*1 «58 ques- my the classification that is founded a difference
tion reasonable; rather, rational, fair,
either discriminatory. arbitrary
n classification health, protects the neither
-welfare, safety people promote en- Idaho nor
'State of
courage temperance in the use intoxicat- liquor.
ing
HAGAN, Judge, District concurs.
PARMA COMPANY
GENERAL INSURANCE OF Defendant-Appellant. AMERICA,
No. 10387.
Supreme Idaho.
April 17, 1972.
further, any against defend suit sought.” damages insured in are provided further, insurance prominently an endorsement entitled “Prod- Exclusion,” Operations Completed and premium “In at consideration agreed policy which this is written it is liability, apply Burke, Boyd, Elam, Jeppesen, Evans & expense arising claims or Boise, defendant-appellant. for completed operations or as defined be- Schiller, Nampa Young Williams, and & low : Blanton, Moffatt, Thomas, Barrett & manufactured, (1) goods or Boise, plaintiff-respondent. for sold, handled, by distributed the nam- or by trading ed or others under his insured McQUADE, Chief Justice. name, pos- if the accident occurs after giving litigation are The facts rise to this products has goods session of such or dispute. appears complex neither nor in relinquished been the named others Seed, respondent purchas- Parma Inc. his trading others under or ed a blanket from away name accident occurs and such appellant Company of General owned, premises rented, or con- from Appellant’s agent suggested America. insured; provided, trolled named respondent purchase coverage,” “products goods or shall be deemed such respondent but declined this additional cov- thereof, any other to include container erage. During period when the blanket any vehicle, than a but shall not include liability policy effect, respondent re- any vending property, other machine or weedkilling ceived orders for a certain container, than or located rented to Respondent’s supplier chemical. sold; for use but not or on of others wrong product respondent’s prem- premises owned, rented or controlled ises, respondent’s agents passed and insured, if used in connection with or potent product respondent’s on to cus- any types following consumed in tomers. The result was the destruction enterprises: crops upon application several field (2) operations, the accident occurs product. operations complet- after such have been respondent Claims were made or abandoned occurs ed customers, supplier by respondent’s its owned, premises rented or controlled respondent upon appel- made demand provided, operations the named insured: adjust lant Appellant these claims. incomplete shall not deemed because fused, maintaining that these claims were improperly defectively performed or or exempted coverage under the insur- may operations be re- because further Respondent ance contract. thereafter filed quired pursuant pro- agreement; to an complaint initiating the case now before yided further, following shall not be us. ‘operations’ deemed to be within insuring agreement provided pickup meaning paragraph: (a) of this appellant agreed delivery, or from or onto a rail- execute * * * car, road maintenance of vehicles (b) pay, “To the in on behalf of owned or or behalf used sured, all shall sums which the insured insured, tools, un- (c) the existence legally pay as obligated to dam become equipment and abandoned or ages installed because of an occurrence which * ** ‘operations’ unused materials. bodily The word injury causes * * *; in connec- includes act omission property to or destruction of performed by operations or on tión with if the respond- prem- the named insured seeking behalf of ent is indemnification arose out of elsewhere, goods manufactured, sold, ises or whether handled, or *3 opera- are in such respondent, involved distributed if the accident giving tions.” rise to the occurred after possession goods of the relinquish- has been provided, The insurance contract also others, ed to and if the accident occurred “L-144,” that endorsement away respondent’s Indeed, from premises. premium charg- “In consideration of