For affirmance -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For reversal -- None. The opinion of the court was delivered by Weintraub, C.J.
Merchants Indemnity Corporation of New York (herein "Merchants") seeks a judgment declaring it is not obligated under its policy of automobile liability insurance to defend and to pay any judgment which may be obtained in a pending action against its insureds for injuries and death. The trial court found Merchants is so obligated, and the Appellate Division affirmed, 68 N.J. Super. 235 (1961). We granted certification, 36 N.J. 132 (1961).
The "Family Automobile Policy" was issued to Edward L. Eggleston and initially covered only his Chrysler automobile. Later, by endorsement, coverage was added with respect to a Lincoln owned by his wife, Jean, and she was included as a "named insured." By further endorsement a Thunderbird was substituted for the Lincoln. The Thunderbird, while driven by Jean's brother, Jacob F. Tussel, Jr., was involved in a serious accident, from which emerged the law suit mentioned above.
The Thunderbird was registered in the name of Jean. Merchants asserts Jacob was the true owner, and seeks to be
relieved because of an alleged misrepresentation as to ownership.
The trial court found a material misrepresentation, but held Merchants had waived its right to disclaim by reason of its assumption of the defense of the law suit. The Appellate Division held there was no misrepresentation; that, to prevail, Merchants had to prove concealment with intent to defraud; and, finally, that it need not decide whether Merchants had met that burden since it agreed with the trial court that Merchants had waived its right to deny liability.
Jacob, age 19, lived with his parents at their home. Jean and her husband lived in a trailer located upon the same parcel of land. The Lincoln was Jean's car. It is conceded that Merchants knew Jacob was to drive the Lincoln. For that reason the endorsement read "This Lincoln is added at Class 2A rates." The classification plan attached to the policy provided:
"CLASS 2A * * * MEANS -- the operators of the automobile under 25 years of age are male and are not owners or principal operators of the automobile, or the owners or principal operators of the automobile under 25 years of age are male and are married."
Jean drove the Lincoln to her work daily while Jacob used it after his working hours. The driving arrangement with respect to the Thunderbird appears to have been precisely the same. The cost of the Thunderbird was $2,700, of which Jacob furnished $700, the balance coming from the parents of Jacob and Jean. Jacob signed the purchase order but the bill of sale went to Jean, who simultaneously disposed of the Lincoln. Jean paid the registration fee and the cost of insurance on the Thunderbird. The agent of Merchants knew Jacob was to drive the Thunderbird, and Class 2A rate, ascribed to the Lincoln, continued as to the substituted car.
The policy begins with a recital that insurance is provided "in reliance upon the statements in the declarations." It closes with the usual provision:
"By acceptance of this policy, the insured named in Item 1 of the declarations agrees that the statements in the declarations are his agreements and representations, that this policy is issued in reliance upon the truth of such representations * * *."
The "declarations" contain no representation as to ownership.
The provision upon which Merchants relies appears in the endorsement which added the Lincoln and in the endorsement which substituted the Thunderbird. The format of the pertinent provision is significant and hence it is reproduced:
The Automobile is fully paid
for and the Insured is the sole
thereof, except as follows:
Installment Payments Due Date of Final
Encumbrances Number Amount Each Installment is
$$Merchants contends that, by accepting the endorsements, the insured adopted the "representation" as to sole ownership contained therein. Citizens Casualty Co. v. Zambrano Trucking Co., Inc., 140 N.J. Eq. 378, ...