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Selected Risks Insurance Co. v. Zullo

Decided: December 23, 1966.

SELECTED RISKS INSURANCE COMPANY, PLAINTIFF-APPELLANT,
v.
ALBERT ZULLO, ADMINISTRATOR, ETC., ET AL., DEFENDANTS-RESPONDENTS



For affirmance -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Schettino and Haneman. For reversal -- Justice Hall. The opinion of the court was delivered by Proctor, J. Francis, J. (concurring).

Proctor

This case concerns coverage under the omnibus clause of two automobile liability insurance policies issued by plaintiff, Selected Risks Insurance Company.

At the trial in the Law Division of plaintiff's suit for declaratory judgment, counsel for the plaintiff made an opening statement to the jury asserting that defendant Richard Keeter, the driver of an automobile involved in an accident, was not a person insured under the omnibus clause in policies issued by plaintiff to George A. Blumberg, the owner of the automobile, and defendant Marvin Keeter, Richard's father.

Other defendants in this suit are the representatives of passengers injured in the accident and the Unsatisfied Claim and Judgment Fund.*fn1 On motions of defendants at the conclusion of this opening, the trial court held that Richard Keeter was an insured under both policies and entered judgment for defendants. The Appellate Division affirmed. We granted certification. 47 N.J. 85 (1966).

The facts before the Court show that on April 2, 1963 Richard Keeter, a minor, while driving an automobile owned by Blumberg on the Englishtown-Jamesburg Road, Monmouth County, had an accident. As a result Richard Yuhas, John Palladino, and Benjamin Zullo, passengers in the car, were injured, Zullo fatally. Actions have been brought against Blumberg, as owner, and Richard Keeter, as driver, for injuries suffered by Yuhas and for the death of Zullo. In addition, claims have been made on behalf of Palladino, and for property damage allegedly sustained by Charles Godbolt and the New Jersey Bell Telephone Company.

The two policies issued by plaintiff and in force on the day of the accident contained the omnibus clause which follows:

"Persons insured:

(a) with respect to the owned automobile,

(1) The named insured and any resident of the same household,

(2) any other person using such automobile with the permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission,

(b) with respect to a non-owned automobile,

(1) the named insured.

(2) any relative, but only with respect to a private passenger automobile or trailer, provided his actual operation or (if he is not operating) the other actual use thereof is with the permission, or reasonably believed to be with the permission, of the owner and is within the scope of such permission,

On the day before the accident Richard Keeter and Blumberg agreed that Richard would pick up Blumberg's car at the Englishtown Post Office where Blumberg and Marvin Keeter were employed, drive it to the Keeter home, wash it, and drive it back to the post office. This car-wash arrangement had occurred previously. Richard picked up the car keys from Blumberg around 1:30 P.M. the next day, April 2, drove the car to his home and washed it. After the car was washed, Richard and some friends who had been with him while the car was being washed, Palladino, Yuhas, and Zullo, all minors, started to return the car. However, on the way to the post office the boys decided to go for a soda. Richard drove out of town in a direction at right angles to the road to the post office, and the accident occurred about one mile out of town. It was the position of the plaintiff that this trip for a soda exceeded the authority given to Richard Keeter by Blumberg to operate the automobile, and therefore Richard was not a person insured under either policy because his use of the automobile was beyond the scope of permission given him by the owner, Blumberg.

The trial judge ruled on the authority of Matits v. Nationwide Mutual Ins. Co., 33 N.J. 488 (1960), that Richard Keeter was insured under the omnibus clause of both policies.

In Matits the omnibus clause involved was the standard form which is in wide use throughout the country and includes as persons insured: "* * * any person or organization legally responsible for the use of the described automobile provided the actual use was with the permission of the policy-holder or such spouse." The Court there determined that valid and substantial policy considerations dictated a reading

of this clause to extend coverage to any permittee of the owner who had "initial ...


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