In Lessak v. Metropolitan Casualty Ins. Co. of N.Y., 168 Ohio St. 153, 151 N.E.2d 730 (1958), the insured was an individual doing business as a hardware company and he sold some BB's to a minor in violation of state law.Summary of this case from Farm Bureau Mutual Ins. Co. v. Lyon
Decided July 2, 1958.
Liability insurance — Construction of policy — Merchant selling air-gun ammunition to minor — Injuries to third person off merchant's premises — Liability of insurer — Test of insurer's duty to defend suit against insured — Duty to defend regardless of ultimate liability — Declaratory judgment — Available to establish obligations of insurer.
1. Where an insurance company issues a policy of liability insurance in which it agrees to pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of liability imposed upon him by law for damages sustained by any person or persons caused by accident or arising out of ownership, maintenance or use for the purposes stated in the policy and arising out of all operations during the policy period which are necessary or incidental to such purposes, and where in such policy there is no limitation as to where the accident occurs, the policy is operative to protect the insured against a claim as to an accident occurring away from the insured's premises, where the hazard arose from an operation upon the premises, which was incidental to the purposes for which the premises were maintained.
2. The sole test as to the duty of an insurance company, under a policy of liability insurance, to defend an action against the insured is the allegations of the petition in the action against the insured, and where such petition brings the action within the coverage of the policy, the insurer is required to make defense, regardless of the ultimate outcome of the action or the liability to the insured. ( Socony-Vacuum Oil Co. v. Continental Casualty Co., 144 Ohio St. 382, approved and followed.)
APPEAL from the Court of Appeals for Summit County.
On April 25, 1955, William J. Lessak, doing business as Massillon Road Hardward Lumber Company, hereinafter designated plaintiff, instituted an action for a declaratory judgment in the Court of Common Pleas of Summit County against The Metropolitan Casualty Insurance Company of New York and Floyd Daniel Fouts, a minor, hereinafter designated, respectively, the insurance company and Fouts.
Plaintiff alleges in his petition that he and his wife entered into a contract of liability insurance with the insurance company, which was in full force and effect on January 22, 1954; that on April 9, 1954, Fouts filed a petition in the Summit County Court of Common Pleas against plaintiff and other parties, praying for money damages for injuries suffered by Fouts as the result of being struck by a B-B pellet allegedly sold by plaintiff in violation of law; that all the proper notices were given to the insurance company, together with a copy of Fouts' petition; and that, notwithstanding the provisions of the insurance policy, the insurance company has notified plaintiff that it will not honor the provisions of such policy, defend plaintiff in the action instituted by Fouts, or pay any judgment that might be rendered therein against plaintiff, to the extent of the coverage set forth in the contract of insurance.
Plaintiff prays that the court order, adjudge and declare that the coverage under the contract of insurance exists according to the terms and provisions of such contract, and that the court grant plaintiff such other and further relief as may be just and equitable.
It appears that, in the petition filed by Fouts against the plaintiff and others, Fouts alleges that one Lonnie St. Clair, a minor, about 13 years of age, on January 22, 1954, purchased from plaintiff, who is engaged in the operation of a general hardware store wherein he sells air guns and ammunition, approximately six packages of ammunition to be used in the discharge of an air gun, commonly termed a B-B gun; that such sale to said minor was contrary to the laws of Ohio in force and effect at the time of the sale; that Lonnie St. Clair's stepfather and mother furnished Lonnie with an air gun, contrary to the laws of Ohio; and that, while Lonnie was using the air gun loaded with the ammunition which he purchased and which was furnished to him by an agent of plaintiff, Lonnie negligently and carelessly caused the air gun to be discharged and caused the B-B pellet with which the same was loaded to be hurled through the air and to strike Fouts in the region of his right eye, as a result of which he sustained serious injury.
