LEGAL I~'OTES 241 LEGAL NOTES SAUL B. ACKER~AN (OP THE NEW YORK BAR) ACCIDENT

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1 LEGAL I~'OTES 241 LEGAL NOTES BY SAUL B. ACKER~AN (OP THE NEW YORK BAR) ACCIDENT Violation of Law:--[Zurich General.Accident & Liability Ins. Co. vs. Flickinger. 33 P. (2d) 853.] The insured died from drinking bootleg liquor which contained wood alcohol. The policy sued on insured against loss of life 'resulting from bodily injuries,.. directly and independently of all other causes, through accidental means.' The company defended on the ground of non-accidental means and violation of law. The court allowed a recovery and said: "1. We think there can be no question that the death of insured resulted from accidental means within the meaning of the policy. Insured intended, it is true, to drink the cocktails which he did drink and which caused his death, but he did not intend to drink poisonous wood alcohol, and did not know that wood alcohol was contained in what he was drinking. The case falls squarely, therefore, within the oft-quoted rule laid down by Mr. Justice Blatchford in the leading case of U. S. Mutual Accident Ass'n. us. Barry, 131 U. S. 100, 9 S. Ct. 755, 759, 33 L. Ed. 60: 'If in the act which precedes the injury something unforeseen, unexpected, unusual, occurs, which produces the injury, then the injury has resulted through accidental means.' Here the act which preceded the injury was the drinking of the supposed intoxicating beverage. And the thing which was 'unforeseen, unexpected or unusual' therein was the fact that it contained wood alcohol, a deadly poison. In other words, there was the unintentional and unexpected drinking by insured of a poisonous substance. "2. It is next insisted that the death of the insured resulted from his violation of law, and that consequently there can be no recovery in the policy. The answer to this is, in the first place, that it does not appear that the death of insured was the result of violation of law on his part. Assuming that the wood alcohol which caused his death was not pure wood alcohol, but was contained in a beverage which it was unlawful to sell, transport, or possess because of the provisions of the National Prohibition Act (27 USCA), there is no evidence that insured had any connection with it, except that he drank some of it at the invitation

2 242 LEGAL NOTES of his host; and it has been expressly held that to drink at the invitation of the owner does not involve such possession as to constitute a violation of the act. "In the second place, the policy contains no provision exempting the insurer from Hability for injury sustained as a result of violation of law. In the absence of such provision, we think it is clear that the insurer is liable, notwithstanding the insured may have been injured as a result of violating the law, if it does not appear that the policy was obtained in contemplation of such violation and the danger consequent thereon. "To hold that death or injury from violation of law defeats recovery under a policy, in the absence of provision to that effect in the policy itself, would open up an avenue for evasion of liability which so far as our investigation goes, no court has yet seen fit to open. If insurance companies desire to avoid liability on such ground they should insert a clause in their policies to that effect." AUTOMOBILE Driver Under 16 Years:--[New Amsterdam Casualty Co. vs. PickreU. 19 S. W. (2d) 955.] An automobile collision policy provided: 'Condition A. This policy does not cover: (1) any accident caused by any automobile while being used for or in any race or speed test: (2) while any automobile is being driven by any person in violation of law as to age, or under the age of sixteen years in any event.' At the time of the collision the car was being driven by a boy under 16 years of age, but was without plaintiff's knowledge or consent. The collision was the fault of the driver of the other car, and the age of the boy driving the car had nothing to do with the accident. The insurance company denied liability. The court held that the insured could recover and said: "It is evident that something has been omitted from clause 2 of Condition A. As written it does not make sense. To make sense we must combine clauses 1 and 2. When this is done the policy will read: 'This policy does not cover: (1) any accident caused by any automobile while being used for or in any race or speed test, or (2) any accident while any automobile is being driven by any person in violation of law as to age or under the age of sixteen (16) years in any event.' There is nothing in this language that remotely suggests that it applies to damage to the car of the insured. On the contrary, it deals with accidents caused by any automobile while being used in a race or driven in violation of law as to age, and not to accidents to the car of the

3 LEGAL NOTES 243 insured. This conclusion is fortified by the fact that the remaining clauses provide in effect that the policy does not cover any automobile while being used for towing, or any automobile, while being used for rental or livery purposes, etc., thus placing stress on the use of the automobile, and not on the fact that the accident was caused by the automobile. We are therefore constrained to the view that clauses 1 and 2 of Condition A do not apply to damages to the automobile of the insured. Having this view of the question, it follows that appellee's loss was covered by the policy." BURGLARY Property Deposited by Hold Guests:--(Cohen vs. London Guarantee & Acc. Co. 225 N. W. 549.) A "hold-up" policy issued to a hotel provided: "The company shall not be liable for (a) loss of or d mage to any property unless it is owned by the assured or held by him in trust or on commission or as collateral for indebtedness to the assured or is held by the assured in any capacity that would render him liable to the owner thereof for such loss or damage us is covered hereby." Money and jewelry belonging to guests, but deposited in the hotel safe, were stolen. The hotel owner sued for the loss. The Court held that he was entitled to recover and said: "Both at common law, and under statutory provision an innkeeper is entitled to a lien on the effects of guests for the amount of the reasonable charges for their entertainment. This extraordinary privilege corresponds to, and is concurrent with, the extraordinary liabilities which the law imposes on the innkeeper. The lien is not created by a contract, but by law; the innkeeper being obliged by law to receive the guest, is given the lien by the law as a protection. Consequently an innkeeper may maintain his lien even against a guest who is not legally capable of making a binding contract. "The lien of an innkeeper extends generally to all property, and each article thereof, brought by the guest to the inn. "Now if plaintiff had a lien on the money and jewelry of his guests to secure the payment to him of his lawful charges, and we so hold, and it was in his possession in the office safe, and the proofs so show, it is quite difficult to perceive what system of reasoning we should indulge to reach the conclusion that it was not 'collateral for indebtedness to the assured' and within the terms of the policy. The policy was issued to indemnify plaintiff from loss, and ought not to receive so strained a construction as to defeat its purpose."

