The Western Casualty and Surety Company v. Grolier Incorporated and the Richards Company, Inc.

501 F.2d 434, 1974 U.S. App. LEXIS 7503
CourtCourt of Appeals for the Eighth Circuit
DecidedJuly 23, 1974
Docket73-1429
StatusPublished
Cited by6 cases

This text of 501 F.2d 434 (The Western Casualty and Surety Company v. Grolier Incorporated and the Richards Company, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
The Western Casualty and Surety Company v. Grolier Incorporated and the Richards Company, Inc., 501 F.2d 434, 1974 U.S. App. LEXIS 7503 (8th Cir. 1974).

Opinion

MOORE, Senior Circuit Judge:

This is an appeal by Grolier Incorporated and The Richards Company, Inc. (referred to collectively as “Grolier”), defendants in the court below, from judgments in the amount of $91,770.82 awarded against them and in favor of The Western Casualty and Surety Company (hereinafter “Western Casualty”). The theory of recovery was that Grolier owed Western Casualty a duty to indemnify it for a loss incurred under an insurance policy issued by it, insuring Arthur S. Bronston (hereinafter “Arthur”) against liability arising out of an accident resulting from the ownership and operation of an automobile owned by Arthur. Because no such duty to indemnify can be derived from the facts of this case, we reverse the judgment of the District Court.

Grolier sells encyclopedias and other publications. Mitchell Bronston (hereinafter “Mitchell”) was employed by Gro-lier as a field manager or supervisor over certain salesmen of Grolier’s products. On June 25, 1968, Mitchell, while driving a car owned by and driven with the consent of Arthur (stated by the court, in an- order on a motion to dismiss the complaint, to be the father of Mitchell), was involved in a one-car accident in Cherokee County, Iowa, injuring Peter E. Verstegen, a passenger and fellow Grolier employee.

At the time of the accident, Mitchell and Peter Verstegen were acting within the scope of their employment. Grolier, a self-insurer under Iowa’s Workmen’s Compensation Act, paid Verstegen $26,986.61 as a result of his injuries in accordance with the Act. Despite the fact that he received Workmen’s Compensation payments from his employers, Verstegen was entitled to sue any third party who might under the law be liable to him. Verstegen sued both Arthur and Mitchell.

Mitchell’s negligence was conceded to be a proximate cause of the accident, and Arthur as the owner was liable to Verstegen under the Iowa Owner-Liability Statute. Iowa Code § 321.493 (1962); In settlement of this suit, Western Casualty, as insurer of Arthur, paid $90,000 to Verstegen and obtained his release of both Arthur and Mitchell. This settlement has been stipulated to be fair and reasonable. Western Casualty also paid court costs in the amount of $114.84 and incurred attorneys’ fees in the amount of $1,520.00 and expenses of $135.98. Western Casualty then brought the present action, as subrogee of Arthur, seeking indemnity from Gro-lier for the sums it expended in settling Verstegen’s suit and for costs, attorneys’ fees and expenses, a total of $91,770.82.

Grolier filed a third-party action against Mitchell in this action and was awarded judgment against him in a similar amount.

Western Casualty, as subrogee of Arthur, having paid $91,770.82 to Verste-gen then brought this action against Grolier. The complaint alleged an agreement between Grolier and Mitchell under which Mitchell was to furnish an *436 automobile to transport Grolier’s employees to areas selected by Grolier for the sale of its products; that Arthur agreed to furnish the car for this purpose; that Verstegen sued Arthur and Mitchell for his injuries sustained in the accident; that Mitchell’s negligence was the proximate cause of the accident, which negligence was imputable to Gro-lier; that Arthur was liable to Verste-gen by reason of the Iowa Consent Statute § 321.493 Iowa Code (1962); that Western Casualty paid $91,770.82 in settlement, which settlement was fair and reasonable; and that Western Casualty made a demand for indemnity from Gro-lier which was refused.

Grolier moved to dismiss the complaint on the ground that it failed to state a cause of action against it. The District Court denied the motion on the ground that Grolier’s liability is that of a master under the doctrine of respon-deat superior; that Grolier’s negligence was primary, the car owner’s negligence secondary and that the owner was not in pari delicto with Grolier.

When the case came to trial it was submitted largely upon the pre-trial order and facts stipulated therein.

The District Court found as an underlying fact that Arthur was liable to Ver-stegen under the Iowa Consent Statute, § 321.493. 1 However, the Court concluded that Arthur (Western Casualty as Arthur’s subrogee) was entitled to indemnity from Grolier because Grolier was Mitchell’s employer; that Mitchell was driving a car owned by and with the consent of Arthur; that an accident occurred in which Verstegen, a fellow employee, was injured; that Mitchell and Verstegen were acting within the scope of their employment; that Mitchell’s negligence was the proximate cause of the accident; that Grolier was insured under the Iowa Workmen’s Compensation Act and paid Verstegen $26,986.61 thereunder; that Verstegen brought a suit against Arthur and Mitchell; that Arthur had an automobile liability insurance policy issued by Western Casualty ; that Western Casualty settled the suit for a total of $91,770.82, which sum was fair and reasonable; that Western Casualty had tendered the defense to Grolier which was refused; and that Western Casualty had demanded indemnity from Grolier, which likewise was refused.

Appellants take issue with the conclusions reached below. They argue to this Court that Iowa’s Workmen’s Compensation Statute limits the liability of the employer. 2 While an employee who is covered by the Statute may recover for his injuries according to the schedule provided, he may not independently initiate a cause of action against his employer. Likewise, according to appellants, an employee cannot indirectly recover additional monies from his employer by suing a responsible third party who can, in turn, claim indemnity from the employer.

As authority for this proposition, appellants rely on Great Northern Railway Co. v. Bartlett & Co., 298 F.2d 90 (8th Cir. 1962). Great Northern was in the business of renting railroad cars to commercial users. Bartlett was one of its lessees. While loading a car leased to Bartlett by Great Northern, one of Bartlett’s employees was injured. He received a Workmen’s Compensation award from his employer and then sued Great Northern as a negligent third party because he claimed that the car supplied by Great Northern had been equipped with defective handbrakes. *437 The employee prevailed in his suit. Great Northern then sought contribution or indemnity from Bartlett on the ground that Bartlett’s failure to inspect the car before putting it to use made it, at the very least, a joint tortfeasor. Both contribution and indemnity were denied. This Court held that it was necessary for the party seeking indemnity to show an independent duty of indemnity running to it from the employer before the ultimate liability could be shifted and that, under the circumstances, no such duty could be found.

The District Court largely ignored the implications of Great Northern and instead based its memorandum decision on the authority it derived from seven different opinions which it cites but does not discuss.

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Bluebook (online)
501 F.2d 434, 1974 U.S. App. LEXIS 7503, Counsel Stack Legal Research, https://law.counselstack.com/opinion/the-western-casualty-and-surety-company-v-grolier-incorporated-and-the-ca8-1974.