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Cobbins v. Gen. Accident Fire & Life Assur. Corp.

JANUARY 25, 1972.




APPEAL from the Circuit Court of Cook County; the Hon. EDWARD J. EGAN, Judge, presiding.


Rehearing denied February 22, 1972.

This appeal is to review a summary judgment entered in a suit brought under the Declaratory Judgment Act. (Ill. Rev. Stat. 1969, ch. 110, par. 57.1.) The plaintiff, Bernard Cobbins, a minor, by Dorothy Cobbins, his mother and next friend, prayed for a declaratory judgment construing an insurance policy. The defendants were General Accident Fire & Life Assurance Corporation, Ltd. and M. Fingerhut, d/b/a Coral Stores. No issue of fact is involved.


In 1964 Fingerhut owned a variety store at 4040 West Roosevelt Road in Chicago. For a three-year period which began on February 15, 1963, he was insured by an owners-landlords-tenants liability policy issued by General Accident. Among other things, Fingerhut sold fireworks in his store. Under the provisions of Ill. Rev. Stat. 1963, ch. 127 1/2, par. 112, it was "[u]nlawful for anyone to sell fireworks of any kind at any time to children under age of twelve (12) years without the consent of their parents." On July 4, 1964, plaintiff Bernard Cobbins, then 11 years of age, went to Fingerhut's variety store and purchased a kind of fireworks, sparklers, which he took to the yard of his home. There he lit them. A spark ignited his shirt and he suffered permanent injuries from resulting burns. In the suit later filed to recover for his injuries, plaintiff alleged that in selling the fireworks in violation of a statute, Fingerhut was guilty of negligence; that he carelessly and negligently failed to post a warning regarding the dangerous propensities of the fireworks; that he carelessly and negligently sold an inherently dangerous product to minors; that he carelessly and negligently failed to ascertain plaintiff's age and knowledge of fireworks prior to the sale and that Fingerhut was negligent in selling fireworks in violation of two other sections of chapter 127 1/2.

Under a division captioned "Defense, Settlement, Supplementary Payments," Fingerhut's insurance policy with General Accident provides that "[w]ith respect to such insurance as is afforded by this policy for bodily injury liability * * * the company shall: (a) defend any suit against the insured alleging such injury * * * and seeking damages on account thereof, even if such suit is groundless, false or fraudulent * * *." When Fingerhut tendered plaintiff's suit, General Accident refused to defend it on the ground that a "products-completed operations" exclusion applied to an injury which occurred away from the insured premises and after Fingerhut had relinquished the product (the fireworks). Thereafter, on August 20, 1964, Fingerhut paid an additional premium and obtained coverage for products liability and completed operations.

Following General Accident's refusal to defend the suit, plaintiff filed the complaint for declaratory judgment. He alleged issuance of the policy to Fingerhut by General Accident, sale of the fireworks to him by Fingerhut, the resulting injury in the yard of his home, filing of the suit and General Accident's refusal to defend. Plaintiff alleged that there existed an actual controversy between him and defendants, General Accident and Fingerhut. He prayed that the trial "[c]court find and declare that the defendant, M. Fingerhut, * * * is an `insured' and is entitled to the benefits and protection of the said policy of insurance, * * * entitled to be defended in the lawsuit described * * * and further, that defendant General Accident * * * be found obligated to pay any judgment entered against the defendant, M. Fingerhut, * * * up to the limits provided in the bodily injury coverage." General Accident moved to dismiss the complaint on the ground, among others, that plaintiff had no standing to bring the suit. The motion was denied; and thereafter, Fingerhut filed an answer which concluded with the prayer (consistent with plaintiff's) that "[t]his court find and declare that the defendant M. Fingerhut, * * * is an `insured' and is entitled to the benefits and protection of the said policy of insurance * * * that defendant General Accident * * * be found obligated to pay any judgment entered against the said defendant M. Fingerhut, * * * up to the limits provided in the bodily injury coverage * * *."

