Buzzone v. Hartford Acc. & Indem. Co.

• Decision Date: 25 February 1957
• Docket Number: No. A--70,A--70
• Citation: Buzzone v. Hartford Acc. & Indem. Co., 129 A.2d 561, 23 N.J. 447 (N.J. 1957)
• Parties: Hannah BUZZONE and George Buzzone, her husband, Plaintiffs-Appellants, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, a corporation of the State of Connecticut, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 447

23 N.J. 447

129 A.2d 561

Hannah BUZZONE and George Buzzone, her husband, Plaintiffs-Appellants, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, a corporation of the State of Connecticut, Defendant-Respondent.

No. A--70.

Supreme Court of New Jersey.

Argued Feb. 4, 1957.

Decided Feb. 25, 1957.

Hymen B. Mintz, Newark, for plaintiffs-appellants (Sol Herships, Newark, attorney).

Samuel A. Larner, Newark, for defendant-respondent (Budd, Larner & Kent, Newark, attorneys).

The opinion of the court was delivered by

BURLING, J.

Plaintiffs, husband and wife, were victims of an automobile accident in this State in 1951. They recovered a judgment of $40,000 against one Fred Mancini, a New York resident, the driver of the other vehicle. The judgment remained unsatisfied and the instant suit was commenced against Mancini's insurer, defendant Hartford Accident and Indemnity Company, a corporation of the State of Connecticut. Defendant succeeded in the trial court and the Superior Court, Appellate Division, affirmed on appeal, 41 N.J.Super. 511, 125 A.2d 551 (App.Div.1956), Judge Freund dissenting. Our jurisdiction is grounded in N.J.Const.1947, Art. VI, Sec. V, par. 1(b); R.R. 1:2--1(b).

Fred Mancini is an assumed name. The true name of the New York resident is Fabrizio Inghilleri. In 1948 he was involved in an accident in New York and in accordance with that law his driver's license was suspended pending proof of financial responsibility. The proof was not forthcoming. Instead, Inghilleri assumed the name of Mancini and obtained a license thereby. He was also successful in securing insurance coverage from defendant under the fictitious name. The policy was never certified as proof of financial responsibility.

The policy contained the following provision:

'8. Financial Responsibility Laws. (Coverages A and B). Such insurance as is afforded by this policy for Bodily Injury Liability or Property Damage Liability Shall comply with the provisions of the motor vehicle financial responsibility law of any state or province which shall be applicable with respect to any such liability arising out of the ownership, maintenance or use of the automobile during the policy period, to the extent of the coverage and limits of liability required by such law, but in no event in excess of the limits of liability stated in this policy. The Insured agrees to reimburse the Company for any payment made by the Company which it would not have been obligated to make under the terms of this policy except for the agreement contained in this paragraph.' (Emphasis supplied.)

Plaintiffs' contention is that by virtue of this 'conforming clause' (see Standard Provisions for Automobile Policies, Condition 4, Insurance Policy Annotations, Section of Insurance Law, A.B.A.1941) the laws of New Jersey and New York relating to the financial responsibility of motor vehicle operators are applicable and that the policy here is a 'required' policy which, by statutory impact, deprives the insurer of any defenses which it might otherwise have in consequence of Inghilleri's fraud.

The insurer denies that our law is applicable in determining the policy status; that under the New York law the policy must be 'certified' to the proper public authority as proof of financial responsibility before the insurer is denied any defenses arising from a contractual breach of the insured.

A majority of the Appellate Division, Judges Weintraub (now a Justice of this court) and Coolahan, held the New York law applicable and interpreted that law to require certification of the policy as a condition precedent to its status as a required policy. The dissenting judge interpreted the 'conforming' clause as responding to the laws of the state where the accident occurred and, in the alternative, that the New York law was opposed to the public policy of New Jersey and should not be applied in any event.

Three questions require attention:

Under what law are the insurer's rights and liabilities to be determined? (Point I)

If the law of New York is applicable, does the public policy of New Jersey resist against its application? (Point III)

Does the applicable law deprive the insurer from asserting policy defenses against the plaintiffs? (Point II)

I.

We think it too settled to be questioned that the rights and liabilities of the insurer under the policy and the statutory impact thereon are to be determined by the law of the state where the contract was made. 'The question of what is the obligation imposed by a contract of insurance, what are its terms and provisions, has usually rightly been held to be governed by the law of the place of contracting.' 2 Beale on Conflict of Laws, sec. 346.4, p. 1210 (1935). See Universal Ins. Co. v. Millside Farms, 119 N.J.L. 534, 197 A. 648 (Sup.Ct.1938); Manhattan Life Ins. Co. v. Manger, 66 F.Supp. 670 (D.C.N.J.1946); Pritchett v. Continental Cas. Co., 117 Ky. 923, 80 S.W. 181 (Ct.App.1904); Boisvert v. Boisvert, 94 N.H. 357, 53 A.2d 515 (Sup.Ct.1947). The liabilities arising from the policy are to be distinguished from the legal consequences in tort which stem from the occurrences of the risk insured against. Clement v. Atlantic Casualty Ins. Co., 13 N.J. 439, 100 A.2d 273 (1953), is of the latter variety, and note Boisvert v. Boisvert, supra. Compare Watson v. Employers Liability Assur. Corp., 348 U.S. 66, 75 S.Ct. 166, 99 L.Ed. 74 (1954).

