Westchester Fire Ins. Co. v. Continental Ins. Companies

• Decision Date: 27 November 1973
• Citation: 126 N.J.Super. 29,312 A.2d 664
• Parties: WESTCHESTER FIRE INSURANCE CO., et al., Plaintiffs-Appellants, v. The CONTINENTAL INSURANCE COMPANIES, et al., Defendants-Respondents. Elmer Richard POTENT, Guardian Ad Litem for Richard M. Potent, an infant, et al., Plaintiffs, v. Jackie W. EISNER, et al., Defendants.
• Court: New Jersey Superior Court — Appellate Division

Page 29

126 N.J.Super. 29

312 A.2d 664

WESTCHESTER FIRE INSURANCE CO., et al., Plaintiffs-Appellants, v. The CONTINENTAL INSURANCE COMPANIES, et al., Defendants-Respondents.

Elmer Richard POTENT, Guardian Ad Litem for Richard M.

Potent, an infant, et al., Plaintiffs, v. Jackie W. EISNER, et al., Defendants.

Superior Court of New Jersey Appellate Division.

Argued Nov. 7, 1973.

Decided Nov. 27, 1973.

Edward B. Meredith, Trenton, for plaintiffs-appellants, Westchester Fire Ins. Co. and Holcombe (Meredith, Meredith & Chase, Trenton, attorneys).

Andrew J. Smithson, Trenton, for defendant-respondent, The Continental Ins. Companies (Dietrich, Stockman & Lake, Trenton, attorneys).

Richard D. Catenacci, Newark, for defendant-respondent, New Jersey Manufacturer's Ins. Co. (Hughes, McElroy, Connell, Foley & Geiser, Newark, attorneys).

Jerome S. Lieb, East Orange, for defendants-respondents, Motor Club Fire & Casualty Co. and Eisner (Lieb, Teich & Berlin, East Orange, attorneys).

Frank V. Walsh, Jr., Trenton, for plaintiffs Potent. (Gregory V. Hopkins, Trenton, on the brief).

Before Judges CARTON, SEIDMAN and GOLDMANN.

The opinion of the court was delivered by

CARTON, P.J.A.D.

This case presents novel questions as to coverage afforded under automobile and homeowner's insurance policies by reason of the act of a passenger who threw a stick from a moving automobile, which struck a passing bicyclist. The basic issue is whether the injury sustained by the bicyclist was one 'aris(ing) out of the ownership, maintenance or use of the owned automobile * * *' within the meaning of the automobile insurance policies. Corollary to this issue is the applicability of an exclusionary clause of the homeowner's policy making its coverage inapplicable to 'the * * * use of automobiles * * *.'

The underlying facts are stark and briefly stated. Jackie Eisner was driving his father's automobile. Richard Holcombe, a passenger in the right rear seat, threw a piece of wooden molding with a nail in it out of the right rear window. The stick struck Richard Potent, an infant, above the left eye as he was riding his bicycle.

The Potent boy, through his guardian Ad litem, and his parents Per quod, brought action against Eisner, the driver of the automobile, and his parents, and also against the passenger, Holcombe, and his parents, on various theories:

(1) against Jackie, the driver, because Holcombe, the passenger, threw the piece of wood from the car allegedly with his knowledge and consent;

(2) against the Eisners, Sr. for negligence in the care, control and discipline of their child;

(3) against Jackie for placing the piece of wood in the car knowing that it would constitute a nuisance because of temptation to a passenger to throw it from the car;

(4) against passenger Holcombe for negligently throwing it from the vehicle, and

(5) against Holcombe's parents for negligence in the care, control and discipline of their child.

Motor Club Fire & Casualty Company and Westchester Fire Insurance Co. had issued homeowner's insurance policies for the Eisners and Holcombes, respectively. They filed answers on behalf of these defendants.

Later Westchester and the Holcombes sought a declaratory judgment to declare that (1) the National Union Insurance Company (Eisner's automobile liability carrier) was obligated to defend the action and pay any judgment which might result; (2) New Jersey Manufacturers was obligated to defend and pay its proportionate share of any judgment or alternatively, to provide excess insurance coverage, and (3) the Westchester Fire and Motor Club homeowner's policies were inapplicable.

On cross-motions for summary judgment in the declaratory judgment action, the trial judge ruled that the homeowner's insurance carriers, and not the automobile liability insurance carriers, were obligated to defend and be responsible for any ensuing judgment. Motor Club, the Eisners, Westchester Fire and the Holcombes all appealed.

We consider first whether coverage is afforded under the automobile policies. Parenthetically, we note that the automobile carriers for the Eisners and the Holcombs have agreed as to which has primary responsibility in the event coverage under the automobile policies is held to exist. Hence we need not consider the question of primary and excess coverage.

