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CENTURY INDEM. CO. v. SIMON

May 3, 1948

CENTURY INDEMNITY CO
v.
SIMON et al.



The opinion of the court was delivered by: SMITH

This is a civil action under Section 274d of the Judicial Code as amended, 28 U.S.C.A. § 400, the Declaratory Judgment Act. The plaintiff, as insurer, seeks a judgment declaratory of the rights and liabilities of the respective parties under a policy of insurance issued to one of the defendants, its insured, and an endorsement thereto issued to another. The jurisdiction of the Court is founded upon diversity of citizenship.

Facts.

 I. The plaintiff Century Indemnity Company (hereinafter identified as Century) issued to the defendant Jack Simon (hereinafter identified as Simon) a motor vehicle liability policy, No. A771529, which covered the automobiles therein described. The policy was issued on March 13, 1944, and expired on March 13, 1945.

 II. The policy was the standard liability policy in which the insurer agreed, among other things, to indemnify the insured for any sums which the latter might be required to pay to others for personal injury or property damage 'caused by accident and arising out of the ownership, maintenance or use' of the automobiles described therein. The coverage thereunder extended to the 'insured' as therein defined, which included 'any person while using the automobile * * * , provided the actual use of the automobile (was) with the permission of the named insured.' The express provisions of the policy limited the 'bodily injury liability' to $ 5000 for each person and $ 10,000 for each accident.

 III. Simon accepted the policy as tendered, and thereby adopted as his own the declarations therein contained, among which was the following declaration of ownership: 'Except with respect to bailment lease, conditional sale, mortgage or other encumbrance the Named insured is the sole owner of the automobile, except as herein stated: No exceptions.'

 IV. The policy contained, in addition to others, the following condition: 'Such insurance as is afforded by this policy for bodily injury liability or property damage liability shall comply with the provisions of the motor vehicle financial responsibility law of any state or province which shall be applicable with respect to any such liability arising out of the ownership, maintenance or use of the automobile during the policy period, to the extent of the coverage and limits of liability required by such law, but in no event in excess of the limits of liability stated in this policy. The insured agrees to reimburse the company for any payment made by the company which it would not have been obligated to make under the terms of this policy except for the agreement contained in this paragraph.' This condition is limited to the coverage therein noted, to wit, such liability as may be imposed by 'the motor vehicle financial responsibility law of any state.'

 V. The defendant Frank Russo (hereinafter identified as Russo) was employed by Simon as a route salesman on August 6, 1944, and was so employed until November 1, 1944. Russo was required by the express provision of a written agreement, dated August 8, 1944, to furnish Simon with a bond to indemnify the latter 'for any loss or losses sustained on' the route assigned to the former. This agreement, and particularly the said provision, is relevant and material here only because of the dispute between the said defendants as to the ownership of the automobile covered by the endorsement attached to the policy.

 VI. Russo, having been previously convicted of violations of the Motor Vehicle Law, and having had his driver's license revoked therefor, was subject to the Motor Vehicle Financial Responsibility Law as amended, R.S. 39:6-1 et seq., N.J.S.A. 39:6-1 et seq., which required proof of financial responsibility as a condition precedent to his right to hold a driver's license. Simon, cognizant of this fact, requested Century to extend the coverage of the policy to Russo and furnish proof thereof to the commissioner of motor vehicles.

 VII. Century, after investigation, and with full knowledge that Russo was a person subject to the Motor Vehicle Financial Responsibility Law as amended, extended the coverage of the policy to him, and as evidence thereof issued an endorsement (P-3), in lieu of a policy, 'attached to and forming a part of' the policy. The policy, supplemented by the endorsement, was 'non-cancelable except after ten days' written notice to the commissioner' of motor vehicles, as required by the said Law, R.S. 39:6-11, N.J.S.A. 39:6-11. Pursuant to the provisions of the said Law, Century filed with the commissioner of motor vehicles an 'owner's policy certificate' as evidence of Russo's financial responsibility. The coverage of Russo was limited to the automobiles described in the policy and owned by Simon.

 VIII. The pertinent provisions of the endorsement follow:

 'In consideration of an additional premium of * * * $ 1.00 it is hereby understood and agreed that the Company has filed a certificate to comply with the Financial Responsibility Laws of the State of . . . New Jersey, in behalf of . . . Frank Russo . . .

 'Additional Premium

 'B.I. . . . .60

 P.D. . . . . ...


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