Dunne v. Fireman's Fund American Ins. Co.

• Decision Date: 24 February 1976
• Parties: John DUNNE et al., Plaintiffs-Respondents, v. FIREMAN'S FUND AMERICAN INSURANCE COMPANY, Defendant-Respondent, and The COUNTY OF MORRIS, Defendant-Third-Party Plaintiff-Appellant, v. The STATE of New Jersey, Third-Party Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 244

69 N.J. 244

353 A.2d 508

John DUNNE et al., Plaintiffs-Respondents, v. FIREMAN'S FUND AMERICAN INSURANCE COMPANY, Defendant-Respondent, and The COUNTY OF MORRIS, Defendant-Third-Party Plaintiff-Appellant, v. The STATE of New Jersey, Third-Party Defendant-Respondent.

Supreme Court of New Jersey.

Argued Oct. 20, 1975.

Decided Feb. 24, 1976.

John H. Dorsey, Pine Brook, for appellant Morris County.

Richard W. Berg, Deputy Atty. Gen., for respondent State of N.J. (William F. Hyland, Atty. Gen., attorney, Richard W. Berg and Steven Leonard Strelitz, Deputy Attys. Gen., on the briefs and of counsel).

Herbert M. Korn, Morristown, for respondents Dunne, Bickley and Spann (Stephen S. Weinstein, Morristown, attorney).

Clifford W. Starrett, Morristown, for respondent Fireman's Fund Am. Ins. Co. (Schenck, Price, Smith & King, Morristown, attorneys).

The opinion of the Court was delivered by

SCHREIBER, J.

This is another round in the litigation of Paul and Irene Cashen against three Morris County detectives, John Dunne, Robert Bickley and Frank Spann, for monetary redress because of an illegal search of the Cashen home in June 1970. Illegality resulted from the allegedly erroneous affidavit upon which the search warrant issued. We are now called upon to decide whether the County of Morris, or its liability insurance carrier, Fireman's Fund American Insurance Company (Fireman's Fund), or neither is obligated to furnish a defense for the detectives in the Cashen suit.

Initially the County of Morris was joined as a defendant in the Cashen suit because of its asserted vicarious responsibility for acts of the three detectives. The trial court had granted motions for summary judgment in favor of all defendants. On appeal the Appellate Division reversed as to the three detectives, but affirmed the dismissal as to the County of Morris. Cashen v. Spann, 125 N.J.Super. 386, 311 A.2d 192 (App.Div.1973). The Appellate Division reasoned that the detectives, in preparing the affidavit upon which the search warrant was predicated (Bickley executed the affidavit, Spann submitted information contained therein, and Dunne participated in drafting it), were agents of the State and not of the County. Accordingly, the judgment of dismissal in favor of Morris County was upheld.

We affirmed. 66 N.J. 541, 334 A.2d 8 (1975), Cert. den. 423 U.S. 829, 96 S.Ct. 48, 46 L.Ed.2d 46 (1975). Justice Pashman, writing for a unanimous court, carefully noted that

* * * in the context of this case, * * * the detectives are to be considered as agents of the State and not the county. * * * We wish to make it clear, however, that our resolution of this issue is limited to the factual circumstances here presented. We find it appropriate to regard the defendant officials as State agents where the alleged tortious conduct arose out of the investigation of criminal activity, but we express no opinion on the question of whether * * * detectives can be considered State or county employees for other purposes. (Id. at 552, 334 A.2d at 14).

Fireman's Fund had issued to Morris County a comprehensive general liability insurance policy for the calendar year 1970. Thus the incident in question occurred within the policy's time coverage. The Cashen complaint charged Dunne, Spann and Bickley with false arrest and imprisonment, libel, slander, invasion of privacy, assault and battery, and negligence. The policy expressly excluded coverage of liability for libel, slander, or violation of right of privacy, but provided subject matter coverage for other torts such as negligence. Because of this situation Fireman's Fund entered into a reservation of rights agreement with the County under which it agreed to furnish a defense for the County and the detectives. The agreement also provided that the County and Fireman's Fund would share the defense costs. The parties reserved their rights to assert their respective positions as to coverage. Thereupon Fireman's Fund undertook defense of the action on behalf of the detectives and the County. The carrier engaged in pretrial discovery, successfully moved for summary judgment, and defended the favorable trial court determinations before the Appellate Division. After receipt of the Appellate Division's decision, the company refused to continue to defend the detectives.

