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Atlantic Casualty Insurance Co. v. Bingham

Decided: September 11, 1951.

ATLANTIC CASUALTY INSURANCE COMPANY, A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF,
v.
STANLEY BINGHAM, WILLIAM J. DONNELLY, JAMES CLARKIN AND MICHAEL ZUKOTYNSKI, DEFENDANTS



Stein, J.s.c.

Stein

On motion to strike complaint on the ground that same fails to state a cause of action against the defendants William J. Donnelly, James Clarkin and Michael Zukotynski.

Plaintiff seeks to cancel an insurance policy issued by it to the defendant Stanley Bingham, the owner and operator of an automobile which struck and damaged a taxicab owned by the defendant William J. Donnelly.

The plaintiff issued an automobile liability policy in the statutory form covering the said Stanley Bingham as the named assured for liability to third persons for bodily injury and for property damage. The policy is dated March 1, 1951, and the insurance period is from February 24, 1951, to February 24, 1952.

The collision in which the defendant Donnelly's taxicab was damaged by the defendant Stanley Bingham occurred March 18, 1951. Plaintiff seeks to cancel its policy alleging that the defendant Stanley Bingham, the named assured, had made various misrepresentations which would justify the cancellation of the policy ab initio , namely, that the named assured had been involved in an accident prior to the issuance of plaintiff's policy involving collision claims of approximately $500.

Paragraph 8 (p. 5) of the policy provides that the insurance shall "comply with the provisions of the Motor Vehicle Financial Responsibility Law of any state * * * 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."

It therefore appears upon the face of the complaint and the allegations of the plaintiff, which for the present

motion must be deemed to be true, that the Financial Responsibility Law, R.S. 39:6-1 et seq. , is applicable.

Under the statute the liability of the insurance company is absolute, even though the named assured has been guilty of misrepresentation, or the breach of any condition or warranty, and the policy may not be cancelled as against a third party after the occurrence of an accident in which the third party has sustained loss and damage.

The Financial Responsibility Act, R.S. 39:6-1 et seq. , provides that if a driver has been involved in an accident causing damage either to person or property of at least $25, the provisions of the Financial Responsibility Act become obligatory and the driver must carry liability insurance for bodily injury and property damage in the amounts fixed by the statute.

In the complaint filed the plaintiff alleges that the named assured had been involved in prior accidents involving approximately $500. Paragraph 8 of the conditions of the policy expressly makes the policy subject to the provisions of the Financial Responsibility Act of the State. The act becomes operative even though the Commissioner of Motor Vehicles has not called for proof of financial responsibility. It was so held in Steliga v. Metropolitan Casualty Ins. Co. of N.Y. , 113 N.J.L. 101 (Sup. Ct. 1934), a case where the Commissioner had not requested that the policy be issued. The court there held: "The insured, being in the class requiring such proof, was not obliged to wait until the commissioner should act before complying with the terms of the act by establishing through insurance the proof of responsibility which the law required. It was likewise optional with the company to assume such liability, but if it did so it could not escape the responsibility thus undertaken." To the same effect is Ambrose v. Indemnity Insurance Co. of N.A. , 120 N.J.L. 248 (E. & A. 1938).

In United States Casualty Co. v. Timmerman , 118 N.J. Eq. 563 (Ch. 1935), Vice-Chancellor Bigelow held that where a policy had been issued ...


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