DiOrio v. New Jersey Mfrs. Ins. Co.

• Decision Date: 05 March 1979
• Citation: 398 A.2d 1274,79 N.J. 257
• Parties: , 8 A.L.R.4th 374 Generoso J. DiORIO and Gennaro DiOrio, Plaintiffs, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Respondent, and Mike & Joe's Texaco Station, Defendants, and John Palmer, Individually and as Guardian ad Litem of Jon Leigh Palmer, aninfant, Defendants-Appellants.
• Court: New Jersey Supreme Court

Page 257

79 N.J. 257

398 A.2d 1274, 8 A.L.R.4th 374

Generoso J. DiORIO and Gennaro DiOrio, Plaintiffs, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Respondent and Mike & Joe's Texaco Station, Defendants and John Palmer, Individually and as Guardian ad Litem of Jon Leigh Palmer, aninfant, Defendants-Appellants.

Supreme Court of New Jersey.

Argued March 7, 1978.

Decided March 5, 1979.

E. Barry Kline, Trenton, for defendants-appellants (Kline, Kline & Canfield, Trenton, attorneys; E. Barry Kline, Trenton, of counsel; Michael R. Canfield, Trenton, on the brief).

Richard D. Catenacci, Newark, for defendant-respondent (McElroy, Connell, Foley & Geiser, Newark, attorneys; Richard D. Catenacci, of counsel and on the brief).

The opinion of the court was delivered by

CLIFFORD, J.

I

This declaratory judgment action was instituted to determine the scope of coverage under a standard family automobile policy of insurance. The controversy derived from a one-vehicle accident of May 1, 1968. The automobile involved was a 1956 DeSoto owned by Mike & Joe's Texaco Station, a service station business in which plaintiff Generoso DiOrio was one of two general partners. At the time of the accident Generoso's 17 year-old son, plaintiff Gennaro DiOrio, a member of the same household, was operating the car. A passenger, defendant Jon Leigh Palmer, an infant, sustained severe personal injuries in the accident. Suit was brought on his behalf against the DiOrios, father and son, ¹ and against the service station.

Reliance Insurance Company, liability carrier of Mike & Joe's Texaco Station, offered the Palmers its full policy limit of $50,000. This being inadequate fully to compensate for the passenger's injuries and damages, excess coverage was sought from defendant New Jersey Manufacturers Insurance Company (NJM) under the DiOrio family automobile policy. NJM disclaimed, whereupon the present suit followed.

The trial court, noting that there was no coverage under NJM's policy for a non-owned automobile "furnished for the regular use of either the named insured or any relative," ² ruled in favor of the insurance carrier after finding that the DeSoto had been furnished for the regular use of the named insured's son, Gennaro. The Appellate Division affirmed the judgment for NJM on that basis.

Thereafter this Court, in a divided decision, reversed the judgment, 63 N.J. 597, 311 A.2d 378 (1973) (hereafter DiOrio I ), holding that the courts below had erred in concluding that the automobile was furnished to the son for his regular use. However, we remanded to the trial court for further proceedings addressed to two issues, namely, whether the DeSoto automobile was furnished for the regular use of the father, and whether excess coverage is denied to All insureds (and thus to the son) if the vehicle was furnished for regular use of Any insured (here, the father) even though Not furnished for the regular use of the insured claiming coverage (the son). In DiOrio I we concluded as to the first stated issue that the facts had not been adequately developed below and that the trial court had made no finding as to whether the vehicle was furnished for the regular use of Generoso, the father. 63 N.J. at 608, 311 A.2d 378. The second issue we characterized as "probably one of law to be resolved in the light of a full record." Id. at 607, 311 A.2d at 384.

Upon the remand the trial court conducted the necessary hearing and made detailed findings and conclusions leading to a dismissal of the complaint. It held that the NJM policy afforded no excess liability coverage to plaintiffs because the service station partnership's DeSoto had been furnished for the regular use of Generoso, and hence the limitations in the policy's non-owned automobile provisions withheld protection from his son, Gennaro.

The Appellate Division affirmed essentially for the reasons expressed in the comprehensive opinion of the trial court. We granted certification, 75 N.J. 540, 384 A.2d 519 (1977), to review this determination. We affirm.