The 'conforming provision' of the policy does not operate to implant therein the financial responsibility law of the state where the accident occurred. the state where the accident occurred. far as our law is concerned Inghilleri was not a person from whom New Jersey could require proof of financial responsibility because he had never incurred the compulsion of the New Jersey law. See Farm Bureau Automobile Ins. Co. v. Georgiana, 14 N.J.Super. 459, 468, 82 A.2d 217 (Ch.Div.1951); Hartford Accident & Indemnity Co. v. Breen, 2 App.Div.2d 271, 153 N.Y.S.2d 732 (App.Div.1956); Earle, 'The Motor Vehicle Liability Policy Under Financial Responsibility Laws,' No. 369 Insurance Law J. 678, 684 (1953). Our law reacts to non-residents involved in accidents within New Jersey, R.S. 39:6--25, N.J.S.A., R.S. 39:6--35, 36, N.J.S.A., but in the absence of this factor New Jersey residents are dependent upon the integrity of the financial responsibility laws of sister states to successfully persuade their residents to obtain insurance coverage.

The court below was correct in looking to the law of the State of New York.

II.

Every state in the Union now has some type of legislation directed to the problem of the financially irresponsible motorist. Analysis of Security-type Motor Vehicle Safety Responsibility Laws (Association of Casualty and Surety Companies--1955). These laws are a strong pronouncement of the public desire that all motorists voluntarily obtain insurance in order that persons who are injured at their hands may be compensated by some thing more than a bare judgment. The persuasive influence is manifested by attaching serious consequences to those who choose to remain uninsured and become involved in a highway accident. Formerly an unsatisfied judgment or accident involvement was the point at which financially irresponsible drivers were set apart from others. But this only required proof of financial responsibility as to Future accidents, and thus the common terminology of 'first-bite' laws. See L.1929, c. 116, repealed L.1952, c. 173, sec. 34.

Today these laws require the immediate deposit of security from uninsured persons involved in an accident causing bodily injury or property damage (in varying minimal amounts) on pain of license suspension. See e.g., R.S. 39:6--25, N.J.S.A. In addition, many states also require proof of financial responsibility to respond to damages arising from future accidents. This proof usually takes the form of a motor vehicle liability policy which, as we use the term, connotes a required policy through statutory compulsion, and in this sense differs from automobile liability insurance voluntarily contracted. See generally, 5 Couch, Cyclopedia of Insurance Law, sec. 1175(i) (1929); Collins, 'Implementation of Public Policy Against the Financially Irresponsible Motorist,' 19 Brooklyn L.Rev. 11 (1953); Note, 33 Iowa L.Rev. 522 (1948).

A motor vehicle liability policy, required of the driver by statutory compulsion, has the significant feature under these laws of depriving the insurer of a defense which it might otherwise have in a suit on a voluntary policy. R.S. 39:6--48(a), N.J.S.A. provides, Inter alia:

'The liability of a company under a motor vehicle liability policy shall become absolute when loss or damage covered by the policy occurs * * *.'

The New York statute contains an identical provision. N.Y. Vehicle and Traffic Law, McKinney's Consol. Laws, c. 71, § 94--q(i)(1). Under the ordinary policy the insurer can oppose recovery for any breach thereof by the insured and thus defeat a just claim of the injured plaintiff. Under such a policy, the rights of an injured party against an insurer are no greater than those of the insured. Kindervater v. Motorists Casualty Ins. Co., 120 N.J.L. 373, 199 A. 606 (E. & A.1938); Seltzer v. Indemnity Ins. Co., 252 N.Y. 330, 169 N.E. 403 (Ct.App.1929). Thus the very type of policy (voluntarily contracted) which financial responsibility laws persuade motorists to obtain do not make the insurer's liability absolute. Injured plaintiffs must, unfortunately, bear the consequences of the insured's breach. Absolute liability of the insurer is the exception rather than the rule. Note, 27 N.Y. Univ.L.Rev. 817, 826 (1952). In those few states where all drivers are Required by statute to have insurance coverage the insurer's liability may be absolute. Fallon v. Mains, 302 Mass. 166, 19 N.E.2d 68 (Sup.Jud.Ct.1939); Continental Ins. Co. v. Charest, 91 N.H. 378, 20 A.2d 477 (Sup.Ct.1941). New York has recently enacted a compulsory type...