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National Union Fire Insurance Co. v. Falciani

Decided: March 23, 1965.


Gaulkin, Foley and Collester. The opinion of the court was delivered by Gaulkin, S.j.a.d.


[87 NJSuper Page 159] On January 2, 1961 Douglas A. Veale was driving a 1940 Ford coupe owned by Romeo Lattanzi

when he ran into a tree. Veale and Eugene R. Lattanzi, son of Romeo, were killed; the other passenger, George C. Hinson, was injured.

National Union Fire Insurance Company (National Union) had issued a "Family Combination Automobile Policy" covering Romeo Lattanzi from April 4, 1960 to April 4, 1961. National Grange Mutual Insurance Company (National Grange) had issued a policy covering Romeo Lattanzi from February 7, 1960 to February 7, 1961. Maryland Casualty Company had issued a policy covering Douglas A. Veale.

National Union instituted this action for a declaratory judgment, seeking to be exonerated from all liability with reference to the accident, or, in the alternative, to have National Grange declared a co-insurer. Romeo Lattanzi and those claiming damages because of the accident resisted National Union's effort to be relieved of liability, and also sought to have National Grange declared a co-insurer. Maryland Casualty took the position that National Union and National Grange were primary insurers and its policy was excess insurance. The Chancery Division adjudged that the policy of National Union insured Veale and Romeo Lattanzi with reference to the automobile involved in the accident, but that the policy of defendant National Grange did not, and therefore National Grange was free of liability. It held that the policy of Maryland Casualty was excess insurance. National Union appeals, and those seeking damages as a result of the accident cross-appeal from the exoneration of National Grange.

There appears to be no challenge of the holding that the policy of Maryland Casualty Company is excess insurance, and that holding is affirmed. We affirm, also, that portion of the judgment which holds that the National Union policy covers, for the reasons stated by Judge Wick. However, we hold the National Grange policy also covers, and that National Grange is a primary co-insurer with National Union.

The automobile which was involved in the accident was acquired by Romeo Lattanzi about December 15, 1960. Those claiming the benefit of the National Grange policy (including

Romeo Lattanzi) contended that the automobile was automatically covered as soon as it was acquired because the policy provided:

"Condition No. 2

Premium If the named insured disposes of, acquires ownership of or replaces a private passenger, farm or utility automobile or, with respect to Part III, a trailer, he shall inform the company during the policy period of such change. Any premium adjustment necessary shall be made as of the date of such change in accordance with the manuals in use by the company. The named insured shall, upon request, furnish reasonable proof of the number of such automobiles or trailers, and a description thereof."

For brevity, hereafter we shall call this provision "Condition 2."

National Grange admits in its brief that under Condition 2 "the named insured has the right to extend coverage to after-acquired or substitute automobiles by giving notice to the company during the policy period." However, it argues that the insured has the option not to submit a newly acquired automobile for coverage, and that here Romeo Lattanzi had elected, before the accident, not to have National Grange cover the automobile.

The evidence shows that in December 1960, after Lattanzi purchased the automobile, he went to Bertram E. Harper, the agent of National Union, and arranged for the National Union policy to cover it. In addition, he arranged with Harper for National Union to take over the insurance on the two automobiles described in the National Grange policy when that policy expired, on February 7, 1961. Lattanzi did not notify National Grange of the acquisition of the automobile prior to the accident. Indeed, we find no evidence in the record to indicate when National Grange first learned of the acquisition of the automobile, or whether it was "during the policy period."

National Grange argues that the foregoing facts show clearly that Lattanzi elected not to have its policy cover this automobile, and therefore there was no contract between Lattanzi and National Grange to cover it. We disagree.

There is nothing in the evidence to show that Lattanzi understood that Condition 2 provided coverage for after-acquired vehicles, and that he knowingly rejected the coverage. Therefore, we need not pass upon the question whether a knowing election not to avail himself of coverage, not communicated to the insurer, debars an insured from thereafter claiming the coverage.

The facts in the case at bar are similar to those in Imperial Casualty & Indemnity Co. v. Relder, 308 F.2d 761 (8 Cir. 1962). In that case the policy contained Condition 2. The policy period was from August 12, 1959 to August 12, 1960. In October 1959 Relder purchased a new automobile but made no report thereof to Imperial Casualty & Indemnity Company. Instead, he obtained a policy from Home Indemnity Company covering the new automobile. In June 1960 the ...

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