II

The policy as to which excess coverage is sought is denominated by NJM as a family automobile policy, a standard form policy first filed ³ in New Jersey and 47 other states in 1956. As observed by the trial court, its predecessor was the basic automobile liability policy, which continued in use after introduction of the family automobile policy for those partnerships, corporations and businesses not eligible for family automobile policy coverage. The family automobile policy extended coverage to relatives not included in the basic automobile policy, at no additional premium for this additional coverage.

The policy in question provides, on the first page of four pages, that NJM will

pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of (bodily injury and property damage) arising out of the ownership, maintenance or use of the owned automobile or any non-owned automobile * * *.

And on the same page a "non-owned automobile" is defined, in language which has remained unchanged for 20 years, as

an automobile * * * not owned by or furnished for the regular use of either the named insured or any relative * * *.

This latter language concerning non-owned automobiles is the current standard version of "drive other cars" coverage. The purpose of such coverage is generally recognized to be

to cover occasional or incidental use of other cars without the payment of an additional premium, but to exclude the habitual use of other cars, which would increase the risk of the insurance company without a corresponding increase in the premium. (Annot., "Exclusion from 'drive other cars' provision of automobile liability insurance policy of other automobile owned, hired, or regularly used by insured or member of his household," 86 A.L.R.2d 937, 940 (1962).)

On the other hand the industry has developed, and NJM offered, a specific "extended non-owned automobile coverage" endorsement which appears to contemplate the DiOrios' situation exactly. This endorsement extends liability coverage for the persons named therein to "any automobile" not owned by a member of the named insured's household a significant variation from the coverage provided by the policy in question. The former protects all family members for whom the extended coverage is sought and as to whom a separate premium is calculated and charged. The record demonstrates that excess personal injury liability coverage in the amount of $250,000 per person and $500,000 per accident was available under this "extended non-owned automobile coverage" endorsement for a premium of about $6 for Generoso and $8 for Gennaro DiOrio.

Anent this very point the trial court observed:

The majority opinion (in DiOrio I ) raised the issue of "the underwriting concept" which "the insurer had in mind," and whether the carrier afforded the additional non-owned automobile coverage and "charged little or nothing for the additional coverage." The facts presented at trial establish clearly that the insurer's intent was not to provide under the basic policy the coverage of the type claimed by plaintiffs, for it provides such coverage by endorsements specifically designed for that purpose, and for which additional premiums are charged.

We conclude, as did the trial court, that without such an endorsement, the NJM policy will not yield the coverage claimed by plaintiffs in this case.

III

The first question remanded by DiOrio I for determination by the trial court was the factual issue of whether the automobile was furnished for the regular use of the plaintiff Generoso, the father. As indicated, this question was answered in the affirmative, a determination amply supported by the evidence. Indeed, so strong is the record in this regard that the conclusion is well-nigh inescapable.

NJM had written Generoso DiOrio's personal automobile insurance for about 20 to 25 years. The 1956 DeSoto was originally owned by Generoso and used by him as his personal car. Until 1966 it was listed as an owned automobile on the family automobile policy issued by NJM. In that year Generoso purchased a new 1967 Chrysler for his personal use and transferred the title of the DeSoto to Mike & Joe's Texaco. The DeSoto replaced a Chevrolet then owned by the partnership, whose automobile liability insurer, Reliance, thereupon amended the service station's policy to cover the DeSoto in place of the Chevrolet. Simultaneously, and significantly, Generoso instructed NJM to remove the DeSoto from the family automobile policy and to substitute the Chrysler in its place.

Thereafter, and up until the time of the accident, the partnership used the DeSoto as a service car, loaning it to customers whose vehicles were being repaired and sending it out on business errands. Unless a customer needed the automobile, Generoso drove it home every night. He estimated that on less than twenty occasions in six years had customers kept the service car overnight. As had been the case with the Chevrolet which it replaced, the DeSoto was Generoso's only means of getting to and from work inasmuch as his wife commuted to her job in the family's Chrysler. Generoso's testimony on remand, confirmed by his partner, was that there was no "restriction whatsoever on how and why and when (he) could use the DeSoto."

Generoso undertook to give driving instructions to his son, Gennaro, starting in January, 1968 and continuing several times a week up until shortly before the accident. Only the DeSoto was used for this purpose. In addition Generoso used the vehicle for personal errands. After Gennaro obtained his license on April 23, 1968, he was permitted to drive the vehicle several nights a week and on weekends this with the express permission of his father and subject to his returning home at a specified hour. In all respects, then, the DeSoto was used as one might expect any second family car to be....