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Liguori v. Allstate Insurance Co.

Decided: August 29, 1962.


Pashman, J.s.c.


[76 NJSuper Page 206] This is a summary proceeding instituted by the plaintiff Alfred Liguori, individually and as administrator ad prosequendum of the estate of Florence Liguori, deceased, against defendants Allstate Insurance Company (Allstate) and Harold A. McDermott, Harold McDermott, the estate of Nicholas Bonelli, Jr. and Thomas Pedersen, Jr., directing defendant Allstate to show cause why it should not be restrained from consummating a settlement in the amount of $8,000 with the personal representatives

of the defendant estate of Nicholas Bonelli, Jr., and why it should not institute an interpleader action for the purpose of evaluating and ratably distributing the proceeds of an automobile insurance policy issued by Allstate to Harold McDermott. The parties have agreed that final judgment should be entered pursuant to R.R. 4:85-5.

The circumstances from which this action arises are as follows: On January 26, 1962, Alfred Liguori was the owner and operator of a motor vehicle traveling south on Paterson Plank Road, North Bergen, New Jersey, in which vehicle his wife, decedent Florence Liguori was a passenger. The Liguori automobile was involved in a collision with a motor vehicle owned by Harold McDermott and driven by his son Harold A. McDermott, in which decedent Nicholas Bonelli, Jr., and Thomas Pedersen, Jr. were passengers. As a result of the collision, Florence Liguori and Nicholas Bonelli, Jr. were killed and the other parties were injured. (The McDermott vehicle was covered by a policy of automobile liability insurance issued by Allstate in the amount of $10,000 for each injury and $20,000 for each accident.)

Shortly after the aforementioned accident actions were instituted by Alfred Liguori as administrator ad prosequendum of his wife's estate and in his individual capacity, and by Thomas Pedersen, Jr. et al. against Harold McDermott et al. , in the Superior and County Courts, Hudson County, respectively. These actions have now been consolidated and are pending in the Hudson County Court. On June 17, 1962, settlement negotiations between Allstate and the parents of decedent Bonelli were concluded and releases were forwarded to Allstate the following day.

In support of his contention that he is entitled to the relief sought, the plaintiff maintains that the aforementioned settlement was the product of "bad faith" on the part of Allstate, which is manifested by the amount of the settlement together with what the plaintiff equivocally characterizes as "misleading conduct" on the part of a Mr. Dennis, a representative of Allstate. Plaintiff states further that

unless the court prevents the consummation of the proposed settlement, a serious reduction of available proceeds (to all prospective claimants) will take place and an inequitable preference will occur resulting in the visitation of irreparable harm upon the plaintiff.

The initial problem facing the court in the case sub judice involves the plaintiff's standing to obtain the desired equitable relief in view of the fact that his law action has not been tried, no less reduced to judgment. While a distinction is often drawn between the rights of a beneficiary of a policy of indemnity and that of a policy of absolute liability (the language of the insurance contract being the dispositive criterion), see, e.g., Hynding v. Home Accident Insurance Co. , 214 Cal. 743, 7 P. 2 d 999, 85 A.L.R. 13 (Sup. Ct. 1932), and Fallon v. Mains , 302 Mass. 166, 19 N.E. 2 d 68 (Sup. Jud. Ct. 1939), the present circumstances compel a different approach. Indeed, our Supreme Court has recently reiterated the salutary proposition that this State is committed to a "strong legislative policy of assuring financial protection for innocent victims of automobile accidents," Indemnity Insurance Co. of North America v. Metropolitan Cas. Ins. Co. of N.Y. , 33 N.J. 507, 512 (1960); see also Matits v. Nationwide Mutual Ins. Co. , 33 N.J. 488 (1960); Eggerding v. Bicknell , 20 N.J. 106, 113 (1955), and the State Legislature, in enacting the Motor Vehicle Security-Responsibility Law, N.J.S.A. 39:6-23 et seq. , and the Unsatisfied Claim and Judgment Fund Law, N.J.S.A. 39:6-61 et seq. , has given equal thrust to this socially desirable remedy. In essence, drivers of motor vehicles are encouraged to secure liability insurance in order to alleviate the possibly harsh effects visited upon the inequitable victims of automotive mishaps. As a complement to the legislative scheme, our courts have interpreted such contracts in a manner most beneficial to the injured party, since he is the one who is ordinarily least able to bear the loss. See, e.g. , the Indemnity and Matits cases, supra , which deal with the

coverage of the standard "omnibus clause" in relation to "second permittees." The conclusion to be reached seems inescapable. It is incumbent upon the parties to automotive liability insurance contracts to conduct their dealings in such a manner, that being called upon to apply the proceeds of that policy, they refrain from compounding the injuries of the very persons for whose benefit the contract was intended.

Despite the preceding observation it is not true that every injured party is assured full compensation for the loss he suffers. Unlike our sister states of New York and Massachusetts, New Jersey does not require its licensed drivers to carry liability insurance. Nor is the operator who does acquire such a policy required to insure himself beyond the $10,000/$20,000 limit. N.J.S.A. 39:6-46(b). Nevertheless, where a private fund does exist which is shown to be unduly threatened so as to jeopardize the limited chance of recompense afforded persons in plaintiff's position, the availability of this court as a forum for certain types of relief where the circumstances so demand is unquestionably a concomitant part of the overall scheme.

It is not inappropriate to note in passing that our courts have had occasion to apply a similar analysis as regards the necessity of permitting victims of automobile accidents to establish their rights against an insurer prior to judgment. In Le Felt v. Nasarow , 71 N.J. Super. 538 (Law Div. 1962), it was held that the typical "no action" clause of an automobile liability policy did not bar the maintenance of a declaratory judgment proceeding at law to determine the liability coverage of a disclaiming insurer prior to judgment. While the procedural differences between Le Felt and the instant suit are apparent, the underlying rationale cannot be ignored. ...

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