Kish v. Motor Club of America Ins. Co.

• Decision Date: 02 February 1970
• Parties: Gayna KISH, an infant by her Guardian ad Litem, Dorothy Bonomolo, and Dorothy Bonomolo, Individually, Plaintiffs-Appellants, v. MOTOR CLUB OF AMERICA INSURANCE COMPANY, Charles E. Harding, Edwin M. Gordon and Urania Gordon, Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 405

108 N.J.Super. 405

261 A.2d 662

Gayna KISH, an infant by her Guardian ad Litem, Dorothy

Bonomolo, and Dorothy Bonomolo, Individually, Plaintiffs-Appellants, v. MOTOR CLUB OF AMERICA INSURANCE COMPANY, Charles E. Harding, Edwin M. Gordon and Urania Gordon, Defendants-Respondents.

Superior Court of New Jersey

Appellate Division.

Argued Dec. 8, 1969.

Decided Feb. 2, 1970.

Douglas T. Hague, Edison, argued the cause for appellants (Henry M. Spitzer, Perth Amboy, attorney, Ronald R. Kogos, on the brief).

Jerome S. Lieb, E. Orange, argued the cause for respondent Motor Club of America Ins. Co. (Lieb, Teich & Berlin, E. Orange, attorneys).

Before Judges CONFORD, COLLESTER and KOLOVSKY.

The opinion of the court was delivered by

KOLOVSKY, J.A.D.

The infant plaintiff (Kish), while a passenger in an Oldsmobile automobile owned by her and being driven with her permission by defendant Harding, was injured when the automobile collided with that of defendants Gordon.

Defendant Motor Club of America Insurance Company (Motor Club) had theretofore issued a binder for an automobile liability insurance policy describing the Kish ('the owned') automobile and designating Kish as the named insured. Under Coverage 'A' of the policy, Motor Club agrees

To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of:

A. bodily injury, sickness or disease, including death resulting therefrom, hereinafter called 'bodily injury', sustained by any person;

arising out of the ownership, maintenance or use of the owned automobile * * *.

The policy defines 'insured' to mean 'a person or organization described under 'Persons Insured. " The 'Persons Insured' provision of the policy reads in pertinent part as follows:

The following are insureds under Part 1:

a. with respect to the owned automobile,

(1) the named insured and any resident of the same household,

(2) any other person using such automobile with the permission of the named insured * * *.

The only other provision of the policy pertinent to the issue here presented is the following appearing among its exclusionary clauses:

This policy does not apply * * * (K) under Coverage A, to death of or injuries to the named insured, or any insured, or the spouse or minor children of the named insured or any insured, whether related by blood or adoption, unless the policy is specifically endorsed to cover the same.

The infant plaintiff and her mother instituted a negligence action against Harding and the Gordons to recover for the injuries sustained by the infant in the collision. Motor Club, relying on exclusion (K) quoted above, denied that any insurance coverage was due Harding with respect to the claim of Kish, the 'named insured.' It filed an answer in the negligence action on Harding's behalf only after he had executed a nonwaiver agreement.

Kish then instituted this action seeking a declaratory judgment that exclusion (K) is invalid and that in any event Motor Club is obligated to afford a defense to Harding and to pay any judgment which Kish may recover against him. On cross-motions for summary judgment the trial judge entered judgment in favor of Motor Club. He ruled that exclusion (K) is valid and a bar to any liability of Motor Club with respect to the Kish claim, citing with approval State Farm Mut. Auto. Ins. Co. v. Cocuzza, 91 N.J.Super. 60, 219 A.2d 190 (Ch.Div.1966), which involved a substantially similar exclusionary clause. Plaintiffs appeal.

We reverse and hold that the exclusion is invalid and may not be applied to deprive Harding of the insurance coverage to which he, as one who was using the automobile with the permission of the named insured, is otherwise entitled under the policy. Selected Risks Ins. Co. v. Zullo, 48 N.J. 362, 225 A.2d 570 (1966); Willis v. Security Insurance Group, 53 N.J. 260, 250 A.2d 129 (1969), affirming 104 N.J.Super. 410, 250 A.2d 158 (Ch.Div.1968).