The insurance company answered the petition of plaintiff, admitting that it issued the contract of insurance to him and his wife concerning the operation of a retail hardware store; that the policy was in full force and effect on January 22, 1954; that Fouts brought an action in the Common Pleas Court of Summit County against a number of defendants, of which plaintiff was one, for bodily injuries allegedly sustained by being struck in the eye by a B-B shot, which shot was claimed to have been purchased from the business establishment of plaintiff; and that the insurance company informed plaintiff that the policy of insurance did not cover plaintiff for the incidents or hazards, as alleged in the case brought by Fouts.
These admissions are followed by a denial of all other matters.
In the Court of Common Pleas, a judgment was rendered finding that, pursuant to the policy of insurance, the insurance company is obligated to defend plaintiff against the action brought against him and others by Fouts and to pay any judgment recovered therein by Fouts against plaintiff, up to the limits of liability set forth in the policy.
Upon appeal to the Court of Appeals, that court affirmed the judgment of the Court of Common Pleas.
The cause is before this court upon the allowance of a motion to certify the record.
Messrs. Buckingham, Doolittle Burroughs, Mr. Hugh Colopy and Mr. Allan Johnson, for appellee.
Messrs. Kaufman, Shama Devany, for appellant
The question before us is whether the insurance policy obligates the insurance company to defend the action of Fouts against plaintiff and to pay any judgment which may be rendered therein up to the limits of liability of the policy, by reason of plaintiff's alleged unlawful act of selling B-B shot to a minor, with the result that injury to another occurred away from plaintiff's premises.
This court has decided that an action for a declaratory judgment is appropriate to establish the obligations of an insurance company in a controversy between it and its insured as to the fact or extent of liability thereunder to persons injured through the wrongful act of the insured and as to the insurer's defense of the insured in an action for damages against him. Travelers Indemnity Co. v. Cochrane, Jr., 155 Ohio St. 305, 98 N.E.2d 840.
This court has likewise held that "the duty of a liability insurance company under its policy to defend an action against its insured is determined from the plaintiff's petition, and when that pleading brings the action within the coverage of the policy of insurance, the insurer is required to make defense regardless of its ultimate liability to the insured." Socony-Vacuum Oil Co. v. Continental Casualty Co., 144 Ohio St. 382, 59 N.E.2d 199.
In the present case, the action brought against plaintiff by Fouts is based upon the claim that the unlawful sale of B-B shot to a minor was a proximate cause in an uninterrupted sequence of an injury to Fouts, although the injury occurred away from the premises of plaintiff.
The provisions of the policy which we must interpret are as follows:
"THE METROPOLITAN CASUALTY INSURANCE COMPANY OF NEW YORK
"* * *
"Does hereby agree with the insured * * *
"I Coverage A — Bodily Injury Liability
"To pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law for damages, including damages for care and loss of services, because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person or persons, caused by accident and arising out of the hazards hereinafter defined.
"* * *
"DEFINITION OF HAZARDS
"Division 1. Premises — Operations
"The ownership, maintenance or use, for the purposes stated in the declarations, of the premises, and all operations during the policy period which are necessary or incidental to such purposes.
"Division 2. Elevators
"* * *
"Division 3. Products
"The handling or use of, the existence of any condition in or a warranty of goods or products manufactured, sold, handled or distributed by the named insured, other than equipment rented to or located for use of others but not sold, if the accident occurs after the insured has relinquished possession thereof to others and away from premises owned, rented or controlled by the insured or on premises for which the classification stated in division 1 of the declarations or in the company's manual excludes any part of the foregoing; or operations, if the accident occurs after such operations have been completed or abandoned at the place of occurrence thereof and away from premises owned, rented or controlled by the insured, except (a) pick-up and delivery, (b) the existence of tools, uninstalled equipment and abandoned or unused materials and (c) operations for which the classification stated in division 1 of the declarations or in the company's manual specifically includes completed operations; provided, operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to a service or maintenance agreement.
"* * *
"II Defense, Settlement, Supplementary payments
"It is further agreed that as respects insurance afforded by this policy, the company shall
"(a) defend in his name and behalf any suit against the insured alleging such injury or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent * * *
"* * *
"This policy does not apply:
"(a) under division 1 of the definition of hazards * * * to liability with respect to which insurance is or can be afforded under division 3 of the definition of hazards * * *."
