Germer v. Public Service Mut. Ins. Co., L--23670

• Decision Date: 17 November 1967
• Docket Number: No. L--23670,L--23670
• Citation: 99 N.J.Super. 137,238 A.2d 713
• Parties: Margaret GERMER and Edward G. D'Alessandro, Plaintiffs, v. PUBLIC SERVICE MUTUAL INSURANCE CO., a corporation of the State of New York, Defendant, and Seaboard Fire & Marine Insurance Company, a corporation, Intervenor-Defendant.
• Court: New Jersey Superior Court

Page 137

99 N.J.Super. 137

238 A.2d 713

Margaret GERMER and Edward G. D'Alessandro, Plaintiffs, v. PUBLIC SERVICE MUTUAL INSURANCE CO., a corporation of the

State of New York, Defendant,

and

Seaboard Fire & Marine Insurance Company, a corporation,

Intervenor-Defendant.

No. L--23670.

Superior Court of New Jersey

Law Division.

Nov. 17, 1967.

Nicholas Scalera, Newark, for plaintiffs (Friedman & D'Alessandro, Newark, attorneys).

Jerome S. Lieb, East Orange, for defendant, Public Service Mut. Ins. Co. (Harkavy & Lieb, East Orange, attorneys).

Edward F. Neagle, Jr., Newark, for intervenor, Seaboard Fire & Marine Ins. Co. (Fox, Schackner, Neagle & Mastrangelo, Newark, attorneys).

FUSCO, J.S.C.

This matter is before me on a motion by plaintiff Germer and her counsel, D'Alessandro, for summary judgment against defendants Public Service Mutual Insurance Company (hereinafter Public Service) and Seaboard Fire & Marine Insurance Company (hereinafter Seaboard). Both defendants have filed cross-motions for summary judgment against plaintiffs.

The case arose out of an automobile accident in which Germer was injured while a passenger in the vehicle of Dorothy Root. Root's vehicle had collided with an automobile owned by Eileen Stallone. Thereafter, pursuant to the insurance policy held by Root, a claim for medical payments in the amount of $2,000 was made to and paid by Seaboard. Upon the receipt of said monies, a proof of loss containing a provision assigning to the insured the right of subrogation to her rights was signed by Germer.

Plaintiff instituted an action against Root and Stallone to recover for personal injuries received in the accident. D'Alessandro, the other plaintiff in this motion, represented her in the prosecution of that action. At the time of the collision Stallone had a policy of insurance with defendant Public Service with limits of $10,000/$20,000. A verdict of no cause of action was returned against Root and a judgment of $60,500 entered against Stallone.

Germer appealed the verdict as to Root after a motion for a new trial was denied. Stallone also appealed and cooperated with plaintiff in her appeal. However, the Appellate Division affirmed the verdicts and judgment below.

Plaintiffs thereafter commenced the present action against Public Service to recover the amount of $10,000 plus interest on the entire judgment returned against Stallone, the insured. Public Service paid the $10,000 into court on June 2, 1967 (the judgment had been entered on February 7, 1966) and crossclaimed against Seaboard who counterclaimed against plaintiff for the $2,000. Plaintiffs counterclaimed against Seaboard to determine (1) whether the subrogation clause in the proof of loss is against public policy, (2) the priority of liens, (3) whether counsel who prosecuted the case is entitled to counsel fees and costs as a lien, and (4) to determine whether payment should be on a Pro rata basis.

The issues before the court on this motion are (1) whether plaintiffs are entitled to receive interest on the entire judgment or upon the amount which defendant Public Service is required to pay under its insurance policy, and (2) whether, if the medical payment subrogation clause is vaild, Seaboard is entitled to recover $2,000 or a Pro rata share from the $10,000 in proceeds afforded by the Public Service policy, subject to costs and counsel fees.

With respect to the first issue, plaintiffs rely principally upon Roth v. General Casualty & Surety Co., 106 N.J.L. 516, 146 A. 202 (E. & A.1929), wherein a unanimous decision was rendered affirming the court below, and Kraynick v. Nationwide Insurance Co., 80 N.J.Super. 296, 193 A.2d 419 (Law Div. 1963). Public Service contends that these authorities do not control the case and, moreover, that the company offered to pay its liability immediately after the judgment was entered against the insured and therefore no interest should be charged against them.

