Jordan v. Ferro

• Decision Date: 10 April 1961
• Docket Number: No. D--6304,D--6304
• Parties: Jessie JORDAN, Petitioner-Respondent, v. Alexander F. FERRO, T/A Dale Iron and Metal Company, and Pennsylvania Threshermen and Farmers' Mutual Casualty Insurance Company, Respondent-Appellant. Claim Petition
• Court: New Jersey County Court

Page 188

67 N.J.Super. 188

170 A.2d 69

Jessie JORDAN, Petitioner-Respondent, v. Alexander F. FERRO, T/A Dale Iron and Metal Company, and Pennsylvania Threshermen and Farmers' Mutual Casualty Insurance Company, Respondent-Appellant.

Claim Petition No. D--6304.

Union County Court,

Law Division,

New Jersey.

April 10, 1961.

Louis C. Jacobson, Newark, for petitioner-respondent (Brass & Brass, Newark, attorneys).

James T. Kirk, Elizabeth, for respondent Alexander F. Ferro; Brian D. Conlan, Newark, for respondent-appellant Pennsylvania Threshermen & Farmers' Mut. Cas. Ins. Co. (Gurry & Conlan, Newark, attorneys).

HOPKINS, J.C.C.

Jessie Jordan, the petitioner, was severely and permanently injured on June 19, 1957 in an accident arising out of and in the course of his employment by Alexander F. Ferro, trading as Dale Iron and Metal Company. On April 27, 1959 a substantial judgment was entered in favor of the petitioner against his employer and Pennsylvania Threshermen and Farmers' Mutual Casualty Insurance Company, alleged to be the insurance carrier. On the present appeal of the insurance Company, two questions are presented for determination: (1) the jurisdiction of the Workmen's Compensation Division of the Department of Labor and Industry to enter the judgment; and (2) the factual existence of insurance coverage at the time of the accident.

Normally the question of jurisdiction would be determined first; but, in order that the matter may be completely delineated, the factual situation will be explored prior to the determination of the jurisdictional question.

I.

Alexander Ferro, the respondent employer, was engaged in business in New York under a corporate setup known as Jafco Iron and Metal Corporation. He was familiar with the general procedures involved in the issuance of insurance policies, and particularly the issuance of and the necessity for workmen's compensation insurance, at least so far as that state is concerned. He entered into business in New Jersey on May 7, 1957, individually, trading as Dale Iron and Metal Company, and in anticipation thereof he engaged Henry Pflug, a licensed insurance broker of New Jersey, to secure compensation insurance for him. The broker was unable to secure insurance on a voluntary basis through the regular channels and advised Ferro he would have to make application for assignment of an insurance carrier in accordance with the New Jersey Assigned Risk Plan--Workmen's Compensation Insurance. On May 16, 1957 such an application was filled out, signed by Ferro, and filed with the Bureau.

At the top of the application in red ink under the heading 'important' the following words appear--'No insurance is provided by this application. Insurance becomes effective only in accordance with the terms of the Assigned Risk Plan.' Paragraph 5 of the Paln contains the language pertinent to this matter. It states, in part:

'Upon receipt of an assignment from the Bureau, the designated carrier shall make available to the employer Workmen's Compensation and Employers' Liability insurance to become effective not more than five business days after the date of the assignment, Provided the premium is paid to the carrier. In the event that the premium is not paid within the five day period, the company shall be authorized to defer the effective date of the insurance until 12:01 A.M. on the day following payment.' (Emphasis supplied.)

This provision of the Plan was known not only to the respondent employer's broker, a licensed broker for over 20 years, but he also testified as follows:

'Q. As an insurance broker with the client, did you convey to Mr. Ferro that he had no insurance until the premium was paid? A. I told him that originally.

'Q. What did you tell him originally? A. I told him that the premium had to be paid to the company before any coverage.

'Q. When did you tell him that? A. I told him the day I worked up the assignment.'

Under date of May 29, 1957 the Bureau directed a letter to Ferro, with a copy to his broker, advising that the risk had been assigned to the respondent insurance company. The second paragraph of that letter is as follows:

'We direct your attention particularly to the provision of the Plan which provides that the proper premium be paid to the company before any coverage is issued.'

On the same day, May 29, 1957, the Bureau directed a covering letter to the insurance company advising that the risk had been assigned to it. On May 31, 1957 the insurance company wrote Ferro, with copy to the broker, asking for his check for $1,835.50, the estimated annual premium, and further stating:

'Your prompt attention to the above will be appreciated, as coverage cannot be made effective until receipt of the premium.'

Upon receipt of his copy of the letter, the broker contacted Ferro but was unable to secure a check for the premium. On June 14, 1957 the insurance company directed another letter to Ferro, with copy to the broker, advising they had received no reply to their letter of May 31, 1957 and stating:

'To date we have not received your check and now we are wondering if this coverage is no longer desired. Will you kindly advise.'

At this time the broker again contacted Ferro and told him he had better get the check but was unable to secure one.

The next steps are of particular significance. On June 19, 1957 the accident occurred and the petitioner received the substantial injuries referred to. On the afternoon of that day, a check for $600 dated June 18, 1957 was delivered to the broker and he wrote the insurance company enclosing a check

'in the amount of $600 which they are tendering on acct of their premium of $1835.50 and ask if it would be in order to write the policy and they would arrange to pay the balance as soon as they can make arrangements for the same.'

The letter was handwritten by the broker 'because I wanted to get it off fast.'

On June 24, 1957 the insurance company wrote the broker returning the check for $600, advising it would accept nothing less than full payment. On the same day, June 24, 1957, the broker had mailed Ferro's check for $1,235, the balance of the premium, to the insurance company, and upon receipt by him of the returned check for $600 he again mailed it to the insurance company on June 25, 1957. The insurance carrier, upon receipt of the check for $1,235 on June 26, 1957, issued its policy effective 12:01 a.m. June 27, 1957 to June 27, 1958. The check for $600 was again received by it on June 28, 1957; both checks were deposited and returned for insufficient funds. Notice of cancellation was sent to the employer, Ferro, but before the cancellation date payment was made by certified check and the policy was reinstated as of June 27, 1957.

A simple reading of the chronological data, together with the provisions of the plan, makes it obvious that on June 19, 1957, the date of the accident, there was no effective policy of insurance or any contractual liability between the insurance company and the employer, either in a regular business way or under the rules of the New Jersey Assigned Risk Plan for Workmen's Compensation Insurance, by which liability can, or should be, imposed upon the respondent insurance company.

A substantial part of the testimony and of the argument of counsel is devoted to an asserted ambiguity in the dealings and correspondence between the employer and the insurance company, under which it is claimed the employer was led to believe he was insured prior to the accident. Particular attention is directed in the proceedings below, and in the decision of the deputy director, to the language used in the letter of the insurance company dated June 14, 1957 and recited above. Taken in context with all of the correspondence and dealings among the insurance company, the broker and the employer, there does not appear to this court to be the slightest ambiguity or...