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Brynildsen v. Ambassador Insurance Co.

Decided: February 16, 1971.

ROBERT H. BRYNILDSEN, PLAINTIFF,
v.
AMBASSADOR INSURANCE COMPANY, A CORPORATION OF THE STATE OF VERMONT DOING BUSINESS IN THE STATE OF NEW JERSEY, DEFENDANT



Beetel, J.c.c. (temporarily assigned).

Beetel

This case comes before the court on cross-motions for summary judgment brought by the parties under R. 4:46-2. There appearing to be no genuine issue as to the facts involved, it would appear that this matter is ripe for determination.

On or about April 17, 1968 one Stanley Lenzner purchased a fire insurance policy from defendant on premises owned by him at 292 Peshine Avenue in Newark, New Jersey. The face amount of the policy was $5,000, and it ran from April 17, 1968 to April 17, 1969. Attached to the body of the policy and made a part thereof was a "warranty endorsement"*fn1 by which the insured party warranted that there was "in full force and effect, covering the same property insured hereunder a policy of insurance identical with this policy in all respects, * * * issued by Jefferson Insurance Co. in the amount of $10,000.00." Another policy of insurance in the amount of $5,000, issued by the Cumberland Insurance Co., was also in effect when the policy written by defendant

became effective, but no reference to the Cumberland policy appears in the warranty clause or elsewhere in defendant's policy.

On November 15, 1968 plaintiff purchased the premises from Lenzner. In December 1968, the Jefferson policy was cancelled, and when voluntary placement could not be made, it was replaced by a $20,000 policy issued by Aetna Insurance Company through the "Fair Plan" or assigned risk plan. Plaintiff's attorney frankly conceded at the hearing on the motion that no notice of the cancellation by Jefferson or the obtaining of the Aetna policy was given to Ambassador by plaintiff or plaintiff's attorney, and does not contend that it had no opportunity to do so.

On January 28, 1969 the insured property was damaged by fire to the extent of approximately $18,000.00. Defendant has refused to admit liability, maintaining that the warranty endorsement was breached by the cancellation without notification.

I

Plaintiff urges that since defendant's position under its contract of insurance was strengthened rather than prejudiced by the substitution of the Aetna policy for the Jefferson policy, in that its potential liability was clearly diminished, this court should prevent Ambassador from denying liability by following the rationale set forth in Cooper v. Government Employees Insurance Co. , 51 N.J. 86 (1968).

Defendant, on the other hand, urges that since there are no ambiguities contained in the language of the warranty, and since plaintiff admits there was no notification of change of insurance company or amount of coverage, the warranty was plainly breached and the policy coverage therefore was voided. Defendant alleges that whether its position was hindered or helped by the activities is irrelevant when dealing with the question of breach of an express warranty.

This court is in accord with the general principle of the law of insurance that forfeitures are not looked upon

with favor, and is disposed to avoid forfeiture if by reasonable interpretation it can do so, Neilson v. American Mut. Liab. Ins. Co. , 111 N.J.L. 345 (1933). It would appear to be the duty of this court to construe a forfeiture clause in such a manner as to confer coverage, where an interpretation defeating forfeiture is reasonably deducible from the terms or words used. Hampton v. Hartford Fire Ins. Co. , 65 N.J.L. 265, 47 A. 433 (1900); 3 Williston on Contracts , §§ 620 and 790; 3 Corbin on Contracts 115, § 552. See also Rockmiss v. New Jersey Mfrs. etc. Co. , 112 N.J.L. 136 (1933). The insurer having in most cases drawn the particular policy, all doubt as to the construction of terms in an insurance policy is to be construed most ...


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