On appeal from the Superior Court, Law Division.
For affirmance -- Chief Justice Weintraub, and Justices Wachenfeld, Burling, Jacobs, Francis and Proctor. For reversal -- Justice Heher. The opinion of the court was delivered by Proctor, J.
This appeal, which we certified on our motion prior to its consideration in the Appellate Division, is from a summary judgment for the plaintiffs entered in the Law Division of the Superior Court. 49 N.J. Super. 341 (Law Div. 1958). Defendant's motion for summary judgment was denied and it asks that the judgment below be reversed and summary judgment entered in its favor.
The controversy concerns the construction of a comprehensive liability insurance policy issued by the defendant insurer to George D. Malanga, Alfred L. Malanga and Louis Malanga t/a Mal Bros. Trucking Co. and Mal Bros. Contracting Company. The named insured is a partnership. The policy is in standard form and includes four classes of coverage, of which only "Coverage B -- Bodily Injury Liability -- Except Automobile" is pertinent. Under this provision the defendant undertook "To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury * * * sustained by any person and caused by accident." Under the heading "Conditions" the policy provides that "Assault and battery shall be deemed an accident unless committed by or at the direction of the insured." "Insured" is defined in the policy as follows:
"III Definition of Insured: The unqualified word 'insured' includes the named insured and also includes (1) under Coverages B and D, any executive officer, director or stockholder thereof while acting within the scope of his duties as such * * * and if the named insured is a partnership, the unqualified word 'insured' also includes any partner therein but only with respect to his liability as such. * * *"
While the policy was in effect, one Thompson instituted an action in the Superior Court against the named partnership and George D. Malanga and Alfred Malanga individually. His complaint charged them with wrongful use and occupation of his property, trespass, assault and battery and a malicious injury, for which he sought compensatory and punitive damages. The partnership and the individual
partners called upon the insurer to defend this action. Upon the insurer's refusal, the partnership and the individual partners retained counsel who undertook the defense of the suit. Thereafter, Thompson amended his complaint to include a count charging negligence. The insurer was so notified and, because the policy indisputably covered liability for negligence, it accepted a substitution of attorney and undertook the defense of the entire action despite the refusal of the partnership and the individual partners to execute "non waiver" agreements as requested.
The proofs at the trial disclosed that on October 19, 1955 Thompson, while standing on his own property, refused to permit Alfred Malanga, one of the partners, and certain employees of the partnership who were working on adjacent land, to remove dirt from his premises. At that time Alfred Malanga, the only partner present, was seated in an earth-moving machine. After a heated argument with Thompson, Alfred Malanga told him to "Get way or I will bury you in the dirt." He then drove the machine directly at Thompson who fell into its bucket and was injured. At the close of the entire testimony the trial court granted a motion to dismiss the negligence count. As Thompson had previously abandoned the trespass and use and occupation counts, the sole issue submitted to the jury was the assault and battery claim. The court charged the jury that if it found that Alfred Malanga committed the assault and battery while acting in the ordinary course of business of the partnership, then the verdict could go not only against him but also against the partnership and George D. Malanga as a partner thereof. This instruction embraced the punitive as well as the compensatory damages. The jury returned a verdict in favor of Thompson against the partnership and George D. Malanga and Alfred Malanga, individually, in the amount of $7,500 compensatory damages and $10,000 punitive damages. No appeal was taken from the judgment entered thereon. Upon the insurer's refusal to satisfy the judgment, the partnership paid it and instituted the present action for reimbursement. As noted above, the Law Division
granted this relief to the partnership and the defendant insurer appealed.
The sole issue for our determination is whether under the terms of the policy the partnership as such is covered for liability imposed upon it as the result of an assault and battery committed by a partner in the course of partnership business. The defendant insurer upon this appeal makes no distinction between the compensatory and punitive damage awards, and does not contend that the judgment in the Thompson suit is res judicata or that the doctrine of equitable estoppel applies as to the partnership's participation in the tort.
The policy covers liability for bodily injury caused by accident. Assault and battery is deemed an accident "unless committed by or at the direction of the insured." Under the "Definitions" provision of the policy, in addition to the named partnership as an entity, coverage is extended to the individual partners. Alfred Malanga, as a partner, is therefore an insured under the policy. But as he committed the assault and battery he is excluded from coverage because, as to him, the assault and battery cannot be deemed an accident. Farm Bureau Mut. Automobile Ins. Co. v. Hammer, 177 F.2d 793 (4 Cir. 1949). However, the exclusory clause is without effect as to an insured who neither committed nor directed the commission of the assault and battery. Western Casualty & Surety Co. v. Aponaug Mfg. Co., 197 F.2d 673 (5 Cir. 1952); cf. Maryland Cas. Co. v. New Jersey Mfrs., etc., Ins. Co., 48 N.J. Super. 314 (App. Div. 1958), affirmed per curiam 28 N.J. 17 (1958). The reason the insurance policy denies coverage of an assault and battery committed by or at the direction of an insured is that it would be contrary to public policy to indemnify a person for a loss incurred as a result of ...