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LIBERTY MUT. INS. CO. v. BORSARI TANK CORP. OF AME

March 9, 1956

LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff,
v.
BORSARI TANK CORPORATION OF AMERICA, Anheuser-Busch, Inc., Employers Mutual Liability Insurance Company of Wisconsin, Defendants



The opinion of the court was delivered by: DAWSON

This is an action brought under the Federal Declaratory Judgments Act, 28 U.S.C. 2201, for a determination of the rights of the parties under a certain policy of Workmen's Compensation Insurance issued by the plaintiff Liberty Mutual Insurance Company (hereinafter called 'Liberty Mutual') to Borsari Tank Corporation of America (hereinafter called 'Borsari'). Although the amended and supplemental complaint is framed as one for declaratory judgment, to determine the rights of the parties, the plaintiff in practical effect seeks a determination that it is entitled to recover $ 5,000 from the defendants, Borsari and Anheuser-Busch, Inc. (hereinafter called 'Anheuser-Busch').

The case has been tried on this issue, and there is no reason why the Court should not decide it, even though ordinarily a declaratory judgment action is not the appropriate method for securing such a result. *fn1"

 On motion of the plaintiff and with the consent of the defendants, the action was discontinued against the defendant Employers Mutual Liability Insurance Company of Wisconsin without costs.

 The Facts

 The following factual situation seems to have been clearly established:

 Liberty Mutual issued its Standard Workmen's Compensation and Employers Liability Policy to the defendant Borsari to be in effect from April 1, 1952 to April 1, 1953. The policy covered employees of Borsari in the States of Missouri, New Jersey, and New York. The premiums were 'subject to adjusted rates' and subject to an experience modification credit. The policy provided that at the end of each three-month period Borsari should furnish Liberty Mutual with a declaration of the amount of compensation earned during that period by the employer's covered employees and should pay to Liberty Mutual a premium computed at the rate or rates specified in the policy. The policy provided that:

 'The statements in Items 1 to 4 inclusive, in the Declarations hereinafter contained, are true; those stated as estimates only are believed to be true. This Policy is issued upon such statements and in consideration of the provisions of the Policy respecting its premium and the payment of the premium in such Declarations expressed.'

 Declaration 4 states:

 'The foregoing enumeration and description of employees includes all persons employed in the service of this Employer in connection with the business operations above described to whom remuneration of any nature in consideration of service is paid, allowed or due together with an estimate for the Policy Period of all such remuneration * * *'

 On or about July 23, 1952, Borsari submitted to Anheuser-Busch a proposal of certain work to be done in a brewery in Newark, New Jersey. One of the provisions of the proposal was that Anheuser-Busch should provide insurance protecting Borsari and any subcontractor 'under any Workmen's Compensation Act' or other statute imposing liability for injuries sustained by the employees of Borsari in connection with the work covered by such proposal. This proposal resulted in a contract embodying these terms.

 On or about November 7, 1952, Borsari requested Liberty Mutual to eliminate from its existing Workmen's Compensation policy all coverage for any Borsari employees working on the Anheuser-Busch job at Newark, New Jersey, stating that 'separate Workmen's Compensation insurance would be secured by Anheuser-Busch, Inc. for such employees pursuant to the contract hereinabove referred to.' In accordance with the representation, the plaintiff Liberty Mutual advised Borsari by letter that coverage for Borsari employees on the Anheuser-Busch job was excluded from the Liberty Mutual policy and an endorsement was prepared and sent to Borsari stating that the policy did not insure with respect to injury or death sustained by any employee engaged in work directly connected with the operations of the Anheuser-Busch job in Newark, New Jersey. As a result of the elimination of the coverage of the employees on the Anheuser-Busch job in Newark, New Jersey, Liberty Mutual collected no premium from Borsari with respect to such employees.

 Although Anheuser-Busch, under its contract, had agreed to obtain insurance covering Borsari 'under any Workmen's Compensation Act', Anheuser-Busch failed to do so, but instead secured coverage for Workmen's Compensation from Employers Mutual Liability Insurance Company of Wisconsin, which was limited to compensation payable under the laws of the State of New Jersey. Anheuser-Busch sent to Borsari a Certificate of Insurance of Employers Mutual Liability Insurance Company which stated that the coverage was 'Full coverage under workmen's compensation law. As designated in endorsements for coverage under paragraph One (b)', and this Certificate of Insurance was sent to Liberty Mutual. The policy issued by Employers Mutual Liability Insurance Company was retained by Borsari and did not come to the attention of Liberty Mutual until after the events hereinafter stated.

 On March 11, 1953, a fire occurred at the Anheuser-Busch plant at Newark, New Jersey, resulting in the death of three employees of Borsari who were residents of the State of Missouri. Their next of kin and estates filed claims under the Missouri Workmen's Compensation Law, V.A.M.S. § 287.010 et seq., where the benefits were higher than would have been the case if they had filed under the New Jersey law, N.J.S.A. 34:15-1 et seq. Since the contracts of employment of these deceased employees had been entered into in the State of Missouri, they and their dependents were eligible to recover from Borsari and from Liberty Mutual, as its insurance carrier in Missouri, the compensation benefits under the Missouri Workmen's Compensation Law. Under the Missouri Workmen's Compensation Law, an award may be made directly against the insurance carrier. As a result, final awards were issued by the Industrial Commission of Missouri against Borsari and Liberty Mutual for the widows of the three deceased employees in the aggregate sum of $ 37,200.

 The estates of the three deceased employees also instituted common law third party actions in the State of New Jersey to recover damages against certain contractors and subcontractors alleged to have been responsible for the death of the said employees. Borsari and Liberty Mutual, pursuant to the laws of New Jersey, asserted liens against any recovery by the aforesaid estates of the employees. These common law actions were settled, and in the course of the settlement, the liens of ...


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