MORRIS WOLOSHIN, PLAINTIFF-RESPONDENT, v. THE CENTURY INDEMNITY COMPANY (A FOREIGN CORPORATION), DEFENDANT-APPELLANT

New Jersey Supreme Court1936-07-09

116 N.J.L. 577

Summary · law.co

Holding. The judgment in favor of the plaintiff is affirmed. An insurance company cannot void a liability policy based on a warranty breach when the policy incorporates the state's Motor Vehicle Financial Responsibility law, as the statute prohibits cancellation or avoidance of coverage after an accident and provides protection to injured members of the public regardless of the insured's contractual breaches.

An insurance company issued a liability policy on an automobile in 1933 and later modified it to cover a different vehicle. When that vehicle was involved in an accident in 1934 and the named insured was sued, the insured obtained a judgment. The injured plaintiff then sued the insurance company to enforce the policy. The insurer argued the policy was void from its inception because the named insured did not have complete ownership of the automobile as warranted, but instead held title under a conditional bill of sale.

The court rejected the insurer's defense, holding that the policy explicitly incorporated the state's Motor Vehicle Financial Responsibility law. Because the named insured had been involved in a prior accident in 1931 resulting in damages exceeding $100, he was already required to maintain financial responsibility when this policy was issued in 1933. Under the Financial Responsibility statute, an insurer cannot avoid liability based on breach of policy conditions after an accident occurs and a cause of action arises, nor can it cancel the policy. The statute's purpose is to protect members of the public injured in motor vehicle accidents, and the policy remains valid despite any breach of warranty by the insured.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether an insurance policy is void ab initio due to breach of an ownership warranty
Effect of the Motor Vehicle Financial Responsibility law on an insurer's liability despite policy breaches
Whether an insurer can escape responsibility when a policy is issued to someone already required to maintain financial responsibility
Public policy protection for third-party accident victims under motor vehicle insurance statutes

Procedural posture

The defendant insurance company appealed a judgment entered in favor of the plaintiff in the District Court, where the case was tried before a judge without a jury.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

The opinion of the court was delivered by

Trenchard, J.

This is an appeal by the defendant below from a judgment rendered for the plaintiff by the judge of the District Court sitting without a jury.

The defendant insurance company (hereinafter called the defendant) on July 27th, 1933, issued its policy covering one Peller, as named assured, for liability arising from the operation of the automobile therein identified, in consideration of a premium therein named, and paid. On September 14th, 1933, by endorsement on the policy such automobile coverage was changed to a Chevrolet sedan, likewise identified. On February 18th, 1934, and before the expiration of the policy, the latter automobile was involved in an accident as a result of which the plaintiff below sustained personal injuries, and he brought suit against the named assured and recovered a judgment. Execution issued and remained unsatisfied. Thereafter this suit was brought against the defendant and resulted in a judgment for the plaintiff.

The defendant on this appeal contends that its policy was void ab iniiio upon the ground that the warranty contained therein was that Peller, the named assured, had “complete ownership” of the car, whilst in fact he held title under a conditional bill of sale.

But that contention is ill-founded in law. The defendant relies upon the case of Hudson Casualty Insurance Co. v. Garfinkel, 111 N. J. Eq. 70. That case does not seem to be in point. That was a direct proceeding to cancel a policy. This case turns upon the effect of the statute herein considered. The policy now in question expressly provided that any coverage provided therein for liability for bodily injury or property damage “is hereby amended to conform with the provisions of the Motor Vehicle Financial Responsibility law of the state” in which the automobile is operated at the time of the accident. Under the policy, therefore, the defendant is liable thereon if made so by the terms of the Financial Responsibility law. Pamph. L. 1929, p. 195, as amended by Pamph. L. 1931, p. 334.

Now at the trial it was proved without dispute that in 1931, prior to the issuance of the policy in question, the named assured, while operating an automobile as driver, had an accident resulting in personal injuries or property damages to another of at least $100. When, therefore, the policy in question was issued to the assured in 1933, he was already in that category of persons of whom evidence of financial responsibility was required, and hence the defendant insurer subjected itself to. liability under the Financial Responsibility act, and was governed by the provisions thereof so far as its liability on this risk was concerned. The statute provides that the insurance carrier cannot cancel or annul such policy after an accident has occurred and a cause of action therefor has accrued against the assured, regardless of any breaches or violations by the assured of the contractual provisions of the policy (and in point of fact the defendant at no time attempted to cancel the policy). Furthermore, the statute clearly indicates that if the insurer is obliged to pay a loss under such policy where there has been a breach of any of the contractual provisions of the policy by the insured, that the insurer can have recourse only against the assured for any loss that the carrier has sustained.

It seems to be a fact that this policy of insurance was not issued at the request of tire motor vehicle commissioner. This was not relied upon by the defendant at the argument, and we believe that the fact is immaterial. The rule is that one concerned in a motor vehicle accident, resulting in injury to another person, may have arranged in advance with an insurance company for a policy conforming to Pamph. L. 1929, p. 195, as amended, Pamph. L. 1931, p. 334; and in such ease, as here, the insurer cannot escape the responsibility it lias undertaken, even though the commissioner of motor vehicles has not required proof of financial responsibility. Steliga v. Metropolitan Casualty Company of New York, 113 N. J. L. 101; affirmed, 114 Id. 156; United States Casualty Co. v. Timmerman, 118 N. J. Eq. 563.

It also seems clear that the beneficiaries of the statute and of the policy provisions required thereby, are the public— those who may be injured in a motor vehicle .accident; and the policy remains valid as to third persons injured in such an accident, despite assured’s breach of a warranty or con-cl it ion precedent. United States Casualty Co. v. Timmerman, 118 N. J. Eq. 563. That the policy is not to be regarded as void ab initio is plainly indicated by the case last cited wherein it was pointed out that a “policy void ad initio because of a warranty or condition precedent affords no protection to the public.”

We believe that the foregoing observations dispose of every question argued.

The judgment below will be affirmed, with costs.