#### Gustav T. Lawrence, Respondent, *v.*The General Accident Assurance Corporation, Limited, of Perth, Scotland, Appellant.

Second Department,

February 28, 1908.

Insurance — indemnity against liability for personal injuries — contract construed — when insured not entitled to recover cost of successful defense. '

Under a contract indemnifying the assured from common-law or statutory liability for damages on account of personal injuries, whicli provides that if process served upon the assured is transmitted to the insurer it will defend the action on behalf of the assured, but thahno action will lie against the insurer , for any loss under the policy unless it be brought by the assured himself to reimburse himself for loss actually sustained • and paid in satisfaction of a judgment, .etc., the assured is not entitled to recover the expense of maintaining a successful defense to an action brought against him for an accident sustained on the premises covered by the contract.

Gaynor, J., dissented, with opinion. . . :

Appeal by the defendant,' The General Accident Assurance Corporation, Limited, of Perth, Scotland, from a judgment of the Municipal' Court of the city of New York, borough of Brooklyn, in favor of the plaintiff, rendered on the 31st day of October, 1907, overruling the defendant’s demurrer to the complaint.

*Ilerriclc O.*Allen, for the‘appellant.

*Hobert Godson,*for the respondent.

Miller, J.: •

The action is brought to recover damages for the breach of covenant contained in a contract indemnifying the plaintiff, in the ; words of the contract, “ Against loss from common law or statutory liability for damages on account - of bodily injuries, fatal or nonfatal, accidentally suffered within the period of this Policy by any ■ person or persons while within the premises hereinafter mentioned' • or upon the sidewalk or other ways immediately adjacent thereto.”

The following are among' the material provisions of the cóntraet:

“1. The assured upon the occurrence of an accident shall give immediate written notice thereof,: with the1 fullest information obtainable at the time, to the United States Managers at' the office of the Corporation, in Philadelphia, Pa., or to the duly authorized ' *546local agent. He shall give like notice with full particulars of any claim that may be made on account of such accident, and shall at all times render to the Corporation all' co-operation and assistance in his power, • . .

“2. If thereafter • any suit is brought against the Assured to enforce a claim for . damages on account of an accident covered by this Policy, the Assured shall immediately forward to the United States Managers, at the office of the Corporation, in Philadelphia, Pa., every summons or other process as soon* as the same shall have been served on him, and the' Corporation will defend against such proceedings in the name and on behalf of the Assured^ or settle the same, assuming costs incident to the conduct of. such defense or negotiations for settlement, unless it shall' elect to pay to the Assured the indemnity provided for in Clause A of Special Agreements as limited herein.”

“7. No action shall lie against the Corporation as respects any loss under this Policyunless.it shall be brought by the Assured himself to reimburse him for loss actually sustained and paid by him in satisfaction of a judgment within sixty days from the. date of such judgment and after trial of the issue,. No'such action shall lie unless brought within the period within which a claimant might sue the Assured for' damages unless at the expiry of such period there is such an action pending against the Assured, in which case an action may be brought against the Corporation, by the Assured within sixty days after final judgment has been rendered and satisfied as above. The Corporation does not prejudice by this clause any defenses to such action which it may be entitled to make under this policy.”

The suit is brought to recover as damages for the breach of the defendant’s agreement to defend, the expenses of maintaining a successful defense to an action brought against the plaintiff for an accident sustained on. the premises mentioned in said contract, and I think that by fair and reasonable intendment the complaint in this action should be deemed to allege that the claim as presented in that action was for damages for bodily injuries accidentally suffered on said premises by reason of the owner’s negligence¡; If. the case were one of original impression I should say that the nature of the claim as presented (not what might ultimately be adjudged in *547the action) determined whether the suit was brought “ against the assured to enforce a claim for .damages on account of an accident covered by this policy,” and that an action could be brought to recover damages for a breach of the defendant’s covenant to defend independently of the stipulation in the contract that “Ho action shall lie against the Corporation as respects any loss under this Policy unless it shall be brought by thé Assured himself to reimburse him for loss actually sustained and paid by him in satisfaction of a judgment;” that the covenant to defend and the provision quoted last above are independent. However, I am unable to distinguish this case from the case of *Cornell*v. *Travelers' Ins. Co.*(175 N. Y. 239), for certainly a “loss from common law .or.statu- t tory liability” is not essentially different from liability for injuries occasioned “under circumstances which shall impose upon the insured a common law or statutory liability.” We are constrained by that decision to reverse the judgment appealed from.

Jenks, Hooker and Bien, J J., concurred; Gaynor, J., read for affirmance.

Gaynor, J. (dissenting):

I do not see that we need to be embarrassed by the very much, said in the *Cornell*case, for the words of the contract here are different, and that case may well be deemed as standing alone on its own peculiarities. The contract here is divisible into two independent parts in the respects under consideration. First, it indemnifies the insured “ against loss from common law or statutory liability for damages ” by bodily injuries by accident to any one in or about the- premises of the insured, which damages have been ascertained in an action by the injured person against the insured by a judgment obtained upon a trial of the issues. *Second,*it is agreed that if “ any suit is brought against the assured to enforce a claim for damages' on account of any accident covered by this policy ”, the insured shall turn the papers therein o ver to the insurer who shall defend such suit in the name of the insured but at its own expense. How this phrase, “ a claim for damages on account of any accident covered by this policy”, is not .to be limited as the said indemnity . clause necessarily is, or by it, tp claims in which the claimant finally prevails and obtains a judgment instead of losing his case. The agree*548ment to defend lias reference to actions at their beginning, not- at. ¡ their end. Mo one then knows what, their result is to be. Oh the . insured turning them -over to the insurer it is bound by the contract, to defend them at, its own cost. It will win some of them and lose .- some. 'The agréement to defend therefore necessarily refers to actions in which there is no liability for damages, as tested" by a - final judgment, as well as to actions .in which siich liability exists and ¿hall be established by such a judgment, for there is no criterion . by which it is possible tó separate such actions " at the outset, and distinguish,,those in which there is such liability from those in which . there is hot." It follows that.the complaint in .the action 'is tile cri- , terion hy which to determine whether the “ claim ’’ be one.for dam- ■ ages on account of an “ accident covered by this policy.” That the . claim- and accident as there alleged are covered by" the policy suffices. To say that only claims and accidents on which a judgment . is finally recovered are meant would'be to strain .the words and,, destroy-the undoubted intention. The letter , often lcilléth. The law is never absurd, though" it may sometimes be made to appear so.

The interlocutory judgment should be affirmed.

Judgment of the Municipal Court reversed, with "costs, and demurrer, sustained, with costs, with leave to plead over on payment of costs. Leave to appeal, to the Court of Appeals granted. ■