Having recovered a judgment against Mert Francis Conville for injuries arising out of automobile negligence, plaintiff brings this insurance coverage action, in the alternative, against Hanover Insurance Co. and the Unsatisfied Claim and Judgment Fund. At the time of the accident Conville was operating his wife's vehicle, which was insured by Hanover. Prior to trial and following the occurrence of events which are described later in detail, Hanover, citing lack of cooperation, disclaimed all responsibility for either coverage or representation. Thereafter, Conville's defense was handled by the Fund. The sole issue before the court centers upon an automobile liability assured's covenants of cooperation.
On March 20, 1964 Conville, driving his wife's vehicle, struck plaintiff's automobile under aggravating circumstances -- passing through a stop street and crossing three one-way lanes of a major highway before colliding -- justifying Conville's being charged with both careless driving and driving under the influence of intoxicating liquor. The charges required Conville to post bail. Hanover was notified of the accident through Conville's personal insurance agent within two days after the event and subsequently reimbursed Conville for the cost of the bail he had posted. Shortly thereafter Hanover sent plaintiff a claim form which he ignored. In the face of that silence Hanover closed its file, only to re-open it about 14 months later when it received a letter of representation from the plaintiff's counsel.
Plaintiff instituted suit against Conville and his wife, and the summons was served at a Stratford, New Jersey, address where it was believed Conville and his wife resided. The suit papers were forwarded to Hanover, which in turn transmitted them to its attorneys. Without contacting either defendant they filed an answer on their behalf. A later attempt to amend the answer to raise lack of jurisdiction by reason of defective service on Conville was unsuccessful. The claim against Conville's wife was dismissed upon her showing that her husband was not driving as either her servant or agent at the time of the accident.
Plaintiff then served interrogatories upon defendant. Following Hanover's unsuccessful efforts to locate Conville -- he had apparently left his wife and family -- Conville's answer was suppressed. Immediately thereafter Hanover's attorneys successfully moved to be relieved as attorneys for Conville. The Fund then appeared to defend Conville.
It should be noted that between May 1965, when Hanover was presented with a written list of plaintiff's special damages, and January 1966, Hanover's investigative efforts were superficial and, with one exception, primarily conducted through the mails; on one occasion Hanover's investigator personally visited a gas station where he thought Conville was employed. That excursion was fruitless.
Although it is fundamental that the "cooperation" clause in an automobile liability insurance policy is a material condition, Pearl Assurance Co. Ltd. v. Watts , 58 N.J. Super. 483, 490 (App. Div. 1959); Kraynick v. Nationwide Insurance Co. , 72 N.J. Super. 34, 39 (App. Div. 1962); Mariani v. Bender , 85 N.J. Super. 490, 500 (App. Div. 1964), certif. den. 44 N.J. 409 (1965), Hanover has failed to demonstrate that Conville, the assured, deliberately breached the cooperation clause in a material and essential particular. Pearl Assurance Co. Ltd. v. Watts, supra , at 490; accord, Pearl Assurance Co. Ltd. v. Watts , 69 N.J. Super. 198, 206 (App. Div. 1961); Sutera v. Provident Insurance
Co. , 67 N.J. Super. 554 (App. Div. 1961); Mariani v. Bender, supra , at 500. On the issue of deliberate breach, the carrier retains the ultimate burden of persuasion. Cooper v. Government Employees Ins. Co. , 51 N.J. 86, 94 (1968).
While the court acknowledges that in the days immediately preceding trial Hanover was unsuccessful in making contact with its assured, it nevertheless finds that that estrangement was precipitated by Hanover's inaction. Immediately after the accident Hanover did nothing to investigate the accident or contact Conville, save forwarding a proof of claim to the injured victim. It made no effort to uncover evidence when witnesses were available. Moreover, if the carrier had promptly checked out the police report and bail bond, it would have learned that after Conville was taken from the scene of the accident and examined by a doctor, he was charged with driving under the influence of intoxicating liquor, which in and of itself should have apprised a reasonable carrier of particularly serious implications under its liability policy. Additionally, the police report should have motivated them to additional inquiry.
The decision not to investigate the case when the evidence was fresh and the witnesses available was a calculated risk on Hanover's part. It gambled on the outcome and it lost.
Quite apart from the facts which portray an absence of deliberate noncooperation on the part of Conville, and affirmatively suggest an imprudence of Hanover's own making, there is additionally an absence of a showing by Hanover that it performed its reciprocal duties under the cooperation clause. Numerous decisions have discussed the dual nature of the cooperation covenant. See, e.g., Carpenter v. Superior Court in and for County of Maricopa , 101 Ariz. 565, 422 P. 2d 129 (Sup. Ct. 1967); Jameson v. Farmers Mutual Auto Ins. Co. , 181 Kan. 120, 309 P. 2d 394 (Sup. Ct. 1957); 8 Appleman, Insurance Law and Practice , § 4784; 8 Blashfield ...