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Inductotherm Corp. v. New Jersey Manufacturers Casualty Insurance Co.

Decided: May 1, 1964.

INDUCTOTHERM CORPORATION, A PENNSYLVANIA CORPORATION, PLAINTIFF,
v.
NEW JERSEY MANUFACTURERS CASUALTY INSURANCE COMPANY, DEFENDANT



Barlow, J.c.c. (temporarily assigned).

Barlow

[83 NJSuper Page 465] In this action, tried by the court sitting without a jury, and in which the essential facts were not disputed, plaintiff Inductotherm Corporation seeks reimbursement for monies paid by it to

satisfy judgments entered against it in the State of Michigan, along with compensation for expenditures made by it in connection with defending the suits which resulted in such judgments, and counsel fees and expenses arising out of the instant case, alleging that a comprehensive public liability policy issued to it by defendant insured plaintiff against the accidents which formed the basis of the judgments entered against it and, further, obligated defendant to undertake the defense of the civil actions which produced the judgments.

Defendant declined to defend plaintiff against the claims originally asserted, or to pay the resultant judgments, on the ground that the policy in question specifically excluded coverage of the risk from which plaintiff's liability resulted.

On July 13, 1958, the defendant issued to plaintiff a comprehensive public liability policy in which it agreed as follows:

"To pay on behalf of the insured, all sums which the insured shall become legally obliged to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom sustained by any person and caused by accident."

With respect to the obligation to defend suits brought against the insured, the policy further provided:

"With respect to such insurance as is afforded by this policy, the company shall: (a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; * * *."

The policy also contained an exclusion clause, as follows:

"It is agreed that the policy does not apply

1. to the products hazard as defined in the policy; * * *."

The term "products hazard" is defined in the policy as:

"(1) goods or products manufactured, handled, or distributed by the named insured * * * if the accident occurs after possession of such goods or products has been relinquished to others by the

named insured * * * and if such accident occurs away from the premises owned, rented, or controlled by the named insured * * *."

(2) operations, if the accident occurs after such operations have been completed or abandoned and occurs away from premises owned, rented or controlled by the named insured; provided, operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to an agreement; * * *."

Thereafter, and during the period in which the policy was in effect, plaintiff leased an induction melting unit manufactured by it to Superior Kendrick Bearings, Inc., a Michigan corporation (hereinafter referred to as "Kendrick"), together with a number of ceramic crucibles to be used in conjunction with the induction melting unit.

On October 22 and 23, 1958 four of Kendrick's employees sustained injuries when certain of the crucibles supplied by plaintiff suffered bottom failures, splattering molten bronze on the floor of Kendrick's foundry, with the resultant injuries to its employees.

On April 2, 1959 plaintiff notified the defendant that it had been advised that the workmen's compensation carrier for Kendrick's employees had announced its intention to collect its costs and expenses, and that the injured employees had retained counsel with a view toward instituting civil actions against plaintiff for damages by reason of the injuries so sustained. Following receipt of notice of such claims, on May 5, 1959 defendant notified plaintiff that it had completed its investigation of the claims, and that in its opinion the claims concerned only "product's liability," for which claims its comprehensive liability policy afforded no coverage. Again, on May 7, 1959 plaintiff wrote to defendant conceding that even though the "product's liability" was not covered by the policy, it was concerned with an allegation contained in the complaint ...


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