4 ~4 LEGAL NOTES COMPENSATION Refusal of Medical Attention:--(Zant vs. U. S. Fidelity & Guaranty Co. 148 S. E. 765.) An employee recovered compensation for a broken leg. The leg was not properly set and he refused to undergo an operation for rebrealdng and resetting. The employer thereupon discontinued payments on the ground of refusal to accept medical attention. Is the employee entitled to compensation? The court held that he is and said: "It is clearly within the contemplation of the act that the refusal of the injured employee to accept medical, hospital, or surgical service, when provided for him by the employer, will not bar the employee from the receipt of further compensation which has been awarded him, where the refusal of the employee to accept such tendered service is 'reasonable' or is, under 'the circumstances, justified.' "The reduction of the effect of an injury, and the consequent reduction in the amount of compensation payable by the employer therefor, is the only interest which the employer has in requiring an injured employee, who is entitled to compensation, to undergo an operation for the purpose of relieving the injury. "The evidence is conclusive and without dispute that the surgical treatment tendered by the employer to the injured employee, namely, the rebreaking of the employee's leg, was an operation which would endanger the employee's life, and which from its nature must necessarily be accompanied with great physical and mental pain, that the chances of a benefit to the injured employee did not exceed 50 per cent. and therefore there was no reasonable expectancy that the operation would be a success and would thereby reduce the compensation and none of the physicians who testified would recommend it." POWER PLANT Other Insurance:--(Kanawha Ins. Co. vs. Hartford Steam Boiler Inspec. Ins, Co. 149 S. E. 605.) A policy covered certain machinery for damage caused directly by the breakdown of any of such machinery. It also provided: "If at the time of an accident covered by this policy there shall be any other similar, valid and collectible insurance against damage to property, the assured shall in no event demand or recover of the company any greater proportion of the loss from

5 LEGAL NOTES 245 damage to property than the insurance applicable under this policy to such loss bears to the whole amount of such insurance thereon." An elevator broke down. The breakdown was accompanied by a fire which was confined to the motor of the elevator. Is the insurer liable for the whole loss or only proportionately with the fire insurers of the building? The Court held that it was liable for one whole loss and said: "The fire policies were general; the policy in suit was specific. It covered particular items of property and for particular purposes; this denotes marked dissimilarity, rather than similarity. In our opinion, the phrase 'other similar.., insurance' refers to other policies having the same specific coverage, and does not refer to those having a general coverage." PUBLIC LIABILITY Waiver by Company:--(269 Canal St. Corp. vs. Zurich Gem Ace. & L. Ins. Co. 235 N.. S. 63.) Liability insurer's attorney secured an extension of time to answer in a negligence action against the insured, and then discovered that prompt notice of the accident had not been given as required by polic:~. However, it continued to act for the insured in conducting the defense without question or protest for almost three months, during which time it drafted and served an answer, demanded a bill of particulars, attempted to obtain a change of venue, and opposed a motion for a preference. Then it procured the insured to sign a non-waiver agreement wherein the insured stipulated that the insurer's undertaking the defense of the case would not waive any provision or condition of the policy. The company contended it was relieved from liability by this agreement. The Court held that it was not and said: "If this nonwaiver agreement was supported by consideration flowing from the defendant, it is a defense to this action. The defendant continued to act for the plaintiff in the conduct of the defense in a negligence case, without question or protest, at least for almost three months after it admittedly had full knowledge of the claimed breach of condition. At the time of the execution of the so-called nonwaiver agreement it was, therefore, absolutely bound to defend the negligence action. When it received notice

6 9"46 LEGAL NOTES of the breach of condition, it was competent for the company 'to stand upon its right and disclaim liability, leaving this plaintiff to defend the action.' It chose not to follow this course, but with the full knowledge to interfere with the defense of the negligence case in vital respects. "The only consideration moving from the defendant in a nonwaiver agreement was its implied undertaking to continue the defense of the action. This it was already bound to do; and it is fundamental that 'neither the promise to do a thing, nor the actual doing of it, will be a good consideration if it is a thing which the party is bound to do by the general law, or by a subsisting contract with the other party.' " SURETY Conslruaion:--(Maryland Casualty Co. Vs. Fowler et al 31 F. R. 881.) A surety bond was conditioned upon the principal's indemnifying the oblige6 against any loss or damage directly arising from failure of the principal to faithfully perform the contract, and one of its provisions was that no right of action should accrue upon it to any person other than the oblige6. By reference, however, it incorporated all of the provisions of the contract which it guaranteed, one of which was that the contractor should furnish and pay for all material, labor, etc., required for the performance of the work. Could the furnishers of materials recover? The court held that they could and said: "The rule which permits a surety to stand upon his strict legal rights, when applicable, does not prevent a construction of the bond with a view to determining the fair scope and meaning of the contract in the light of the language used and the circumstances surrounding the parties. "The very reason for the existence of this kind of corporation, and the strongest argument put forward by them for patronage, is that the embarrassment and hardship growing out of individual suretyship that give application for this rule is by them taken away; that it is their business to take risks and expect losses. If, with their superior means and facilities, they are to be permitted to take the risks, but avoid the losses, by the rule of strictissimi juris, we may expect the courts to be constantly engaged in hearing their technical objections to contracts prepared by themselves. It is right, therefore, to say to them that they must show injury done to them before they can ask to be relieved from contracts which they clamor to execute."