Newell-Blais Post No. 443, Veterans of Foreign Wars of U.S., Inc. v. Shelby Mut. Ins. Co.
| Decision Date | 28 January 1986 |
| Docket Number | NEWELL-BLAIS |
| Citation | 487 N.E.2d 1371,396 Mass. 633 |
| Parties | POST # 443, VETERANS OF FOREIGN WARS OF the UNITED STATES, INC. v. The SHELBY MUTUAL INSURANCE COMPANY. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Richard R. Eurich, Boston, for defendant.
James J. Walsh, Boston, for plaintiff.
Before HENNESSEY, C.J., and WILKINS, ABRAMS, and O'CONNOR, JJ.
The plaintiff (Newell-Blais) sought a declaratory judgment in the Superior Court to establish the obligations of The Shelby Mutual Insurance Company (company) under the terms of an insurance policy issued by the company to Newell-Blais. After trial, at which the parties submitted a statement of agreed facts, the trial judge entered a judgment ordering the company to defend and indemnify Newell-Blais. The company appealed, and we transferred the case here on our own motion. We affirm that part of the Superior Court's judgment that requires the company to defend Newell-Blais.
We summarize the facts. Newell-Blais is a nonprofit veterans' organization incorporated under G.L.c. 180 (1984 ed.) for "fraternal, patriotic, historical, and educational" purposes. Newell-Blais is the owner of premises at 50 Jefferson Street, North Attleborough. Alcoholic beverages are served at these premises, in accordance with a license issued to Newell-Blais under G.L.c. 138, § 12 (1984 ed.).
The company issued a comprehensive general liability insurance policy under which the company was obliged to defend and indemnify Newell-Blais in any suit for bodily injury or property damage covered by the policy. This policy was in full force and effect at all material times.
A wrongful death action was filed against Newell-Blais on January 23, 1980. The complaint alleged that Newell-Blais negligently served alcoholic beverages to one of its patrons on January 25, 1977, and that, as a result of this negligence, the patron so carelessly operated his motor vehicle as to cause the death of the plaintiffs' decedents, two minor children.
Newell-Blais requested the company to defend it in this wrongful death action. The company denied liability, stating that the policy did not afford coverage for the allegations set forth in the complaint against Newell-Blais, due to the operation of exclusion (h). 1 Newell-Blais subsequently commenced this declaratory judgment action, and the judgment ensued that the company must defend and indemnify Newell-Blais.
The company argues that (1) the claims against Newell-Blais are excluded from coverage by paragraph (h) of the policy; 2 (2) the judge improperly excluded evidence of the company's underwriting practices; and (3) the judge erred in ordering the company both to defend and indemnify Newell-Blais, rather than holding the issue of indemnification in abeyance until the completion of trial in the underlying wrongful death action.
The company argues that Newell-Blais is an "organization engaged in the business of manufacturing, distributing, selling or serving alcoholic beverages" within the meaning of exclusion (h)(1). The word "business" is not defined in the policy. This term thus must be given its ordinary and usual meaning, and construed in the manner that the insured would reasonably understand to be the scope of his coverage. Slater v. United States Fidelity & Guar. Co., 379 Mass. 801, 803, 400 N.E.2d 1256 (1980). Save-Mor Supermarkets, Inc. v. Skelly Detective Serv., Inc., 359 Mass. 221, 226, 268 N.E.2d 666 (1971). "Business" is defined as "a usually commercial or mercantile activity customarily engaged in as a means of livelihood." Webster's New Int'l Dictionary 302 (3d ed. 1961). "Business," as commonly understood, is thus an activity engaged in for the purpose of gain or profit. As a nonprofit organization incorporated for charitable purposes, Newell-Blais is not engaged in the "business" of selling or serving alcoholic beverages within the clear meaning of exclusion (h)(1).
Next, the company argues that coverage for the wrongful death claims brought against Newell-Blais is precluded by exclusion (h)(2)(i), which excludes coverage for property damage or bodily injury where liability is imposed on the owner or lessor of premises "by, or because of the violation of, any statute, ordinance or regulation pertaining to the sale, gift, distribution or use of any alcoholic beverage." The action for wrongful death charges Newell-Blais with violating G.L.c. 138, § 69 (1984 ed.), which prohibits a licensed seller of alcoholic beverages from selling or delivering such beverages "to an intoxicated person, or to a person who is known to have been intoxicated within the six months last preceding." The company argues that, since the wrongful death action is based on a violation of G.L.c. 138, § 69, the liability of Newell-Blais is excluded from coverage under the policy by the operation of exclusion (h)(2)(i).
Our decision in Three Sons, Inc. v. Phoenix Ins. Co., 357 Mass. 271, 257 N.E.2d 774 (1970), is controlling on this issue. In Three Sons, we held that language in an insurance policy excluding from coverage "liability imposed ... by reason of any statute or ordinance pertaining to ... any alcoholic beverage" was insufficient to preclude coverage where the underlying complaint averred that the insured had negligently sold alcoholic beverages to one of its customers in violation of G.L.c. 138, § 69, inserted by St.1933, c. 376, § 2. Three Sons, supra at 275, 257 N.E.2d 774. We held that the words "by reason of" imported a direct causal relationship between the fact of liability and the violation of the statute. Id. This clause would therefore exclude coverage only where the violation of a statute, without more, was sufficient to impose liability. Id. General Laws c. 138, § 69, does not in itself impose civil liability. The underlying tort action in Three Sons was based on the common law doctrine of negligence, and not on the statute. The violation of G.L.c. 138, § 69, was invoked merely as evidence of negligence, and not as an independent basis for relief. We thus concluded that liability was not alleged "by reason of any statute" within the terms of the exclusion.
The same result must be reached in this case. The language of exclusion (h)(2)(i), precluding coverage for liability "by, or because of" the violation of a statute, is...
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