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Johnson Bros. Boat Works v. Conrad

Decided: November 5, 1959.


Civil action. Opinion on motion to dismiss.

The opinion of the court was delivered by Larrabee, J.c.c. (temporarily assigned).


Under R.R. 1:31-1, Johnson Bros. Boat Works on February 26, 1959 filed suit against Lester Conrad, alleging that it had repaired Conrad's Matthews cruiser Privateer pursuant to a written contract for a paint, varnish and refinishing job priced at $1,441.95, which was also the reasonable value thereof, and further repaired, refinished, refurnished, refitted and reconditioned the Privateer on oral contract with Conrad, the reasonable value of which was $6,368.59.

Conrad answered admitting the written contract but denying (1) that he requested the second job, which he contends was done at the request and direction of General Insurance Co., and denying (2) that the sum claimed is reasonable value. Further, contending (3) that the second job was required to repair damage caused by the negligence of Johnson Bros.' mechanic who, in the course of a repair job, disconnected and removed the exhaust line leading from the motor to the stern of the cruiser and failed to replace it or plug the hole in the transom through which the exhaust was discharged; that water entered the hull, the Privateer sank and water damage as a result made necessary the second job.

Conrad also counterclaimed for damages of $7,500 based on the negligence of Johnson Bros.' mechanic.

Conrad obtained leave of the court to file a third-party complaint against General Insurance Company, and the complaint was duly filed on July 2, 1959. In it Conrad alleged the occurrence of the main suit and, further, that General Insurance Company had issued an insurance policy on the

boat for one year from April 14, 1957 to April 14, 1958 in the sum of $7,000 against loss or damage to the hull. Further, that by endorsement the boat could remain in commission until March 15, 1957. That the accident referred to above occurred on or about October 24, 1957, whereby the boat was damaged $6,084.18; that Conrad gave prompt notice to the General Insurance Company, which recognized its liability, undertook to negotiate for the repairs and reimbursed Conrad $1,472.01; that the General Insurance Company ordered the second job done by Johnson Bros. Conrad asks that if judgment be entered against him in the main suit, one for the same sum be entered in favor of him against the General Insurance Company. A copy of the policy is annexed to the third-party complaint.

The third-party complaint has been served upon the General Insurance Company which now moves for a dismissal of the third-party complaint. The defendant insurance company, hereinafter referred to as General, contends that the third-party complaint fails to state a cause of action.

The grounds alleged by General are:

1. That General's policy is restricted to indemnification and since Conrad has not paid for the cost of repairs he is not entitled to reimbursement or indemnification.

2. That Conrad has no right of recovery because by applying for the policy he warranted by implication that the boat was seaworthy and the boat was not seaworthy.

3. That General's policy insures against "perils of the sea" and that no peril of the sea was involved in the sinking of the Privateer.

4. That no recovery can be had on the clause because no fittings were involved.


In the course of the argument, counsel for Conrad stated that Conrad's claim is based on section A of the policy. This section provides liability type coverage as distinguished from section B which, in form, provides indemnity type

coverage. Conrad could not have relied on section B because, not having paid for the loss, he would not be entitled to indemnification.

General contends that even section A is indemnity insurance, but inspecting the policy as a whole, the court notes that section A provides that General "does hereby insure Lester I. Conrad * * * upon the wood gas yacht Privateer 1930 * * * loss, if any, payable in funds current in the United States to insured or order."

Section B is explicit in stating that "if the insured shall * * * become liable to pay and shall pay." Section C states that "The company agrees to pay to or for each person * * * who sustains bodily injury * * * the ...

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