Travelers Indem. Co. v. Nieman

• Decision Date: 16 September 1977
• Citation: 563 S.W.2d 724
• Parties: The TRAVELERS INDEMNITY COMPANY, Appellant, v. J. Arthur NIEMAN and John Courtny Schneider, Appellees.
• Court: Kentucky Court of Appeals

Page 724

563 S.W.2d 724

The TRAVELERS INDEMNITY COMPANY, Appellant, v.J. Arthur NIEMAN and John Courtny Schneider, Appellees.

Court of Appeals of Kentucky.

Sept. 16, 1977.

Rehearing Denied Nov. 18, 1977.

Discretionary Review Denied April 25, 1978.

James G. Apple, T. Kennedy Helm, III, Stites, McElwain & Fowler, Louisville, for appellant.

Fielden Woodward, Woodward, Hobson & Fulton, Louisville, for appellees.

Before COOPER, REYNOLDS and WINTERSHEIMER, JJ.

COOPER, Judge.

This is an appeal from a judgment in the Jefferson Circuit Court awarding appellees the sum of $10,000, the amount of settlement of a civil action with third parties, plus $2,275.00 attorneys' fees.

This action was filed in the Jefferson Circuit Court, Common Pleas Branch, on February 27, 1973, by appellees, J. Arthur Nieman and John Courtny Schneider against the appellant, The Travelers Indemnity Company, hereinafter Travelers.The complaint alleged that a certain insurance policy issued to Louisville Apothecary, Inc. covered Nieman and Schneider against damages sought in an action filed earlier in the same court by one Cebert Barnes against Nieman and Schneider and Louisville Apothecary, Inc. as a result of Nieman and Schneider illegally and on numerous occasions selling a dangerous drug, Obedrin LA, an amphetamine type narcotic, to Barnes' wife.An amended complaint also alleged that Travelers was estopped from denying coverage.Neiman and Schneider sought recovery from Travelers in the amount of a settlement of $10,000 negotiated by them with Mr. and Mrs. Barnes in connection with the civil action and criminal proceedings against them.They claimed damages in the amount of $10,000 plus attorneys' fees of $2,275.00.

Travelers filed an answer setting up the insurance policy and its specific provisions as a defense denying that it was estopped to deny coverage, and alleging that the settlement with Barnes was a settlement to dispose of criminal claims against them by Barnes' wife and was made by them as volunteers, for which Travelers had no responsibility and no liability.

A trial was held before the lower court on May 28, 1974.The court, in essence, found:

(1) that the policy of insurance in question covered the appellees on the Barnes' claim against them;

(2) that Travelers was estopped to deny coverage; and

(3) that appellees were entitled to be awarded attorneys' fees.

Judgment was entered on these findings of fact and conclusions of law on November 15, 1974.

Nieman and Schneider, appellees, were and are pharmacists for Louisville Apothecary, Inc., a corporation which operated eight (8) pharmacies in the Louisville area.Nieman, who is also president of Louisville Apothecary, Inc., worked at the Broadway store and Schneider was the manager of the store on Preston Street.Both acted in the stores as pharmacists, filling prescriptions and dispensing drugs.

In December, 1968, Mrs. Cebert Barnes contacted Dr. Earl Roles about her weight problem.Dr. Roles prescribed a weight reducing drug, Obedrin LA, for Mrs. Barnes.This drug is an amphetamine type drug and controlled by the drug laws of Kentucky.

Mrs. Barnes took the prescription to the Broadway store of the Louisville Apothecary, where it was filled by Nieman, the pharmacist on duty.

Thereafter, Mrs. Barnes took the amphetamine pills once a day and this continued for approximately six months.She would refill her prescription at the Broadway store each time she needed the amphetamine pills.After six months, she started taking two pills a day, and in 1970she started taking two pills two or three times a day.This consumption gradually increased until she was taking fifteen (15) pills a day.Approximately one year after she first had the prescription filled, Nieman told her she could buy the pills at the Preston Street store of Louisville Apothecary, and called Schneider and told him it was all right to sell her the amphetamine pills.Thereafter, she bought the pills at both stores.At first she was charged $5.80 for 40 tablets but this price was increased to as high as $20.00.When Mrs. Barnes moved to Florida in 1970 with her husband, Nieman would mail her pills to her.

Her narcotic habit was causing marital difficulties, beginning in late 1970 or early 1971.

Mrs. Barnes' husband had advised the police about her habit and Mrs. Barnes went to the police in March, 1971.She told the police that she had been buying the pills from Louisville Apothecary and was told that she would have to buy them with a policeman present before any prosecution could proceed.She gave a statement to Lt. Childress of the Louisville Police Department.She went to both the Broadway and Preston Street stores on several occasions in March, 1971, and purchased the amphetamine tablets with the police present.On none of these occasions did Nieman or Schneider call Dr. Roles' office for approval to refill the prescription, although it had been over two years since the original prescription was written.

As a result of Nieman and Schneider unlawfully selling amphetamines to Mrs. Barnes without a prescription, both men were arrested on or about March 30, 1971.Later, on November 8, 1971, both men were indicted by the Jefferson County grand jury, each charged with two counts of unlawfully selling amphetamine tablets known as Obedrin LA....