Goldmann, Foley and Lewis. The opinion of the court was delivered by Foley, J.A.D.
[69 NJSuper Page 200] Defendants appeal from a declaratory judgment adjudicating that defendant Bertha Watts breached a policy of insurance issued to her by plaintiff insurance company, that the company therefore owed to her no obligation to defend an action brought against her by defendants
Gallagher, and absolving the company from all liability under the policy. Plaintiff cross-appeals from an adverse holding by the trial court with respect to one of the grounds upon which it asserted its nonliability. The historical background of the case is detailed in Pearl Assurance Co. Ltd. v. Watts , 58 N.J. Super. 483 (App. Div. 1959), and the factual recital therein is adopted for the purposes of this opinion.
Briefly stated, in the prior case in which Milton S. Watts was also a defendant, plaintiff sought a judgment declaring that both he and Bertha Watts, his wife, had given inconsistent statements to the insurance company and had thereby breached the cooperation clause of the policy. The trial court found for the defendants.
On appeal we affirmed the judgment as to Mrs. Watts since at the time the action was brought she had given to the company but one statement. However, we held, contrary to the finding of the trial court, that Mr. Watts had given inconsistent statements and we remanded the case for a determination of whether such statements were deliberately made, and also whether he was guilty of fraud and collusion as plaintiff charged.
Shortly thereafter the present case was instituted. To crystallize the issues therein, we set forth verbatim the allegations in the complaint which are made the basis of plaintiff's charge that Bertha Watts breached her agreement to cooperate with the company in defense of any claim within the coverage of the policy:
"* * * During the preparation of the defense in the action against Milton S. Watts and Bertha D. Watts, the defendant Bertha D. Watts gave a statement and approved and acquiesced in statements as to conditions concerning property owned by her and Milton S. Watts, and subsequently the defendant Bertha D. Watts made an inconsistent and contradictory statement, and said Bertha D. Watts has assisted Jessie F. Gallagher and Charles Gallagher to present their claim and prosecute the action against Milton S. Watts and Bertha D. Watts; has colluded with Jessie F. Gallagher and Charles Gallagher; has given irreconcilable factual statements concerning
liability; has given information and statements to Jessie F. Gallagher and Charles Gallagher and their representative, and said Bertha D. Watts has further failed to disclose entirely facts concerning the condition of the property." (Paragraph 6)
The case was presented to the trial court on documentary evidence which included a statement made by Bertha D. Watts on January 6, 1958, depositions of Jessie Gallagher and Mrs. Watts dated October 10, 1958, and a second deposition given by Mrs. Watts on April 26, 1960.
The issues which the trial court was called upon to decide were purely factual. They were: (1) whether there existed inconsistencies between Mrs. Watts' statements of January 6, 1958 and her deposition of October 10, 1958 which constituted a breach of the cooperation clause in the policy; and (2) whether she colluded with defendants Gallagher in the maintenance of their action against her, and thereby perpetrated a fraud upon the insurance carrier.
On January 6, 1958 Mr. and Mrs. Watts appeared at the office of plaintiff's attorneys. Mr. Watts was interrogated at length and a transcript of his statement was taken stenographically by a certified shorthand reporter. He denied knowledge prior to the accident of the defect in the Wattses' premises upon which the Gallagher action was predicated. At the conclusion of the interview, Mrs. Watts was briefly examined as follows:
"Q. You have been present while I have been questioning Mr. Watts. Is there anything you want to add to this that we didn't cover? A. No, I don't think so.
Q. Is there any information that you have that Mr. Watts didn't bring out, or anything you know about this accident, or the circumstances surrounding it, that are different than what Mr. Watts told us? A. No. The only thing I know, she went to grab the rail and as she did it broke loose and she lost her balance and went down the stairs.
Q. Had you taken particular notice of that rail before your mother fell? A. I had no occasion to use it. I just went up and down the steps ...