No. 229 March Term, 1978, Appeal from Judgment of the Court of Common Pleas of Dauphia County, Pennsylvania, at No. 1700 September Term, 1975.
Leo E. Gribben, Jr., York, for appellant.
David E. Lehman, Harrisburg, for appellee.
Cercone, P. J., and Wieand and Hoffman, JJ.
[ 271 Pa. Super. Page 221]
The Board of Education of the Central Dauphin School District adopted a resolution which imposed a tax on the occupations of all persons eighteen years of age or older who resided in the district. On March 14, 1975, the Court of Common Pleas of Dauphin County held the resolution invalid as to persons who were not engaged in a gainful occupation,
[ 271 Pa. Super. Page 222]
e. g., homemakers and retirees.*fn1 As a result of this ruling, the school district refunded $529,000 in tax monies collected from those exempt taxpayers who submitted written claims in accordance with the Act of May 21, 1943, P.L. 349, No. 162 § 1, as amended, 72 P.S. § 5566b. The school district promptly filed a claim with its insurer, American Casualty Company, requesting indemnification for the monies it was compelled to pay exempt taxpayers. The insurance company concluded that the refund of illegally collected taxes was not a "loss" as contemplated by the policy and denied the claim. It conceded, however, that the school directors' error in adopting a defective tax resolution was a "wrongful act" as defined by the policy and agreed to reimburse the school district for its legal expenses in defense of the equity suit. The present action in assumpsit was brought to recover all monies refunded by the district to its taxpayers. The trial court initially found in favor of the insurer. The school district filed exceptions, however, and the trial court, upon reconsideration, reversed its prior verdict and entered judgment in favor of the school district. The insurance company appealed.
Appellee's initial policy, entitled "Board of Education Liability Including School District Reimbursement Policy", had been amended by a Liberalization Endorsement. Prior to amendment, the policy had provided protection for the school directors and employees of the district*fn2 for loss occasioned by their wrongful acts. The School District had been covered only to the extent it was required to indemnify an Assured for loss resulting from an Assured's wrongful act. It could not recover in its own right for claims made against it for loss caused by an Assured's actions. The Liberalization Endorsement, however, extended the policy's coverage to the School District. While appropriately amending
[ 271 Pa. Super. Page 223]
the provisions of the policy, the endorsement added a new insuring clause by which the company agreed:
"With the School District that if during the policy period any claim or claims are made against it as a result of any Wrongful Act occurring during the policy period, the Insurer will pay on behalf of, in accordance with the terms of this policy, all loss which the School District shall become legally obligated to pay."
Appellee contends that by this language the insurer agreed to indemnify it against sums which it was required to pay out in response to tax refund claims. Appellant, on the other hand, argues that it cannot be liable thereon because the insured did ...