{ "id": 1621157, "name": "FARM BUREAU MUTUAL INSURANCE Company of Arkansas, Inc. v. Joseph Shelby LYON", "name_abbreviation": "Farm Bureau Mutual Insurance Co. of Arkansas, Inc. v. Lyon", "decision_date": "1975-11-03", "docket_number": "75-67", "first_page": "802", "last_page": "813", "citations": [ { "type": "official", "cite": "258 Ark. 802" }, { "type": "parallel", "cite": "528 S.W.2d 932" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "151 N. E. 2d 730", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1958, "opinion_index": 0 }, { "cite": "168 Ohio St. 153", "category": "reporters:state", "reporter": "Ohio St.", "case_ids": [ 1726731 ], "year": 1958, "opinion_index": 0, "case_paths": [ "/ohio-st/168/0153-01" ] }, { "cite": "80 Cal. Rptr. 482", "category": "reporters:state", "reporter": "Cal. Rptr.", "year": 1969, "opinion_index": 0 }, { "cite": "204 F. Supp. 713", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 1469568 ], "year": 1963, "opinion_index": 0, "case_paths": [ "/f-supp/204/0713-01" ] }, { "cite": "316 F. 2d 77", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 168997 ], "year": 1963, "opinion_index": 0, "case_paths": [ "/f2d/316/0077-01" ] }, { "cite": "132 F. 2d 794", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1265993 ], "year": 1942, "opinion_index": 0, "case_paths": [ "/f2d/132/0794-01" ] }, { "cite": "283 F. Supp. 365", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 2810854 ], "year": 1968, "opinion_index": 0, "case_paths": [ "/f-supp/283/0365-01" ] }, { "cite": "173 F. Supp. 862", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 429636 ], "year": 1959, "opinion_index": 0, "case_paths": [ "/f-supp/173/0862-01" ] }, { "cite": "151 N.E. 2d 730", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1958, "opinion_index": 1 }, { "cite": "168 Ohio St. 153", "category": "reporters:state", "reporter": "Ohio St.", "case_ids": [ 1726731 ], "year": 1958, "opinion_index": 1, "case_paths": [ "/ohio-st/168/0153-01" ] } ], "analysis": { "cardinality": 803, "char_count": 19521, "ocr_confidence": 0.906, "pagerank": { "raw": 1.5655670762683364e-07, "percentile": 0.6776582341287078 }, "sha256": "5ccc03fd16f9ed4e50b324fc76984007525052cbe2eb1a4c7656127121477566", "simhash": "1:61e6c796083c3c95", "word_count": 3135 }, "last_updated": "2023-07-14T18:03:57.275817+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Fogleman, Jones and Byrd, JJ., dissent.", "Fogleman and Jones, JJ., join in this dissent." ], "parties": [ "FARM BUREAU MUTUAL INSURANCE Company of Arkansas, Inc. v. Joseph Shelby LYON" ], "opinions": [ { "text": "Elsijane T. Roy, Justice.\nThis case presents a novel issue which has not heretofore been considered by this court. Both appellee and appellant have favored us with excellent briefs.\nThe appellant, Farm Bureau Mutual Insurance Company of Arkansas, Inc., or on about December 2, 1970, contracted to insure Jack Hardman, d/b/a Hardman\u2019s Sporting Goods, against liability for certain hazards in his business operations.\nThe appellant\u2019s broad general insuring language in the subject policy provided as follows:\nCoverage A - Bodily Injury Liability. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages (except punitive damages) because of bodily injury, sickness or disease, including death at any time resulting therefrom sustained by any person. . . .\nWhile the policy was in full force and effect, the insured\u2019s agent sold gunpowder, which was to be used as an explosive in a sound-making device at football games, to some minors including Joseph Shelby Lyon. Appellee Lyon, when using the gunpowder for this purpose, was severely and permanently injured by an explosion of the gunpowder. Thereafter, he filed suit against the insured alleging negligence in the sale of the gunpowder. The trial resulted in a $38,500 judgment in appellee\u2019s favor against the insured. The appellant refused to defend on the basis of an exclusion contained in the policy which provides as follows:\nThis policy does not apply under Coverages A (bodily injury liability) ****, to products hazard, which is defined as follows: (emphasis supplied)\n(1) 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, if the accident occurs after the insured has relinquished possession thereof to others and away from the premises owned, rented or controlled by the insured:\n(2) operations, if the accident occurs after such operations have been completed or abandoned at the place of occurrence thereof and away from the premises owned, rented or controlled by the insured.