Plaintiff D'Alessandro denies this last contention in his affidavit. Although this apparently raises a factual dispute, there are clearly no facts whatsoever in the record to indicate that defendant made an unconditional legal tender of such monies to plaintiff. Totowa v. American Surety Co. of New York, 39 N.J. 332, 350, 188 A.2d 586 (1963); Robbins v. Mack International Motor Truck Corp., 113 N.J.L. 377, 384, 174 A. 551 (E. & A.1934). This appeared, too, during the course of the argument wherein defendant exhibited to the court the checks which it had tendered, and it appeared clearly that there was not an unconditional legal tender but a tender on condition that a warrant for satisfaction of judgment be signed in advance thereof.

In Kraynick plaintiff recovered a judgment against defendant's insured. Thereafter, she sued the insurance company and received a verdict in her favor. The insurer appealed from the judgment and the case was reversed and remanded. Upon the retrial of the cause a verdict was again returned in favor of plaintiff. The issue in that case was whether plaintiff was entitled to recover interest on the entire judgment originally entered, and the court held that she was entitled to interest on the entire judgment.

However, in that case the insurance policy provided that the company was obligated to 'pay all interest on the entire judgment accruing after the entry of judgment until the Company has paid, tendered or deposited in court such part of such judgment as does not exceed the limit of the Company's liability thereon.' 80 N.J.Super., at p. 298, 193 A.2d at p. 420. Because of this clear provision, the court held that the obligation to pay interest on the entire judgment was contractual and therefore was recoverable as of right:

'It is the feeling of this Court that the obligation to pay interest is a contractual one founded in the original contract of insurance, paragraph V(2) (d), and continuing down to the present time. * * * Interest was part of the bargain struck when the contract of insurance was entered into and it is recoverable as of right. Deerhurst Estates v. Meadow Homes, Inc., 64 N.J.Super. 134, 165 A.2d 543, supra.' (at p. 301, 193 A.2d at p. 422.)

Kraynick is not on all fours with the present case because Stallone's policy does not use the phrase 'entire judgment.' Rather, the policy here provides that the company is obligated to pay 'all expenses incurred by the company, all costs taxed against the insured in any such suit and all interest accruing after entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon.'

In Roth, supra, the court held that an insurer was required to pay interest on the entire judgment, irrespective of the policy limits. The provision before the court was similar to, although not identical with, the one contained in Stallone's policy heretofore recited. The policy in Roth stated:

'* * * Expense incurred by the company in defending the suit, including court costs and all interest accruing after entry of judgment, will be borne by the company irrespective of the limit of the liability expressed in the policy.' 106 N.J.L., at p. 520, 146 A. at p. 203.

The court said:

'We think this language 'all interest accruing after entry of judgment' clearly means interest upon the amount of the judgment.' (at p. 520, 146 A. at p. 204)

Public Service argues that Roth is distinguishable from the instant case because of the different language employed in the respective policies. It contends that the phrase in Roth, 'all interest accruing after entry of judgment,' must be read within the context of the phrase, 'will be borne by the company irrespective of the limit of liability expressed in the policy.'

There are cases in other jurisdictions which have construed provisions similar to the one in the Public Service policy. The courts which hold that the insurer is required to pay interest on the entire judgment, irrespective of the policy limits, generally rely upon one or all of the following reasons: (1) the clause is ambiguous and therefore must be construed against the insurer; (2) the company could have qualified the word 'judgment', had it desired to do so, and (3) the insurer controls the litigation and by delaying payment it may influence the accumulation of interest. Therefore, it should bear the expense of a delay. Mayberry v. Home Insurance Co., 264 N.C. 658, 142 S.E.2d 626 (Sup.Ct.1965); Powell v. T.A. & C. Taxi, Inc., 104 N.H. 428, 188 A.2d 654 (Sup.Ct.1963); ...