Leonard, Seidman and Bischoff. The opinion of the court was delivered by Bischoff, J.A.D.
This appeal presents another facet of the problem created when a person, injured by an uninsured motorist, seeks to recover under uninsured motorist (UM) endorsements available to him under two separate policies issued by different insurance carriers for the damages and losses sustained.
The procedural history and facts of this case are fully set forth in the opinion of the trial court reported at 127 N.J. Super. 187 (Ch. Div. 1974), and are only briefly restated here.
Plaintiff owned a Ford automobile insured in defendant Ohio Casualty Insurance Company (Ohio) and a motorcycle insured in Reserve Insurance Company (Reserve). Both policies of insurance contained the UM endorsement required by statute. N.J.S.A. 17:28-1.1.
While riding his motorcycle plaintiff was severely injured when he was involved in a collision with an uninsured motorist. Reserve paid the $10,000 limit of its liability under its UM endorsement. Plaintiff's damages exceeded $10,000 and he made demand upon Ohio for payment under the UM endorsement of its policy. Ohio refused to pay, contending its policy contained an exclusion to coverage when a named insured was operating a vehicle owned by him but not insured under the policy issued by Ohio. Plaintiff filed a complaint against Ohio seeking a judgment directing Ohio to proceed to arbitration of plaintiff's claim. Cross-motions for summary judgment resulted in a judgment dismissing plaintiff's complaint. The trial judge held it was the legislative intent, in the enactment of N.J.S.A. 17:28-1.1, to protect the Unsatisfied Claim and Judgment Fund and that "the objective of the statutory scheme [was] not to compel UM coverage in such form as to maximize a policyholder's recovery in the uninsured motorist situation, but only to insure recovery by the insured motorist in such amount as will avoid liability on the part of the Fund." 127 N.J. Super. at 195. He concluded that the exclusion in the Ohio policy did not violate either the terms of the statute or the legislative intent and should be applied as written.
After the determination of the trial judge herein, the case of Motor Club of America Ins. Co. v. Phillips, 66 N.J. 277 (1974), was decided. In that case Phillips, a passenger, was injured when his host's vehicle was involved in an accident with an uninsured motorist. He was paid the policy limits by the insurance carrier under the UM endorsement on the host car. His damages were in excess of that limit, and he sought recovery under the UM endorsement on the policy of his own car. His policy contained an exclusion which purported to prohibit recovery on the UM endorsement if he had recovered or had available access to uninsured motorist coverage on the vehicle he was occupying at the time of the accident. The court recognized a split among jurisdictions having statutes similar to N.J.S.A. 17:28-1.1 as to the
validity of such an "excess-escape" clause, but found that a majority of jurisdictions held such clauses invalid where an insured was "not seeking multiple recovery on more than one policy on cars owned by a named insured or others in his household, and provided the aggregate of all recoveries will not exceed" his damages. Id. at 288. The court on principle held that
The "excess-escape" clause under the facts there presented was held "invalid and ineffective." Id. at 294. However, the court specifically observed that as to that case, it was implying no view on the result reached below. Id. at 282-283. This squarely presents to us the issue as to whether the difference between the "excess-escape" clause involved in the Phillips case and the "exclusion to coverage" clause in this case for injuries sustained while the insured is in a second-owned, nonscheduled vehicle mandates a different result.
The cases cited by the Supreme Court as illustrative of the majority holding in note 2 at 288,*fn1 while involving "excess-escape"
clauses, all espouse the same theory as that expressed in Phillips, namely, that any attempt by an insurer to restrict the liability on a UM endorsement by way of the clause is ...