The opinion of the court was delivered by: BYERS
In this cause in personam, the libelant seeks to recover from its insurer the amount which it has paid in settlement of personal injury claims, and incurred for counsel fees, in connection with damage to the covered barge Harry in tow of the tug Dixie, as stated in (C.C.A.) 57 F.2d 184.
The claims were made by Mrs. Turner, wife of the captain of the Harry, and by him for her medical expense, etc., as the alleged result of the striking of the barge by the Herkimer. Both the latter vessel and the Dixie were held at fault in the collision cause.
This respondent insured the owner of the Dixie under a protection and indemnity policy No. C 1002, and the question for decision is whether the personal injury claims, and the counsel fee incurred in connection therewith, are within the engagements of the policy.
The latter, among many other undertakings, covers:
"(1) Liability for loss of life of, or personal injury to, or illness of, any person, excluding, however, unless otherwise agreed by endorsement hereon, "
Then follow fourteen numbered paragraphs of various exclusions, which have no present application.
Then follow a large number of "General Conditions and/or Limitations," which do not affect the controversy.
Following the above, and in heavy type, there are set forth five separate paragraphs, under this heading:
"Notwithstanding the foregoing, no liability attaches to the Assurers:"
"For any loss, damage, expense, or claim arising out of or having relation to the towage of any other vessel or craft, whether under agreement or not, unless such towage was to assist such other vessel or craft in distress to a port or place of safety, provided, however, that this clause shall not apply to claims under this policy for loss of life or personal injury to passengers and/or members of the crew of the Assured's above named vessel arising as a result of towing, subject, however, to amount deductible under this policy.
"* * * (not applicable)."
The tug Dixie is a named vessel, not the barge Harry.
There is inserted below in type, i.e., a rider, as follows: "For any claim in respect of Tower's Liability."
The question seems not to have been previously decided.
Mrs. Turner was not a passenger on the Dixie, so that the proviso limiting the exclusion above quoted did not operate in her favor. It seems equally clear that the claim for her personal injuries arose out of the towage of the Harry by the Dixie, for the latter had the barge in two when the Herkimer collided with the latter.
It is argued for the libelant that the matter cannot be so decided, because the quoted printed paragraph is inconsistent with the rider, and that the latter must prevail, and that only tower's liability in general was thereby lifted out of the policy. If this is so, the further argument is, that personal injury claims are not included in tower's liability, and hence Mrs. Turner's claim falls within the general coverage of the policy.
If the rider can fairly be construed as a substitute for the printed paragraph, the argument is sound. The language employed does not lend itself to this interpretation, for the reason that tower's liability ordinarily does not embrace claims for personal injury, according to the testimony of the only witness called; therefore a clause which expressly includes liability for personal injury arising out of towage of a vessel in distress to a place of safety involves an engagement which would not ordinarily attach to a tower; consequently the addition of the rider, which excludes any claim in respect to tower's liability, is not the introduction of a broader exemption for a more limited one, but the addition of a restriction which does not affect the printed obligation.
Stated differently, the rider and the printed paragraph can be construed together, and effect can be given to each, which is a desirable result. If possible, the construction must favor the insured. See Wheeler v. AEtna Ins. Co. (C.C.A.) 68 F.2d 30, at page 31, and cases cited.
Here, if a personal injury claim had arisen out of the towage by the Dixie, while she was assisting the Harry, or any other vessel in distress, to a place of safety, the exclusion from the general coverage would not have applied, and the company would be called upon to pay. On the other hand, a personal injury claim, incident to or arising from the conventional towage relation, is thought to have been excluded by the terms of the policy, and any other claim labeled "tower's liability" is excluded by the rider.
If the foregoing is sound, the rider did not act as a substitute for the printed paragraph which has been quoted; it merely added an exclusion not contained in the printed form. The latter must be construed so as not to admit Mrs. Turner's claim to the policy in virtue of the printed provisions above quoted.
The remaining question is whether the respondent in effect is estopped to deny its liability to the libelant for the amount paid by the latter in settlement of the claims and which it has incurred by way of counsel fee.
The facts upon this branch of the case are as follows:
According to the policy, the insured is obligated to give prompt notice of claim and to forward to the United States P. & I. Agency all communications, processes, pleadings, etc., relating thereto. It is provided that that agency acts for the respondent company in all matters arising under the policy.
The libelant is forbidden to make any admission of liability or to interfere in negotiations for settlement and agrees to assist in securing information, evidence, witnesses, etc.
Further, the respondent is not liable for the cost or expense "of prosecuting or defending any suit unless the same shall have been incurred with the written consent of the United States P. & I. Agency, Inc., or the Assurers shall be satisfied that such approval could not have been obtained under the circumstances without unreasonable delay, or that such costs and charges were reasonably and properly incurred. The cost and expense of prosecuting any claim in which the Assurers shall have an interest by subrogation or otherwise, shall be divided between the Assured and the Assurers, proportionately to the amounts which they would be entitled to receive respectively, if the suit should be successful.
"The cost of defending any suit against the Assured on any claim based on a liability or an alleged liability of the Assured covered by this insurance, shall be payable by the Assurers if the amount of the claim and the costs and expenses of the defense exceeds the amount deductible under this policy. * * *"
The summons and complaint in the State Court action were served on the libelant prior to October 19, 1931, for on that date the pleadings were forwarded to the respondent by the New York Marine Company, an assured named in the said policy, accompanied by a letter, which is Libelant's Exhibit 3, addressed to the United States P. & I. Agency, Inc., and which referred to the collision hereinbefore referred to, and continued:
"We enclose three summonses and complaints served on us today in an action started by Gladys Turner and Willard Turner against the tug 'Dixie' and the steamer 'Herkimer' claiming $25,000 for personal injuries alleged to have been sustained in the above accident.
"This claim is covered under policy No. C-1022 (corrected in pencil to read C-1002) of the Continental Insurance Company. Please give these summonses and complaints the necessary attention."
On October 21, 1931, the United States P. & I. Agency, Inc., replied (Libelant's Exhibit 4):
"United States P. & I. Agency, Inc.
"116 John Street, New York, N.Y.
"New York Marine Co., 17 Battery Place, New ...