Maryland Casualty Company v. Clean-Rite Maintenance Co.

Appellee is an Oregon corporation engaged in the business of building maintenance. Acting through its president, one Hill, it entered into a contract with the owners and operators of the Postal Building in Portland, represented by Mrs. Reíos, to clean the windows of that building. In performing the work, one of appellee’s employees fell and was severely injured. Alleging that the accident was caused by the defective nature of the building’s window frames and that the building owners had been negligent in permitting the defective condition to exist, as well as in failing to warn of its existence, the injured employee sued the owners for damages in an Oregon state court. Appellant, a Maryland corporation and the owners’ public liability insurance carrier, undertook defense of the action and ultimately settled it for $22,-500.

Claiming to be subrogated to rights of the building owners, appellant then sought to recover its loss by the present action in the United States District Court, 28 U.S.C. § 1332 . It alleged that the appellee had breached an oral contract with the owners “to provide insurance protection” which would have indemnified the building owners against “any and all…