David Baker and Lee J. Baker v. The American Insurance Company of Newark, New Jersey

ALBERT V. BRYAN, Circuit Judge:

In the accident policy issued by American Insurance Company to David and Lee J. Baker the insurer covenanted: <1) “to pay * * * all sums which the insured should become legally obligated to pay as damages because of injury to * * * property * * * caused by accident”; and (2) to defend “any suit against the insured alleging such injury * * * and seeking damages on account thereof * * * ” (Accent added.)

The policyholders (Baker) were sued in a South Carolina court for damages under circumstances they thought entitled them to the insurance protection, but American…