New Jersey Property Liability Guaranty Ass'n v. Brown

• Decision Date: 06 August 1980
• Citation: 417 A.2d 117,174 N.J.Super. 629
• Parties: NEW JERSEY PROPERTY LIABILITY GUARANTY ASSOC., as successor to Interstate Insurance Company, now solvent, Plaintiff-Respondent, v. Raymond BROWN and Leonard Shaw, Defendants-Appellants.
• Court: New Jersey Superior Court — Appellate Division

Page 629

174 N.J.Super. 629

417 A.2d 117

NEW JERSEY PROPERTY LIABILITY GUARANTY ASSOC., as successor to Interstate Insurance Company, now solvent, Plaintiff-Respondent, v. Raymond BROWN and Leonard Shaw, Defendants-Appellants.

Superior Court of New Jersey, Appellate Division.

Argued Jan. 21, 1980.

Reargued June 2, 1980.

Decided Aug. 6, 1980.

David L. Greene, Freehold, for defendant-appellant Raymond Brown (Greene & Newell, attorneys; Paul E. Newell, Freehold, on the brief).

Jerome L. Rubinowitz, Paterson, for defendant-appellant Leonard Shaw (Rosenthal & Rubinowitz, Paterson, attorneys; Richard P. Blender, Paterson, on the brief).

Mauro C. Casci, Rahway, for plaintiff-respondent (Methfessel & Werbel, Rahway, attorneys; Lane M. Ferdinand, Rahway, on the brief).

Before Judges SEIDMAN, MICHELS and FURMAN.

The opinion of the court was delivered by

SEIDMAN, P. J. A. D.

The question presented by this appeal is whether a homeowners insurance policy issued to defendant Leonard Shaw by plaintiff's predecessor, Interstate Insurance Company, covered an occurrence at Shaw's business office when a revolver which he was showing to defendant Raymond Brown was accidentally discharged, resulting in serious bodily injury to Brown. The latter brought suit against Shaw, charging him with "negligently, carelessly, wrongfully and intentionally discharg(ing) a firearm causing the bullet to strike (Brown)." Thereafter, plaintiff instituted a declaratory judgment action against Brown and Shaw, seeking a determination that it was not obligated under the policy to defend or indemnify its insured. On motion and cross-motion for summary judgment, the trial judge concluded that the incident was not covered by the policy and entered judgment in favor of plaintiff, Brown and Shaw appealed.

Specifically at issue is the interpretation of an exclusion in the policy with respect to

. . . bodily injury or property damages arising out of business pursuits of any insured except activities therein which are ordinarily incident to non-business pursuits. (Emphasis supplied)

To the extent pertinent here, the facts are essentially undisputed. On the evening in question Brown called upon his friend Shaw, a bail bondsman, at the latter's office. The parties agree that the visit was social and unrelated to the business. According to Brown, Shaw received a telephone call from someone "stating that they were coming for their money." Later, in the course of their conversation, Shaw related to Brown how he had been assaulted in his office a few days earlier. He said that "(i)f somebody comes now, I got something for them." He displayed a .38-caliber revolver which he took from his desk drawer. In some manner, the gun was discharged and the bullet struck Brown.

Shaw's deposition discloses that he had purchased the gun for use in his business and would carry it when transporting large sums of money. He had kept another gun, an automatic pistol, in his office, but it was stolen prior to the shooting incident. After the assault Shaw brought the revolver to the office.

In granting the insurer's motion for summary judgment the trial judge stated the issue to be whether the incident had arisen out of a business pursuit. He reasoned:

There is no doubt in this particular case that the weapon was held for purposes of a business pursuit. Certainly there was a dual purpose; but this was a business pursuit. If we follow the logical extention of that it was unfortunate the incident occurred as an accident and the weapon was being shown to someone else . . . and I find that the incident occurred as the result of a business pursuit.

We do not agree with the trial judge's concept of the exclusionary clause in the policy.

It is to be noted preliminarily that the clause first removes from coverage claims for injury or damage arising out of business pursuits. But, as an exception, activities ordinarily incident to nonbusiness pursuits are included within the coverage of the policy. The modifying language of the exception clearly narrows the scope of the exclusion that precedes it. See Gulf Ins. Co. v. Tilley, 280 F.Supp. 60, 64 (N.D.Ind.1967), aff'd 393 F.2d 119 (7 Cir. 1968). Thus, the inquiry is not whether the insured was engaged in a business pursuit at the time of the accident, for the clause plainly has reference to accidents that occur in the carrying on of the business. See Neal v. Celina Mutual Ins. Co., 522 S.W.2d 179 (Ky.1975). Rather, it is whether the particular activity at the time of the accident, i. e., the display of the weapon to a social visitor, was nevertheless one ordinarily incident to nonbusiness pursuits.

The parties have not cited to us any reported case in this jurisdiction directly in point. The problem has been dealt with elsewhere. See Annotation, "Construction and application of 'business pursuits' exclusion provision in general liability policy," 48 A.L.R.3d 1096 (1973). However, the courts have often obscured rather than elucidated the distinction between an activity that is not itself a business pursuit of the insured within the meaning of the exclusion and one that, though arising out of a business pursuit, is not ordinarily associated with it.

Coverage under the exception cannot rest on a determination that the insured was not engaged in a business pursuit when the...