On appeal from a judgment of the Supreme Court.
For the appellant, Harry Green.
For the respondents, Henry H. Eisenberg.
The opinion of the court was delivered by
HEHER, J. The Anna Kindervaters, mother and daughter, severally recovered judgment against defendant's assured, William Simoni, for the pecuniary equivalent of personal injuries attributable to a highway collision, on July 11th, 1931, between the latter's automobile -- driven by him and occupied by the Kindervaters as his "invitees" -- and two like vehicles operated by David Doyle and Moe Brodsky; and Rudolph Kindervater, the husband and father, was likewise
awarded his consequential damages. The parties waived trial by jury, and submitted the cause on a stipulation of facts.
Some two weeks after the mishap, Simoni, at the instance of a member of the Brodsky family, made the following written acknowledgment of responsibility for the collision: "William Simoni do admit colliding, damaging and injuring the occupants in automobile operated by Moe Brodsky on the highway to the Victory bridge named Scott Avenue, namely an Oldsmobile coach and my car, a Chevrolet coupe. * * * I admit liability in the above mentioned accident." And the decisive question is whether he thereby breached -- so as to forfeit the benefit of the stipulated indemnity -- the provision of his liability policy commanding him to render to the defendant insurer "all co-operation within his power," and not to "voluntarily assume any liability, settle any claim or incur any expense, except at his own cost, or interfere in any negotiations for settlement or legal proceedings without the consent of the Company previously given in writing." We resolve the inquiry in the affirmative.
This covenant is in the nature of a promissory warranty -- a condition upon which the liability of the insurer to render indemnity depends. The insurer's obligation is expressly conditioned upon "compliance with the provisions" set out in the policy. That is a condition precedent to recovery upon the policy. This particular provision is obviously an essential term of the contract; and its breach operates as an avoidance of the insurer's contractual liability. Hudson Casualty Insurance Co. v. Garfinkel, 111 N.J. Eq. 70; Coleman v. New Amsterdam Casualty Co., 247 N.Y. 271; 160 N.E. Rep. 367; American Automobile Insurance Co. v. Fidelity and Casualty Company of New York, 159 Md. 631; 152 A. 523.
Concededly, the provisions of chapter 116 of the laws of 1929 (Pamph. L., p. 195), in effect when the policy was issued, are not applicable; and in such circumstances the rights of these judgment creditors under the policy coincide with those of the assured. Their rights are purely derivative. They stand in the shoes of the assured; and such defense as
the insurer is at liberty to interpose against the assured, arising out of a breach of this condition, is likewise available against them. Hutt v. Travelers Insurance Co., 110 N.J.L. 57; Hudson Casualty Insurance Co. v. Garfinkel, supra.
Thus we are brought to a consideration of the question of whether the assured's admission of "liability" for the collision served to absolve the insurer from its contractual obligation to make indemnity for such liability to respond in damages as the law imposed upon the assured. This court answered that inquiry in the affirmative as regards the claim of George Brodsky, the owner of the vehicle driven by Moe Brodsky. Brodsky v. Motorists Casualty Insurance Co., 112 N.J.L. 211; affirmed, 114 Id. 154. But the learned trial judge read the policy condition in question as providing "a forfeiture by the assured of all his rights against the insurer under the policy" only "as to that liability for which he has assumed responsibility." Distinguishing the two cases, he found that the assured "was undoubtedly remiss in the ...