Hartford Acc. & Indem. Co. v. Travelers Ins. Co.

• Decision Date: 09 March 1979
• Citation: 400 A.2d 862,167 N.J.Super. 335
• Parties: HARTFORD ACCIDENT & INDEMNITY COMPANY, Plaintiff, v. TRAVELERS INSURANCE COMPANY, Defendant.
• Court: New Jersey Superior Court

Page 335

167 N.J.Super. 335

400 A.2d 862

HARTFORD ACCIDENT & INDEMNITY COMPANY, Plaintiff, v. TRAVELERS INSURANCE COMPANY, Defendant.

Superior Court of New Jersey, Law Division.

March 9, 1979.

Eugene M. Purcell, Pluckemin, for plaintiff (Purcell, Ries & Shannon, Pluckemin, attorneys).

James D. Butler, Jersey City, for defendant.

MARGOLIS, J. S. C.

The court is here presented with a question of novel impression in this State concerning coverage, if any, afforded under an automobile insurance policy by reason of an accident involving a tow truck, which was towing an oil truck, and which tow truck was in a collision with a third vehicle.

The primary issue is whether the act of towing a vehicle is a "use" of the towed vehicle within the meaning of the policy insuring the towed vehicle, thereby making the operator of the tow truck an "insured" under the towed vehicle's policy. Corollary to this threshold determination is the validity of an exclusionary clause which purports to exclude coverage for said accident.

The underlying facts are undisputed. On January 14, 1973 Richard A. Fisher was the operator of a tow truck owned by Polizzi Towing Corp. (Polizzi), which vehicle was insured by Hartford Accident & Indemnity Company (Hartford). Polizzi's tow truck was involved in an accident while towing an oil truck owned by Wellen Oil Co. (Wellen) and insured by Travelers Insurance Company (Travelers). As a result of the accident various claims and lawsuits for personal injuries and property damage were made and instituted against Polizzi and Fisher. Hartford demanded that Travelers agree that its policy also provided coverage for Polizzi and Fisher, which demand Travelers refused. A lawsuit against Polizzi and Fisher was tried on the issue of liability only, and resulted in a verdict against Polizzi and Fisher. Subsequently, Hartford which had alone defended the lawsuit, settled all claims for damages arising out of the accident. The parties have stipulated, for purposes of this action, that the Wellen vehicle neither contributed to, nor was involved in, the actual impact.

The instant action was commenced by Hartford against Travelers seeking a judgment declaring that at the time of the accident between Hartford's insured and the third vehicle, that Hartford's insured was also entitled to coverage under the Travelers policy insuring the Wellen vehicle. Travelers filed an answer contending that (1) neither Polizzi nor Fisher were insureds under the Travelers policy; (2) the settlements entered into by Hartford on behalf of Polizzi were made without Travelers consent, and (3) the settlements were unreasonable in amount. Hartford replied, contending that Travelers by its actions was either estopped or had waived its right to challenge the validity or reasonableness of the settlements. Hartford now moves for summary judgment solely on the issue of policy coverage under the Travelers policy.

We first consider whether the act of towing is a "use" of the towed vehicle within the meaning of the Travelers policy which states:

COMPREHENSIVE AUTOMOBILE LIABILITY INSURANCE COVERAGE PART

I. Coverage C Bodily Injury Liability Coverage D Property Damage Liability

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

Coverage C. bodily injury or

Coverage D. property damage

to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance or use, including loading and unloading, of any automobile, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements.

II. Persons Insured

Each of the following is an insured under this insurance to the extent set forth below:

(c) any other person while using an owned automobile or a hired automobile with the permission of the named insured, provided his actual use thereof is within the scope of such permission * * *.

(d) Any other person or organization but only with respect to his or its liability because of acts or omissions of an insured under (a), (b) or (c) above.