Both Eisner, sr. and Holcombe, Sr. had standard family automobile liability policies on their cars. The Eisner policy was issued by National Union Insurance Company, with policy limits of $25,000 and $50,000. Holcombe, Sr.'s New Jersey Manufacturers' policy had limits of $250,000 and $500,000.

Under the terms of each policy the carrier agreed with the insured named in the declaration (Eisner, Sr. and Holcombe, Sr., respectively),

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 * * * sustained by any person * * *

Arising out of the ownership, maintenance or use of the owned automobile or any non-owned automobile, and * * * defend any suit alleging such bodily injury * * * and seeking damages which are payable under the terms of this policy, even if any of the allegations of the suit are groundless, false or fraudulent * * *. (Emphasis added)

The carrier also agreed to insure the following:

(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, provided the actual use thereof is with the permission of the named insured;

(b) With respect to a non-owned automobile,

(1) the named insured,

(2) any relative * * *;

(c) Any other person or organization legally responsible for the use of

(1) an automobile * * * not owned * * * provided the actual use thereof is by a person who is an insured under (a) or (b) above with respect to such automobile * * *.

The definitions clause of the policies provided that "named insured' means the individual named in * * * the declarations and also includes his spouse, if a resident of the same household'; that "non-owned automobile' means any automobile * * * not owned by the named insured or any relative * * *,' and that "use' of an automobile includes the loading and unloading thereof.'

The critical issue is whether the injury allegedly sustained by plaintiff Potent comes within the scope of the policy provision 'arising out of the ownership, maintenance or use' of the automobile, and whether the insurance company is obligated to 'defend (the) suit alleging such bodily injury.'

Our research has produced little authority in New Jersey on the meaning of the provision. There is a sharp division of authorities in the courts of other jurisdictions as to its proper interpretation. See Annotation, 'Automobile Liability Insurance--Risks,' 89 A.L.R.2d 150 (1963), which collects many of the cases.

While there is no New Jersey case directly in point, certain cases have supplied certain guidelines. We start with the well settled proposition that if the language of a policy will support two meanings, one favorable to the insured and the other favorable to the insurer, that which will sustain coverage will be applied. Mazzilli v. Acc. & Cas. Ins. Co. of Winterthur, 35 N.J. 1, 7, 170 A.2d 800 (19961). Specifically, it has been held that the language of the omnibus clause of a policy must be construed broadly in favor of the insured and injured persons to effectuate a strong legislative policy of assuring financial protection for innocent victims of automobile accidents. Indemnity Ins. Co. v. Metropolitan Cas. Ins. Co. of New York, 33 N.J. 507, 512--513, 166 A.2d 355 (1960). Applicable also is another settled principle, that purchasers of insurance are entitled to 'the broad measure of protection necessary to fulfill their reasonable expectations.' In the language of our Supreme Court, 'their policies should be construed liberally in their favor to the end that coverage is afforded 'to the full extent that any fair interpretation will allow. " Kievit v. Loyal Protection Life Ins. Co., 34 N.J. 475, 482, 170 A.2d 22, 26 (1961).

We consider, then, the language of this provision in light of these general rules of interpretation. In the phrase 'ownership, maintenance or use,' the term 'use' is the key word. One commentator has remarked that this term is a broad catch-all designed to include all proper uses of the vehicle not falling within the term 'ownership (and) maintenance.' See Baudin v. Traders and Gen. Ins. Co., 201 So.2d 379 (La.Ct.App.1967), writ refused 251 La. 224, 203 So.2d 557 (1967); see also Annotation, 89 A.L.R.2d at 163, Supra.

The court's comment in Indemnity Ins. Co. Supra, 33 N.J. at 513, 166 A.2d at 358, on the word 'use' in the omnibus clause also sheds some light on its meaning here:

* * * We think that in this context the words Use and Operation are not synonymous. The use of an automobile denotes its employment for some purpose of the user; the word 'operation' denotes the manipulation of the car's controls in order to propel it as a vehicle. Use is thus broader than Operation. Brown v. Kennedy, 141 Ohio St. 457, 48 N.E.2d 857 (Sup.Ct.1943); Maryland Casualty Company v. Marshbank, 226 F.2d 637 (3 Cir. 1955). One who operates a car uses it, Cronan v. Travellers Indemnity Co., 126 N.J.L. 56, 18 A.2d 13 (E. & A. 1941), but one can use a car without operating it. An automobile is being used, for example, by one riding in it although another is driving.

In the present case it seems clear that the Eisner vehicle was being used by the driver as well as by his passenger. Gronquist v. Transit Casualty Co., 105 N.J.Super. 363, 252 A.2d 232 (Law Div.1969). As Justice Proctor stated in Indemnity Ins. Co., supra, at 513, 166 A.2d at 358 '(t)he Use of an automobile denotes its employment for some purpose of the user * * *.'

Thus, in the present case the Eisner vehicle was employed for purposes of transportation--that is, to carry those in...