Plaintiffs seek a declaratory judgment to determine the existence and extent of insurance coverage under three insurance liability policies.
On August 5, 1963 an accident occurred on Bloomfield Avenue, Nutley, N.J., when a vehicle driven by Edward Coleman collided with a 1953 Dodge automobile driven by Pieter Velkers, Jr. As a result, personal injury suits were instituted and are presently pending in the Superior Court
by the Colemans and Peter Frazza, the latter being a passenger in the Coleman vehicle. Pieter Velkers, Jr. (hereinafter referred to as Junior), his father Pieter Velkers, Sr. (hereinafter referred to as senior) and Lynn Chevrolet (hereinafter referred to as Lynn) are defendants in these actions.
The present controversy essentially is to determine, for the purposes of insurance coverage, who owned the 1953 Dodge which was being driven by Junior at the time of the accident. The testimony reveals a complex factual pattern. The Dodge was purchased by Senior from Joseph Bator in June 1963. Though the certificate of ownership indicated only "Pieter Velkers" as owner without distinguishing between Senior or Junior, it is apparent that Senior was the intended "legal" owner of the vehicle. Upon Junior's obtaining a driver's license and insurance coverage, he was to have the exclusive use of the Dodge and was responsible for its maintenance. The Velkers, through James D. Williams, an insurance agent, sought to obtain insurance for the Dodge. Thus, an application for coverage was made in June of 1963 to Indemnity Insurance Company of North America (hereinafter referred to as INA). Senior, as the owner of a 1960 Oldsmobile, was already the named insured under a "Family Automobile Policy" issued by INA, affording coverage up to $500,000. Accordingly, Williams requested that the Dodge be added as an insured vehicle under this policy. INA refused to make such an addendum to the family policy apparently because it was aware that Junior was to be the principal driver and it did not want to insure a teenage driver for such high limits. However, INA informed Williams that it would temporarily insure Junior as on a $10/20,000 policy until he could place Junior in the Assigned Risk Plan.
After obtaining a driver's license in June 1963 Junior applied for insurance as an assigned risk. The application was filled out by Williams upon information supplied bona fide by Junior. It indicated that Junior was the registered owner of the Dodge. Consequently, the Glens Falls Insurance Company (hereinafter referred to as Glens Falls) issued a
policy in July of 1963 insuring the Dodge and designating Junior as the named insured.
After the issuance of the Glens Falls policy, Senior decided to transfer the registration of the Dodge to Junior's name. To this end, Senior endorsed his name on the back of the certificate of ownership. However, an effective transfer was not consummated since Senior never delivered the certificate of ownership to Junior for the latter's signature and thus a new certificate of ownership and registration was not obtained in Junior's name. Senior explained at trial that he did not deliver the document to Junior because at about that time Junior had seen a 1958 Chevrolet at Lynn which he wanted to purchase and he (Senior) concluded that it was pointless to go through with the transfer.
On August 1, 1963 Junior and his parents went to Lynn in order to effect a deal for the Chevrolet. An agreement was reached between Ovell E. Robertson, a Lynn salesman, and Senior whereby the Chevrolet was to be purchased for $995, less a $95 trade-in allowance for the Dodge. Senior paid $100 on August 1 and agreed to pay the balance of $800 upon delivery of the Chevrolet on August 2.
On August 1 or 2 Senior also tendered the certificate of ownership for the Dodge to Robertson. Robertson did not accept it stating that it was "no good" since Senior had already endorsed it over to Junior. Robertson said "that it had to be transferred in the Motor Vehicle Department" and told Senior that same could be done the following week. Though there is conflicting testimony as to precisely when the bill of sale for the Dodge was delivered to and accepted by Lynn, it is clear that it was not accomplished until some time after the accident.
On Friday, August 2, 1963, Junior and Senior went to Lynn separately in order to consummate the transaction by paying the balance of the purchase price for the Chevrolet. Senior gave Robertson a check for $800, the balance of the purchase price, and obtained a receipt for same and an invoice for the Chevrolet which was marked "paid in full." Senior
also received a guarantee certificate on the Chevrolet and the registration card indicating title in "Pieter Velkers." The license plates originally on the Dodge were transferred of record to the Chevrolet. The evidence is in conflict as to the date when the Dodge was delivered to Lynn, but clearly this was done on or before August 3.
Before leaving the Lynn premises on August 2 it was discovered that the Chevrolet had some transmission trouble and the Velkerses refused to take the car off the lot until the trouble was remedied. Robertson told the Velkerses to return the next morning (August 3) when the Chevrolet would be completely repaired.
The events on Saturday, August 3, 1963 are unclear. Junior testified that when he returned to Lynn he was informed that the Chevrolet had not yet been repaired. Junior importuned Robertson for the Chevrolet since he had arranged a trip to the New Jersey shore for the weekend. He could not use the Dodge because the registration had been delivered to Lynn and the license plates had been transferred to the Chevrolet as a matter of record. According to Junior, Robertson agreed that Junior could use the Chevrolet over the weekend even though it was not working properly. Junior was to return the Chevrolet Sunday evening, transfer the plates to the Dodge, and drive home in the Dodge which Robertson agreed to leave in the Lynn driveway. Robertson denied making such arrangements and testified that he was not at work at Lynn Chevrolet on Saturday, August 3, since he habitually went to his home at the seashore on summer weekends.
Junior testified that he dropped the Chevrolet off at Lynn on Sunday evening, August 4, and picked up the Dodge as per arrangement. He emphasized that he used the Dodge only to get home and did not intend to retake ownership.
According to Junior, the following afternoon, August 5, he drove the Dodge to Lynn in order to return it. Since the Chevrolet was still not ready, Junior decided to drive home in the Dodge. It was on the way home that the accident occurred.
The Chevrolet was finally ready on Tuesday, August 6. Junior drove to Lynn that afternoon in the Dodge. While he was there, Robertson noticed a dent in the Dodge. When questioned as to the cause thereof, Junior deliberately and admittedly lied by telling Robertson that the dent was always there.
Lynn, believing Junior's representation that the dent had always been there, made no attempt to notify its insurance carrier regarding the occurrence of an accident. The first time that Lynn became aware that an accident had occurred was by a letter dated July 12, 1965 signed by Allan Maitlin, a Newark attorney. Mr. Maitlin advised Lynn that he had been retained by the Velkerses with respect to the accident. He stated that it was his opinion that Lynn was the owner of the Dodge at the time of the accident and thus the Velkerses would be additional insureds under Lynn's liability policy. Lynn forwarded this correspondence to its insurance carrier, General Accident, Fire and Life Insurance Corporation, Ltd. (hereinafter referred to as General Accident). On September 20, 1965 General Accident informed Mr. Maitlin by letter that it was the company's decision that the comprehensive general liability policy issued to Lynn did not apply to either of the Velkerses. The disclaimer letter indicated that the Velkerses were not considered additional insureds, and furthermore, that no notice of the accident was received by General Accident until almost two years after its occurrence, thereby violating a condition of the policy which required notice as soon as practicable.
The Velkerses bring this declaratory judgment action seeking coverage by Glens Falls, INA and General Accident, either collectively or individually.
A partial summary judgment was entered on July 29, 1966 against Glens Falls obligating that company to provide insurance coverage to Junior under its policy. Glens Falls had undertaken the investigation and defense of the lawsuit arising from the accident for a prolonged period of ...