Specifically, the issue is whether the act of towing comes within the scope of the Travelers policy providing coverage for accidents "arising out of the ownership, maintenance or use" of the Wellen vehicle. Although there is no New Jersey authority which addresses the act of towing in this respect, the term "use" has been judicially interpreted in the context of insurance coverage disputes on numerous occasions. In Indemnity Ins. Co. v. Metropolitan Cas. Ins. Co. of New York, 33 N.J. 507, 166 A.2d 355 (1960), the court said * * * the use of an automobile denotes its employment for some purpose of the user; the word 'operation' denotes the manipulation of the car's controls in order to propel it as a vehicle. Use is thus broader than Operation * * *. One who operates a car uses it, * * * but one can use a car without operating it. An automobile is being used, for example, by one riding in it although another is driving. (at 513, 166 A.2d at 358)

The term "use" is broad and includes a wide variety of situations. In Westchester Fire Ins. Co. v. Continental Ins. Cos., 126 N.J.Super. 29, 312 A.2d 664 (App.Div.1973), aff'd o. b. 65 N.J. 152, 319 A.2d 732 (1974), the court held that an accident arose out of the use of an automobile where a bicyclist was injured by a stick thrown by a passenger from a moving automobile. In Unsatisfied Claim and Judgment Fund Bd. v. Clifton, 117 N.J.Super. 5, 283 A.2d 350 (App.Div.1971), a gas station employee engaged in repairing an insured's car injured a friend of his who had been helping him guide the car onto a hydraulic lift. The court held that the employee's use was a permitted one covered by the insured's policy. In Selected Risks Ins. Co. v. Nationwide Mutual Ins., 133 N.J.Super. 205, 336 A.2d 24 (App.Div.1975), a garage owner was examining a customer's vehicle when it suddenly lurched forward, killing the garage owner and injuring the customer's wife. The court held that the estate of the deceased was covered under the omnibus clause in the customer's policy, since the examination of the auto was a permitted use under the customer's policy. In Motor Club Fire & Cas. Co. v. New Jersey Mfrs. Ins. Co., 73 N.J. 425, 432, 375 A.2d 639, 643 (1977), Cert. den. 434 U.S. 923, 98 S.Ct. 402, 54 L.Ed.2d 281 (1977) our Supreme Court noted that the meaning and scope of the coverage provided "must be considered in light of our courts' expansive view of the coverage provided by the standard omnibus clause * * *."

Courts in other jurisdictions which have considered the issue here involved have generally adopted a broad interpretation of the term "use" and have held the act of towing to be a "use" of the towed vehicle within the meaning of the standard omnibus clause.

In State Automobile Mut. Ins. Co. v. State Farm Mut. Ins. Co., 456 F.2d 238 (6 Cir. 1972), the court held that the driver of a towing vehicle was also "using" the towed vehicle. There, plaintiff was the insurer of an automobile which was towing a jeep insured by the defendant. Both vehicles crossed the center line on a highway and collided with another vehicle. Defendant carrier contended that the towed vehicle which it insured did not cause or contribute to the accident and therefore there was no coverage under its policy. Both vehicles were in common ownership. The court, in rejecting defendant carrier's contention, noted that both policies provided coverage for accidents "arising out of the ownership, maintenance, or use" of the automobile, and that such coverage "is about as general and broad as could be * * *." 456 F.2d at 239. The court further noted that the accident arose out of the insured's use of both vehicles, and that it was immaterial that the towing vehicle rather than the towed vehicle collided with the tractor trailer, since the court concluded that the automobile and the jeep constituted a unit which the insured of both companies operated on the wrong side of the road causing the accident. The court referred to its earlier decision in Insurance Co. of North Amer. v. Royal Indem. Co., 429 F.2d 1014 (6 Cir. 1970). There, separate policies of insurance were issued by different companies on a tractor and trailer which collided with another vehicle. The court affirmed the entry of judgment against the insurer of the trailer in the amount of its prorated liability, despite the fact that the trailer did not figure in the accident other than being part of the tractor-trailer unit.

In Industrial Indem. Co. v. Continental Cas. Co., 375 F.2d 183 (10 Cir. 1967), an oil company was having work performed on its site. A cement company truck was unable to cross a muddy area to reach a well site and was towed by a caterpillar tractor owned by a construction company. After traversing the muddy section of the site, the driver of the truck left his vehicle and disconnected the tow chain between the two vehicles. However, before he could withdraw from between the vehicles, the tractor slipped back against the truck, pinning the driver against it. After paying the injured driver's claims, Industrial, the tractor's insurer, commenced an action against Continental, the insurer of the truck, to determine whether Continental's policy covering the truck also extended coverage to the driver of the tractor. Continental's policy defined "insureds" to include any person "using" an owned automobile with the permission of the named insured. The Court of Appeals affirmed the...