\nIn joining the issues appellant filed a motion for summary judgment and later an amended motion for summary judgment alleging there was no genuine issue as to any material fact and that the appellant was entitled to judgment as a matter of law. Appellee filed a cross-motion for summary judgment and response to defendant\u2019s motion which alleged that the exclusion in the subject insurance policy, relied upon by appellant as its sole defense, is inapplicable as a matter of law and, there being no genuine issue of material fact on this point, appellee is entitled to summary judgment on his complaint. Furthermore, in the alternative, in response to appellant\u2019s motion for summary judgment, appellee states that appellant\u2019s agent made a material misrepresentation or representation to its insured, Jack Hardman, on which he relied; the representation was to the effect that the subject insurance policy covered Hardman against the type of risk which gave rise to appellee\u2019s injuries; and appellant is bound by such representation or misrepresentation.\nThe court, after due consideration of the respective summary judgment motions, attached affidavits and certain designated portions of depositions and on December 20, 1974, rendered a summary judgment for appellee in the sum of $38,500 plus interest, penalty and a reasonable attorney\u2019s fee in the sum of $5,000. The appellant timely perfected this appeal.\nFor reversal the appellant relies upon the following points:\n1. The trial court erred in refusing to grant defendant\u2019s motion for summary judgment^and\n2. The trial court erred in determining that a material fact question existed in the event the validity of the exclusion was determined in defendant\u2019s favor by Summary Judgment.\nThe issue before us, as far as the exclusion is concerned, is whether the judgment awarded appellee Lyons falls within a risk covered by the insurance policy. Stated conversely, was the negligent sale of the gunpowder, under the circumstances of this case, a risk which is excluded from the terms of the policy?\nThis court has not passed on the precise question presented here and there is a definite split on the point at issue in other jurisdictions. Some courts have given a broad sweep to the \u201cproducts completed operations\u201d exclusion (which this exclusion is often called) in favor of the insurer to an extent which this court finds unwarranted upon consideration of the policy as a whole. However, other courts have read the exclusion in conjunction with the basic insuring clause and looked to see whether an off-premises injury was prokimately caused by on-premises negligence as opposed to off-premises negligence or a defective product.\nWe think the better view is that enunciated in the trial court\u2019s opinion and in the cases supporting the reasoning of the trial court in granting appellee\u2019s motion for summary judgment. The language of the exclusion clearly appears to indicate it is to apply to \u201cproducts completed operations\u201d only-\nAppellant\u2019s brief calls attention to some general insurance law with which this court does not find fault. The fault lies in the appellant\u2019s application of the principles enunciated. Some of appellant\u2019s citations and quotes therefrom might more appropriately be cited in behalf of appellee.\nWe call attention to one of appellant\u2019s citations of this nature which indicates that in all probability the exclusion was drafted to cover the ever broadening products liability field and has no application to the general insuring provision.\n7A Appleman, Insurance Law and Practice, \u00a7 4508, p. 98, (1962) states:\nProducts liability insurance, is becoming increasingly important with the passage of time, in view of the ever present potentialities for injury resulting from such things as lime compounds used for waterproofing, cosmetics, drugs, certain dyed materials, explosives, and other products possessing inherent hazards. Clearly a company which writes an ordinary liability policy does not want a risk extending without end as a result of work performed or merchandise sold; nor, conversely, would a company willing to undertake the products risk want to assume the general liability burden, (emphasis supplied)\n****\nIt is scarcely just either to deprive a purchaser of the protection he is entitled to receive or to extend one type of coverage to fit a completely different situation from that contemplated, (emphasis supplied)\nAppellee contends, and we agree, that this accident was the type for which he purchased coverage since the negligence which was the proximate cause of the accident occurred on premises insured under the terms of the policy.