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Small v. Schuncke

Decided: July 18, 1963.


Goldmann, Freund and Foley. The opinion of the court was delivered by Foley, J.A.D.


[80 NJSuper Page 98] Third-party defendant Pennsylvania Threshermen & Farmers' Mutual Casualty Insurance Company (Threshermen) appeals from a summary judgment entered in the Law Division, adjudicating that third-party plaintiff Schuncke was entitled to the coverage provided by the omnibus clause contained in an automobile liability insurance policy which Threshermen had issued to Herbert B. Weidel. The omnibus clause was of standard form and provided in pertinent part that coverage under the policy

was extended to "* * * any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or such spouse or with the permission of either."

The basic facts are not in material dispute. Weidel, who resided in Baltimore, Maryland, and was the owner of the insured vehicle, entered a Baltimore hospital on June 2, 1957 for treatment. He drove his car to the hospital, leaving it in the parking area. A day or two later his nephew Michael Wagner visited him at the hospital. Wagner was a sailor, home on leave from the Navy. Weidel asked Wagner if he would mind using Weidel's car for certain specified purposes -- to drive Mrs. Weidel to and from the hospital, to take her shopping if necessary, to deliver some wedding presents which were in Weidel's vehicle, and to pick up Weidel's pay check. Wagner agreed, and did in fact serve his uncle in the manner requested from that time until June 7, 1957. Wagner did not at any time request that he be given permission to use the car for his personal purposes. Weidel, on the other hand, never expressly prohibited such use by his nephew. In short, the matter of personal use by Wagner never came up, and so there was no occasion to discuss it.

On the evening of Friday, June 7, 1957, Wagner, in furtherance of the purposes specified by Weidel, drove his mother (Weidel's sister) to the Weidel residence where she acted as a baby sitter for Mrs. Weidel while Wagner drove the latter to see her husband in the hospital, as he had done on several preceding nights. After the visit he drove Mrs. Weidel home and then took his mother to her home. On the way he saw Schuncke, a friend and neighbor for many years. After taking his mother home Wagner drove around to see Schuncke. The two young men then drove to a nearby restaurant where they met two girls. After a "couple hours," during which they consumed soft drinks, they took the girls home.

Wagner and Schuncke then drove to a restaurant or tavern where they had two or three bottles, or glasses, of beer. While they were there Schuncke suggested that they drive to New York City for the week end. Wagner agreed. After stopping at their respective homes for clothing they started for New York. En route they picked up five hitch-hikers. Along the way Schuncke took over the driving of the vehicle and Wagner fell asleep. Travelling northerly on the New Jersey Turnpike at or near Newark the car was in violent collision with another vehicle approaching from the rear.

Subsequently, actions were instituted in behalf of the passengers in Weidel's automobile, against Weidel, Schuncke, and the owner and driver of the other car. Threshermen declined to defend the action against Schuncke upon the ground that he did not fall within the coverage provided by the Weidel policy. Schuncke had coverage under an automobile liability policy issued by the Liberty Mutual Insurance Company (Liberty) to his father. Both the Weidel and Schuncke policies had identical policy limits of $10,000/$20,000. Although the fact is not clearly stated, it seems evident from the issues framing this case that the Liberty coverage did not become effective until the Threshermen coverage was exhausted, providing Schuncke was entitled to coverage under the omnibus clause of the Threshermen policy.

Later the actions brought by the plaintiffs were consolidated, and Schuncke was permitted to file a third-party complaint against Threshermen in which he claimed coverage under the Threshermen policy and demanded judgment in his favor for "all sums as may be found due against him * * * together with all costs incurred by him in defense of said actions [plaintiffs'] * * *." The consolidated cases of plaintiffs were settled in the course of trial. Under the terms of the settlement Liberty contributed the sum of $20,000 to the group of settlements. Threshermen paid nothing either in behalf of Weidel or as a third-party defendant. It was agreed that the sum of $20,000 was a fair

and reasonable contribution. Thereafter, the third-party action was litigated, with the result already noted. While Schuncke is named as the third-party plaintiff, the real party in interest, of course, is Liberty.

In its brief Threshermen concedes that if Wagner was a permittee in the use of the Weidel car, and thus had coverage under the Threshermen policy, Schuncke also had coverage thereunder as a second permittee.

The Law Division judge grounded the summary judgment upon the holding that the case was controlled by Costanzo v. Pennsylvania Threshermen, etc., Ins. Co. , 30 N.J. 262 (1959) and Matits v. Nationwide Mutual Ins. Co. , 33 N.J. 488 (1960). Costanzo, supra , which was decided prior to the adoption of the "initial ...

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