the it would be phrase difficult to the exclusion ed, coverage as is agreed it is that such succinctly phrased than it is apply as afforded does not exclusionary clause. think We respects: it is clear that when results from seeds, mean- 1. Erroneous the functioning malfunctioning of a whereby ing wrongful filling of orders product by respondent, sold and the event species dif- genus the seed e., establishing (i. the accident) by the customer. fers that thet ordered relinquishment possession occurs after Any crop due to 2. claim for loss of product by of the respondent, and occurs pollination, diseas- nongermination, cross respondent’s premises, coverage poisoned ed seed.” and/or is precisely excluded. That is the situation the district Upon trial the case to in this case. court, the lia- it was held Respondent strongly argues that liabili- bility by respondent afforded incurred was ty product does not “arise out of” a sold nor policy. “products” Neither by respondent product unless the was in- exclusionary “completed operations” defective, herently or at least malfunctions. clauses, district supra, found were It is contended that arose in coverage. Appeal from court to exclude respondent’s premises” instance out of “on had to the district court decision was failing to detect Court, opinion issued a unanimous and we product had been received from 30, 1970, reversing judgment November supplier, and not it- out of the for rehear- of the district court. Petition Closely self. related is the contention that ing respondent December was filed on “accident” this instance was granted February 1970, and on 1971. misdelivery respondent’s March, reargued in The case was premises. January, conclusion of this It is the 1972. Respondent cases and cites a number of opinion Court of November support authorities in as of its contentions hereby 1970, in this should be and is “liability scope phrase arising withdrawn, and this is substituted However, Employers’ products.” out of therefor. Youghiogheny Liability Assurance v. Co.,1 upon by respondent, the litigation & Ohio Coal cited
The focus of clearly Court involv “products completed operations” stated that car, freight exclusionary in ed resulted from a defective clause of the contract of coal, and therefore coverage for and not the insured’s surance. decide whether To inapplicable. liability giving litigation exclusion was rise to this also, Metropolitan Casual in Lessak “products” portion under the So v. excluded ty York,2 facts dis exclusionary clause, of New as is contended Ins. Co. prod tinguish that the appellant, the Court’s decision we must determine whether exclusionary inapplicable. “arising products” as clause one liability for policy, there observed quoted supra. defined in the We air-gun pellets (with to a minor exclusionary to exclude the sale of read this clause Ohio 151 N.E.2d 1. 214 F.2d St. another) infirmity same injury to arises from is encountered in the
resulting
state-
child,
quoted
ments
other
minority of the
and not from the
These
works.
furthermore,
decision,
general
simply
product.
turn-
statements
do
establish
in the
phrasing
exclusion
issue is
upon
ed
here in
coverage.
respondent
as narrow as
contends.
granting
reading
Respondent
Atkins
Ac
support of its
cites
v.
Hartford
issue,
Co.;5
respondent
Indemnity
also
cident &
Brant
Citi
of the clause
6Co.;
on insurance law.
zens Mutual Automobile Ins.
Stev
lies
several works
Maryland Casualty
quotes Appleman,
Respondent
Industries,
ens
Inc.
Practice,
Co.;7
stating:
Equipment
Law and
Thibodeaux v. Parks
*4
Company,8
Paul
and Marine
and St.
Fire
completed,
operation has been
the
“‘[I]f
proposition
Ins. Co. v. Coleman9 for the
by
liability
either
results thereafter
liability arising
delivery
that
the
of
a
in merchandise or
reason of
defect
delivery
wrong product,
opposed
of
as
workmanship,
that
is called
improper
product
the correct
which
to be
turns out
liability
completed opera-
products
or
gives
liability,
defective or otherwise
rise to
pur-
can be
tions,
protection of which
the
”
is not
the
exclusion
excluded
premium.’