\nA number of the citations upon which appellant relies are distinguishable. In Dixie Furniture Co. v. Central Assurity and Ins. Co., 173 F. Supp. 862 (E. D. Ark. 1959), a loss occurred off of the insured\u2019s furniture store premises when the insured\u2019s employee, repossessing a stove, negligently failed to cap a gas pipe. After a third party was injured and sued the insured, the insured there sued the insurance company. Judge Henley noted that the accident arose from the \u201ccompleted operations\u201d sub-section of the \u201cproducts provision.\u201d In other words, a work project away from plaintiff\u2019s premises was involved and this renders the case entirely different from the case at bar. The negligence which caused the accident occurred off the insured\u2019s premises as contrasted with the negligence here of Hardman\u2019s agent which occurred in his store.\nAppellant\u2019s citation, Bituminous Casualty Corp. v. Horn Lumber Co., 283 F. Supp. 365 (W. D. Ark. 1968), supports appellee, not appellant. In Bituminous a person was injured when straps binding lumber on a lumber truck broke during an unloading procedure allegedly because of a defect in the binding materials. In construing this exclusion, Judge Miller wrote:\nThe endorsement is written, apparently, to exclude coverage for injuries which result from defects in products after the product has been given up by the insured and placed in the stream of commerce. In other words the policy did not cover \u2018products liability.\u2019\nIn the case at bar neither party alleges any defect in the gunpowder purchased by Lyons.\nIn Standard Accident Insurance Co. v. Roberts, 132 F. 2d 794 (8th Cir. 1942), the insured, a seller of furniture and appliances in the State of Arkansas, negligently installed a refrigerator in a customer\u2019s home. The customer and his family were injured by escaping gas that very night. The loss was excluded under the Products-Completed Operations hazard, largely because it occurred away from the insured\u2019s premises. Appellant can find no support from this citation as, again, we find a work project away from the insured\u2019s premises.\nWe are not overlooking other citations furnished by appellant in support of its position, but we do not find the reasoning upon which they are buttressed to be as sound as that found in St. Paul Ins. Co. v. Coleman, 316 F. 2d 77 (8th Cir. 1963), affirming 204 F. Supp. 713 (W. D. Ark. 1963). In that case the general insuring clause provided coverage for hazards related to the \u201cownership, maintenance or use of the premises and all operations\u201d (of a public boat dock business). The insured\u2019s employee had negligently refueled plaintiff\u2019s boat and after the boat had drifted about 73 feet from the boat dock, it caught Fire, injuring several persons. The insurance company denied coverage based on the Products-Completed Operation exclusion (the exclusion relied upon by defendant in this case) which provided that:\n.... \u2018[I]f the accident occurs after possession of such goods or products (i.e., those \u201cmanufactured, sold, handled or distributed by the Named Insured\u201d) has been relinquished to others **** and if an accident occurs away from premises owned, rented or controlled by the Named Insured, coverage for such an \u201coccurrence\u201d is not afforded by its policy. . . . \u2019 (316 F. 2d, p. 79) (emphasis supplied)\nThe Eighth Circuit held that the negligent refueling of gasoline did not render it a \u201cproducts case\u201d which would be excluded under the \u201cProducts-Completed Operation\u201d exclusion. The court stated:\n.... The appellees do not make any claim that they were injured because of the nature or condition of the gasoline sold to Stover (plaintiff), (emphasis supplied by the court)\n*****\n.... The place where the fire \u2018occurred\u2019 is not here\u2019controlling under the \u2018Premises-Operations\u2019 coverage afforded by appellant\u2019s policy.. (316 F. 2d, p. 80)\nThe insurance company in Coleman attempted to do exactly what the appellant here is trying to do, i.e., tie the \u201caway from premises\u201d exclusion onto the basic coverage. The Eighth Circuit rejected this attempt:\nUnder the terms of appellant\u2019s policy, \u2018Products-Completed Operations\u2019 is the only coverage related to \u2018away from premises\u2019 exclusion. There is no such limitation or exclusion from coverage as to \u2018Premise-Operations.