Court Opinion

ID: 7820150
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:51:20.219118+00
Date Added: 2024-06-11T16:30:43.110137
License: Public Domain

James C. Luker, Special Justice, dissenting. The question before us is the interpretation to be placed upon the words “the insured” as used in exclusion (d) of Farm Bureau’s policy, which exclusion provides that there is no coverage for “bodily injury to any employee of the insured (Emphasis added) Lengthy annotations at 50 ALR 2d 78 (1956) and 48 ALR 3d 13 (1973) report decisions from State and Federal Courts in over thirty states. As the majority opinion points out, these Courts are “in hopeless conflict”. Two United States District Courts have been called upon to anticipate what Arkansas Courts would do when presented with this question, and have reached opposite conclusions. See Curran v. Security Insurance Company, 195 F. Supp. 562 (WD ARK 1961) finding that the exclusion was not applicable to prevent coverage for an additional, insured for injuries to an employee of the named insured; and Employers Mutual Liability Insurance Company v. Houston Fire and Casualty Insurance Company, 194 F. Supp. 828 (WD LA 1961) finding that the exclusion negated coverage for an omnibus insured where the injured party was an employee of the named insured. The majority reaches its decision by applying the long standing rule of liberal construction in favor of an insured. But, in this case, since the parties to this action are both insurance carriers, which is entitled to the benefit of the rule? In my opinion, it is neither, and we should look to the intentions of Jim Dixon when he obtained the automobile liability policy issued by Farm Bureau. As is pointed out in the dissenting opinion of Special Associate Justice Howard, contracts of insurance should receive a reasonable construction so as to effectuate the purpose for which they are made and the object to be accomplished. Aetna Life Insurance Company v. Spencer, 182 Ark. 496. Employers v. Houston, supra, quotes extensively from American Fidelity and Casualty Company v. St. Paul-Mercury Indemnity Company, 248 F. 2d 509 (5th Cir. 1957) which reasoned that: “A business assured has two primary fields of exposure: (1) to employees; and (2) to third parties, members of the public and persons not in the status of employees. The two present different hazards of frequency and severity and traditionally are underwritten separately. The first group is cared for by Employer’s Liability insurance which, includes as well, if applicable, State or Federal workmen’s compensation coverage. This insurance is carefully limited to persons in the status of employees and excludes all others. The second group is cared for by Public Liability coverage, either for general operations as Larsen’s CGL policy, or specifically in connection with automobiles, as in American’s automobile policy. These invariably exclude employees of the assured and, to eliminate any doubts, exclude liabilities imposed under workmen’s compensation acts. The obvious result is that the prudent businessman obtains two types of insurance and, of course, pays two premiums. “Since, for businessmen, if not for the general public, business and law have long abandoned the naive idea that the payment of losses are “free” to the assured, the purpose of an assured to integrate his program and reduce costs is thwarted if the policies, so carefully dovetailed, are construed to duplicate coverage. In this sense, it is not a matter of the legal concept of liability (master-servant compared to third party), or the coincidence that an employee may be able to contrive a third party relationship on which to base a damage suit. The thing of importance is that for an injury received in the course of the named assured’s employment, his employee is enabled to recover ultimately from the employer’s Public Liability insurer (and hence him), the very kind of losses or damages which the assured has paid another to underwrite. “Of course, these payments must ultimately come from somewhere, and it is the fact of business life that claims paid will, as they must, someday come from the assured’s pocket. “Since (the named insured) obtained and paid for Employer’s Liability coverage, is it likely that for injuries to these employees while in his service, he intended to provide and pay for more?” It is my opinion that Employers v. Houston and American Fidelity v. St. Paul-Mercury, supra, reach the better result. In each, the Court was simply unable to believe that the named insured, the one who will ultimately pay the price, intended the result reached by the majority in the present case. Neither can I. I would affirm the judgment of the Circuit Court.