The opinion of the court was delivered by: John E. Miller, Chief Judge.
Defendant's motion for summary judgment is before the court for
consideration. The action was filed March 27, 1961. On April 17,
1961, an order was entered extending until May 18, 1961, the time
for defendant to answer or otherwise plead. On May 18, 1961,
defendant filed its motion for summary judgment, attaching
thereto a copy of the insurance policy which forms the basis of
this lawsuit. Briefs have been received from the parties in
support of their respective contentions, and the motion is now
ready for determination.
The plaintiff, Curran Development Company, Inc., is a
corporation organized under the laws of the State of Arkansas for
the purpose of constructing residential properties, and Arthur L.
Curran, Armeta Curran, Margie L. Curran and David H. Curran
constitute all the stockholders of the corporation. David H.
Curran is a director, the treasurer and the general manager of
the company. The following facts are not in dispute.
Francis E. (Sam) Hall was an employee of the plaintiff
corporation, and while engaged in his employment he met death on
July 8, 1959. On November 3, 1960, his Administratrix filed suit
in the Circuit Court of Garland County against David H. Curran,
seeking damages in the total sum of $284,787.50, and alleged that
David H. Curran was guilty of negligence which was a proximate
cause of the death of Sam Hall.
The insurance policy in question was issued by the defendant
company, and in it the defendant agreed, among other things, to
pay on behalf of the insured all sums which the insured shall
become legally obligated to pay as damages because of bodily
injury, sickness or disease, including death at any time
resulting therefrom, sustained by any person, caused by accident
and arising out of the hazards as defined in the policy. The
above provision for bodily injury liability is referred to in the
policy as Coverage A. It is further provided in the policy that
with respect to the insurance afforded by it for bodily injury
liability and for property damage liability, the company will
"defend any suit against the insured alleging such injury,
sickness, disease or destruction and seeking damages on account
thereof, even if such suit is groundless, false or fraudulent;
but the Company may make such investigation, negotiation and
settlement of any claim or suit as it deems expedient."
The term "insured" is defined in Section III of the policy as:
"With respect to the insurance under coverages A,
B, and D the unqualified word `Insured' includes the
named Insured and also includes any executive
officer, director or stockholder thereof while acting
within the scope of his duties as such, and any
organization or proprietor with respect to real
estate management for the named Insured. If the named
Insured is a partnership, the unqualified word
`Insured' also includes any partner therein but only
with respect to his liability as such."
In the instant action the plaintiffs seek a declaratory
judgment, declaring, the obligation of the defendant insurance
company to assume the defense of the action filed by Selma Oliver
Hall, Administratrix of the Estate of Francis E. (Sam) Hall,
deceased, and likewise declaring the obligation of the defendant
to pay any judgment that may be rendered against David H. Curran
to the extent of the policy limits, plus costs and attorneys'
In the defendant's motion for summary judgment it is contended
as to the plaintiff, Curran Development Co., Inc., that no
controversy exists or will exist between the plaintiff
corporation and the defendant insurance company. As to the
individual plaintiff, David H. Curran, defendant contends that:
(1) The acts David H. Curran was performing, which are the
basis of the action by Hall's Administratrix, were not those "of
an executive officer, director or stockholder," but rather he was
acting merely as an electrician;
(2) That the plaintiff, David H. Curran, is excluded from
coverage by reason of exclusion (j) of the policy, which reads:
"This policy does not apply: * *
"(j) under coverages A and D, to any obligation for
which the Insured or any carrier as his insurer may
be held liable under any workmen's compensation,
unemployment compensation or ...