Merchants Indemnity Corporation v. Peterson

• Decision Date: 07 June 1940
• Docket Number: No. 7322.,7322.
• Citation: 113 F.2d 4
• Parties: MERCHANTS INDEMNITY CORPORATION OF NEW YORK v. PETERSON et al.
• Court: U.S. Court of Appeals — Third Circuit

113 F.2d 4 (1940)

MERCHANTS INDEMNITY CORPORATION OF NEW YORK v. PETERSON et al.

No. 7322.

Circuit Court of Appeals, Third Circuit.

June 7, 1940.

McCarter & English, of Newark, N. J. (Gerald M. McLaughlin and Woodruff J. English, both of Newark, N. J., of counsel), for appellant.

Baruch S. Seidman and George S. Applegate, Jr., both of South River, N. J., for appellees.

Before BIGGS, MARIS, and BUFFINGTON, Circuit Judges.

BIGGS, Circuit Judge.

On February 10, 1938, the appellant, Merchants Indemnity Corporation of New York, issued an automobile casualty policy to Richard Randolph by the terms of which the appellant agreed to pay all claims for damages sustained against Randolph arising out of the operation of Randolph's automobile upon conditions stated in the policy. The appellees, the Petersons, were Randolph's passengers when Randolph had an automobile accident on April 23, 1938, in which they suffered personal injuries. The appellees sued Randolph for damages, recovering a judgment in the sum of $4,860.45. Randolph failed to pay the judgment and the appellees sued the appellant, which refused payment on the ground that Randolph had failed to co-operate with it as required by the policy.

Paragraph 13 of the complaint alleges that prior to the issuance of the policy sued upon by the appellant to Randolph and on April 20, 1930, Randolph, while operating an automobile in New Brunswick, New Jersey, had a collision with another car, operated by one Snowhill, resulting in personal injuries to the latter and in property damage in excess of $100. Other paragraphs of the complaint allege that under the terms of the Financial Responsibility Statute, N.J.R.S. 39:6-1, N.J. S.A. 39:6-1 the Commissioner of Motor Vehicles must require proof of financial responsibility from any person who has been "concerned" in a motor vehicle accident as indicated by the statute. Paragraph 16 of the complaint alleges that as a result of the accident in 1930 Randolph was obligated to furnish proof of financial responsibility, that the policy issued by the appellant and here sued upon was a "required" policy under the statute, and, that as a result the liability of the insurer was absolute under R.S. 39:6-20, subd. a, N.J.S.A. 39:6-20, subd. a. If the policy sued upon in the case at bar is a "required" policy under the statute, the defense of lack of co-operation by Randolph may not be pleaded by the appellant as a defense.

The appellant filed an answer which alleges that Randolph failed to co-operate in the defense of the Petersons' suit. As to paragraph 13 of the complaint, the appellant answered that it was without knowledge or information sufficient to form a belief. The answer denies the allegations of paragraph 16. The appellees moved to strike paragraph 13 of this answer on the ground that it was insufficient in law and paragraph 16 on the ground that it was sham. The appellees also moved to strike all the additional defenses set up by the answer on the ground that they were insufficient in law. Affidavits were filed in support of and against this motion. The court below struck the answer and entered summary judgment for the appellees. This judgment is appealed from.

In the case of Ambrose v. Indemnity Insurance Company of North America, 120 N.J.L. 248, 199 A. 47, the Court of Errors and Appeals of New Jersey dealt with the question with which we are concerned in the case at bar. In 1936 Ambrose recovered a judgment against his brother for injuries sustained when he was struck by an automobile owned by the latter. When the judgment was not paid, Ambrose sued the insurance carrier. It appeared that in 1930 a school bus owned by the brother had killed a child. In delivering the opinion of the court, Justice Donges stated that the proof was uncontradicted that Ambrose's brother had never been required by the Motor Vehicle Commissioner to furnish proof of financial responsibility, but the court held that the policy taken out by Ambrose's brother, a person who because of the prior accident was liable to furnish proof of financial responsibility, was a required policy under the statute and the liability of the insurance carrier was absolute and unconditional.

The appellant for its part contends that since the Statute, R.S. 39:6-4 and 39:6-16, N.J.S.A. 39:6-4 and 39:6-16, provides a three-year period after which...