\u2019 Appellant\u2019s attempt to read that limitation into the \u2018Premises-Operations\u2019 coverage is not justified by any rule of construction known to us. An unbiased reading of appellant\u2019s policy must convince a reasonable mind that such is not a proper legal interpretation thereof. (316 F. 2d, p. 80)\nJudge Miller quotes from Appleman:\n\u2018. . . . [A]n injury or loss may result while an activity is in progress, and prior to the completion thereof, either as the result of an act of negligence or an omission. That is what is embraced within the ordinary liability aspect of a public liability policy. But if the operation has been completed, and liability results thereafter either by reason of a defect in merchandise or improper workmanship, that is called \u2018products liability\u2019 or \u2018completed operations\u2019 (here \u201cproducts hazard\u201d), the protection of which can be purchased for a premium. . . . \u2019 (283 F. Supp., p. 368) (emphasis supplied)\nAnother case following the same line of reasoning as Coleman and almost identical with the case at bar is McGinnis v. Fidelity and Casualty Co. of N.Y., 276 Cal. Appl. 2d 15, 80 Cal. Rptr. 482 (1969). In that case a fifteen year old boy purchased a can of gunpowder from the insured ammunition dealer. A week later the powder exploded and McGinnis was injured. He sued the dealer and obtained a judgment, then he sued the insurance company which had declined coverage. The California court noted that the insured ammunition dealer had not paid a premium for the following specific coverage:\n\u2018Division 4-Products-Completed Operations.\n(1) Goods or products manufactured, sold, handled or distributed by the named insured, or by others trading under his name, if the accident occurs after possession of such goods or products has been relinquished to others by the named insured or by others trading under his name and if such accident occurs away from premises owned, rented or controlled by the named insured. . . . \u2019 (80 Cal. Rptr., p. 483)\nThe defendant insurance company contended that the failure to buy this specific coverage excluded coverage, but the California court held that the dealer was insured under the general insuring clause. In regard to the Products-Completed Operation provision, that court stated:\nOne would be hard put to express a \u2018products liability\u2019 exclusion more clearly than does the foregoing clause upon which appellant relies. Since Piper (ammunition dealer) paid no premium for such coverage, the first question that emerges is whether the accident in this case comes within the doctrine of products liability and, a fortiori, within the exclusion.\nIn 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\u2019s to a minor in violation of state law. Subsequently the minor was injured by the BB\u2019s. The involved insurance policy has the same general insuring clause as to bodily injury liability as we have in the case at bar. The policy in Lessak offered additional coverage under \u201cDivision 3 Products\u201d and the coverage offered there is set forth in language almost identical to the exclusion in the policy in the instant case. The insured in Lessak had not purchased coverage under Division 3 and contended that he was covered under Division 1. The insurance company declined coverage on the contention that the risk came under Division 3, which the insured had not purchased. The court rejected this contention and held for the injured party and the insured. After pointing out there was not a defective product involved, the court stated:\nA careful perusal of division 3, \u2018Products,\u2019 discloses that it is concerned with reference to the existence of any conditions or warranty of goods or products manufactured, sold, or handled or distributed by an insured, and that it is not applicable to the hazard described in division 1, upon which plaintiff must rely.