Camden Fire Ins. Ass'n v. Johnson

• Decision Date: 01 July 1982
• Docket Number: No. 15354,15354
• Court: West Virginia Supreme Court
• Parties: The CAMDEN FIRE INSURANCE ASSOCIATION v. James Okie JOHNSON, Sadie Johnson, et al.

Page 116

294 S.E.2d 116

170 W.Va. 313

The CAMDEN FIRE INSURANCE ASSOCIATION v. James Okie JOHNSON, Sadie Johnson, et al.

No. 15354.

Supreme Court of Appeals of West Virginia.

July 1, 1982.

Sanders & Austin and Lane O. Austin, Princeton, for appellants.

Sanders & Blue and Fred O. Blue, Bluefield, for appellee.

McGRAW, Justice:

This case comes to us on appeal from a final order of the Circuit Court of Mercer County, entered January 28, 1981, which rendered a declaratory judgment in favor of the appellee, Camden Fire Insurance Association. The circuit court found that under the terms of the homeowner's insurance policy issued by the appellee to appellant James Oakie Johnson, the appellee was not obligated to defend appellant Sadie Johnson in a personal injury suit pending in the circuit court or to pay any damages awarded against her therein. We reverse.

On August 1, 1979, the four year old grandson of James Oakie Johnson and Sadie Johnson was struck by an automobile and injured while he was in the care and control of Sadie Johnson. By the terms of a contract entered into by the child's mother, Stella Hubbard, and the Department of Welfare, Sadie Johnson was paid approximately $80 per month to care for and supervise the child in her home while his mother worked. A similar arrangement existed with respect to the child's younger brother.

At the time of the accident, the Johnsons were insured against personal liability for accidental injuries under a homeowner's insurance policy issued to James Oakie Johnson by the appellee, Camden Fire Insurance Association. The terms of the policy obligated the appellee to defend any suit brought against the Johnsons seeking damages for such injuries. The policy specifically excluded from coverage, liability for any "bodily injury ... arising out of business pursuits of any insured except activities therein which are ordinarily incident to non-business pursuits."

On January 10, 1980, Stella Hubbard brought a civil action in the Circuit Court of Mercer County, individually and on behalf of the infant, against William Waddell, the driver of the vehicle which struck the child, and Sadie Johnson for the negligent injury of the infant. A settlement was subsequently achieved between the plaintiffs and Waddell. The appellee filed an answer to the complaint in the civil action on behalf of Sadie Johnson and then instituted this declaratory judgment action to determine its liability, if any, under the terms of the homeowner's policy for any judgment that might be rendered against her. The appellee asserted below that Sadie Johnson was engaged in a "business pursuit" within the meaning of the policy's exclusionary clause at the time of the accident by virtue of the agreement with the Department of Welfare. The circuit court found that by rendering day care services for compensation, Sadie Johnson was in fact engaged in a business pursuit. The court ruled that the insurance policy did not obligate the appellee to defend her in the civil action or to pay any judgment rendered against her therein. It is from this ruling that the instant appeal is prosecuted.

The "business pursuits" exclusion has become a standard feature of homeowner's insurance policies. It is intended as a limitation upon the comprehensive personal liability coverage provided in such policies. The wording of the exclusion before us is typical. The question presented for our determination is whether the activities of Sadie Johnson constituted a business pursuit within the meaning of the exclusionary clause so as to exclude the appellee from liability.

The threshold question in our inquiry is the meaning of the term "business pursuits". Some courts have held that for purposes of an exclusionary clause such as the one involved here, the term "business pursuits" should be taken as "embracing everything about which a person may be engaged where profit is a motive." Salerno v. Western Casualty & Surety Co., 336 F.2d 14, 19 (8th Cir. 1964). Other jurisdictions have noted, however, that "[n]ot every activity undertaken for profit is necessarily a business pursuit." O'Connor v. Safeco Insurance Co. of North America, 352 So.2d 1244, 1245 (Fla.App.1977). The majority view is that "business pursuits" comprehends two elements: continuity and profit motive. The reasoning of this approach was succinctly stated in Home Insurance Co. v. Aurigemma, 45 Misc.2d 875, 879, 257 N.Y.S.2d 980, 985 (1965).

