Court Opinion

ID: 9651383
Source: CourtListenerOpinion
Date Created: 2023-08-23 16:17:12.878034+00
Date Added: 2024-06-11T18:12:32.912590
License: Public Domain

PHILLIPS, Circuit Court
(dissenting).
I think we should adhere to the views and the conclusion reached in our first opinion herein.
The claims asserted by Gilbert, adminis-tratrix, and Thompson in the actions brought by them against Hilderbrandt were clearly without the coverage of the policy. They sought damages for breach of duty by Hilderbrandt, as employer, to Thompson and H. C. Gilbert, as his employees. The policy expressly excluded claims by employees of Hilderbrandt. It was impossible for the Casualty Company to determine with certainty whether the true facts were as stated to it by Hilderbrandt and Humphrey, or as alleged by Gilbert, admin-istratrix, and Thompson in their respective petitions.
The Casualty Company offered to defend the actions brought by Gilbert, administra-trix, and Thompson, provided Hilderbrandt would consent to a reservation of right by the Casualty Company to deny liability. Had the Casualty Company defended the actions without a reservation of right to *301deny liability, expressly or impliedly consented to by Hilderbrandt, it would have been obligated to pay any judgment recovered against Hilderbrandt. Hilderbrandt expressly refused to consent to such reservation. To construe the policy as obligating the Casualty Company to defend an action predicated on a claim clearly without the coverage of the policy, without the insured consenting to a reservation of its right to deny liability, would produce this anomalous result: By the covenant to defend, the Casualty Company would be obligated to defend a claim it was not obligated to pay because it was clearly without the coverage of the policy, and, by virtue of having defended it, would then be obligated to pay the claim if established,1 although by the terms of the insuring clause it was excluded from the coverage. Such a construction would render meaningless the limitations written into the coverage clause.
I think the conclusion reached in the first opinion herein is supported by the cases cited in Note 3 thereto. My associates are of the opinion that those cases are inapplicable because, under the true facts, claims growing out of the same accident could have been asserted by Gilbert, administratrix, and Thompson, within the coverage of the policy. Conceding that.claims could have been asserted within the coverage of the policy, no such claims were asserted. Until they were asserted, there was no obligation on the Casualty Company either to defend or pay the claims. Certainly, the existence of a claim within the coverage of the policy did not obligate the Casualty Company either to defend or pay a claim clearly without the coverage of the policy. I am of the opinion that the refusal to defend did not constitute a breach of the policy and that when Hilderbrandt elected to pay claims clearly without the coverage of the policy, there was no obligation on the part of the Casualty Company to reimburse him therefor.
The holding in University Club v. American Mutual Liability Ins. Co., 124 Pa.Super. 480, 189 A. 534, 535, does not seem to me to be contrary to the views herein expressed. In that case, the coverage of the policy was limited to employees legally employed. In the claim asserted against the insured, the plaintiffs alleged that the employee at the time of the accident was 17 years of age. If that allegation were true, his employment was unlawful. But the claim asserted against the insured was not predicated on the unlawful employment of the employee. It was predicated upon a defective elevator and was within the coverage of the policy. The allegation of age was merely incidental or collateral and was not relied on as a basis for the claim. In the opinion the court said:
“It will be noted that the plaintiffs in that action [the personal injury action against the insured], in their statement of claim, based their right of recovery on the defective condition of the elevator, and did not aver, or specifically rely on, any illegal employment of the minor plaintiff.”
Had the claim been based on alleged illegal employment, I think the court would have held there was no duty to defend.
I do not think an incidental or collateral allegation of fact in the action against the insured not essential to the claim asserted, and not in anywise constituting the basis thereof, relieves the insurer from the duty to defend. The test is whether the claim asserted against the insured is within the coverage of the policy. Here, the claims were predicated upon the relation of master and servant and a breach of duty by the master, and claims predicated on that relationship were expressly excluded from the coverage of the policy.
For the reasons indicated, I respectfully dissent.

 See cases cited in Note 4 to the first opinion herein.