(Respondent’s
chased for a
clause
do
these
before us.
not
We
find
emphasis).3
persuasive.
cases
The Atkins and Brant
However,
para-
same
language in the
the
upon
cases turned
the courts’ conclusions
graph
precedes
quoted
the
sentence
place
as to the
the
occurred.
where
accident
para-
the
significant.
part
is
The
of
first
distinguishable
the
The Stevens case is
on
graph states:
same
de
basis. The Thibodeaux case was
liability under
apparent
is
that
what
“It
cided on
ambiguity
the
of an
found
basis
liability’
ordinarily
‘public
cov-
we
term
insurance;
in the contract of
must
we
fundamentally in three
arise
erages can
agree with
reasoned
in that
the well
dissent
may
loss
ways.
distinct
An
or
ambiguity
was
the
rationale
progress,
activity
result
is
while
persuasive
tenuous.
is
The decision
not
thereof, eith-
prior
completion
to the
respondent’s position
for
St.
herein. The
negligence
of an act of
er as
result
Paul Fire
dis
& Marine
case is
embrac-
omission.
is
or an
That what
short,
tinguishable
its facts.
In
re
on
ordinary
aspect
the
ed within
spondent
authority
persuasive
no
offers
public liability policy.”
phrase “liability
proposition
the
the
arising
products”
out of
include
does not
quoted
the
Then follows
sentence
by respondent
in this
incurred
arises,
way
spondent. The third
wrong
case from the sale of the
chemical.
categorized
Appleman,
through
as
itself,
g. shipping
hand,
-damage
e.
On
do not find the
other
we
may readily
seen that
cited
appellant
particularly
losses.
cases
context,
statement,
Appleman
persuasive
phrase
viewed
as
support
respondent’s
“liability
conten-
arising
products.”
lends little
in this
exclusion
are generally distinguishable
tion
cases
on
apply
portion
exclusionary
does
is not
basis of
of the
inherently
deciding
results
defective or
focused
product. The
court,10
the basis
differences
Appleman,
(La.App.1962).
Prac-
8.
3.
Insurance Law and
phrasing in the
ambiguity
clauses defin-
created an
exclusionary-
ing
hazard excluded.11 How-
clause which should be resolved in favor
ever,
aspects
despite'
coverage. Respondent
case
Tide-
further contends
endorsement,
that the
quoted
Northwest Cas-
“L-144”
water Associated Oil Co. v.
su-
pra,
ualty
Company12
make
case
makes
exclusion clause
ambiguous,
reasoning
distinguishable,
because if
Court
the clause
read
broadly
so
speak
persistently
as to
exclude
that case
present
then
respondent that
it is
case
voiced contention of
“L-144” endorsement
is superfluous.
agents
respondent’s
liability”
in-
“products
such that is
The latter contention carries little
in the case
volved
before us.
weight. Even if the “L-144” endorsement
Tidewater- states:
unnecessary,
was
language
prod
of in which
every case
practically
“In
exclusion is not rendered am
handling
jury
damage
is caused
biguous.
event,
appears
by a defective con-
product,
or use
this,
“L-144” endorsement
added-
'
product,
the occurrence
dition in
agreement
to be certain that
*5
damage can be
injury or
causing' the
appellant
the
would not be liable for-non-
negligence.
pre-existing
some
traced to
germinating
commonplace
seeds.
It is
in
per-
injured
Indeed,
the
not
were this
so
particular
insurance contracts for
endorse
a
claim
for
tort
son
have no basis
would
ments, designed
spe
to ensure exclusion of
Thus,
if the al-
the insured.
potential liability,
cific
overlap
areas of
to
negligence were
legation
pre-existing
of
with
exclusionary
broader
clauses found
controlling, the result
regarded as
in
elsewhere
the contracts. The extra
product lia-
the
would be to emasculate
represented by
measure of caution
“H-144”'
13
bility exclusion.”
in this case does
compel
not
us to narrow
the
products-
apply
construction we
the
reasoning, and find
with this
We concur
liability exclusion.
reading of the
supportive
our
of
us.
in
case before
exclusionary clause
the
contention,
The former
noted,
terms
respondent
“occurrence”
previously
and “accident”
As
have
create
we
an ambiguity to be
occurred when
resolved
favor of
contends
“accident”
insured,
places
supplied
with
issue the intent
its customers
parties.
intent,
ascertain that
product.
