London & Lancashire Ins. Co. v. Government Emp. Ins. Co.

• Decision Date: 16 March 1961
• Docket Number: No. C--2501,C--2501
• Parties: LONDON AND LANCASHIRE INSURANCE COMPANY, Ltd., a corporation, and Mallon Suburban Motors, Inc., a corporation, Plaintiffs, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, a corporation, Charles Sayour, administrator ad prosequendum of the Estate of George M. Sayour, Deceased, Werner Bloch, and General Motors Corporation, a corporation, Defendants.
• Court: New Jersey Superior Court

Page 269

66 N.J.Super. 269

168 A.2d 855

LONDON AND LANCASHIRE INSURANCE COMPANY, Ltd., a corporation, and Mallon Suburban Motors, Inc., a corporation, Plaintiffs, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, a corporation, Charles Sayour, administrator ad prosequendum of the Estate

of George M. Sayour, Deceased, Werner Bloch, and General

Motors Corporation, a corporation, Defendants.

No. C--2501.

Superior Court of New Jersey

Chancery Division.

March 16, 1961.

Bernard T. Hein, Hackensack, for plaintiff London & Lancashire Ins. Co., Ltd. (Hein, Smith & Mooney, Hackensack, attorneys).

William P. Kirkpatrick, Newark, for defendant Government Employees Ins. Co. (Mead, Gleeson, Hansen & Pantages, Newark, attorneys).

Saul Cohen, Clifton, for defendant Werner Bloch (Werksman, Saffron & Cohen, Clifton, attorneys).

William M. Feinberg, Bayonne, for defendant Charles Sayour (Feinberg, Dee & Feinberg, Bayonne, attorneys).

MINTZ, J.S.C.

This is a declaratory judgment proceeding. The respective insurance companies cross-motion for judgment on the pleadings. R.R. 4:12--3. The essential facts are undisputed.

On February 13, 1960 Dr. Werner Bloch, a prospective purchaser of an automobile from Mallon Suburban Motors, Inc., was operating a Mallon-owned vehicle on his private driveway adjoining his residence. The Mallon salesman, George M. Sayour, was in front of the vehicle, giving directions to the doctor who was endeavoring to enter his garage. The vehicle struck Sayour, fatally injuring him. Thereafter, the administrator Ad prosequendum of Sayour's estate instituted suit for the resultant damages, naming Dr. Bloch and General Motors Corporation as defendants. That suit is still pending.

At the time of the collision Mallon was insured by London and Lancashire Insurance Company, Ltd. ('London') under a comprehensive general automobile liability policy with maximum coverage of $200,000 per person and $500,000 for each accident. Dr. Bloch was an additional insured under this policy. Dr. Bloch also was a named insured under two separate policies, both issued by Government Employees Insurance Company ('Government'). One was a comprehensive personal liability policy with maximum coverage of $10,000 which covered accidents on the doctor's premises, with 'premises' defined as including the private approaches to a residence. The other was a family automobile policy which included coverage of accidents arising out of the use of a 'non-owned' automobile.

Plaintiff London instituted this action seeking a determination that the Government comprehensive policy be declared the first applicable policy to the loss in question to the full extent of its coverage, and, should there be liability above this coverage, that the Government automobile policy and the London automobile policy share equally in the amount of settlement or judgment and expenses to the full extent of their respective coverages. Government counterclaimed for an adjudication that the policy issued by London to Mallon be declared the primary insurance for all claims asserted against Dr. Bloch arising out of the accident on February 13, 1960, and that the automobile policy isued by Government be declared excess insurance over and above the limits of the London policy. Government further asserts that its comprehensive personal liability policy affords no coverage for the accident, but if it does, that it be deemed excess insurance to that of London and defenant's automobile policy, or, in the alternative, that it be deemed co-insurance to the extent of prorating its limit of liability with the limit of liability of both automobile liability policies.

This action is not prematurely brought. The litigants have demonstrated possession of truly adverse legal interests of sufficient immediacy and reality amply to justify resort to declaratory judgment procedure. See Hartford Accident and Indemnity Co. v. Selected Risks Indemnity Co., 65 N.J.Super. 328, 167 A.2d 821 (App.Div.1961); Condenser Service & Engineering Co., Inc. v. American Mutual Liability Insurance Co., 45 N.J.Super. 31, 131 A.2d 409 (App.Div.1957).

The issues are to be resolved upon a determination of the legal effect of the 'Other Insurance' provisions appearing in the respective policies. London's provision is as follows:

'Other Insurance: If the insured has other insurance against a loss covered by this policy the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss; provided, however, the insurance under this policy with respect to loss arising out of the maintenance or use of any hired automobile insured on a cost of hire basis or the use of any non-owned automobile shall be excess insurance over any other valid and collectible insurance.'

The 'Other Insurance' provision in Government's automobile policy issued to Dr. Bloch is substantially the same. Under that provision, Dr. Bloch's operation of the Mallon vehicle constituted use of a non-owned automobile.

The 'Other Insurance' provision in Government's comprehensive personal liability policy issued to Bloch reads as follows 'Other Insurance--Coverage A:

'If the insured has other insurance against a loss covered by this policy, the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss.'

London urges that since Government's comprehensive personal liability policy is the only policy without an excess insurance clause, it is to be deemed the policy affording the primary coverage, citing Cosmopolitan Mutual Insurance Co. v. Continental Casualty Co., 28 N.J. 554, 147 A.2d 529, 69 A.L.R.2d 1115 (1959). I do not regard that case as authority for any such proposition. In Cosmopolitan the court concluded that each of the policies before it contained a mutually repugnant excess insurance clause, and therefore such clauses would be disregarded and each policy held to afford primary coverage. London's 'Other Insurance' clause specifically provides for excess coverage in the case of use of a hired or non-owned automobile. As already observed, Dr. Bloch operating the Mallon-owned vehicle was an additional insured under the London policy. Hence the excess insurance clause in that policy does not apply, and it remains a policy of primary insurance. There is no merit to Government's argument that accidents of the type Dr. Bloch was involved in were not intended to be covered under its comprehensive liability policy. The fact is that Government insured this risk under that policy which does not contain an excess insurance clause, and is accordingly primarily liable with London. The extent of its primary liability will be hereinafter considered.

Government's automobile policy specifically provides...