Century Indemnity Co. v. Simon

• Decision Date: 03 May 1948
• Docket Number: Civil Action No. 5195.
• Parties: CENTURY INDEMNITY CO. v. SIMON et al.
• Court: U.S. District Court — District of New Jersey

77 F. Supp. 221

CENTURY INDEMNITY CO. v. SIMON et al.

Civil Action No. 5195.

District Court, D. New Jersey.

May 3, 1948.

COPYRIGHT MATERIAL OMITTED

James L. Handford, of Newark, N.J., for plaintiff.

David Wilentz, of Perth Amboy, N.J., for defendant Simon.

Edward Sachar, of Plainfield, N.J., for defendant Minicozzi.

SMITH, District Judge.

This is a civil action under Section 274d of the Judicial Code as amended, 28 U.S. C.A. § 400, the Declaratory Judgment Act. The plaintiff, an insurer, seeks a judgment declaratory of the rights and liabilities of the respective parties under a policy of insurance issued to one of the defendants, its insured, and an endorsement thereto issued to another. The jurisdiction of the Court is founded upon diversity of citizenship.

Facts.

I. The plaintiff Century Indemnity Company (hereinafter identified as Century) issued to the defendant Jack Simon (hereinafter identified as Simon) a motor vehicle liability policy, No. A 771529, which covered the automobiles therein described. The policy was issued on March 13, 1944, and expired on March 13, 1945.

II. The policy was the standard liability policy in which the insurer agreed, among other things, to indemnify the insured for any sums which the latter might be required to pay to others for personal injury or property damage "caused by accident and arising out of the ownership, maintenance or use" of the automobiles described therein. The coverage thereunder extended to the "insured" as therein defined, which included "any person while using the automobile * * *, provided the actual use of the automobile (was) with the permission of the named insured." The express provisions of the policy limited the "bodily injury liability" to $5000 for each person and $10,000 for each accident.

III. Simon accepted the policy as tendered, and thereby adopted as his own the declarations therein contained, among which was the following declaration of ownership: "Except with respect to bailment lease, conditional sale, mortgage or other encumbrance the Named Insured is the sole owner of the automobile, except as herein stated: No exceptions."

IV. The policy contained, in addition to others, the following condition: "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." This condition is limited to the coverage therein noted, to wit, such liability as may be imposed by "the motor vehicle financial responsibility law of any state."

V. The defendant Frank Russo (hereinafter identified as Russo) was employed by Simon as a route salesman on August 6, 1944, and was so employed until November 1, 1944. Russo was required by the express provision of a written agreement, dated August 8, 1944, to furnish Simon with a bond to indemnify the latter "for any loss or losses sustained on" the route assigned to the former. This agreement, and particularly the said provision, is relevant and material here only because of the dispute between the said defendants as to the ownership of the automobile covered by the endorsement attached to the policy.

VI. Russo, having been previously convicted of violations of the Motor Vehicle Law, and having had his driver's license revoked therefor, was subject to the Motor Vehicle Financial Responsibility Law as amended, R.S. 39:6-1 et seq., N.J.S.A. 39:6-1 et seq., which required proof of financial responsibility as a condition precedent to his right to hold a driver's license. Simon, cognizant of this fact, requested Century to extend the coverage of the policy to Russo and furnish proof thereof to the commissioner of motor vehicles.

VII. Century, after investigation, and with full knowledge that Russo was a person subject to the Motor Vehicle Financial Responsibility Law as amended, extended the coverage of the policy to him, and as evidence thereof issued an endorsement (P-3), in lieu of a policy, "attached to and forming a part of" the policy. The policy, supplemented by the endorsement, was "noncancelable except after ten days' written notice to the commissioner" of motor vehicles, as required by the said Law, R.S. 39:6-11, N.J.S.A. 39:6-11. Pursuant to the provisions of the said Law, Century filed with the commissioner of motor vehicles an "owner's policy certificate" as evidence of Russo's financial responsibility. The coverage of Russo was limited to the automobiles described in the policy and owned by Simon.

