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Hartford Accident and Indemnity Co. v. Selected Risks Indemnity Co.

Decided: February 7, 1961.


Conford, Freund and Kilkenny. The opinion of the court was delivered by Freund, J.A.D.


The issue presented for our determination is whether two concededly "excess" automobile liability carriers, called upon to contribute to a settlement or judgment, should share equally rather than in proportion to their respective applicable policy limits.

Plaintiff instituted a declaratory judgment action seeking resolution of this question in its favor. Its demand for relief was granted, by way of a determination that " inter se coverage afforded by the plaintiff and the defendant are concurrent, and that, in any settlement or judgment, the plaintiff and defendant will share equally up to their respective limits of liability, irrespective of what those limits might be." Defendant appeals from that substantive conclusion, in addition to alleging that the question is not ripe for adjudication.

The facts are not in dispute. The Community Service Station, while repairing the vehicle of one William B. Knight, Jr., had supplied him with an automobile as a temporary substitute. The liability policy on this car was carried by Employers Liability Assurance Corp., Ltd. ("Employers"). On December 28, 1957, while the vehicle was being operated by James Knight, Jr., with the permission of his uncle, William B. Knight, Jr., riding as a passenger, it was involved in a collision with another automobile driven by Mary M. Herbert. Her father, Charles H. Herbert, the owner of the car, was a passenger, along with her sister, Carol G. Herbert. As a result of the accident, both William B. Knight, Jr. and Charles Herbert died, and the Herbert girls sustained severe personal injuries. Shortly after the filing of the pleadings in the instant matter, suit was instituted on behalf of Mr. Herbert's estate and the Herbert sisters against James Knight, Jr., Community Service

Station, and the executrix of the estate of William B. Knight, Jr.

The involvement of plaintiff ("Hartford") and defendant ("Selected") arises out of policies issued by them to James Knight, Jr. and William B. Knight, Jr., respectively, covering automobiles owned by the two men. The Hartford policy protects relatives of the named assured with respect to a "non-owned" automobile; the Selected policy covers, by its terms, named and additional assureds while operating a "temporary substitute" automobile. It is conceded by each company that its policy covers this accident.

Employers has accepted its responsibility as primary carrier, providing coverage to the limits of its policy for all three defendants in the Herbert-Knight action. Hartford and Selected, having stipulated that they are "excess" carriers under the terms of their policies, focus their respective legal contentions on the following clause, contained in identical form in each of their instruments:

"Other Insurance: If the insured has other insurance against a loss covered by Section I of this policy, the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss; provided, however, the insurance with respect to a temporary substitute automobile or non-owned automobile shall be excess insurance over any other valid and collectible insurance."

Defendant urges that the quoted provision evidences an intention that where a non-owned or temporary substitute automobile is involved, the contribution of the carriers should be pro-rated on the basis of the liability limits in their respective policies. Plaintiff counters this contention by submitting that the issue has been foreclosed by the Supreme Court's holding for equal sharing of the loss in Cosmopolitan Mutual Insurance Co. v. Continental Casualty Co. , 28 N.J. 554 (1959).

We consider, preliminarily, the contention that this action was brought prematurely. The Declaratory Judgment

Act, N.J.S. 2 A:16-50 et seq. , is a remedial device designed to expedite the definitive establishment of private rights and duties and thereby forestall the emergence of costly and cumbersome trial proceedings. See National-Ben Franklin Fire Ins. Co. v. Camden Trust Co. , 21 N.J. 16 (1956). The worthy purposes of the act amply justify the liberal construction accorded it since the establishment of our new court system by the 1947 Constitution. Ibid. , 21 N.J. , at p. 22; Utility Blade & Razor Co. v. ...

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