United States Cas. Co v. Timmerman

• Decision Date: 06 September 1915
• Parties: UNITED STATES CASUALTY CO v. TIMMERMAN et al.
• Court: New Jersey Court of Chancery

180 A. 629

UNITED STATES CASUALTY CO

v. TIMMERMAN et al.

Court of Chancery of New Jersey.

Sept. 6, 1915.

Syllabus by the Court.

1. Holder under conditional sales agreement is not exclusive owner within the meaning of that term in motor vehicle liability policy.

2. One concerned in a motor vehicle accident resulting in injury to another person may arrange with an insurance company for a policy conforming to P. L. 1929, p. 195 (Comp. St. Supp. 1930, § 135—119 et seq.) as amended P. L. 1931, p. 334 (N. J. St. Annual 1931, §§ 135—119, 135—120, 135—128, 135— 129), and insurer cannot escape the responsibility thus undertaken even though the commissioner of motor vehicles has not required proof of financial responsibility.

3. Agreement contained in liability policy to extend the insurance so as to conform with statutory provisions afforded immediate insurance in conformity with statute and should not be construed to mean that in event assured should be required by the commissioner to furnish proof of financial responsibility, then insurer would indorse its policy so as to provide the statutory coverage.

4. The beneficiaries of the statute and of the policy provisions required thereby are the public—those who may be injured in motor vehicle accidents.

5. The policy remains valid as to third person injured in such an accident, despite assured's breach of a warranty or condition precedent.

Suit by the United States Casualty Company against Raymond Timmerman and another.

Bill dismissed.

Feder & Rinzler, of Passaic, for complainant.

Hugh C. Spernow, of Paterson, for defendant Timmerman.

Louis Santorf, of Paterson, for defendant Godlewska.

BIGELOW, Vice Chancellor.

This suit turns on the Motor Vehicle Financial Responsibility Act, P. L. 1929, p. 195 (Comp. St. Supp. 1930, § 135—119 et seq.), as amended P. L. 1931, p. 334 (N. J. St. Annual 1931, §§ 135—119, 135 —120, 135—128, 135—129), and on an automobile liability policy issued by complainant to defendant Timmerman.

November 27, 1931, Timmerman, while operating a motor vehicle, was concerned in an accident resulting in injury to another person. In January, 1934, complainant issued to him the policy in question. Some three months later Timmerman, by the allegedly negligent operation of his automobile, injured defendant God-lewska. In October, she instituted against Timmerman an action for damages, which is still pending. On December 18, 1934, complainant gave notice to Timmerman that it canceled its policy as of the time of the issuance thereof. It filed its bill in the present cause a few days later, and prays that the policy be annulled on grounds now to be stated.

The policy certifies that complainant does agree to insure Timmerman "subject to the following conditions:" Then follow a number of stipulations:

"Condition O: This policy is issued in consideration of the premium and of the statements set forth in the schedule of statements and made a part hereof, which statements the named assured, by acceptance of this policy, warrants to be true."

The schedule of statements contains, among others:

"Statement 8. The occupation or business of the named assured is Mineral Water."

"Statement 13. The automobiles or trailers covered hereby are owned exclusively by the named assured, except as follows: No exceptions."

"Statement 14. No similar insurance has been declined or canceled by any company, during the past two years, except as follows: No exceptions."

Timmerman, at the time the policy was issued, worked for his father at a road stand; he served food and drink, including mineral waters, and also including alcoholic liquors. Complainant says he should have been described as a bartender. I would suggest waiter. But the statement "mineral water" was not false.

Timmerman's automobile described in the insurance policy was held by him on a conditional bill of sale; it was not owned exclusively by him.

The title of a conditional vendee is not an "unconditional and sole ownership." Hudson Cas. Ins. Co. v. Garfinkel, 111 N. J. Eq. 70, 161 A. 195, 196. "'Exclusive ownership' is necessarily ownership free from any kind of legal or equitable interest in any one else." Comstock v. Boyle, 144 Wis. 180, 128 N. W. 870, 872.

A similar policy had been issued to Timmerman by the Globe Indemnity Company and had been canceled by that company October 14, 1933, but in lieu thereof, 16 days later, the same company issued another policy to Timmerman of the same general character. It is not shown why the one policy was substituted for the other. I do not think such a cancellation is intended by statement 14, but I do not have to decide that question definitely, since it clearly appears that statement 13 was untrue.

The appeal to this court is founded on chancery's jurisdiction in matters of fraud. It should be noted that Timmerman did not represent to the complainant, in order to procure the policy, that he was the exclusive owner of the automobile. Complainant issued the. policy without previous inquiry on that point. It may be that, by accepting the policy, Timmerman estopped himself from denying that he had represented that he was the exclusive owner of the automobile or it may be that equity should intervene on the ground of mistake. But I incline to believe that complainant has no equitable cause of action for rescission; that its defense to the policy is purely legal—a breach of warranty or of a condition precedent. In Hudson Cas. Ins. Co. v. Garfinkel, supra, which may seem authority for the present bill, the question was not raised. New Amsterdam Cas. Co. v. Mandel, 115 N. J. Eq. 198, 170 A. 19. I have not, however, carefully considered this matter, as I have come to the conclusion that the bill must be dismissed on other grounds.

Defendants claim that the Motor Vehicle Financial Responsibility Act and the policy itself forbid its cancellation, even for fraud, after a third party, the victim of an accident, has become interested.

The statute (section 1 [N. J. St. Annual 1931, § 135—119]) directs the commissioner of motor vehicles to require from certain classes of persons, which include Timmerman, "proof of financial responsibility to satisfy any claim for damages, by reason of personal injury to, or the death of, any one person of at least five thousand dollars ($5,000)." Such person's license to operate a motor vehicle shall be suspended by the commissioner until the proof be furnished.

Section 2 (N. J. St. Annual 1931, § 135—120). Such proof may consist of "evidence of the insuring of such person against public liability * * * in the form of a certificate signed by any duly licensed agent of any company issuing the policy of insurance," or a bond properly conditioned or cash or collateral.

Section 10 (N. J. St. Annual 1931, § 135—128). The insurance policy which may be taken as proof of financial responsibility may embody "any agreements, provisions or stipulations not contrary to the provisions of this act and not otherwise contrary to the law." The form of the policy shall be submitted to the commissioner for his approval, but he shall approve any form "which discloses the name, address and business of the insured, the coverage afforded by such policy, the premium charged therefor, the policy period, the limit of liability and the agreement that the insurance thereunder is provided in accordance with the coverage defined in this section and is subject to all of the provisions of this act." The policy is subject to...