CASES

IN THE

SUPREME COURT

OF

MINNESOTA.

KENNEDY v. FIDELITY AND CASUALTY COMPANY. [100 Minn. 1, 110 N. W. 97.]

INSURANCE, CASUALTY-Indemnity-Right of Action.-A casualty insurance policy providing that "no action shall lie against the company as respects any loss under this policy, unless it shall be brought by the assured himself to reimburse him for loss actually sus tained and paid by him in satisfaction of a judgment within sixty days from date of such judgment and after trial of the issue," constitutes a contract of indemnity, and such judgment may be paid and satisfied by the assured by the execution and delivery of notes in good faith and so accepted by the judgment creditor, and the assured is thereupon entitled to recover against the insurance company. (pp. 659, 660.)

R. E. Olds and Davis, Kellogg & Severance, for the appellant.

S. A. Anderson and J. C. Mangan, for the respondent.

2 LEWIS, J. Respondent was the owner and operator of a steam laundry, and was insured by appellant company against loss up to $5,000 from liability for damages on account of bodily injuries suffered by his employés. One of his employés, Kathryn Carlin, was injured during the term of the policy and recovered a judgment against respondent for $7,943.75, which was entered January 19, 1906. February 24, 1906, the judgment was satisfied, and in full payment thereof respondent delivered to the judgment creditor, or her attorney, four promissory notes, dated on that day, with interest at six per cent per annum, and indorsed by M. J. Clark, guarantor; one for $1,000, payable in three installments, $200 sixty days, $400 six months, and $400 one year from date thereof; another for $1,000, payable in four equal quarterly

installments beginning May 24, 1907; one for $1,000, payable in four equal quarterly installments beginning May 24, 1908; and one for $2,000, payable in four equal quarterly installments beginning May 24, 1909. No cash, property, or other consideration than the execution and delivery of the notes passed from respondent to Kathryn Carlin in satisfaction of the judgment. Respondent, having made demand upon appellant company for the payment of the face of the policy, commenced this action, and at the close of the case the court directed a verdict for plaintiff for the full amount demanded. Appeal was taken from an order of the court denying appellant's motion for judgment notwithstanding the verdict, or for a new trial. Two hundred and two dollars was paid on the first note after the action was commenced.

The policy upon which the suit was founded provided that the company, in consideration of the warranties made in the application for the policy and $25, agreed to indemnify respondent for the period of twelve months, subject to certain special and general agreements, against loss from commonlaw or statutory liability for damages on account of bodily injuries, fatal or nonfatal, accidentally suffered within the period of this policy by any employé or employés, etc., and under the head of general agreements, subdivision 7 reads: "No action shall lie against the company as respects any loss under this policy unless 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 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 expiration of such period there is such an action pending against the assured in which case an action may be brought against the company by the assured within sixty days after final judgment has been rendered and satisfied as above. The company does not prejudice by this clause any defenses to such action which it may be entitled to make under this policy." We accept the views of appellant that this is a contract of indemnity, and not one of insurance, to the extent of $5,000. In this respect the policy differs materially from the one considered in Anoka Lumber Co. v. Fidelity & Casualty Co., 63 Minn. 286, 65 N. W. 353, 30 L. R. A. 689. The contract contemplates that an actual loss shall be sustained and paid before the company becomes liable, and appellant submits that

by the fair and reasonable meaning of the language the assured cannot accomplish payment or satisfaction of the judg ment in any other way than by actually parting with the cash. It is admitted that the debt and judgment was paid and satisfied by the execution of the promissory notes, if given in good faith: Bausman v. Credit Guarantee Co., 47 Minn. 377, 50 N. W. 496. But the whole argument of appellant rests upon the claim that the mere giving of the notes did not amount to a loss actually sustained for the reason that the maker of the notes and the guarantor might never be called upon to make payment, might become insolvent, that there is no certainty they will ever be paid, and, if not paid, there is no loss actually sustained. This means that the party assured, no matter what his financial condition might be, would be compelled to raise the actual cash within sixty days and pay it to the judgment creditor, or be foreclosed from enforcing the indemnity against the company. If the position 4 is sound, the money could not be raised by borrowing at a bank, or at any other place, upon promissory notes secured either by a signer or by property, because, before the notes became due, the property might become worthless, deteriorate in value, or the parties might become insolvent, and no actual payment ever be made; hence no loss. Fairly construed, the language means simply that the judgment must be paid and satisfied within sixty days from date of its entry, and, when such judgment is paid or satisfied, the loss is actually sustained. Of what consequence is it to the company whether respondent has on hand immediate cash to pay the judgment, or whether the judgment debtor is compelled to borrow that amount on the most favorable terms, or whether he makes the payment and secures the satisfaction by the execution of promissory notes running direct to the judgment creditor? Logically there is no difference in the method, and in either case it amounts to a payment and satisfaction of the judgment.