VIII. The pertinent provisions of the endorsement follow:

"In consideration of an additional premium of * * * $1.00 it is hereby understood and agreed that the Company has filed a certificate to comply with the Financial Responsibility Laws of the State of ...... New Jersey, in behalf of ...... Frank Russo ......

"Additional Premium

"B. I. ...... .60

"P. D. ....... .40

"It is further understood and agreed that the certificate is required as the result of ...... Speeding ...... occurring ...... October 1942 — Clark Township ......

"Cancellation of this Policy shall not become effective until ...... Ten (10) ...... days after receipt of written notice of such cancellation by ...... Commissioner of Motor Vehicles ...... of the State of .... New Jersey ......

"Attached to and forming part of Policy No. ...... A 771529 ...... issued to ...... Jack Simon tr/as Simons Pure Milk Co. ...... issued by ...... The Century Indemnity Company ...... and is effective from ...... August 24th, 1944. ......"

IX. The provisions of the Motor Vehicle Financial Responsibility Law having been complied with, the commissioner of motor vehicles authorized Russo to obtain a "conditional auto driver's license." This license was obtained by the said defendant. The driving privileges thereunder were limited to automobiles owned by Simon.

X. Thereafter, on September 7, 1944, Russo purchased a Chevrolet sedan from the Public Motor Sales. Pursuant to a previous understanding, title to this vehicle, subject to a conditional sales agreement with the Mutual Discount Company, was taken in the name of Simon. The initial deposit on the purchase price was made by Russo, but thereafter, until January of 1945, monthly payments were made by Simon. These payments, however, were either advanced by Russo or deducted from his earnings. The balance of the purchase price, which was not paid until some time after December 11, 1944, was paid by Simon, who then sold the vehicle and retained the proceeds of the sale.

XI. At the request of Simon, the Company issued an endorsement, attached to and forming a part of the policy, which extended the coverage of the policy to the sedan. This endorsement became effective on September 9, 1944, and by the terms of the policy expired on Mar. 13, 1945. The additional premium was paid by Simon but from funds deducted from Russo's earnings.

XII. It seems reasonably clear that Simon held nothing more than legal title to the sedan, subject, however, to the conditional sales agreement. Simon was not "the sole owner" of this vehicle within the meaning of the declaration embodied in the policy, although he may have had an interest therein by reason of his agreement with Russo. This fact, however, will not invalidate the policy.

XIII. The sedan was purchased by Russo for his own personal use. After its purchase he had the exclusive use and possession of it until November 1, 1944, when he left the employ of Simon, and thereafter until some time after the accident of December 11, 1944, when Simon took possession of it. This use and possession of the vehicle was with the full knowledge and permission of Simon. The permission was not limited to a particular use and was not revoked upon the termination of Russo's employment.

XIV. On December 11, 1944, the sedan, while being driven by Russo, struck and injured the defendant Joseph Minicozzi (hereinafter identified as Minicozzi), who thereafter instituted an action for damages in the New Jersey Supreme Court against Russo and Simon. A judgment against Russo in the amount of $20,000 has been entered in the said action. The action against Simon is still pending.

XV. Simon testified that on November 1, 1944, when Russo left his employ, he instructed him not to use the car. This testimony follows:

"Q. Did he take the car with him when he quit that day? A. No, he didn't, I told him not to.

"Q. Did he come back? A. Yes, he came back later.

"Q. The same day? A. That's right.

"Q. What did he say he wanted the car for? A. He came back and told me that the car was in bad shape, which I had known, and he said that as long as he isn't going to be working now he will have plenty of time to fix it up so that if I sold it I would get a bigger price. Well, I thought that would be a pretty good idea so I gave him the keys. I had the keys in my possession at the time and I gave him the keys and told him that under no condition can he use the car, all he can do is fix it and to keep it at his home.

"Q. And not use it for anything? A. No, nothing."

XVI. We are inclined to doubt this testimony because it seems inconsistent with the facts. Russo, although not in the employ of Simon, remained in possession of the sedan and continued to use it for more than a month before the accident. Simon knew that Russo was in possession of the sedan, and, in fact, accepted from Russo two monthly payments on the...