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EMPLOYERS MUTUAL CASUALTY COMPANY v. SUPERVISORS LEWIS TOWNSHIP (06/29/84)

decided: June 29, 1984.

EMPLOYERS MUTUAL CASUALTY COMPANY, APPELLANT
v.
SUPERVISORS OF LEWIS TOWNSHIP, APPELLEES



Appeal from the Order of the Court of Common Pleas of Lycoming County in the case of Supervisors of Lewis Township v. Employers Mutual Casualty Company, No. 81-2776.

COUNSEL

James W. Hennessey, Sherr, Moses & Zuckerman, P.C., for appellant.

Richard A. Gahr, Kieser & Gahr, for appellees.

Judges Williams, Jr., MacPhail and Doyle, sitting as a panel of three. Opinion by Judge MacPhail.

Author: Macphail

[ 83 Pa. Commw. Page 420]

Employers Mutual Casualty Company (Company) appeals here from a decision of the Court of Common Pleas of Lycoming County which ordered the Company to provide insurance coverage pursuant to its contracts of insurance with Lewis Township (Township) and Township employees, for surcharges imposed and judgments entered against former Township Supervisors.

[ 83 Pa. Commw. Page 421]

The trial court found that the surcharges in question were a result of actions taken in 1978 by former Township Supervisors Donald Chute, Edward Deljanovan and James Remick, and in 1979 by Chute and Deljanovan acting as Township Supervisors. Judgment was entered on July 2, 1979, in the amount of $801.37 for the surcharges covering 1978, and on July 1, 1981, in the amount of $10,833.66 for the surcharges covering 1979.

The Company, through its agent, had issued various policies of insurance to the Township, with coverage for "legal liability and loss reimbursements," which were in effect throughout the time during which the actions occurred which resulted in the surcharges. Each policy provided, inter alia, that the Company would pay on behalf of the insured, loss which the insured became legally obligated to pay because of a "wrongful act" during the policy period. A "wrongful act" was defined as any and all "actual or alleged errors, mis-statement or misleading statement, act or omission or neglect or breach of duty by the insured . . . in the discharge of municipal duties. . . ." The policies also provided that "[t]erms of the policy which are in conflict with the statutes of the State wherein this policy is issued are hereby amended to conform to such statutes."

In the instant case, the actions of the former Supervisors fall within the policy definition of "wrongful acts." The Company does not dispute that the actions fall within that definition, but rather argues that coverage of surcharges is either statutorily precluded or in contravention of public policy.

The Company argues here as it did before the trial court that Section 702(XIII) of The Second Class Township Code (Code)*fn1 is controlling. Section 702(XIII)

[ 83 Pa. Commw. Page 422]

    of the Code provides in pertinent part that the ...


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