The statute expressly provides that a policy issued pursuant thereto 'shall be non-cancelable except after ten days' written notice to the commissioner' of motor vehicles. The statute further provides that such a policy shall be subject to the following provision: 'The liability of a company under a motor vehicle liability policy shall become absolute when loss or damage covered by the policy occurs.' The former provision is embodied in both the endorsement issued to Russo and in the certificate filed with the commissioner of motor vehicles; the latter provision is made a part of the policy by the express mandate of the statute.
It seems reasonably clear that an insurer, having issued a policy pursuant to and in accordance with the Motor Vehicle Financial Responsibility Law, may not effectively cancel such a policy or avoid liability thereunder after an accident has occurred and a cause of action therefor has accrued. The liability of the insurer becomes absolute 'when loss or damage covered by the policy occurs.' R.S. 39:6-20, N.J.S.A. 39:6-20. The courts of this state have so held. Ambrose v. Indemnity Ins. Co. of North America, 120 N.J.L. 248, 199 A. 47; Woloshin v. Century Indemnity Co., 116 N.J.L. 577, 186 A. 44; Steliga v. Metropolitan Casualty Ins.Co., 113 N.J.L. 101, 172 A. 793, affirmed 114 N.J.L. 156, 176 A. 331; United States Casualty Co. v. Timmerman, 118 N.J.Eq. 563, 180 A. 629; see also Behaney v. Travelers Insurance Co., 3 Cir., 121 F.2d 838. The defense of breach of warranty, otherwise available to the insurer in a suit on the policy, is not available where, as here, the policy is governed by the said law. Ibid.
The Motor Vehicle Financial Responsibility Law was discussed by Vice Chancelor Bigelow in the case of United States Casualty Co. v. Timmerman, supra. It was therein stated, at page 632 of 180 A.: 'Its purpose is to forbid the use of the roads to certain persons, unless they are able to respond in damages in case they cause injury to others. The beneficiaries of the statute and of the policy provisions required thereby, are the public -- those who may be injured in motor accidents. The protection afforded by the policy to the assured is outside the purpose of the statute, as clearly appears from the clause giving to the company a right of action against assured in certain cases. Now a policy which is void ab initio because of a warranty or condition precedent provides no protection to the public. Such conditions must fail.'
The rights of the beneficiary under the ordinary liability policy are derivative and secondary and are, therefore, no greater than those of the named insured. Ambrose v. Indemnity Ins.Co. of North America, 124 N.J.L. 438, 12 A.2d 693; Kindervater v. Motorists Casualty Ins.Co., 120 N.J.L. 373, 199 A. 606; Neilson v. American Mutual Liability Ins.Co., 111 N.J.L. 345, 168 A. 436. This is not true, however, of the rights of the beneficiary under the liability policy issued pursuant to the Motor Vehicle Financial Responsibility Law. The rights of the beneficiary under such a policy are original and primary, and only he may invoke the Law to defeat the insurer's disclaimer of liability. Ambrose v. Indemnity Ins.Co. of North America, 120 N.J.L. 248, 199 A. 47, and the other cases herein cited. The policy may not be regarded as void ab initio as to him, although it may be void ab initio as between the insurer and the insured. Ibid.
Century seeks to avoid liability on a further ground, to wit, that Russo was using the sedan without the permission of Simon, 'the named insured,' at the time of the accident. It is our opinion that the evidence is clearly to the contrary. The sedan was purchased by Russo for his own personal use, and Simon, who must be regarded as the lawful owner for the purposes of this suit, permitted Russo to use the sedan for his own business and pleasure for several months. This permission was not revoked upon the termination of Russo's employment but was in fact continued. The evidence before the Court is susceptible of no other inference. Even if express permission were lacking, permission may be implied by usage and common practice. Penza v. Century Indemnity Co., 119 N.J.L. 446, 197 A. 29; Lucademo v. Hartford Accident & Indemnity Co. 3 Cir., 142 F.2d 154.
It is our opinion, however, that the liability of Century is clearly independent of the 'omnibus' clause of the policy; its liability is established by the express provisions of the Motor Vehicle Financial Responsibility Law and the endorsement issued to Russo pursuant thereto. This endorsement, issued in lieu of a policy, extended the coverage of the policy to Russo as a named insured; he qualified as a named insured within the meaning of the policy while driving automobile owned by Simon. R.S. 39:6-20, N.J.S.A. 39:6-20. The liability of Century was, therefore, independent of the conditions of the 'omnibus' clause.
It is true that Simon was not 'the sole owner' of the sedan, but this fact will not defeat the rights of Minicozzi under the policy. His rights, as we have heretofore stated, are original and primary, and Century is therefore estopped to deny liability on this ground. The liability of Century became absolute when the accident occurred and the cause of action therefor accrued. R.S. 39:6-20; N.J.S.A. 39:6-20, and the cases herein cited. Any other construction would be inconsistent with the Motor Vehicle Financial Responsibility Law and would defeat its very purpose -- the protection of the public.
It necessarily follows that Century would not be liable under the policy except for the express provisions of the Motor Vehicle Financial Responsibility Law as interpreted by the courts of this state. Therefore the fourth condition of the policy, quoted in paragraph IV of the facts, may be invoked by Century against Russo as the named insured, R.S. 39:6-20, N.J.S.A. 39:6-20. Russo is obligated thereunder to reimburse Century for any payment made by it and which 'it would not have been obligated to make under the terms of this policy except for' the said condition.
Conclusions of Law.
I. The declaration of ownership embodied in the policy of insurance was a warranty. The breach of warranty although available to Century as a defense against the insured, did not invalidate the policy of insurance as between Century and Minicozzi. The rights of Minicozzi under the policy of insurance were original and primary, and as to him the liability of Century was absolute when the accident occurred and the cause of action therefor accrued.
II. Minicozzi is entitled to judgment against Century in the amount of $ 5,000, the limit of liability fixed by the policy. Judgment in favor of the said defendant and against the plaintiff in the said amount will, therefore, be entered.
III. Russo is obligated under the policy to reimburse Century for any payment made by it on account of the said judgment. A judgment in favor of the plaintiff and against the said defendant may be entered upon payment by the plaintiff of the judgment entered in favor of the defendant Minicozzi.
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