General Accident answered the complaint; and then, supported by affidavit, it moved for entry of a summary judgment on the ground that "[t]he subsequent injury claimed by the plaintiff resulting from the use of those fireworks, was not within the terms of the insurance policy in force and in effect at the time of the sale, and at the time of the accident involved herein." In its supporting affidavit General Accident alleged that "[t]here was no insurance for Product Liability, or Completed Operations in effect at the time of the alleged sale, and at the time of the alleged injury involved herein." After receiving briefs, the trial judge granted the motion. The sole issue is whether plaintiff's complaint in the personal injury suit against Fingerhut stated a cause of action within the scope and coverage of the insurance policy in question.


• 1 Determination of this issue depends on the allegations of the complaint and the provisions of the insurance policy. (Maretti v. Midland National Insurance Company, 42 Ill. App.2d 17, 190 N.E.2d 597; Thompson v. Glover, 115 Ill. App.2d 253, 253 N.E.2d 132; Allstate Insurance Company v. Gleason, 50 Ill. App.2d 207, 214, 200 N.E.2d 383.) Looking at the complaint, there are allegations that in the operation of his variety store, Fingerhut negligently sold fireworks to the plaintiff; that later, in the yard of his home, a spark from the fireworks ignited his clothes and he was burned. Looking at the insurance policy, there are provisions intended to cover Fingerhut from any bodily injury liability caused by accident arising out of his ownership, maintenance or use of the insured premises, and all operations incidental thereto. In sum, the subject of the insurance contract was Fingerhut's variety store, the premises and its operation.

From these facts, plaintiff contends that the cause of action he alleged against Fingerhut was covered by the policy because it was predicated on negligence which occurred on the insured premises, namely the alleged negligent sale of the fireworks. Therefore, plaintiff argues, General Accident was obligated to defend his suit against Fingerhut.

General Accident, on the other hand, contends that since the accident arose out of the use of a product (sparklers), and since the injuries were sustained away from Fingerhut's premises, the accident fell squarely within the products hazard. It argues that at the time of the accident, there was no coverage for what occurred because the policy excluded hazards from the sale or handling of products. The coverage afforded by the policy was for "premises-operations" hazards. Thus, it is insisted, the accident was not covered by the policy and General Accident is not obligated to defend Fingerhut in the personal injury suit.

• 2-4 In this state, as in many jurisdictions, products liability is a tort which makes a manufacturer liable if his product has a defective condition that makes it unreasonably dangerous to the user or consumer. (Suvada v. White Motor Company, 32 Ill.2d 612, 210 N.E.2d 182; compare Cunningham v. MacNeal Memorial Hospital, 47 Ill.2d 443, 266 N.E.2d 897; see Restatement of Torts 3d, § 402A (1964).) To state a cause of action based on products liability, plaintiff must allege facts which would show a defective product and injury caused by the defect. (Sweeney v. Matthews, 94 Ill. App.2d 6, 236 N.E.2d 439, aff'd, 46 Ill.2d 64, 264 N.E.2d 170.) It has been held that a complaint, like the one at bar, alleging negligence committed on the insured premises, does not state a case which falls within a products-completed operations exclusion. In McGinnis v. Fidelity & Casualty Company of New York, (1969), 80 Cal.Rptr. 482, 276 Cal.App.2d 15, an insured, operator of a retail store, sold gunpowder to a minor in violation of a statute. The minor took the gunpowder to the home of a friend where it exploded, injuring him severely. The retailer was insured by an insurance policy which had the same products-completed operations exclusion with which we are here concerned. In a suit against the insurer after the minor recovered a judgment against the insured, the insurer made the contention that General Accident makes in this appeal. The California court, 80 Cal.Rptr. 482 at 484, in rejecting the insurer's contention that the products-completed operations exclusion precluded coverage, said:

"The storekeeper in a products liability case is usually an innocent link in the chain of distribution who unknowingly sells a defective product. His liability does not stem from culpability; it is imposed by law as a matter of expedience. [Citations] The injury, here, was not caused by a defective product. The powder did exactly what it was designed to do, and what everyone expected it to do; it exploded when detonated. Consequently this is not a products liability case because no negligence can be attributed to the manufacturer. Stated another way, Piper [the store operator] was ...

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