Hackensack Water Co. v. General Acc. Fire & Life Assur. Corp.

• Decision Date: 09 July 1964
• Docket Number: No. A--971,A--971
• Citation: 84 N.J.Super. 479,202 A.2d 706
• Parties: HACKENSACK WATER COMPANY, a corporation of the State of New Jersey, Plaintiff-Respondent, v. GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION, Ltd., a foreign corporation authorized to do business in the State of New Jersey, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 479

84 N.J.Super. 479

202 A.2d 706

HACKENSACK WATER COMPANY, a corporation of the State of New Jersey, Plaintiff-Respondent, v. GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION, Ltd. a foreign corporation authorized to do business in the State of New Jersey, Defendant-Appellant.

No. A--971.

Superior Court of New Jersey Appellate Division.

Argued June 15, 1964.

Decided July 9, 1964.

Robert E. Tarleton, Jersey City, for appellant (Beggans & Keale, Jersey City, attorneys; James P. Beggans, Jersey City, of counsel).

Thomas J. Brady, Jersey City, for respondent (Milton, Keane & De Bona, Jersey City, attorneys).

Before Judges CONFORD, FREUND and SULLIVAN.

The opinion of the court was delivered by

SULLIVAN, J.A.D.

Defendant General Accident Fire and Life Assurance Corporation, Ltd. (General Accident) appeals from a judgment on the pleadings in favor of plaintiff Hackensack Water Company (Hackensack). The issue involved is coverage under an insurance policy issued by General Accident to Hackensack.

Hackensack instituted the instant action against General Accident to recover the sum of $505 it had expended to defend a third-party action instituted by Vergona & Sons, Inc. (hereafter Vergona).

On June 8, 1960 Lester Jansen, an employee of Hackensack, was injured in the course of his business duties for his employer while on the premises of Vergona. Hackensack is self-insured with respect to workmen's compensation coverage and it paid Jansen workmen's compensation benefits. Jansen then instituted an action grounded in negligence against Vergona. Vergona filed a third-party action against Jansen's employer, Hackensack, seeking indemnification.

The third-party complaint was not based on Hackensack's alleged assumption of liability by contract but rather on the allegation that the injuries to Jansen were caused by the sole, or primary, negligence of Hackensack, and that either Vergona was not negligent or any negligence on its part was secondary in character, resulting in a right to indemnification as a matter of common law.

Hackensack had a combined comprehensive liability insurance policy with General Accident, the pertinent provisions of which read:

'COVERAGE B--BODILY INJURY LIABILITY--EXCEPT AUTOMOBILE To pay on behalf of the insured all sums which the insured shall become legally obligated to pay or the liability of others assumed by him under contract for damages, including damages for care and loss of services, because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person or persons.'

'II DEFENSE, SETTLEMENT, SUPPLEMENTARY PAYMENTS With respect to such insurance as is afforded by this policy, the company shall:

(a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient; * * *.'

'EXCLUSIONS

This policy does not apply:

(e) under Coverages A and B, to any obligation for which the insured or any carrier as his insurer may be held liable under any workmen's compensation, unemployment compensation or disability benefits law, or under any similar law;

(g) under Coverage B, except with respect to liability of others assumed by the insured under contract, to bodily injury to or sickness, disease or death of any employee of the insured arising out of and in the course of his employment by the insured;.'

Hackensack requested that General Accident defend the third-party action, but General Accident refused to do so on the ground that exclusions (e) and (g) of its policy of insurance negated any obligation to defend said action. Hackensack entered its own defense to the third-party action and obtained the entry of summary judgment against Vergona. Hackensack then instituted the instant action to recover the amount of counsel fees incurred in defending the third-party action. The reasonableness of the attorneys' fees is not in dispute.

Hackensack and General Accident each moved for judgment on the pleadings. The trial court denied General Accident's motion and entered judgment in favor of Hackensack, ruling that General Accident was obligated under the terms of the policy to defend the third-party complaint against Hackensack. It held that General Accident 'was obliged to defend in order to establish the basis of the exclusion.'

We think that the third-party complaint must be read in the light of Jansen's complaint against Vergona, since that complaint sought to charge Hackensack with the primary liability for Jansen's injury. Jansen's complaint alleged that he was an employee of Hackensack; that he...