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Daly v. W.e. O'neil Const. Co.

JUNE 30, 1971.

PATRICK J. DALY, PLAINTIFF,

v.

W.E. O'NEIL CONSTRUCTION COMPANY ET AL., DEFENDANTS — (BETHLEHEM STEEL CORPORATION, CROSS-COMPLAINANT AND FOURTH-PARTY PLAINTIFF-APPELLANT,

v.

INSURANCE COMPANY OF NORTH AMERICA, FOURTH-PARTY DEFENDANT-APPELLEE — THE CITY OF CHICAGO, CROSS-DEFENDANT-APPELLEE.)



APPEAL from the Circuit Court of Cook County; the Hon. P.A. SORRENTINO, Judge, presiding.

MR. JUSTICE SCHWARTZ DELIVERED THE OPINION OF THE COURT:

Rehearing denied September 9, 1971.

As can be seen from the title, this case involves multiple parties and pleadings and will be best understood by a preliminary statement detailing the proceedings which culminated in a judgment against Bethlehem Steel Corporation (Bethlehem) and in favor of the Insurance Company of North America (INA) and the City of Chicago (City).

On August 2, 1962, Patrick J. Daly, an employee of Bethlehem, was injured when he fell from a scaffold while working for the City on the construction of a bridge on the Dan Ryan Expressway known and described as the bridge section on the south side of Archer Avenue in Chicago, Illinois. Daly filed suit pursuant to the provisions of the Structural Work Act, naming as defendants the W.E. O'Neil Construction Company (O'Neil), the general contractor, and the City, owner of the premises. Thereafter the City filed a third party complaint for indemnity in four counts, charging (1) that Bethlehem had agreed to indemnify the City, (2) that Bethlehem's active negligence caused Daly's injuries, and (3 and 4) that Bethlehem was liable for indemnity by reason of its breach of an implied duty as well as an express contractual duty to perform the work in a reasonably safe manner. On February 13, 1969 the following judgment order was entered by the trial court:

"By agreement of all the parties, the Court finds as follows:

1. On the complaint, the Court finds the issue of liability in favor of the Plaintiff and against the City of Chicago * * *. The Court finds that the Plaintiff has been damaged in the amount of $500,000.

2. * * * on the Third Party complaint of the City of Chicago against Bethlehem Steel Company, the Court finds the issues of liability in favor of the City of Chicago and against Bethlehem Steel Company on Count 1, on Count 2, on Count 3, and on Count 4 of said third-party complaint. The Court finds that the Third-Party Plaintiff has been damaged in the amount of $500,000.

4. The said agreement of Bethlehem Steel Company to pay, or the payment, shall not prejudice the rights of Bethlehem Steel Company, the City of Chicago, or the Insurance Company of North America."

In accordance with the provisions of the foregoing judgment order, Bethlehem paid the amount thereof and filed a fourth-party complaint against INA and a cross-complaint against the City. As against INA, Bethlehem sought a declaratory judgment finding that INA was liable to Bethlehem on a policy of insurance for $250,000 in which the City was the named insured. The theory on which Bethlehem's claim is based is that it had procured and paid for the insurance allegedly for the purpose of making INA the primary insurer against any liability of the City arising out of Bethlehem's performance of its construction contract. In the alternative, the cross-complaint filed by Bethlehem alleged that if it is held that the City lost the INA coverage by failing to give timely notice of Daly's suit to its insurer, then Bethlehem is entitled to $250,000 damages from the City for negligent failure to give such notice. INA and the City filed separate motions for judgment on the pleadings. Both motions were granted and judgments were entered in favor of INA and the City and against Bethlehem. On this appeal Bethlehem contends that the pleadings establish causes of action against both INA and the City. We proceed to a consideration of the allegations contained in Bethlehem's fourth-party complaint against INA and the cross-complaint against the City.

On December 15, 1961, Bethlehem entered into a contract with the City, the terms of which required Bethlehem to furnish and erect structural steel for the construction of a bridge at or near Archer Avenue on the Dan Ryan Expressway. Under the provisions of the contract Bethlehem was obligated to procure and maintain two policies of insurance, one for the protection of itself and the other for the protection of the City from claims for damages arising out of the contract. The contract provided as follows:

"(b) Public Liability and Property Damage Insurance. — The Contractor shall take out and maintain during the life of the contract such Comprehensive Public Liability and Property Damage Insurance as shall protect him from claims for damages * * *.

The Contractor shall also take out and maintain during the life of the contract, and in the same amounts as specified * * * Owner's Protective Insurance for the protection of the City of Chicago." (Emphasis added.)

Pursuant to those provisions Bethlehem procured a policy of insurance from INA insuring the "City of Chicago, Chief Engineer, Bureau of Engineering." Bethlehem alleges that "it was the intention of the City and Bethlehem to make, and the provisions of said policy did make, INA the primary insurer of any liability of the City to any person such as the ...


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