event took
To
it is
wrong
This
well
chemical
settled that
Re-
this Court
place
place
business.
must look first to the
at the insured’s
itself,14
contended, during
contract
construing spondent
oral
document
further
If
language
“oc-
whole.15
rehearing,
that an
the entire
argument at
un,der
intent,
parties’
contract
policy, but
reveals the
it is
covered
currence” was
only
applied
unnecessary to
exclusionary
examine extrinsic evidence
premise,
usage,
analogies
technical
or to draw
to an “accident.” On
judicial interpretations in other cases.16
urged that the
of terms
spondent
conflict
;
Contracts,
§
16.Restatement
v.
See Tidewater
1 1.
Associated Oil
235
(Jaeger
Casualty Co.,
Williston. on Contracts
3d Ed.
F.2d
Northwest
1961),
614. Where an
con
expresses
objects
plainly
general
tract
Id.,
12.
at 882.
prescrib
parties
and the conditions
13. Id.
unnecessary
insurer,
ed
ambiguities
337,
DeModena,
Boesiger
in
14.
v.
88 Idaho.
resolve
favor
Snyder,
(1965) ;
sured. Rollefson v. Lutheran
Durant
P.2d 635
Brothe
(1944).
reduced
alia,
respondent agreed,
inter
that “ac
DONALDSON,
(dissenting) :
Justice
re
cidents” which arose from
majority opinion
primarily
deals
with
linquished
oc
to customers and which
“products” portion
of the “Products and
respondent’s premises
curred
Completed Operations
agree
Exclusion.” I
would
covered. To attribute
with the
question
special
“accidents,”
meaning to the term
provision
determination
under
causing
signify
it to
other than
something
whether Parma Seed’s
arose out of
“occurrence,”
an
and then
assert
products sold. But I reach a different re-
crops
destruction of the
customers’
I
damages
sult:
believe that the
for which
covered “occurrence” rather than an ex
recovery
sought
arose out of Parma
“accident,”
cluded
the context
violates
Seed’s
in delivering the
terms
are used and
vitiates
and not out of the
de-
quid
quo
pro
essential
con
embodied
livered.
Reading
entirety, it
tract.
in its
question
states that
The exclusion
is our
that the word “accident”
liability,
apply
“this
exclusionary
clause was intended
expense arising out
claims or
parties
the facts in this
to cover
below”;
operations
completed
as defined
n coverage.
excluding
them from
pur-
wording, then,
provision
its own
n
support
supplementary
conclusion draws
ports
liability “arising out
only
to exclude
Avia
holding
recent
in National
our
products.”
That Parma Seed’s
*6
Underwriters,
-tion
Idaho Aviation
Inc. v.
did
can most
not arise out of
Center,
Inc.,17
as that
that “accidents”
easily
pre-
comparing
be seen
the facts
liability
in
insurance contracts
term used
posed by
sented
with
the fol-
here
those
in
the
refers to the occurrence
which
lowing hypothetical. Suppose that while
buyer
juries
present
making
the seller is
a
to the
are suffered.
In the
buyer’s premises,
negli-
at the
the seller
application of the
that occurrence was the
gently drops
heavy
a
can of weed killer on
crops, resulting in the
weedkiller
foot,
buyer’s
causing
injury.
the
serious
It
damage.
actual
should
be clear that
seller’s
is our conclusion that
would not
within the
hazard
exclusionary clause in
must be
issue
con-
e.,
exclusion —i.
did not arise out of
coverage resulting
products.
strued to exclude
product
merely
The
was
the in-
instrumentality through
cidental
insured,
product
sold
use of
damage was done —but the
in-
cause of the
giving
“accident”
rise to the
oc-
jury
negligence;
was the seller’s
in other
premises
from the
curred
words,
the seller’s
arose out
product
possession
after
sured
was
his negligence
product
and not out
relinquished.
regard
sold. The same can be said in
court is re-
judgment
of the district
the case at bar. When Parma Seed re-
appellant.
