Yannuzzi v. U.S. Cas. Co.
| Decision Date | 27 June 1955 |
| Docket Number | No. A--156,A--156 |
| Citation | 115 A.2d 557,19 N.J. 201 |
| Parties | Alfonse C. YANNUZZI, Mary T. Yannuzzi, Anthony G. Yannuzzi and Mary C. Yannuzzi, Plaintiffs-Appellants, v. UNITED STATES CASUALTY COMPANY, a corporation of the State of New York, Defendant-Respondent. |
| Court | New Jersey Supreme Court |
John J. Rafferty, New Brunswick, argued the cause for the appellants (Rafferty & Blacher, New Brunswick, attorneys; Philip Blacher, New Brunswick, of counsel).
John C. Stockel, Perth Amboy, argued the cause for the respondent.
The opinion of the court was delivered by
The Appellate Division, in an opinion reported at 32 N.J.Super. 373, 108 A.2d 489 (1954), held that the defendant United States Casualty Company was not liable under its automobile accident indemnity policy because the assureds had not sent to the home office of the company, the suit papers in the action instituted against them by the plaintiffs Yannuzzis. We granted certification under R.R. 1:10--2.
The Casualty Company is a New York corporation with its home office at 60 John Street, New York City, and it has a Philadelphia branch managed by John G. Harkins. Under date of May 1, 1950 the Casualty Company entered into an agency contract with Morris H. Zackowitz of Englishtown, New Jersey, which designated Zackowitz as its agent in the following territory--'Englishtown and elsewhere in the State of New Jersey'--and authorized him to solicit applications for insurance, deliver policies, endorsements and binders which the company authorized to be issued and delivered, collect premiums and receipt therefor, cancel policies in his discretion where cancellation was legally possible, and retain his commissions from premiums collected in accordance with specified rates. The contract stipulated that the agent should have the right in his discretion 'to designate sub-agents of the Company in the above described territory, who shall report through him, but the Agent shall be answerable to the Company in respect of business placed with the Agent by such sub-agents and accepted by the Company as if such business had been produced directly by the Agent under this Agreement.'
The agency contract was signed by Harkins on behalf of the company and by Zackowitz as agent and after its execution Zackowitz duly acted as agent for the company, performing all of the functions normally incident to his position. He solicited business and, in regular course, delivered the policies which were sent to him by the company. These policies were completely filled in at the company's Philadelphia branch in accordance with his directions but they provided that they 'shall not be binding upon the Company until countersigned on the declarations page by a duly authorized representative of the Company'; Zackowitz countersigned them as 'Authorized Representative' and delivered them to the assureds. Whenever the assureds had accidents covered by their policies they sent the notices thereof and any later suit papers to Zackowitz and he in turn forwarded them to the company's Philadelphia branch. Zackowitz testified that suit papers invariably came to his office at Englishtown and that in no instance did any of his assureds ever send them to the company's home office in New York or branch office in Philadelphia.
In 1951 George and Steve Charefko of Oldbridge, New Jersey, ordered an automobile accident insurance policy from Zackowitz; in due course they received policy No. AP848170 issued by the defendant Casualty Company effective June 20, 1951 and countersigned by Zackowitz as authorized representative of the company. On December 9, 1951 one of the automobiles covered by the policy was involved in an accident and the Cherefkos notified Zackowitz who in turn sent the customary written notice to the company's Philadelphia office and received its customary acknowledgment. On October 16, 1952 the Cherefkos were served with suit papers in a Middlesex County Court action by the plaintiffs Yannuzzis who claimed damages for injuries allegedly suffered in the December accident. On the following day the Cherefkos delivered the suit papers to the Englishtown office of Zackowitz but by mistake they were forwarded by Zackowitz or his employee to the wrong insurance company.
In the meantime the defendant Casualty Company had terminated Zackowitz' agency effective January 1, 1952, although admittedly no notice of the termination had been given to the Cherefkos or, indeed, to other assureds. On the contrary, even after January 1, 1952 Zackowitz continued, with the company's approval, to process matters relating to policies originally delivered through his office; thus an endorsement effective January 17, 1952 was countersigned and delivered by Zackowitz to the Cherefkos for attachment to their policy and comparable endorsements were likewise countersigned and delivered by Zackowitz to other assureds long after January, 1952. Zackowitz testified that although he sent the notice of the Cherefkos accident in December to the company, it never thereafter suggested to him that he notify the Cherefkos that he was no longer the company's agent or that any ensuing suit papers should be sent directly to the company rather than to him.
