Arthur Douglas Farquhar, 85, a Sandy Spring civic leader and former insurance company executive, died Sunday at Montgomery General Hospital.

Born on a farm, "The Cedars," he lived there most of his life. He was a graduate of Kenyon College and attended Cornell University.

Mr. Farquhar joined the Montgomery Mutual Insurance Co. in 1906 and served as its president for 20 years prior to his retirement in 1966. He continued as a director with the firm until his death.

An Army first lieutenant in World War I, he was a pilot in Europe and was wounded by shrapnel over Austria. He received the Purple Heart and the Italian Cross of War.

Mr. Farquhar founded American Legion Post 68 in 1919 and was a member until his death. He was the founder and first chief of the Sandy Spring Volunteer Fire Department in 1924 and in recent years was an honorary member.

He also organized the Sandy Spring Lions Club in 1946. He had been a director of the Sandy Spring National Bank and Savings Institution since 1923.

A forest warden and crop reporter for the Agriculture Department for many years, Mr. Farquhar belonged to the Sandy Spring Society of Friends, the Sandy Spring Farmers Club, the Order of Daedalians, an organization of former World War I flyers, and the Association of World War I Overseas Flyers.

He is survived by his wife, Helen Thomas Nesbitt Farquhar, of the home; two sons, Norman, of Washington, and Gordon, of Toronto, Canada; two daughters, Margaret Adelfio, of Chevy Chase, and Ann Forbush, of Baltimore, and 14 grandchildren.

The family suggests that expressions of sympathy may be in the form of contributions to the Sandy Spring Friends Meeting House.