Liability coverage, included in a Businessowners policy carried by a Veterans of Foreign Wars Post, contained the familiar "alcoholic beverages" exclusion. A statement appeared at the end of the exclusion that it applied "....only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages."

The evidence made clear that a 20 year old man (underage in Wisconsin for purchasing liquor) was "under the influence" after drinking at the post's bar. Shortly thereafter, one man was killed and another severely injured when he crossed the centerline of a road and struck two oncoming motorcycles.

Ensuing legal action against the insured post resulted in a trial court finding of "no coverage" and grant of summary judgment in favor of the insurance company. It was reversed on appeal. The matter was then reviewed by the Wisconsin Supreme Court.

At issue was whether the post was in the business of selling or serving alcoholic beverages. The court found that it was, despite the argument that it was a nonprofit fraternal society. Precedent established that activities determined if an entity was a "business" rather than the purpose for which it was incorporated being the basis for such determination.

The record demonstrated that the bar was open to the public at least three days a week, and that six bartenders and two other persons were employed in it at the time of the accident to serve alcoholic beverages at a price. The post held an alcoholic beverage license and was a member of the Tavern League of Wisconsin. It paid state sales tax and was subject to federal income tax for income derived from the bar.

The high court concluded that the insured was in the business of selling and serving alcoholic beverages and that the insurer was not required to provide defense and indemnification.

The decision of the appeal court was affirmed in favor of the insurance company and against the insured.

(SPRANGER, Plaintiff-Respondent-Petitioner v. GREATWAY INS. CO. ET AL., Defendants-Petitioners-Respondents. WI Supreme Court. No. 92-1617. April 18, 1994. CCH 1994 Fire and Casualty Cases, Paragraph 4763.)