The meaning of the term "business pursuit" as used by plaintiff in its exclusionary clause must be viewed in the light of the understanding of the ordinary insured, if unambiguous, or, if otherwise, to be construed against the insurer who prepared the form and created the wording. Webster's Third New International Dictionary, Unabridged, defines the "key words" in the subject policy as follows:

"Business. a commercial or mercantile activity customarily engaged in as a means of livelihood."

"Pursuit. an activity that one pursues or engages in seriously and continually or frequently as a vocation or profession".

"Trade. the business one practices or the work in which one engages regularly; one's calling: gainful employment: means of livelihood."

"Profession. a calling requiring specialized knowledge and often requiring long and extensive preparation including instructions in skills and methods."

"Occupation. that which principally takes up one's time, thought and energies, especially one's regular business or employment, also whatever one follows as the means of making a livelihood."

Finally, among lay dictionaries, Oxford Universal Dictionary, Third Edition (Rev.) defines these terms as follows:

"Business. Stated occupation, profession or trade * * * commercial transaction or engagement * * *

"Pursuit. * * * the action of following or engaging in something, as a profession, business, recreation, etc., that which one engages or follows * * *."

From all of the aforesaid authorities it is clear that two elements are present in almost every definition, either expressly or by implication: first, continuity, and secondly, the profit motive. As to the first, there must be a "customary engagement" or a "stated occupation"; as to the latter, there must be shown to be such activity as a "means of livelihood"; "gainful employment"; "means of earning a living"; "procuring subsistence or profit"; "commercial transactions or engagements". (Emphasis in original.)

This definition of "business pursuits" as continuous or regular activity, done for the purpose of earning a profit or making a living has been adopted by a number of jurisdictions. See, e.g., Crane v. State Farm Fire & Casualty Co., 14 Cal.App.3d 727, 729, 92 Cal.Rptr. 621, rev'd on other grounds, 5 Cal.3d 112, 95 Cal.Rptr. 513, 485 P.2d 1129 (1971); O'Connor v. Safeco Insurance Co. of North America, supra, State Farm Fire & Casualty Co. v. Moore, 103 Ill.App.3d 250, 58 Ill.Dec. 609, 430 N.E.2d 641 (1981); American Family Mutual Insurance Co. v. Bentley, 170 Ind.App. 321, 352 N.E.2d 860 (1976); Allied Mutual Casualty Co. v. Askerud, 254 Minn. 156, 94 N.W.2d 534 (1959); Bertler v. Employers Insurance of Wausau, 86 Wis.2d 13, 271 N.W.2d 603 (1978); Annot. 48 A.L.R.3d 1096 (1973).

We think the majority approach to the meaning of the term "business pursuits", within a homeowner's policy excluding from liability coverage injuries arising out of such activities by an insured, is consistent with the terms of this policy. The policy in question defines "business" to mean "a trade, profession or occupation, including farming, and the use of any premises or portion of residence premises for any such purpose." It is well settled that "the terms of an insurance policy should be understood in their plain, ordinary and popular sense, not in a strained or philosophical sense." Polan v. Travelers Insurance Co., 156 W.Va. 250, 255, 192 S.E.2d 481, 484 (1972). We find the definitions relied on by the New York court in Aurigemma, supra, to be accurate and to reflect the ordinary meaning attached to the respective terms.

We also note that similar interpretations of the term "business" have been employed in this jurisdiction in other contexts. In Weatherford v. Arter, 135 W.Va. 391, 395, 63 S.E.2d 572, 574 (1951), the Court made the following statement concerning the use of the words "business" and "industry" in the workmen's compensation statutes.

The term "business" is sometimes given a broad meaning and is also used in a narrower sense. When used in its broad sense, it is said to embrace everything with respect to which a person can be employed. The word is often synonymous with calling, occupation, or trade, engaged in for the purpose of obtaining a livelihood, or profit or gain. 12 C.J.S., Business, pages 762 to 768; Black's Law Dictionary, Third Edition, Page 260; Webster's New International Dictionary, Second Edition, Unabridged, G. & C. Merriam Company, 1940, page 362.

Manifestly the terms "industry" and "business", as used...