It is undisputed that plaintiff was insured only under division 1 of the definition of hazards.
It will be observed that, under the provisions of the policy, plaintiff was insured against damages sustained by any person caused by accident and arising out of the hazards of division 1.
It is true that the accident for which damages are claimed against plaintiff arose away from plaintiff's premises, and the insurance company strenuously maintains that the hazards under division 1 contemplate only accidents occurring upon the premises. However, the language of division 1 does not so state. Such division is only a description of the hazard, and that was the alleged unlawful selling of the B-B shot on the premises of plaintiff. Assuredly, that was an operation necessary or incidental to the purpose for which the premises were used. There is no statement in the policy with reference to the place where the accident occurs, and if the insurance company intended to limit the place of the accident, as well as the incidents of the hazard, to the premises of plaintiff, it could easily have so stated in the policy.
It is axiomatic that in case of a genuine ambiguity or doubt as to the language of an insurance policy, the courts adopt a construction most favorable to the insured. This does not mean that there should be a straining of the meaning of the language in order to bind the insurer, or that, where there is no ambiguity, one should be invented in order to bind the insurer, but it does mean that, since the insurer writes the policy, the language, in the event of a real doubt, must be construed against the insurer. Bobier v. National Casualty Co., 143 Ohio St. 215, 54 N.E.2d 798, and American Policy Holders Ins. Co. v. Michota, 156 Ohio St. 578, 103 N.E.2d 817, 35 A.L.R. (2d), 448.
In the policy in the present case, plaintiff was insured against liability caused by accident. The policy has no statement as to where the accident must occur. The accident must arise out of the operation of the premises of the plaintiff, and it was in the operation of such premises that the alleged unlawful sale of the B-B shot occurred.
The insurance company strenuously contends also that, since the policy, under division 1 of the definition of hazards, does not apply to a liability with respect to which insurance is or can be accorded under division 3 of the definition of hazards, and since such division 3 covers the claimed liability in the present case, and since plaintiff did not buy insurance under division 3, the insurance company is not obligated to defend plaintiff in the action brought against him by Fouts.
A careful perusal of division 3, "Products," discloses that it is concerned with reference to the existence of any conditions or warranty of goods or products manufactured, sold, handled or distributed by an insured, and that it is not applicable to the hazard described in division 1, upon which plaintiff must rely.
It is not claimed that the B-B pellets, which plaintiff's employee is alleged to have sold to the boy, Lonnie St. Clair, were in any manner defective, or that there was any breach of warranty in the sale of them. In fact, there is nothing relative to the condition of the pellets themselves.
As was said by the Court of Appeals: "If the ammunition, with which we are concerned, had been sold by the insured to any of the counsel in this litigation, surely no cause of action could have been made against the store proprietor. The claimed liability arises here from the alleged minority of the child who made the purchase from the insured."
It is obvious that the hazard in the present case was covered by division 1 of the definition of hazards and was not covered by division 3. See Employers' Liability Assurance Corp. Ltd., v. Youghiogheny Ohio Coal Co., 214 F.2d 418.
The insurance company contends that it would be an anomoly to say that if the sale were made to an adult there could be no liability under the policy, whereas a sale made to a minor would create liability, and that such a situation would favor a wrongdoer as against a law-abiding person.
The obvious answer to such a contention is that insurance is sold to protect one against wrongdoing or negligence, and that an insurance company is not called upon for protection in the case of one who is obeying the law or is not negligent.
Doubtless if a groundless suit were brought, even against one guiltless of any wrongdoing or negligence, the insurance company would be obligated to defend the action.
In the present case, it is not claimed that the insured himself sold the B-B pellets, but that his agent was guilty of the illegal act.
We are of the opinion that the Court of Appeals was correct in affirming the judgment of the Court of Common Pleas, and, therefore, the judgment of the Court of Appeals is affirmed.
WEYGANDT, C.J., ZIMMERMAN, MATTHIAS, BELL and HERBERT, JJ., concur.
TAFT, J., not participating.