Dunne, Bickley and Spann then instituted this action by complaint and order to show cause in the Superior Court, Chancery Division, against Fireman's Fund and the County of Morris for an order directing them to defend and pay any lawful settlement or judgment in the Cashen suit. The County filed a crossclaim against Fireman's Fund in which it sought an order directing the carrier to assume responsibility for any relief to which the plaintiffs might be entitled. The County also filed a third party complaint against the State in which it asserted that the State was obligated to defend the detectives and pay any judgment rendered against them.

On the return day of the order to show cause the trial court found that the County of Morris should indemnify the plaintiffs if they were found to be liable 'for something they ought not to pay for where in good faith they did what they were told to do because they didn't have a lawyer.' The Court entered an order that the 'County of Morris shall continue to appear and represent' Dunne, Bickley and Spann. The trial court refused to dismiss the third party complaint against the State and entered no order with respect to that complaint.

The County of Morris appealed to the Appellate Division from that part of the order directing the County to appear and represent the three detectives. ¹ We granted the State's motion for certification of the pending appeal. 68 N.J. 175, 343 A.2d 463 (1975).

The initial issue to which we address ourselves is whether the detectives in the County Prosecutor's office were 'persons insured' under the comprehensive liability insurance policy issued by Fireman's Fund to the County of Morris.

The named insured in the policy is the County of Morris. The policy also included as persons insured 'any executive officer, director or stockholder thereof while acting within the scope of his duties as such'. In two separate endorsements for which an additional premium had been charged, the insurance company had amended the persons insured provision to include 'any employee of the named insured while acting within the scope of his duties as such', and to redefine persons insured to include an employee of the County 'while acting within the scope of his duties as such'.

County prosecutors' detectives possess a hybrid status. The position has been created by the County Detectives and County Investigators Act, N.J.S.A. 2A:157--1 Et seq.--the title, perhaps indicative of some legislative intent, reflects their identification with the county. The Act authorizes the prosecutor to appoint persons 'to be known as county detectives, to assist the prosecutor in the detection, apprehension, arrest and conviction of offenders against the law.' N.J.S.A. 2A:157--2. The prosecutor, a State officer, selects and supervises them. The financial burdens related to the position are imposed on the county. The salary is paid by the county. N.J.S.A. 2A:157--18. The prosecutor may, with the approval of the board of chosen freeholders, fix the salary in excess of the statutory minimum. N.J.S.A. 2A:157--18. No county detectives may be appointed in counties where the number of detectives exceed the maxima fixed by statute (50 in the first class counties, N.J.S.A. 2A:157--3, 28 in certain second class counties, N.J.S.A. 2A:157--4, etc.), without the prior approval of the board of chosen freeholders, except in a county of the first class with a population under 800,000. N.J.S.A. 2A:157--22. Further, all necessary expenses incurred by county detectives, such as costs of insurance, automobiles, and other necessities, must be paid by the county. N.J.S.A. 2A:157--19 and 2A:158--7. The amounts may not exceed those fixed by the freeholders unless specifically authorized by the Superior Court assignment judge for that county. In re Application of Bigley, 55 N.J. 53, 259 A.2d 213 (1969); In re Application of Schragger, 58 N.J. 274, 277 A.2d 212 (1971). In those cases we pointed out that even where the assignment judgment determines the number of additional detectives to be hired at certain salaries it was appropriate for the prosecutor initially to present his needs to the freeholders before turning to the assignment judge for relief.

We have also indicated that the board of freeholders can establish a time off or money equivalent program for overtime for county detectives. Aumaitre, et al. v. Bd. of Freeholders of Camden County, 58 N.J. 449, 279 A.2d 102 (1971) (semble). County detectives acquire Civil Service protection only if the county in which they are employed has adopted the Civil Service Act. Cooper v. Imbriani, 63 N.J. 535, 310 A.2d 457 (1973). The county's employee record data include county detectives. Records of social security taxes, federal withholding taxes, sick leave, vacation leave, pension and insurance are maintained by the county. The requisite filings for social security and income taxes and transmittal of funds are made by the county. From of record keeping standpoint, all the indicia of an employer-employee status exist.

Recognition of county control over county detectives and of existence of an employer-employee relationship is not novel. In Cooper v. Imbriani, supra, we expressly rejected the contention that they were not county employees, at least for the purpose of determining whether they were in the classified service. Id. at 537 n. 1, 310 A.2d 457.

It has been held that detectives who have formed or joined an employee organization may bargain about terms of employment with the county as their employer under the New Jersey Employer-Employee Relations Act, N.J.S.A 34:13A--1 Et seq. Pros., Det.,...