Conford, Collester and Labrecque. The opinion of the court was delivered by Conford, S.j.a.d.
This action, tried without a jury in the Law Division, was brought for recovery of losses due to water damage to certain business merchandise kept in the basement of plaintiffs' home, on two policies issued by defendant insurance company. A water pipe in the house had burst in the winter of 1963 while plaintiffs were away on vacation. The first policy was issued April 7, 1961 for a term of three years and will be referred to hereinafter as the "homeowners policy," as it is denominated on its cover; the other was issued January 15, 1963 for a term of one year and is hereinafter referred to as the "fire insurance policy," so similarly denominated on its cover.
The sole issue argued on this appeal is whether, the loss in question now being conceded not to be covered by either policy, defendant should be held estopped from so contending as to the fire insurance policy and accordingly adjudged liable on that policy for the loss.
The trial court granted a motion for involuntary dismissal at the conclusion of plaintiffs' case, and this appeal is taken from the consequent judgment for defendant.
In April 1961 plaintiffs ordered the homeowners policy from Joseph Meinsohn, a duly accredited agent of defendant, to cover their home in Essex Fells. Plaintiffs' previous homeowners coverage, issued by another company, was then expiring. This was the first insurance business plaintiffs ever transacted with Meinsohn. Insofar as personal property is concerned, that policy did not cover commercial merchandise, being limited to such "unscheduled personal property usual or incidental to, the occupancy of the premises as a dwelling." Plaintiff Herman Harr (who appears to have acted for both plaintiffs in this matter) knew that the homeowners policy did not cover the commercial merchandise he was and had been storing in his basement.
In January 1963 Harr, according to his testimony, telephoned Meinsohn, said he was leaving for Florida (apparently on vacation), and asked "whether he could cover this merchandise for me," describing the merchandise in full. Meinsohn said he would let him know. He called back the same day and said: "Mr. Harr, we can cover you for $7,500 [Harr had asked for more] and you are fully covered." The Harrs left for Florida the next day and returned home in March 1963. While in Florida Mr. Harr received and read the fire insurance policy now in suit. That policy concededly does not cover the instant loss, for it excludes from otherwise covered explosions, "Rupture or bursting of water pipes."
After the damage was discovered on plaintiffs' return home, defendant paid the full amount claimed by plaintiffs for damage to the property covered by the homeowners policy, but refused to pay for damage to the merchandise here involved as not covered by either policy.
Plaintiffs' argument is simply stated. Defendant is estopped from denying coverage since its agent assured them that they were "fully covered" on the merchandise, and this is fairly construable as a representation, upon which they relied, that the to-be-issued new policy would be coextensive, as to hazards covered, with the homeowners policy previously issued plaintiffs by the same company through the same agent. Defendant argues that the doctrine of estoppel cannot be used to enlarge the coverage of a policy, and that in any case the parol evidence rule operates to exclude the conversations proven between Harr and Meinsohn. At the argument on the motion before the trial court defendant also argued that nothing which Meinsohn said or did, factually or legally, created an estoppel against it, and it inferentially renews that contention on the appeal. Defendant does not argue that the issue of estoppel was not raised by plaintiffs below or that it is otherwise procedurally barred from consideration on this appeal.
The trial judge saw the case, as pleaded and argued, as essentially one of the scope of coverage of the policies, possibly because that question, rather than the issue of estoppel, was primarily stressed in the argument on the motion and during the trial. In any case, the effect of the court's action was to reject the estoppel argument, whether on grounds of fact or law. Our conclusion is that the result reached was correct on the facts adduced at the end of plaintiffs' case, see R.R. 4:42-2 (b), even if the doctrine of estoppel in pais is legally available, generally, to defeat a defense to an action on a policy on grounds of non-coverage.
The question whether waiver or estoppel can ever apply against an insurer to permit recovery beyond the coverage of the policy is often answered negatively in general terms, see Goldberg v. Commercial Union Ins. Co. of N.Y., 78 N.J. Super. 183, 191 (App. Div. 1963); Annotation, 1 A.L.R. 3 d 1139, 1147 (1965), but many of the reported cases so stating fail to involve facts presenting all the necessary elements of a true estoppel in pais, e.g., Goldberg, supra (no reliance by insured to his detriment on any representation by insurer's agent). Where the issue is squarely faced and facts evoking a true estoppel are presented, recovery expressly predicated on that ground is frequently allowed. Farmers Mutual Automobile Ins. Co. v. Bechard, 122 N.W. 2 d 86 (S.D. Sup. Ct. 1963) (the lead case for the annotation in 1 A.L.R. 3 d, supra); Ivey v. United National Indemnity Co., 259 F.2d 205 (9 Cir. 1958). Our own court, most recently, in Muller Fuel Oil Co. v. Insurance Co. of North America, 95 N.J. Super. 564 (App. Div. 1967), while not adverting to the supposed general rule, held that if an insurance company's agent sold a comprehensive liability policy with an express oral assurance to the purchaser ...