Court Opinion

ID: 9844451
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:02:59.468426+00
Date Added: 2024-06-11T09:15:35.391001
License: Public Domain

DONALDSON, Justice
(dissenting) :
The majority opinion deals primarily with the “products” portion of the “Products and Completed Operations Exclusion.” I agree with the majority that the question for determination under this provision is whether Parma Seed’s liability arose out of products sold. But I reach a different result: I believe that the damages for which recovery is sought arose out of Parma Seed’s negligence in delivering the wrong product and not out of the product delivered.
The exclusion in question states that “this policy does not apply to liability, claims or expense arising out of products or completed operations as defined below”; by its own wording, then, this provision purports to exclude only liability “arising out of products.” That Parma Seed’s liability did not arise out of products can most easily be seen by comparing the facts presented here with those posed by the following hypothetical. Suppose that while the seller is making a delivery to the buyer at the buyer’s premises, the seller negligently drops a heavy can of weed killer on the buyer’s foot, causing serious injury. It should be clear that the seller’s liability would not be within the products hazard exclusion — i. e., that it did not arise out of products. The product was merely the incidental instrumentality through which the damage was done — but the cause of the injury was the seller’s negligence; in other words, the seller’s liability arose out of his negligence and not out of the product sold. The same can be said in regard to the case at bar. When Parma Seed received the product in question from the *664distributor, ten of the eleven cans of weed killer were marked with the designation “2, 4D-Butyl Ester 6,” which should have indicated to its employees that the contents in these cans were too strong for the purposes intended by their purchasers. The respondent’s employees failed to notice that the product did not conform to what had been ordered, however, and passed this more potent product on to its customers. Parma Seed was negligent in delivering the wrong chemical to its customers, and this negligence was a proximate cause of the crops lost. Parma Seed’s liability arose out of this negligent misdelivery; it did not arise out of products any more than it would have if Parma Seed had negligently dropped a heavy product on the buyer’s foot. See Employers’ Liability A. Corp. v. Youghiogheny & O. Coal Co., 214 F.2d 418 (8th Cir. 1954); McGinnis v. Fidelity & Casualty Co. of N. Y., 276 Cal.App. 15, 80 Cal.Rptr. 482 (1969); Thibodeaux v. Parks Equipment Co., 140 So.2d 215 (La.App.1962); Lessak v. Metropolitan Casualty Ins. Co. of N. Y., 158 Ohio St. 153, 151 N.E.2d 730 (1958); cf. Protane Corp v. Travelers Indemnity Co., 343 Pa. 189, 22 A.2d 674 (1941).
In discussing Employers’ Liability A. Corp. v. Youghiogheny & O. Coal Co., supra, the majority states that the products exclusion was not applicable in that case because the injury “resulted from a defective freight car, and not the insured’s coal.” Actually, the injury resulted from the insured’s negligence in loading and shipping coal in a defective freight car. 214 F.2d at 425. Similarly, the damages in the instant case resulted from the insured’s negligence in delivering something which was not ordered by its customers. As the court pointed out in the Employers’ Liability A. Corp. case, the insured’s liability “had nothing to do with the products of the insured.” Id. The majority also states that in Lessak v. Metropolitan Casualty Ins. Co., supra, the “liability for the sale of air-gun pellets to a minor (with resulting injury to another) arises from the minority of the child, and not from the product.” This is true to the extent that the insured’s liability was “based upon the claim that the unlawful sale of B-B shot [by the insured] to a minor was a proximate cause in an uninterrupted sequence of an injury.” 151 N.E.2d at 733; accord, McGinnis v. Fidelity & Casualty Co. of N. Y., supra, 80 Cal.Rptr. at 484 (The insured was negligent in selling gunpowder to a minor and “his negligence was a proximate cause of the accident.”) These cases stand for the proposition that where the insured’s liability arises out of his negligence, albeit in connection with the sale of products, the products liability exclusion is inapplicable, for the reason that the claim against the insured is not one “arising out of products” sold.
The majority answers the argument that this case is one involving liability for negligence and not products liability by quoting the following language from Tidewater Associated Oil Co. v. Northwest Casualty Co., 264 F.2d 879 (9th Cir. 1959):
“In practically every case in which injury or damage is caused by the handling or use of a product, or by a defective condition in such product, the occurrence causing the injury or damage can be traced to some pre-existing negligence. Indeed, were this not so the injured person would have no basis for a tort claim against the insured. Thus, if the allegation of pre-existing negligence were to be regarded as controlling, the result would be to emasculate the product liability exclusion.” 264 F.2d at 882.
