Malanga v. Manufacturers Cas. Ins. Co.
| Decision Date | 17 November 1958 |
| Docket Number | No. A--25,A--25 |
| Citation | 146 A.2d 105,28 N.J. 220 |
| Parties | George D. MALANGA, Alfred L. Malanga and Louis J. Malanga, trading as Mal Bros. Contracting Co., Plaintiffs-Respondents, v. MANUFACTURERS CASUALTY INSURANCE COMPANY, a foreign corporation, Defendant-Appellant. |
| Court | New Jersey Supreme Court |
Vincent D. Enright, Jr., Newark, argued the cause for defendant-appellant (McKeown, Harth & Enright, Newark, attorneys).
Samuel H. Nelson, Newark, argued the cause for plaintiffs-respondents (Parnell & Krueger, Newark, attorneys).
The opinion of the court was delivered by
This appeal, which we certified on our motion prior to its consideration in the Appellate Division, is from a summary judgment for the plaintiffs entered in the Law Division of the Superior Court. 49 N.J.Super. 341, 139 A.2d 800 (Law Div.1958). Defendant's motion for summary judgment was denied and it asks that the judgment below be reversed and summary judgment entered in its favor.
The controversy concerns the construction of a comprehensive liability insurance policy issued by the defendant insurer to George D. Malanga, Alfred L. Malanga and Louis Malanga, t/a Mal Bros. Trucking Co. and Mal Bros. Contracting Company. The named insured is a partnership. The policy is in standard form and includes four classes of coverage, of which only 'Coverage B--Bodily Injury Liability--Except Automobile' is pertinent. Under this provision the defendant undertook 'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury * * * sustained by any person and caused by accident.' Under the heading 'Conditions' the policy provides that 'Assault and battery shall be deemed an accident unless committed by or at the direction of the insured.' 'Insured' is defined in the policy as follows:
'III Definition of Insured: The unqualified word 'insured' includes the named insured and also includes (1) under Coverages B and D, any executive officer, director or stockholder thereof while acting within the scope of his duties as such * * * and if the named insured is a partnership, the unqualified word 'insured' also includes any partner therein but only with respect to his liability as such. * * *'
While the policy was in effect, one Thompson instituted an action in the Superior Court against the named partnership and George D. Malanga and Alfred Malanga individually. His complaint charged them with wrongful use and occupation of his property, trespass, assault and battery and a malicious injury, for which he sought compensatory and punitive damages. The partnership and the individual partners called upon the insurer to defend this action. Upon the insurer's refusal, the partnership and the individual partners retained counsel who undertook the defense of the suit. Thereafter, Thompson amended his complaint to include a count charging negligence. The insurer was so notified and, because the policy indisputably covered liability for negligence, it accepted a substitution of attorney and undertook the defense of the entire action despite the refusal of the partnership and the individual partners to execute 'non waiver' agreements as requested.
The proofs at the trial disclosed that on October 19, 1955 Thompson, while standing on his own property, refused to permit Alfred Malanga, one of the partners, and certain employees of the partnership who were working on adjacent land, to remove dirt from his premises. At that time Alfred Malanga, the only partner present, was seated in an earth-moving machine. After a heated argument with Thompson, Alfred Malanga told him to 'Get away or I will bury you in the dirt.' He then drove the machine directly at Thompson who fell into its bucket and was injured. At the close of the entire testimony the trial court granted a motion to dismiss the negligence count. As Thompson had previously abandoned the trespass and use and occupation counts, the sole issue submitted to the jury was the assault and battery claim. The court charged the jury that if it found that Alfred Malanga committed the assault and battery while acting in the ordinary course of business of the partnership, then the verdict could go not only against him but also against the partnership and George D. Malanga as a partner thereof. This instruction embraced the punitive as well as the compensatory damages. The jury returned a verdict in favor of Thompson against the partnership and George D. Malanga and Alfred Malanga, individually, in the amount of $7,500 compensatory damages and $10,000 punitive damages. No appeal was taken from the judgment entered thereon. Upon the insurer's refusal to satisfy the judgment, the partnership paid it and instituted the present action for reimbursement. As noted above, the Law Division granted this relief to the partnership and the defendant insurer appealed.
The sole issue for our determination is whether under the terms of the policy the partnership as such is covered for liability imposed upon it as the result of an assault and battery committed by a partner in the course of partnership business. The defendant insurer upon this appeal makes no distinction between the compensatory and punitive damage awards, and does not contend that the judgment in the Thompson suit is Res judicata or that the doctrine of equitable estoppel applies as to the partnership's participation in the tort.
The policy covers liability for bodily injury caused by accident. Assault and battery is deemed an accident 'unless committed by or at the direction of the insured.' Under the 'Definitions' provision of the policy, in addition to the named partnership as an entity, coverage is extended to the individual partners. Alfred Malanga, as a partner, is therefore an insured under the policy. But as he committed the assault and battery he is excluded from coverage because, as to him, the assault and battery cannot be deemed an accident. Farm Bureau Mut. Automobile Ins. Co. v. Hammer, 177 F.2d 793 (4 Cir. 1949). However, the exclusory clause is without effect as to an insured who neither committed nor directed the commission of the assault and battery. Western Casualty & Surety Co. v. Aponaug Mfg. Co., 197 F.2d 673 (5 Cir.1952); cf. Maryland Cas. Co. v. New Jersey Mfrs., etc., Ins. Co., 48 N.J.Super. 314, 137 A.2d 577 (App.Div.1958), affirmed per curiam 28 N.J. 17, 145 A.2d 15 (1958). The reason the insurance policy denies coverage of an assault and battery committed by or at the direction of an insured is that it would be contrary to public policy to indemnify a person for a loss incurred as a result of his own willful wrongdoing. 7 Appleman, Insurance Law and Practice, § 242b (1942). But the public policy which lies behind the exclusory clause is not applicable where liability is imposed upon an insured for an assault and battery in which he himself took no part. In Morgan v. Greater New York Taxpayers Mut. Ins. Ass'n, 305 N.Y. 243, 112 N.E.2d 273 (Ct.App.1953), one of two partners committed an assault and battery upon their tenant. The offense was committed in the ordinary course of the partnership business. The partners were insured as individuals under a policy similar to that in the present case. The victim obtained a judgment against the copartners and the assaulting partner individually. The judgment was unsatisfied and the plaintiff sought to avail himself of the non-assaulting partner's right of indemnity against the insurer. In holding that the innocent partner was entitled to indemnification the court said:
'To indemnify him does not save him from the consequences of a criminal act, for he has committed none.'
Therefore, the exclusory clause of the assault and battery provision is without effect as to the plaintiff partnership unless the assault and battery committed by Alfred Malanga can be deemed to have been committed by or at the direction of the partnership.
The defendant argues that since the assault and battery was committed by a partner in the course of partnership business, his act is imputed to the partnership under N.J.S.A. 42:1--13 and therefore the partnership and all of its members, N.J.S.A. 42:1--15, must be excluded from coverage. N.J.S.A. 42:1--13 provides:
'Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership or with the authority of his copartners, loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act.'
N.J.S.A. 42:1--15 provides:
'All partners are liable:
a. Jointly and severally for everything chargeable to the partnership under sections 42:1--13 * * * of this title.'
The above sections of the Uniform Partnership Law are...
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