McKee v. Allstate Ins. Co.

• Decision Date: 12 April 1967
• Citation: 246 Or. 517,426 P.2d 456,84 Or.Adv.Sh. 673
• Parties: Fred McKEE and Maxine McKee, co-partners dba the Grove Night Club, Appellants, v. ALLSTATE INSURANCE COMPANY, a corporation, Respondent.
• Court: Oregon Supreme Court

Page 456

426 P.2d 456

246 Or. 517

Fred McKEE and Maxine McKee, co-partners dba the Grove Night Club, Appellants, v. ALLSTATE INSURANCE COMPANY, a corporation, Respondent.

Supreme Court of Oregon, Department 1.

Argued and Submitted March 7, 1967.

Decided April 12, 1967.

Richard H. Muller, Portland, argued the cause and filed a brief for appellants.

James H. Clarke, Portland, argued the cause for respondent. With him on the brief were McCulloch, Dezendorf & Spears, and Wayne Hilliard, Portland.

Before PERRY, C.J., and O'CONNELL, GOODWIN, and FORT, JJ.

GOODWIN, Justice.

Plaintiff night-club owners brought action against their liability-insurance carrier to recover $508.00 expended in defending an action by a night-club patron who alleged that the owners and a third person had assaulted and beaten him. The insurance carrier's demurrer was sustained, and plaintiffs appeal the resulting judgment.

The club patron's complaint, which the insurance carrier, after tender, had refused to defend, had alleged that the club owners and one 'John Doe' had assaulted and beaten the patron. There was no trial, as the assault and battery case was eventually dismissed for want of prosecution. The original complaint was never amended. Accordingly, the only question raised by demurrer is whether the facts pleaded by the patron's complaint had fallen within the contractual perimeter of the insurer's duty to defend, or to reimburse the owner for defending, the action.

The patron's complaint had alleged that 'the defendants and each of them' had assaulted and beaten him. This allegation described no facts against which the insurer had engaged to provide liability coverage. The policy expressly excluded coverage for a willful assault by either of the named night-club owners. Under the policy there could be no coverage for an assault by a third person unless other facts were alleged which would establish a reason for the club owners to be responsible for that person's torts. No respondeat superior reason for liability was alleged. Accordingly, nothing in the pleadings in the assault-and-battery case described facts that would create a contractual duty upon the part of the carrier to defend the action.

In Macdonald v. United Pacific Ins. Co., 210 Or. 395, 311 P.2d 425 (1957), this court held that an insurer's duty to defend a tendered action was to be tested by the allegations in the third-party complaint. If such complaint stated an action for an injury not covered by the insured's policy, there would be no obligation to defend. Isenhart v. General Casualty Co., 233 Or. 49, 377 P.2d 26 (1962). In Blohm et al. v. Glens Falls Ins. Co., 231 Or. 410, 373 P.2d 412 (1962), it was held that an insured could not rely on extrinsic facts not pleaded which might bring the incident within the terms of the policy.

Plaintiffs argue that the rules established by the Macdonald, Isenhart, and Blohm cases should be modified in light of Williams v. Farmers Mut. of Enumclaw, 84 Or.Adv.Sh. 85, 423 P.2d 518 (1967). The Williams case held that an insurance company could rely on extrinsic facts in refusing to defend, even though the...