The opinions in State Farm Mut. Auto. Ins. Co. v. Cocuzza, Supra, and in Capece v. Allstate Ins. Co. v. State Farm, etc., Ins. Co., 88 N.J.Super. 535, 212 A.2d 863 (Law Div.1965), referred to in Cocuzza, were concerned primarily with the interpretation of the exclusionary clauses rather than with their validity. Implicit therein, however, and particularly in the citation of numerous out-of-state cases upholding the effectiveness of such clauses (see Cocuzza, Supra, 91 N.J.Super., at 63--64, 219 A.2d 190; Capece, Supra, 88 N.J.Super. at 542--544, 212 A.2d 863), were determinations that the clauses, although they limited the coverage otherwise granted by the omnibus clauses, were not against public policy (see Capece, Supra, at 541, 212 A.2d 863) and should be enforced as written.

The public policy of other states with respect to the question presented, as revealed by the cases cited from their courts, is, however, merely of academic interest in view of the decision of our Supreme Court in Selected Risks Ins. Co. v. Zullo. There the court held that the public policy of this State with respect to omnibus coverage was to be found in the provisions of the Unsatisfied Claim and Judgment Fund Law, N.J.S.A. 39:6--61 et seq., and the Motor Vehicle Security-Responsibility Law, N.J.S.A. 39:6--23 et seq. Neither Capece nor Cocuzza, had discussed the relevance of those statutes, although the opinion in Cocuzza did note that the policy there involved 'was not issued pursuant to the Motor Vehicle Security-Responsibility Law.' 91 N.J.Super., at 61, 219 A.2d, at 191.

In Selected Risks Ins. Co. v. Zullo, the question posed was the omnibus coverage required to be afforded under an owner's automobile liability insurance policy issued not as proof of financial responsibility for the purposes of the Motor Vehicle Security-Responsibility Law, N.J.S.A. 39:6--31 and 46(a), but rather, as in the present case, for the purpose of qualifying the owned automobile as an insured automobile whose owner could thus obtain the advantage of so registering it under the Fund Law.

The court held that in the case of an owner's policy 'there may be no departure from the omnibus coverage described in (N.J.S.A. 39:6--46(a))' (48 N.J., at 374, 225 A.2d, at 577); that the policy 'must have the broad form omnibus coverage set forth in N.J.S.A. 39:6--46(a),' and that 'a policy which purports to have a more restrictive omnibus coverage is automatically amended to conform to the statutory standard' (48 N.J., at 373, 225 A.2d, at 577).

N.J.S.A. 39:6--46(a) provides in pertinent part:

The policy shall:

(a) Designate, by explicit description or appropriate reference, all motor vehicles with respect to which coverage is intended to be granted thereby, and insure the insured named therein and any other person using or responsble for the use of any such motor vehicle with the express or implied consent of the insured, against loss from the liability imposed upon the insured or other person by law, for injury to or the death of a person, other than a person who is covered, as respects the injury or death, by any workmen's compensation law, * * * growing out of the maintenance, use or operation of the motor vehicle in the United States of America.

In Zullo the insurance policy, after defining 'persons insured' with respect to the owned automobile to include 'any other person using such automobile with the permission of the named insured' (in substance the statutory language), added the proviso, 'provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission.' The proviso was held ineffective and 'the policies * * * deemed amended to contain omnibus coverage no less broad than that of the statute.' 48 N.J., at 373, 225 A.2d, at 577.

In Willis v. Security Ins. Group, the policy contained an omnibus clause in the statutory form but by endorsement 'specifically exclude(d) from its omnibus clause individuals driving the insured's car with his permission where such persons have available valid and collectible insurance under their own policies with the minimum limits of $10,000/20,000.' 104 N.J.Super., at 412, 250 A.2d, at 159. The trial court, in an opinion which was adopted by the Supreme Court, held the endorsement invalid because

N.J.S.A. 39:6--46(a) specifically requires that a policy shall 'insure the insured named therein and Any other person using or responsible for the use of any such motor vehicle with the express or implied consent of the insured, * * *.' (104 N.J.Super., at 415, 250 A.2d, at 161; emphasis added)

The principle embodied in Zullo and Willis mandates the conclusion that exclusion (K) is invalid and that the policy is to be deemed amended to delete it. To give effect to exclusion (K) would be to deprive Harding, a person using the automobile with the consent of the named insured, of the coverage which the statute says he is to have and to compel him to expend his own funds in defense of the Kish action and in payment of any judgment that Kish may recover against him, or, if he be without adequate financial resources, to impose the obligation of defending him and paying the judgment entered against him on the Unsatisfied Claim and Judgment Fund.

Under N.J.S.A....