If the assured accomplished the satisfaction and payment of the judgment by executing and delivering the promissory notes above described, the good faith of that transaction was hardly open to question, even though it gave the assured the advantage of collecting from appellant company the amount of insurance before the notes came due. So far as the record shows, the assured paid the judgment in good commercial paper, and there is nothing upon the face of the transaction

to indicate that the arrangement was made for a fraudulent

purpose.

Order affirmed.

For Recent Authorities on the Nature of Contracts of indemnity or casualty insurance, see Sanders v. Frankfort etc. Ins. Co., 72 N. H. 485, 101 Am. St. Rep. 688, and cases cited in the cross-reference note thereto: Frye v. Bath Gas etc. Co., 97 Me. 241, 94 Am. St. Rep. 500.

WALLER v. ROSS.

[100 Minn. 7, 110 N. W. 252.]

NEGLIGENCE-Fall of Awning-Res Ipsa Loquitur.-The liability of the owner of a building for damages to a traveler upon the highway caused by the falling of an awning attached to such building is to be determined upon the principle of negligence in accordance with the maxim "res ipsa loquitur," and not upon the doctrine of insurance of safety, when there is no issue as to nuisance in the case. (p. 662.)

NEGLIGENCE-Fall of Awning.-If a traveler upon the highway is injured by the fall of an awning attached to a building, the owner of such building is prima facie, guilty of negligence. (p. 666.)

Ayers & McDonald, for the appellant.

H. E. Fryberger, for the respondent.

7 JAGGARD, J. This was an action for personal injuries -laimed to have been sustained by plaintiff and appellant vhile she was walking upon the sidewalk on a public street in Minneapolis. While plaintiff was in front of a building of lefendant and respondent, an awning which had been 8 at. ached to that building fell and struck her, and caused the amages for which recovery was here sought. Defendan ad a verdict. Plaintiff appealed from an order denying ner otion for a new trial.

The plaintiff argues that the rule of law applicable is that hen the plaintiff's evidence showed an injury sustained by er while a passenger upon the street, because of the falling pon her of an awning, the burden of proof shifted to the efendant, and that it was incumbent upon the defendant to 10w, first, that the accident was unavoidable; or, second, that le plaintiff was not injured, before he would be relieved from ability on account of the accident; that is to say, plaintiff

invokes the doctrine of insurance of safety as announced in Rylands v. Fletcher, L. R. 3 H. L. 330, and would hold the owner of an awning which did damage to a person properly using the street absolutely responsible notwithstanding the exercise of due care on his part.

In support of that contention she cites Gleeson v. Virginia Midland R. Co., 140 U. S. 435, 11 Sup. Ct. Rep. 859, 35 L. ed. 458, in which the federal supreme court quotes as follows from an English decision, namely: "A man who for his own benefit suspends an object or permits it to be suspended over the highway and puts the public safety in peril thereby is under an absolute duty to keep it in such a state as not to be dangerous." That English case was Tarry v. Ashton, 1 Q. B. 314. It is to be noted, however, that there the jury had found negligence on part of the defendant personally. The lamp overhanging the highway, which fell and injured the plaintiff, a foot-passenger, was out of repair through general decay, although not to defendant's knowledge. The court also referred with approval to the leading case of Kearney v. London, L. R. 5 Q. B. 411, L. R. 6 Q. B. 759, as being directly in point, and as holding that the doctrine of res ipsa loquitur applied to the case of plaintiff injured, while walking on a public highway, by a brick which fell from a pier of defendant's bridge. The case is an authority for the doctrine of res ipsa loquitur in such cases, but not for the doctrine of insurance of safety. Gleeson v. Virginia Midland Ry. Co., 140 U. S. 435, 11 Sup. Ct. Rep. 859, 35 L. ed. 458, itself held a railway company responsible for negligence in maintaining a cut with sides of the character shown by the evidence in that case, because of which loosened earth obstructed the track and derailed the train on which plaintiff was a passenger, whereby he was injured. Not the facts nor the theory, nor the cases cited therein, tend to support the contention of absolute liability in this case; but, on the contrary, sustain the application of the maxim "Res ipsa loquitur."

A large number of cases have been presented to the courts in which a body of considerable weight has been suspended or put in position where it is likely to fall, and has, in fact, fallen and produced damage to a person lawfully using a highway. The liability of the person responsible for such damages has been, under different circumstances, determined upon the doctrine of insurance of safety, of nuisance, of prima facie