On January 29, 1953 the plaintiffs Yannuzzis entered a default judgment in the Middlesex County Court action against the Cherefkos who had failed to file answer. The defendant Casualty Company caused application to be made on Cherefkos' behalf to have the judgment reopened, but the application was denied. The plaintiffs Yannuzzis then filed their action in the Superior Court seeking judgment against the defendant Casualty Company for the amount due on the judgment against the Cherefkos which was well within the policy limits. Trial was duly held and at the close of the testimony cross motions were made for the entry of judgment. The material facts were not in dispute and the trial judge, being of the opinion that the delivery of the suit papers to Zackowitz constituted delivery to the company within the policy requirements, granted the plaintiffs' motion and entered judgment accordingly.
On appeal, the Appellate Division took a contrary view; in its opinion it set forth the pertinent policy provisions which did not differ significantly from those customarily embodied in comparable policies; they provided generally that notice of accident shall be given "to the company or any of its authorized agents"; that in the event claim is made or suit is brought "the insured shall immediately forward to the company every demand, notice, summons or other process received by him"; that no action shall lie against the Company unless, as a condition precedent thereto, "the insured shall have fully complied" with the terms of the policy; that notice to any agent "shall not effect a waiver or a change" in any part of the policy; and that the policy embodied all agreements between the assured "and the company or any of its agents" relating to the insurance. See 32 N.J.Super. at page 376, 108 A.2d at page 491. The Appellate Division construed the policy provisions as casting 'the burden on the insured to forward notice of the suit to the home office and nowhere else' and concluded that this provision was 'not fulfilled by the insured' (see 32 N.J.Super. at page 380, 108 A.2d at page 494); furthermore, it found that the company's employment of Zackowitz 'was not a general agency but limited to the acts directed by the company and without power or authority to waive a condition set forth in the contract.' See 32 N.J.Super. at page 378, 108 A.2d at page 493. Accordingly, it reversed the judgment for the plaintiffs which had been entered in the trial court. We consider that the result reached by the Appellate Division was not in just and proper furtherance of applicable principles of construction, agency and waiver in the field of insurance law. See Toub v. Home Indemnity Co., N.Y., 116 N.J.L. 287, 291, 292, 183 A. 827 (Sup.Ct.1936); Carson v. Jersey City Insurance Co., 43 N.J.L. 300, 310 (Sup.Ct.1881), affirmed 44 N.J.L. 210 (E. & A.1882); Millville Mut. Marine & Fire Ins. Co. v. Mechanics & Workingmens Building Association, 43 N.J.L. 652, 654 (E. & A.1881); Snyder v. Dwelling House Insurance Co., 59 N.J.L. 544, 548, 37 A. 1022 (E. & A.1896). Cf. Mortgage Corporation of New Jersey v. Aetna Casualty & Surety Co., 19 N.J. 30, 115 A.2d 43 (1955); Schneider v. New Amsterdam Cas. Co., 22 N.J.Super. 238, 242, 92 A.2d 66 (App.Div.1952); Volker v. Connecticut Fire Ins. Co., 22 N.J.Super. 314, 325, 91 A.2d 883 (App.Div.1952).
In the Toub case, supra, the policy provided that the assured should give notice of accident to the company's home office at New York or to an authorized agent, and that in the event of suit he 'shall immediately forward to the Company at its Home Office every summons or other process served upon him.' The assured failed to send to the home office the suit papers which had been served in an action instituted against him; however, he did deliver them to the agent who had issued his policy in the defendant Home Indemnity Co., and the agent inadvertently sent them to the wrong insurance company. When the Home Indemnity Co. was later advised of the pendency of the action it disclaimed liability and the assured was obliged to defend at his own expense. In holding that the assured could recover the expense which he had thus incurred, Justice Heher reaffirmed several highly just principles which we consider to be particularly applicable in the instant matter. He first noted that since the language of the accident indemnity policy afforded room for construction it was to be given a liberal interpretation in favor of the assured; the rule to which he referred has been widely recognized in our courts as well as in courts of other states throughout the country. See Mortgage Corporation of New Jersey v. Aetna Casualty & Surety Co., supra; Schneider...
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