product
question
versed.
ceived
Costs
from the
interpreta
668,
(1970) ;
Neither will strict
technical
93 Idaho
killer were marked with
claim that
in
6,”
have
sale
4D-Butyl
[by
which should
of B-B
Ester
shot
the in-
unlawful
proximate
that the contents
to a minor was a
employees
dicated to
cause
sured]
purposes
uninterrupted
strong
sequence
for the
injury.”
too
of an
these cans were
respon
733; accord,
151
at
purchasers. The
N.E.2d
intended
their
McGinnis v.
Fidelity
Casualty
Y.,
&
employees
supra,
failed
notice
Co. of N.
dent’s
80
Cal.Rptr.
(The
had been
at
negligent
did not
to what
insured
conform
in selling gunpowder
ordered, however,
passed
to a minor and “his
proximate
Parma
was a
to its customers.
cause
potent
accident.”)
delivering
These
negligent
cases stand for
Seed was
proposition
customers,
neg
where the insured’s
chemical to its
arises
crops
negligence,
out of his
ligence
proximate cause of the
albeit in
was a
con-
nection
products,
with
liability arose out
the sale of
lost. Parma
Seed’s
products liability
misdelivery;
inapplicable,
not arise
negligent
it did
exclusion is
for the
products any
have
reason that the
out of
more than would
claim
dropped
“arising
products”
is not
negligently
had
one
Parma Seed
heavy product
sold.
buyer’s foot. See
on the
Employers’ Liability
Youghio
A.
argument
answers the
Co.,
(8th
gheny
A.2d 674 causing damage occurrence pre-existing negli- can be traced some discussing Liability Employers’ A. *7 Indeed, gence. were this not so the Co., Youghiogheny & Coal O. jured person for a have no basis would supra, majority products states that the Thus, if against tort claim the insured. applicable exclusion was not in that case allegation pre-existing negligence of injury because the “resulted from a de- controlling, the regarded were to be as car, freight fective and not the insured’s result be emasculate would to Actually, injury coal.” resulted from liability F.2d at 882. exclusion.” 264 loading negligence the insured’s and reasoning, upon the erroneous- shipping freight coal in car. 214 based a defective pre-existing Similarly, damages assumption in the some F.2d at 425. without have injured person would negligence instant from the insured’s “the case resulted the in against negligence delivering something no basis for a tort claim sured,” is, my opinion, fallacious. was not ordered its customers. As ignores pointed completely the existence of Employers’ court in the Lia- out A re liability in tort. liability strict bility Corp. case, the doctrine of insured’s A. though may strictly liable even tailer be held nothing “had with the of the to do be culpable can no act or omission majority insured.” Id. The also states or him; proof negligence Casualty attributed of Metropolitan that in to Lessak v. Fidelity required. Co., “liability fault is not McGinnis supra, sale of for the Y., supra; Casualty air-gun pellets resulting & of N. (with to a minor Carmichael, Tort — An Liability in injury minority Strict to arises from the another) Law, 20 Liability child, Explosion product.” in Products not from the Keeton, ; policy “A an Products construction insurance (1971) L.Rev. 528 Drake of entirely provision Fault and the neutralises one Liability Liability Without — Defect, adopted L.Rev. shoiild not be of a Texas Requirement if Liability susceptible Re construction which Products another (1963); CCH Therefore, finding provisions to and is ports, gives all § effect coverage general not excluded consistent with the intent. No where policy in an be seller’s causes would word should exclusion,” superfluous, as or treated “emasculate assumed superfluous still exclude cover or redundant reason- for this exclusion would age meaning in tort the other of strict able consistent with given it. parts policy need to insure be to cases. The can contract, by the exemplified plain provisions such strict of a Clear law, $3,650,000 recently jury contrary fact that awarded if not to or forbidden solely them on a case submitted to shall not be excluded court theory unnecessary part strict Bush v. thereof. improper tort. Co., Westinghouse Every Air Brake 2nd will be enforced where Judicial Ct, Nevada, County, doing to District Oct. done Washoe can be