\nIt is not claimed that the B-B pellets, which plaintiff\u2019s employee is alleged to have sold to the boy **** 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, (emphasis supplied)\nIt is true that the accident for which damages are claimed **** arose away from plaintiff\u2019s 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 BB 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 incidence of the hazard, to the premises of plaintiff, it could easily have so stated in the policy. (151 N.E., p. 734-5) (emphasis supplied)\nAs in Lessak the general insuring clause in the case at bar has no on-premises limitation as to situs of the accident. The negligent sale of the gunpowder was on insured\u2019s premises. The sale was the proximate cause of the accident and of appellee\u2019s injuries (not a defective product \u2014 nor completed operations away from the premises of the insured). Therefore, it is clear the exclusion has no application herein.\nHaving decided the motion for summary judgment in appellee\u2019s favor it is unnecessary to reach or decide the issue raised by appellee regarding any alleged representations or misrepresentations by appellant\u2019s agent.\nAccordingly, the judgment of the lower court is affirmed in all particulars, including penalty and attorney\u2019s fees.\nFogleman, Jones and Byrd, JJ., dissent.", "type": "majority", "author": "Elsijane T. Roy, Justice." }, { "text": "Conley Byrd, Justice,\ndissenting. I disagree with the majority view. The cases the majority relies upon, such as, Lessak v. Metropolitan Casualty Ins. Co. of N.Y., 168 Ohio St. 153, 151 N.E. 2d 730 (1958), recognize that an insurance company can limit its coverage to both the place and incidence of the hazard to the insured\u2019s premises. At page 9 of the majority opinion the above subject case is quoted as follows, \u2014 to-wit:\n\u201c. . . , and if the insurance company intended to limit the place of the accident, as well as the incidence of the hazard, to the premises of plaintiff, it could easily have so stated in the policy.\u201d\nUnder the policy before us the Farm Bureau Ins. Co. did limit the place of the accident and the occurrence to the appellee\u2019s premises. Its policy provides:\n\u201c1. COVERAGES\nCoverage A \u2014 Bodily Injury Liability. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages [except punitive damages] because of bodily injury, sickness, or disease, including death at any time resulting therefrom, sustained by any person ... .\n2. EXCLUSIONS\nThe policy does not apply:\n(i) under Coverages A and B, to products hazard, which is defined as follows:\n1. the handling or use of . . . goods or products manufactured, sold, handled or distributed by the named insured, if the accident occurs after the insured has relinquished possession thereof to others and away from the premises owned, rented or controlled by the insured.\u201d\nHad not the term \u201cproducts hazard\u201d been defined by the policy, I would agree that the authorities cited by the majority are controlling. Here, however, the term \u201cproducts hazard\u201d is defined by the policy to exclude bodily injury arising from the \u201chandling or use of. . . goods . . . distributed by the named insured, if the accident occurs after the insured has relinquished possession . . . and away from the premises . . . controlled by the insured.\u201d The accident giving rise to this claim occurred both after the insured had relinquished possession and away from the insured\u2019s premises, and I can think of no logical reason for pointing out as the majority does that an insurer can limit the place of the accident when it so states and then not applying the above stated exclusion in this policy.\nFor the reasons stated I respectfully dissent.\nFogleman and Jones, JJ., join in this dissent.", "type": "dissent", "author": "Conley Byrd, Justice," } ], "attorneys": [ "Tackett, Moore, Dowd & Harrelson, for appellant.", "McMath, Leatherman & Woods and Wm. R. Wilson, Jr., for appellee." ], "corrections": "", "head_matter": "FARM BUREAU MUTUAL INSURANCE Company of Arkansas, Inc. v. Joseph Shelby LYON\n75-67\n528 S.W. 2d 932\nOpinion delivered November 3, 1975\nTackett, Moore, Dowd & Harrelson, for appellant.\nMcMath, Leatherman & Woods and Wm. R. Wilson, Jr., for appellee." }, "file_name": "0802-01", "first_page_order": 850, "last_page_order": 861 }