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Integrity Insurance Co. v. Davis

Decided: October 12, 1971.

INTEGRITY INSURANCE CO., A CORPORATION DULY LICENSED BY THE DEPARTMENT OF BANKING & INSURANCE, PLAINTIFF,
v.
HAYES DAVIS, DEFENDANT



Yanoff, J.d.c.

Yanoff

[116 NJSuper Page 419] The facts here are stipulated. On June 24, 1966 defendant (buyer) purchased an automobile from Allen Pontiac, Inc. (Allen). To secure the unpaid balance of the price, the buyer executed a promissory note and retail installment security agreement. Both instruments are printed forms. The note states that it is payable at the Bank of Nutley (bank). The security agreement contains an assignment to the bank. Both were in fact assigned to the bank on or about June 24, 1966. The security agreement provides that the buyer shall provide "dual protection" insurance and also:

If buyer fails (after exercising privilege) to supply insurance on the motor vehicle or is unable to acquire insurance or Seller or subsequent holder is unable to purchase dual protection insurance, Seller or subsequent holder may purchase a single interest insurance policy on the motor vehicle, and Buyer shall pay the premium therefor to Seller on demand (or, if Seller permits, in equal installments concurrently with the installments of the unpaid balance then remaining payable hereunder) and until such full payment the amount of said premium unpaid shall constitute an additional part of the obligation to be paid under this contract.

The stipulation indicates that the bank had a master insurance policy on automobiles upon which it had a security interest. The policy required that individual certificates be issued for each automobile. The coverage under the policy was against

The master policy contained also the following provision:

The company waives right of subrogation against the Purchaser or Borrower in respect to any claim paid under this coverage.

The bank obtained a certificate as to the automobile on or about October 10, 1966, for a premium of $51.69 for the first year. Only the interest of the bank in the automobile was protected by the policy. No charge for the premium was made against the buyer.

Prior to November 1, 1966, no date being specified, the automobile was involved in an accident which resulted in damage in the amount of $936.49. For reasons which are not questioned, the bank repossessed and sold the automobile pursuant to its rights under the security agreement. The validity of the repossession and sale are not questioned. As the result there was a deficiency on account of which buyer made payments, leaving an unpaid balance of $1,264.01.

Thereafter, in January 1967 plaintiff Integrity Insurance Co. paid the bank the sum of $1,230.21 and received an oral assignment of its claim against the buyer. Integrity now sues the buyer for that sum.

Integrity takes the position that it paid the bank as a result of the assignment and not under its policy obligations, and that in consequence it is not subject to the policy provision relinquishing its subrogation rights.

Integrity's brief suggests that there was a question as to whether the loss was covered by the endorsement received by the bank from Integrity, "since the date of loss was unknown to the bank and was unable to be confirmed by the plaintiff." As to this the stipulation is silent. The reasonable inference is that Integrity paid money to the bank because it felt it had some exposure on the policy. Purchase of accounts receivable of questionable collectibility is hardly a normal insurance company investment, even though it may technically have the right to do so under N.J.S.A. 17:24-1(g).

Integrity argues that if the buyer is held to be covered by the insurance policy, he will get something for which he has not paid, and will therefore be unjustly enriched. On the other hand, if Integrity, which has been paid a premium for the policy, makes no payment under it, but ...


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