This is a declaratory judgment action brought by Charles F. Willis and his carrier Allstate Insurance Company for a declaration of the rights of the parties relating to certain automobile liability policies. The facts are as set forth below.
This dispute arises out of an automobile accident occurring on August 31, 1964 on Nicholson Road in the Borough of Audubon. The vehicle, a 1964 Ford, operated by Willis, was owned by Ruffu Ford, Inc., an Atlantic City automobile dealer. The vehicle carried Ruffu Ford, Inc.'s dealer's tags and Willis was operating it with the permission of Robert W. White, the general sales manager of Ruffu Ford. At the time of the accident there were two liability policies in effect. Allstate had issued a "Crusader" policy which was a standard $10,000/20,000 automobile liability policy in favor of Willis. This policy covered, among other things, all cars owned by Willis and driven by him or by anyone with his
permission. It also extended coverage to Willis' driving of "non-owned" vehicles. However, if there was other insurance available with respect to nonowned vehicles, Allstate's policy was to be only "excess insurance" over any other collectible amounts. Allstate contends that the garage liability policy issued by Security in favor of Ruffu is available to protect Willis and therefore Allstate's coverage in this situation is excess only. The Security policy in Endorsement No. 4 specifically excludes from its omnibus clause individuals driving the insured's car with his permission where such persons have available valid and collectible insurance under their own policies with the minimum limits of $10,000/20,000. Security therefore contends that since Willis' policy with Allstate covered nonowned vehicles, it was not responsible for coverage in the accident of August 31, 1964.
It is the contention of Allstate Insurance Co. that the limitation in defendant's omnibus clause, as set forth above, is void as against the policy of this State in regard to the financial responsibility laws for automobile owners and drivers. In the alternative, Allstate contends that even if this clause is valid, Security is liable under its policy because Willis' use of the Ruffu automobile was "in the automobile business," a use specifically excluded from coverage by Allstate's policy, thus negating the condition for non-liability under the Security policy, namely, availability of valid collectible insurance under the driver's own policy.
Since a determination of whether or not Willis was operating the Ruffu automobile "in the automobile business" may obviate the necessity of delving into the validity or non-validity of defendant's Endorsement No. 4, the Court will make that determination first.
The stipulated facts and depositions indicate that the vehicle in question was being used as a demonstrator at the time of the accident. Allstate contends that such use was a "use in the automobile business by the insured" and therefore specifically excluded from coverage by the policy. If that exclusion applies to Willis in this situation, Security would
be liable whether Endorsement No. 4 is valid or not. Plaintiff Allstate cites the case of LeFelt v. Nasarow, 71 N.J. Super. 538 (Super. Ct. 1962), affirmed per curiam 76 N.J. Super. 576 (App. Div. 1962), certiorari denied LeFelt v. Aetna Insurance Company, 39 N.J. 86 (1963), in support of its position. That case involved the use of a vehicle in the process of being repaired by a part-time repairman on a test run by the repairman to determine whether the car was roadworthy. It was during this test run that the car was involved in an accident. In holding that the use was not "in an automobile business" within the meaning of an exclusion identical to that in the instant case, the court heavily relied upon the Washington case of McCree v. Jenning, 55 Wash. 2 d 725, 349 P. 2 d 1071 (Sup. Ct. 1960). The McCree case considered in detail the precise meaning of the exclusionary language and was acknowledged as strongly authoritative by the New Jersey court. The court in that case stated:
"It would appear evident, therefore, that an automobile 'used in the automobile business,' would be one which was employed for some purpose in connection with that business. For example, * * * an automobile used for demonstration purposes, * * * would be 'used in the business'."
All state contends that this statement clearly fits the situation in the case at bar and that it is therefore not liable. The court interprets the McCree statement to be inapplicable to the facts at hand. The specific language of the exclusionary clause in the instant case states that the insured is not covered when driving a "non-owned automobile while used in an automobile business by the insured." The insured here was not using the demonstrator in an automobile business. He was merely making use of a car furnished to him by someone using it in the automobile business. It goes without saying that Willis would ...