This reasoning, based upon the erroneous-assumption that without some pre-existing negligence “the injured person would have no basis for a tort claim against the insured,” is, in my opinion, fallacious. It completely ignores the existence of the doctrine of strict liability in tort. A retailer may be held strictly liable even though no culpable act or omission can be attributed to him; proof of negligence or fault is not required. McGinnis v. Fidelity & Casualty Co. of N. Y., supra; Carmichael, Strict Liability in Tort—An Explosion in Products Liability Law, 20 *665Drake L.Rev. 528 (1971); Keeton, Products Liability — Liability Without Fault and the Requirement of a Defect, 41 Texas L.Rev. 855 (1963); CCH Products Liability Reports, § 4010 (1970). Therefore, finding that coverage is not excluded where the seller’s negligence causes injury would not “emasculate the product liability exclusion,” for this exclusion would still exclude coverage of strict liability in tort in products liability cases. The need to insure against such strict liability is exemplified by the fact that recently a jury awarded $3,650,000 in a case submitted to them solely on the theory of strict liability in tort. Bush v. Westinghouse Air Brake Co., 2nd Judicial District Ct, Washoe County, Nevada, Oct. 16, 1970 ($3,000,000 awarded to plaintiff, $500,000 to plaintiff’s wife for loss of consortium, and $150,000 to their three children for loss of parental guidance of father; for further discussion of case, see 13 A.T.L. News L., No. 9, at 394 — 395 (November, 1970); Time, Dec. 7, 1970, at 68.)
The propriety of the conclusion that the products exclusion is inapplicable in this case is buttressed by the presence of two other exclusions incorporated in the policy issued to Parma Seed. One of these, endorsement “1^144,” excludes coverage for:
“Erroneous delivery of seeds, meaning wrongful filling of orders whereby the seed genus or species delivered differs from thet [sic] ordered by the customer.”
The majority opinion holds that the products exclusion excludes coverage for the erroneous delivery of a product (here, weed killer), meaning the wrongful filling of orders whereby the product delivered differs from that ordered by the customer. It is obvious that under the majority’s construction of the products exclusion, the above-quoted portion of endorsement “L-144” is completely superfluous. Such a construction flies in the face of the generally accepted rule that an insurance contract should be read as a whole and should be construed in a manner which does not render any of its provisions superfluous. As one noted authority on insurance law puts it:
“A construction of an insurance policy which entirely neutralises one provision shoiild not be adopted if the contract is susceptible of another construction which gives effect to all of its provisions and is consistent with the general intent. No word in an insurance policy should be assumed to be superfluous, or treated as superfluous or redundant if any reasonable meaning consistent with the other parts of the policy can be given to it. Clear and plain provisions of a contract, if not contrary to or forbidden by law, shall not be excluded by the court as an improper or unnecessary part thereof. Every clause will be enforced where that can be done without doing violence to the rights of either party, and to do so does not violate the language of the instrument as a whole. The policy should also be interpreted with a view to the whole context, so as, if possible, to give a sensible meaning and effect to all its provisions and to avoid rendering portions of it contradictory and inoperative by giving effect to some clauses and nullifying others. All terms and clauses, even though apparently repugnant, should be reconciled if it can be done by any reasonable construction.” Couch on Insurance 2d, § 15-43 (1964) (emphasis added).
Endorsement “L-128” excludes coverage with respect to:
“property (or the loss of use thereof) upon which a fertilizing agent was either intentionally applied or intended to be applied [by] the named insured or by a person acquiring said fertilizing agent through or from the insured.”
Under the majority’s construction of the general products exclusion, endorsement “L-128” is also rendered unnecessary; and, therefore, as pointed out above, such a construction should not be adopted where it is possible to do otherwise.
Since I have reached the conclusion that the products portion of the exclusion in question in inapplicable in this case, it becomes necessary to decide whether coverage is excluded by the “completed operations” portion of the exclusion. That portion ex*666pressly provides that: “the following shall not he deemed to he ‘operations’ within the meaning of this paragraph: (a) pickup or delivery, except from or onto a railroad car.” Since Parma Seed’s liability arose out of the delivery of herbicide which differed from that ordered by its customers, this delivery was not an “operation.” See Ketona Chemical Corp. v. Globe Indemnity Co., 404 F.2d 181 (5th Cir. 1968). At the very least, the word “delivery,” as used in the exclusion, is ambiguous; and, therefore, its meaning must be determined in light of the principle that ambiguities in an insurance policy must be resolved in favor of the insured. Stephens v. New Hampshire Ins. Co., 92 Idaho 537, 447 P.2d 14 (1968); Medical-Dental Service, Inc. v. Boroo, 92 Idaho 328, 442 P.2d 738, 36 A.L.R.3d 458 (1968). The insurance company wrote the policy, and if it wanted the word “delivery” to have a restricted meaning not ordinarily assigned to it by the users of the English language, it should have defined it specially in the policy’s “definitions” section. Or it could have used the phrase “pick-up and delivery (except misdelivery)” instead. See Hardware Mut. Cas. Co. v. Schantz, 186 F.2d 868 (5th Cir. 1951) (policy used the suggested wording). This patent ambiguity is reinforced by the ambiguity created by the presence of a specific exclusion for misdelivery of seeds (which would be unnecessary if such were a “completed operation”).
Finally, the rule is fundamental that where a clause in an insurance policy is susceptible to more than one construction, the one most favorable to the insured must be adopted.. Stephens v. New Hampshire Ins. Co., supra. That the “Products and Completed Operations Exclusion” is susceptible to more than one interpretation is manifested by the very history of this case on appeal: it has been under consideration by this Court for more than two years; it has been argued three times; and one opinion previously issued by this Court has been vacated. Admittedly, this is a close case, but in such a case, the benefit of the doubt is supposed to be given to the insured; this the majority has decided not to do.
The judgment of the district court should be affirmed.