Conford, Freund and Kilkenny. The opinion of the court was delivered by Conford, S.j.a.d.
[67 NJSuper Page 555] Plaintiffs brought separate actions against the defendant insurance company to recover on its contract to insure Walter Kauger and Grace Kauger (his wife) on a standard automobile liability insurance policy. The actions are predicated on judgments previously recovered in the Hudson County District Court as follows: (a) in favor of plaintiff Ruth Sutera for $1,000, and (b) in favor of plaintiff Ann Nastoi for $1,200, against Grace
Kauger in each instance, for personal injuries sustained by plaintiffs in an automobile accident which occurred December 9, 1956, involving a collision between the Kauger car and another owned and operated by one Guarraci. Plaintiff Nastoi was a passenger in the Kauger car and plaintiff Sutera a passenger in the Guarraci vehicle.
Defendant defended the present actions, which were consolidated, on the grounds of fraud and failure of cooperation by its assured, Grace Kauger. At the conclusion of all the proofs the trial court, sitting with a jury, granted motions for judgments in favor of the plaintiffs, and denied a motion for judgment in favor of the defendant in both actions.
Paragraph 1 of the "Conditions" of the policy requires the insured to give notice of an accident to the company, including reasonably obtainable information respecting the time, place and circumstances of the accident and names of available witnesses. Paragraph 18 of the conditions provides that the insured shall cooperate with the company and shall assist in securing and giving evidence, obtaining the attendance of witnesses and in the conduct of suits. Paragraph 8 is to the effect that no action shall lie against the company unless, as a condition precedent thereto, there shall have been full compliance with all the terms of the policy.
The defense of the claims at the trial was based primarily upon the testimony of Fred W. Jung, Jr., a lawyer, and Edward Curran, Jr., an investigator employed by defendant.
Jung's testimony was to the following effect. Early in 1957 he was retained by the defendant company to defend the negligence actions brought by the present plaintiffs in December 1956 insofar as defendant's assured, Grace Kauger, was involved. Mrs. Sutera (then Ruth Miller), joining as co-plaintiff with Guarraci, had sued Grace Kauger as the operator of the Kauger vehicle; Miss Nastoi had sued Guarraci and Mrs. Kauger as the respective operators of the vehicles involved. The cases were consolidated for trial. Jung first filed a counterclaim against Guarraci for contribution
as a joint tortfeasor. Shortly thereafter he arranged with Mrs. Kauger to represent her personally on a counterclaim against Guarraci for her personal injuries and damages to her car. At that time Mrs. Kauger informed him that she was the driver of her car at the time of the accident. Somewhere between one and three months prior to the taking of depositions in the case (taken May 24, 1957), an attorney for one of the plaintiffs informed Jung that it was his information that Mrs. Kauger was not driving her car at the time of the accident. Jung promptly questioned her about this, but she insisted she had been the driver, saying, "They are lying * * *. I was driving. There was no man in the car." When the deposition of Guarraci was taken, on the date mentioned, he testified that "* * * there was a man driver at the seat." Mrs. Kauger and another woman, he said, were in the front seat. Again Jung questioned Mrs. Kauger closely: "You have to tell me the truth * * *. Was there anyone else in the car?" She answered: "Absolutely not * * *. I was driving the car." On the same occasion the depositions of plaintiff Nastoi were taken, and she, too, testified that Mrs. Kauger was the driver of the car. Based upon what Mrs. Kauger told him, Jung had her sign sworn answers to interrogatories to the effect that she was the driver of the car. He reviewed the matter with her again a week or ten days later and she adhered to her story. He said he then "believed her."
The negligence case was reached for trial in the District Court June 2, 1958. The judge in chambers asked the parties concerning the possibility of settlement. When Jung consulted Mrs. Kauger concerning her views as to this, she said to him, "Mr. Jung, I can't hold this back any longer, I have got to tell the truth." She then told him that she was not driving the car that night; that she owned a tavern in Union City; that plaintiff Nastoi, who was a friend and customer of hers, and a woman named Rose Pisanello were there and were in the company of two men; that all five got into the Kauger car; and that at the time of the accident
one of the men, named Esposito, was driving, with Mrs. Kauger and the Pisanello woman alongside in the front seat, and Miss Nastoi and the other man in the back seat. She also told Jung that "when the accident happened she ordered both the driver of her car and the man in the back seat out and to beat it before the police came." Previously she had "repeatedly" told Jung that there were only three people in the car, "herself, Nastoi and Pisanello." Earlier the defendant's investigators had interviewed Miss Nastoi and Miss Pisanello, but they had refused to give any information at all.
Upon being confronted with this situation, Mr. Jung took the matter up with the District Court Judge and requested that a mistrial be declared (a jury had been drawn). The court granted the application and adjourned the trial to a new date. A transcript of the discussion in chambers indicates that the judge verified from Mrs. Kauger directly, in the presence of counsel for all parties, what she had just told Jung, including the admission that her answers to interrogatories and depositions were false insofar as she had there sworn she was the driver of the car. She told the judge that one Esposito was driving the car. Soon thereafter Jung, with leave of court, withdrew as attorney for Mrs. Kauger, and the defendant insurance company promptly disclaimed liability on the policy on grounds of failure of ...