Conford, Freund and Labrecque. The opinion of the court was delivered by Freund, J.A.D.
The plaintiffs, Carol M. Kraynick, an infant, and John Tasko, recovered judgments in the Superior Court, Law Division, for $62,000 and $13,000 respectively, against Richard W. Rodgers, a resident of Pennsylvania, for personal injuries caused by his negligent operation of his automobile in Trenton, N.J. The defendant herein, Nationwide Insurance Company (Nationwide), had issued to Rodgers in Pennsylvania an automobile liability insurance policy with limits of $10,000 and $20,000. This action was brought to recover the policy limits on the unsatisfied judgments. Nationwide denied liability on the ground that Rodgers had failed to cooperate as required by the terms of the policy. The court submitted this issue to the jury which found for the plaintiffs; hence the present appeal.
The cooperation clause in Rodgers' policy reads as follows:
"The Policyholder or other person entitled to protection or someone on his behalf shall:
(4) assist the Company in all respects in connection with any claim or suit, including examination under oath concerning any claim and the exhibition and protection of any damaged property insured hereunder."
The automobile accident occurred on May 19, 1958 and Rodgers promptly notified Nationwide. He was interviewed on three occasions by the insuror's investigator and gave him two written statements concerning the details of the accident, one dated May 27, 1958 and the other dated July 29, 1958. The summons and complaint in each case were received by Nationwide from Rodgers and then forwarded to defendant's attorneys, who filed answers and appeared in defense of the actions. In its letters of acknowledgement of the process to Rodgers, Nationwide wrote: "It is absolutely essential that you keep us advised at all
times of your correct current address. If the above address is not correct, or should you move from the same, please notify us immediately." At about the end of January 1959 letters addressed to Rodgers by defendant's attorneys were returned with postal notations, "Insufficient address," "Not at this address," "Moved No Ad." Subsequent efforts by defendant to locate Rodgers proved unsuccessful. An investigator of defendant made numerous personal trips to Rodgers' only known address where his wife and a son or stepson resided, but received no helpful information as to his whereabouts. He inquired at diners where he had worked or, apparently, might be thought to have been working. He inquired of neighbors on the same street, but all to no avail. Rodgers' wife told an investigator he had telephoned from a railroad station in New York, but the sustaining of objections by the court to plaintiffs' efforts to furnish more information prevented an evaluation of whether defendant could have inquired further on this slim lead.
On December 7, 1959, when the plaintiffs' injury cases came on for trial, Nationwide, with leave of court, withdrew from the defense on the ground of Rodgers' disappearance and breach of the cooperation provision of the policy. After trial of the negligence issue, the jury rendered its verdicts, and judgments were entered thereon as already noted.
On this appeal, Nationwide urges that the trial court erred in refusing to grant judgment in its favor and in the exclusion of evidence pertaining to defendant's efforts to locate Rodgers, as well as in other alleged respects.
The insurance policy having been executed and delivered to Rodgers in Pennsylvania, the substantive law of that state applies. Buzzone v. Hartford Accident and Indemnity Co. , 23 N.J. 447, 452 (1957); Pennsylvania Threshermen & F.M. Cas. Ins. Co. v. Owens , 238 F.2d 549, 551 (4 Cir. 1956); State Farm Mutual Automobile Ins. Co. v. Palmer , 237 F.2d 887, 891, 60 A.L.R. 2 d 1138 (9 Cir. 1950).
The "cooperation" clause in an automobile liability insurance policy is a material condition of the contract. Pearl Assur. Co. Ltd. v. Watts , 58 N.J. Super. 483, 490 (App. Div. 1959); Cameron v. Berger , 336 Pa. 229, 7 A. 2 d 293, 295 (Sup. Ct.), affirming 132 Pa. Super. 484, 1 A. 2 d 529 (Super. Ct. 1938). It is designed generally to protect the interests of the insuror and to prevent collusion between the insured and injured persons, Kindervater v. Motorists Casualty Ins. Co. , 120 N.J.L. 373, 376 (E. & A. 1938); as well as to enable the insuror to determine whether there is a genuine defense, 8 Appleman, Insurance Law & Practice (1942), § 4774, p. 159. "The purpose of the cooperation clause is to constrain the assured to cooperate in good faith with the insurance company in the defense of claims." American Surety Co. v. Diamond , 1 N.Y. 2 d 594, 599, 154 N.Y.S. 2 d 918, 136 N.E. 2 d 876, 879 (Ct. App. 1956).
Both New Jersey and Pennsylvania, as well as the great weight of authority, place the burden of proving lack of cooperation upon the insuror. Fagan v. Hartford Accident & Indemnity Co. , 114 N.J.L. 281 (E. & A. 1935); Tuder v. Commonwealth Casualty Co. , 10 N.J. Misc. 1206, 163 A. 27 (Sup. Ct. 1932); Schmittinger v. Grogan , 402 Pa. 499, 166 A. 2 d 524 (Sup. Ct. 1961); Pennsylvania Threshermen & F.M. Cas. Ins. Co. v. Owens, supra (238 F.2d , at p. 552). Pennsylvania, in particular, places the burden on the insuror of proving the breach of the condition and of demonstrating ...