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Steiker v. Philadelphia National Insurance Co.

Decided: May 21, 1951.


On appeal from the Law Division of the Superior Court.

For affirmance -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Burling and Ackerson. For reversal -- None. The opinion of the court was delivered by Vanderbilt, C.J.


This is an appeal from a judgment of the Law Division of the Superior Court in favor of the plaintiffs in the amount of $27,937.50. The defendant's appeal to the Appellate Division of the Superior Court has been certified on our own motion.

This action was brought by the plaintiffs, who are automobile and truck dealers in Paterson, to recover damages sustained as the result of a fire loss under two policies of insurance issued by the defendant. Shortly before the policies here involved were issued, the plaintiffs communicated with an agent of the defendant, who made an inspection of the plaintiffs' various places of business and observed the nature of their operations and all of the activities carried on by the plaintiffs in each of their several locations, all of which were located in Paterson with the exception of one in Totowa. After the survey by the defendant's agent was completed, the policies here involved were issued to the plaintiffs, who were described therein as a "new car dealer." These policies were automobile physical damage policies to which were affixed automobile dealer's open policy endorsements. Printed in the policies was the following definition:

"Except where specifically stated to the contrary, the word 'automobile' wherever used in this policy shall mean the motor vehicle, trailer or semi-trailer described in this policy. The word 'automobile' shall also include its equipment and other equipment permanently attached thereto. The word 'trailer' shall include semi-trailer."

In the endorsements it was provided that the policies would not cover

"Automobiles while in any building or premises occupied by the insured as a factory or assembly plant, but this shall not be construed to mean salesrooms, service stations or garages."

Schedules annexed to the endorsements set forth the limit of liability for each of the plaintiffs' various locations, the total liability for the premises here involved, 75 River Street in Paterson, being $25,000.

A few weeks after the policies in question were issued, a fire occurred at the 75 River Street location and considerable property owned by the plaintiffs was destroyed or damaged. This property consisted of motorcycle tops and curtains, motorcycle panel bodies, prefabricated wooden and metal bodies for trucks and trailers, attachments for trailers, and two trucks. The defendant refused to pay for the loss, which it is conceded came to more than $25,000, contending that it was not covered by the policies because the property involved was in an assembly plant and therefore within the exclusionary clause of the policies above quoted, and because the items damaged, not being automobiles, were not covered by the policies. The plaintiffs then commenced this action to recover on the policies. The parties waived a jury and submitted the case to the court on the stipulation that various depositions taken in the case together with answers given by the plaintiffs to interrogatories propounded by the defendant be considered as evidence. It was further agreed that after the court had made its findings of fact based on this evidence it would determine as a matter of law two questions: (1) Was 75 River Street operated by the plaintiffs as an assembly plant? (2) Do the items for which the plaintiffs make claim come within the term "automobile" as that term is defined in the policies,

when not physically attached to a chassis at the time of the fire?

The evidence admitted by stipulation showed that the plaintiffs' business, although carried on at several locations, was closely integrated. Because of limitations of space component parts of various vehicles were stored at various locations so as to best fit in with the plaintiffs' method of operation, which was to purchase truck chassis, bodies and other essential parts adapted to and necessary for the use of the trucks, either from the same manufacturer or from different manufacturers. In each case immediately upon the purchase of the body or other part for a particular truck or other vehicle the item was identified by a tag or label bearing the serial number of the truck chassis for which it was intended. Records were maintained at all times showing the appropriation of the various items to the particular truck chassis, trailer or motorcycle with which they were associated and to which they would eventually be physically attached. These items were kept in storage at several of the plaintiffs' places of business, including 75 River Street. Sales were made in terms of complete trucks, trailers or motorcycles. At the time of the sale of a particular truck, ...

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