Conford, Collester and Labrecque. The opinion of the court was delivered by Conford, S.j.a.d.
[98 NJSuper Page 309] This is a declaratory judgment action brought by the administrator of the estate of Rosa Sneed, claimed to be an additional insured under an automobile liability policy issued by defendant Concord Insurance Co. ("Concord" hereinafter) to plaintiff individually, to establish the insured's right to coverage under the policy in respect of an accident occurring May 15, 1963 involving plaintiff's automobile while driven by Rosa and that of the defendants Raber, in which the Rabers were injured. The Chancery Division decided, adversely to the position jointly taken by plaintiff and the Rabers, that (1) Concord's liability on the policy, insofar as Rosa's liability to the Rabers was concerned, was abated by reason of the fact that she had no driver's license on the date of the accident, and (2) Concord
was not barred from asserting its immunity by reason of the doctrines of waiver or estoppel. The Rabers appeal as derivative claimants in the Sneeds' right. Whittle v. Associated Indemnity Corp., 130 N.J.L. 576, 578 (E. & A. 1943). Plaintiff joins in their position.
The material facts are as follows.
Concord issued to plaintiff Repsie J. Sneed a standard automobile liability policy with bodily injury limits of $10,000-$20,000 for the period of one year from March 28, 1963. The policy provided: "The following persons, provided they are duly licensed to operate an automobile, are insureds as to liability: (1) the named insured and if an individual, the spouse if resident in the same household; * * *." (Emphasis ours)
Although Rosa Sneed was a member of Repsie's household on May 15, 1963, her driver's license had expired April 30, 1963 and was not renewed until May 17, 1963. Why this was so the record before us does not reveal. Rosa died July 19, 1963 of a heart attack unconnected with the accident. Both Leo Raber and his wife Constance (to whom he was not yet married at the time of the accident) suffered personal injuries in that occurrence, the latter's apparently the more serious. Concord was informed of the accident May 20, 1963. Two weeks later it attempted, unsuccessfully, to effectuate a settlement of Leo's claim. However, in July 1963 it reached agreement with him through one Flannery, an independent adjuster, and consummated the settlement on August 2, 1963 for $450. In July Flannery was also trying to settle Constance's claim with her father but they could not come to terms. Although Concord knew on August 2, 1963 that Rosa was unlicensed at the time of the accident, it chose to go through with the previous agreement with Leo Raber "as cheaper and more practical for us."
Concord's preliminary investigation of the accident did not apprise it of the fact that Rosa had lacked a driver's license at the time of the accident, but it learned this on August 1, 1963. It wrote that day to the Sneeds of this
discovery and informed them, over signature of Thomas A. Glasser, chief claims examiner:
"Paragraph IV of your insurance contract with this company provides that coverage is afforded for certain persons 'duly licensed to operate an automobile.' Since Rosa B. Sneed was operating the vehicle involved in the accident at a time when she was not duly authorized to operate same, this is tantamount to a breach of the policy contract and, therefore, the CONCORD INSURANCE COMPANY will continue to investigate this matter, but reserves any and all of its rights under the policy contract and may at any time, disclaim liability thereunder."
The letter contained no language apprising the policy-holders that they were at liberty to accept or reject the company's plan of procedure.
Repsie testified he could not recall having received the foregoing letter, but the trial court found he did, and we accept that finding. Repsie wrote to Concord under date of August 2, 1963, attention of Glasser, the following letter, which bears all the earmarks of a reply to Concord's letter of August 1:
My wife, Rosa B. Sneed is dead. She died on the morning of July 19, 1963. Therefore it is not possible for me ascertain if her license was valid or if she had sent for it before the accident. These factors, I am sorry but I can not answer."
Sneed sent another letter to Concord of similar purport the same day, attention of John M. Wilson, claims adjuster.
Leo Raber testified that on a number of occasions throughout 1964 he communicated with Flannery to inquire about settlement of Constance's claim. Flannery on one occasion asked what the Rabers would take and was told $3,000. On each occasion Flannery told Raber he would have to inquire of Concord, but he never gave Raber an answer. The last such conversation was in February 1965, when Raber said he would soon have to engage a lawyer as the two-year period of limitations was running out. Flannery broke off the negotiations, saying, "Don't threaten me with a lawyer,"
so the Rabers engaged counsel and instituted suit against Sneed April 27, 1965.
Concord's claim manager, Roberts, testified the company did nothing about investigating the Rabers' claims after August 1, 1963. It had no further communication with Sneed until it disclaimed in June 1965, nor did it turn over to Sneed any of its records as to the investigation. Flannery had no authority to do anything after he settled Leo's claim, but ...