without violence ($3,000,000 plaintiff, party, to so rights awarded and to do of either $500,000 plaintiff’s wife for loss of con language does not violate the $150,000 sortium, and their children three as a The should instrument whole. father; parental guidance interpreted for loss of be also with view as, context, possible, give further see A.T.L. discussion of whole so L., News No. (November, meaning at effect all its 394—395 a sensible Time, ; 1970) provisions portions Dec. at 68.) rendering and to avoid inoperative by contradictory and of it propriety conclusion nullify- giving effect to clauses and some inapplicable exclusion is in this clauses, ing others. All terms and even presence case is buttressed of two though apparently repugnant, should incorporated other exclusions in the by any if it done reason- reconciled can be these, issued to Parma One of en- Seed. able construction.” Couch “1^144,” coverage dorsement excludes for: 2d, (emphasis added). 15-43 (1964) seeds, delivery meaning “Erroneous Endorsement excludes “L-128” wrongful whereby filling of orders respect with to: genus species seed differs “property thereof) (or the loss use from thet ordered customer.” [sic] fertilizing agent which a either holds intentionally applied or intended to be coverage for exclusion excludes applied named [by] the product (here, the erroneous *8 agent person fertilizing acquiring said killer), meaning wrongful filling weed through the insured.” or from whereby of orders majority’s Under the construction of by differs from that the customer. ordered exclusion, general products endorsement majority’s It is under the con- obvious that and, unnecessary; “L-128” is also rendered exclusion, struction of the therefore, above, pointed a con- out portion above-quoted “L- of endorsement is adopted should it struction not be where completely superfluous. is 144” Such possible to do otherwise. gen- construction face flies in the erally accepted rule that an con- I have reached the conclusion insurance Since portion be of the exclusion tract should read as a whole and should case, it be- question inapplicable in this be construed a manner not which does necessary provisions superfluous. render decide whether its comes by “completed operations” authority As one noted law is excluded on insurance portion ex- portion That puts it: the exclusion. 666 provides
pressly following that: “the shall (5th 1951) F.2d 868 Cir. (policy used the ‘operations’ suggested he not deemed to he within wording). patent ambiguity meaning paragraph: pickup this (a) by is reinforced ambiguity created delivery, except presence from or onto a railroad specific exclusion for liability arose misdelivery car.” Since Parma Seed’s of seeds (which be un- would delivery herbicide dif- necessary if such opera- “completed were a customers, fered from that ordered its tion”). “operation.” not an See Finally, the rule is fundamental Indemnity Ketona Chemical v. Globe where a an insurance Co., F.2d At the construction, susceptible to more than one least, very “delivery,” the word as used the one most favorable to insured must therefore, exclusion, ambiguous; and, Hampshire adopted.. Stephens v. New meaning light must be determined in Co., supra. Ins. That the “Products and the principle ambiguities in- in an Completed Operations Exclusion” surance must be resolved favor susceptible interpretation one than Stephens Hampshire the insured. v. New very history is manifested of this Co., (1968); 92 Idaho P.2d 14 appeal: case on it been con- has under Service, Boroo, Medical-Dental Inc. sideration for more than two Court Idaho P.2d A.L.R.3d years; times; been argued it has three company wrote opinion previously one issued policy, “delivery” and if it wanted the word Admittedly, has been vacated. this is meaning ordinarily to have a restricted case, close but such a the benefit assigned to English it the users of the supposed given the doubt is language, specially it should have defined sured; this the has decided policy’s in the “definitions” section. Or do. could phrase “pick-up have used the delivery (except misdelivery)” judgment should instead. See of the district court Schantz, Hardware Cas. Mut. Co. v. be affirmed.