Appeal from the Circuit Court of Madison County; the Hon.
Horace Calvo, Judge, presiding.
JUSTICE HARRISON DELIVERED THE OPINION OF THE COURT:
JUSTICE HARRISON delivered the opinion of the court:
Flagg-Utica Corporation (Flagg) and American Mutual Liability Insurance Company (American), third-party defendants, appeal from summary judgments entered by the circuit court of Madison County in favor of Sears, Roebuck and Company (Sears), third-party plaintiff, in the sum of $95,234.57, on Sears' third-party complaint. For the reasons which follow, we affirm the summary judgment entered against American, and reverse and remand for further proceedings on Sears' third-party complaint against Flagg.
The history of this litigation is lengthy. In 1961 and 1962, Flagg sold underwear to Sears. The record contains several purchase contracts between Sears and Flagg in connection with this enterprise; each order is signed by at least one representative from each party. The majority of these contracts contain the following language:
"Seller agrees to protect, defend, hold harmless and indemnify Purchaser from and against any and all liability and expense arising out of the alleged or claimed infringement of any patent, trademark or copyright by merchandise furnished hereunder and any and all liability and expense (including but not limited to that arising out of death or injury to person or damage to property, by whomsoever suffered) arising out of any alleged or claimed defect in such merchandise, whether latent or patent, including allegedly improper construction and design, or in the failure of said merchandise to comply with specifications or with any express or implied warranties of Seller or arising out of the alleged violation by such merchandise or in its manufacture or sale of any statute, ordinance or administrative order, rule or regulation. These agreements and obligations shall not be affected or limited in any way by Purchaser's extending express or implied warranties to its customers, except to the extent that any Purchaser's warranties extend beyond the scope of Seller's warranties, express or implied, to Purchaser.
Seller agrees to obtain and maintain, at its expense, during the term of this Contract, a policy or policies of Products Liability Insurance, with Vendor's Endorsement naming Purchaser, with amounts and in such companies and containing such other provisions which shall be satisfactory to Purchaser covering purchases of merchandise made hereunder. All such policies shall provide that the coverage thereunder shall not be terminated without at least ten days' prior written notice to Purchaser."
At least one of the contracts contained, in lieu of "from and against any and all liability and expense" in the first sentence, the phrase "from and against any and all claims, actions, liabilities, losses, costs and expenses."
As required by these agreements, Flagg obtained a policy of products liability insurance with a vendor's endorsement naming Sears. This policy was issued by American, and the vendor's endorsement states, in pertinent part:
"IT IS AGREED THAT SUCH INSURANCE AS IS AFFORDED BY THE POLICY WITH RESPECT TO THE HANDLING OR USE OF OR THE EXISTENCE OF ANY CONDITION IN THE GOODS OR PRODUCTS MANUFACTURED, SOLD, HANDLED OR DISTRIBUTED BY THE NAMED INSURED, APPLIES TO ANY PERSON OR ORGANIZATION NAMED BELOW WITH RESPECT TO THE DISTRIBUTION OR SALE IN THE COURSE OF BUSINESS OF SUCH PERSON OR ORGANIZATION OF GOODS OR PRODUCTS MANUFACTURED, SOLD
HANDLED OR DISTRIBUTED BY THE NAMED INSURED [.]"
The policy itself contains the following provision:
"With respect to such insurance as is afforded by this policy, the company shall:
(a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seek damages on account thereof, even if such suit is groundless, false or fraudulent; that the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient."
On June 30, 1963, John Ervin was severely burned while welding in a tunnel near Omaha, Nebraska. Ervin filed suit against Sears on December 11, 1964, alleging that he was burned while wearing thermal underwear purchased from Sears and containing a "Sears" label, and that his burns were caused when the underwear "burst into violent flames." Following the filing of Ervin's ...