Commercial Union Ins. Co. of America v. Henshall

• Decision Date: 18 July 1977
• Docket Number: No. 76-387,76-387
• Parties: COMMERCIAL UNION INSURANCE COMPANY OF AMERICA, Appellant, v. Juanita T. HENSHALL and Steve Jaggars, Appellees.
• Court: Arkansas Supreme Court

Page 274

553 S.W.2d 274

262 Ark. 117

COMMERCIAL UNION INSURANCE COMPANY OF AMERICA, Appellant, v. Juanita T. HENSHALL and Steve Jaggars, Appellees.

No. 76-387.

Supreme Court of Arkansas, In Banc.

July 18, 1977.

Plegge, Lowe & Whitmore, Little Rock, for appellant.

Smith, Williams, Friday, Eldredge & Clark by J. D. Watson, Little Rock, for appellees.

FOGLEMAN, Justice.

Appellees brought this declaratory judgment action to determine their insurer's duties, under a homeowner's policy, to defend a personal injury action on their behalf and to pay any damages that might ensue. The trial court held, after a hearing and consideration of stipulated facts, a deposition of appellees and certain exhibits, that appellant-insurance company had both a duty to defend and a duty to pay damages that may be recovered by the injured party.

The insurer appealed, urging, as points for reversal, that its duty to defend is determined by the allegations in the complaint filed by the injured party; that only the injured party may change the allegations in his complaint, which cannot be varied by affidavits of the insured; that the homeowner's insurance policy excludes from coverage injuries connected with business and the injured party alleged that he was a business invitee, therefore, is within the exclusion.

The allegations in the pleading filed by Dr. Benjamin C. Alstadt, the allegedly injured party, which are pertinent to the issues before this court are: he was a business invitee upon the premises of the Jaggars Audio Production Studio at 6720 Mabelvale Cut-Off, which is operated by the defendant, Steve Jaggars, the defendant Mrs. Arthur C. Henshall, being the owner of the real property on which the studio is located; Dr. Alstadt was on the premises of the defendants for business purposes; while in the course of transacting this business the plaintiff tripped and fell over a wire fence strung by the defendants in the yard of the premises causing severe injuries to the plaintiff; that the defendants knew, or should have known, that the wire fence created a dangerous condition for the plaintiff and should have removed said wire fence before allowing a business invitee to walk in the area.

The homeowner's policy pertinent to this action was issued to Mr. Arthur C. and Juanita T. Henshall and covered their residence and appurtenant structures at 6720 Mablevale Cut-Off. On the "daily report," which had appropriate boxes to be checked for coverage and rate making purposes, certain exceptions were listed. One of these was an exception for a business operated on the premises. The appropriate box was not checked to indicate that a business was being operated on the premises. The policy provided under Coverage E Personal Liability, that the company would pay on behalf of the insured all sums which they should become legally obligated to pay as damages because of bodily injury or property damage, to which the insurance applies, caused by an occurrence. Occurrence is defined as an accident, including injurious exposure to conditions, which results in bodily injury. Coverage E further provided that the insurance company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent.

The policy provides, as an exclusion, that it does not apply under Coverage E Personal Liability to bodily injury or property damage arising out of business pursuits of any insured except activities therein which are ordinarily incident to non-business pursuits.

The deposition and exhibits reveal that Mrs. Henshall was the owner of the real property at 6720 Mablevale Cut-Off and that she, her husband and appellee Steve Jaggars, who is her father, shared a home on the premises. A short time before the alleged injury occurred Mr. Jaggars had built a concrete block building on the rear portion of the lot (a corner lot) and had opened a sound recording studio therein. He had been in the sound recording business for some years and from time to time had recorded music for Dr. Alstadt. On the day the alleged injury occurred Dr. Alstadt had visited the studio to have Mr. Jaggars record a song he had written. After they were finished with the recording Dr. Alstadt left the building but mistakenly left his music behind. He came back, after dark, to retrieve the music. He found the studio closed and locked. He made his way to the Henshall back door, knocked, and when Mr. Jaggars answered the door he asked Jaggars for his music and then left. The next day Dr. Alstadt phoned Mr. Jaggars and reported that when he was on the premises he had fallen and broken his arm. Jaggars did not know where or when Dr. Alstadt was injured but surmised that he had tripped and fallen over the fence before he knocked on their door. He thought he remembered the doctor stating that he had fallen but was not sure. He thought the doctor must have fallen over the portion of the fence near the carport and the back door of the house.

A diagram of the premises showed that the two buildings were separated by a carport and that a wire fence was located a few feet beyond the end of the carport on the far side of a side door to the studio. The back door of the residence opened on the carport. Jaggars stated that the fence was built as an enclosure for a small dog. From the diagram, it appears to completely encircle the area beside the house and in back of and beside the studio. A photograph shows a fence beside the parking lot and extending to the side street on which the studio faces.

Appellant argues that, because Dr. Alstadt alleged in his complaint that he was a business...