: ... (d) ... to injury or destruction of (1) property ... in the care, custody, or control of the Insured ..."

There were two storage contracts involved. One of the contracts provided, inter alia: "The Lessor shall have charge and ...


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