Issue: A Druggists’ Liability policy was issued by the company to the druggist, who thereafter was sued by one of his customers. The complaint was based upon the druggist’s actions in refilling a doctor’s prescription without written or oral authorization from the prescribing physician. The company denied liability to defend, and this action was brought by the druggist for declaratory judgment as to its duty to defend him.

Judgment: The company relied upon the policy provision that excluded "bodily injury or property damage cause by the willful violation of a penal statute."

The original prescription was filled on June 26, 1971, and the New York statute relied upon by the company did not take effect until September 1, 1971. The court found that prior to that date, the drug sold to the customer did not appear to come within the statutory ban. Since all the refillings of the prescription were not shown to have occurred after September 1, 1971, the policy did not preclude liability.

The court found that the allegations in the complaint were sufficient to make the insurance carrier liable to defend the action.

Schwamb, d/b/a/ Cowhig Pharmacy v. Fireman’s Insurance Co. of Newark – Court of Appeals of New York - March 29, 1977 – 363 North Eastern (2d) (Rough Notes Magazine June, 1978).