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AUGUST 17, 1983




Herschel Brickell filed suit in the Circuit Court of the First Judicial District, Hinds County, Mississippi, Honorable Charles Barber, presiding, seeking reimbursement under an insurance policy, for expenses incurred as a result of defending a suit against him for malicious prosecution. The case was heard by the trial judge without a jury. At the conclusion of the evidence, he entered judgment in favor of United States Fire Insurance Company [U. S. Fire] and dismissed the suit with prejudice. Brickell has appealed here, assigning the following errors in the trial below:

I. The trial court erred in failing to render judgment in favor of appellant and against appellee since, under the undisputed evidence, appellant was entitled to judgment as a matter of law.

 II. The court erred in excluding evidence of certain costs of defense for which Brickell sought recovery on objection that Brickell had not actually "paid" or "incurred" these expenses personally.

 Brickell, president of Brickell Insurance Agency, has been engaged in the insurance business for more than twenty-eight (28) years. That business is his occupation and he has earned his livelihood from it through the years. However, on March 1, 1968, he agreed with an old friend, Bob Heberling, to enter into a venture for the sale of American Motors automobiles in Jackson, Mississippi. A corporation was organized, and he invested $25,000 in it, loaned another $25,000 on a five-year promissory note, and executed a guaranty instrument for a $25,000 loan from a Jackson bank. Heberling was supposed to be experienced in car dealership management, and was an employee of American Motors Corporation in Memphis, Tennessee, at the time of the agreement. Brickell had no

 experience whatsoever in that type business.

 Brickell claimed that he went into the venture in order to help his friend, and that the plan was for Heberling to acquire all the stock of the dealership from its profits. The business fell upon hard times, and Heberling suggested that Brickell obtain another manager. Brickell then entered into an agreement with one Alton E. McKey in September, 1969, which provided that McKey would buy Brickell's stock. The corporation's charter was amended to reflect the name McKey-McPhail, Inc. and the business operated as McKey American, Inc.

 The business failed to revive, and check of the corporate books on October 31, 1972, showed a loss in excess of $200,000. Brickell took over the dealership on November 9, 1972, and immediately began to liquidate the corporation for the benefit of creditors. The final auction was held on January 10, 1973.

 McKey-McPhail, Inc. bonded its employees through the Travelers' Indemnity Company [Travelers]. After the auction sale, Brickell turned over matters of the corporation to a law firm in Jackson. That law firm instituted suit against Travelers seeking a recovery for employee misconduct in the operation of the McKey-McPhail business. Suit was filed in the United States District Court for the Southern District of Mississippi, against Travelers in the name of McKey-McPhail, Inc., and Travelers entered a third-party complaint impleading practically everyone connected with the business and indebtedness of McKey-McPhail, Inc. and naming Clarence Chapman, a certified public accountant, who worked on the McKey-McPhail, Inc. books, as one of the third party defendants. McKey-McPhail then filed cross-complaints against other parties, including John Palmer and Clarence Chapman, certified public accountants. Whereupon, Chapman and Palmer filed a fourth party complaint impleading Brickell, who then filed a separate cross-complaint against Palmer and Clarence Chapman. The suit was dismissed as to all parties except McKey-McPhail and Travelers. The record indicates that Brickell, individually, never contemplated any action against Clarence Chapman until Brickell was sued in the fourth party complaint.

 On July 12, 1977, Clarence Chapman filed suit in the Circuit Court of the First Judicial District of Hinds County against Travelers, McKey-McPhail, Inc., and Brickell for malicious prosecution. Brickell had an insurance policy issued by U. S. Fire with a personal catastrophe liability endorsement. Listed as "named insured" was Herschel Brickell and the policy provided coverage for "personal liability" which was defined to mean, among other things, mental anguish and

 mental injury, and malicious prosecution or humiliation sustained by any person. U. S. Fire was required to defend any suit against the insured alleging such injury or damage even if such suit was groundless, false or fraudulent.

 Brickell called upon U. S. Fire to defend him in the suit. Eventually, the insurance company denied coverage under Exclusion (h) (business pursuits) of the policy. After much correspondence, in which Brickell insisted that he was covered by the policy, he employed a Jackson law firm to defend him in the suit, which terminated favorably to him. Brickell then called upon U. S. Fire to pay his expenses of defending the case, which request was denied. Hence this suit was filed.


 The lower court found that the "business pursuits" exclusion of the policy applies notwithstanding the definition of "business" in Paragraph A(e) under "CONDITIONS" of the policy which was a standard definition. The court stated that Brickell may, or may not, have entered into the business of McKey-McPhail, Inc. with the idea of financing it, but wound up the principal stockholder and did supervise, in a very limited capacity, the operation of the business. Brickell contends that the lower court erred in failing to enter ...

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