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Lewandowski v. National Grange Mutual Insurance Co.

Decided: April 22, 1977.


Weiss, J.d.c., Temporarily Assigned.


Plaintiff seeks to have defendant's policy of insurance cover a judgment previously entered against an operator of a motor vehicle which was insured by defendant. The facts which bring this suit before the court are as follows:

In early June 1971 Ricardo Osborne, a resident of Brooklyn, New York, brought his 1967 Plymouth to a service station in Staten Island, New York, for repair. When Osborne learned that James Sarjeant, an employee of the service station, had been seen driving the car in Staten Island, he phoned Sarjeant telling him, "My car is in the service station to be fixed and not to be driven." Subsequent to this conversation, and unknown to Osborne, Sarjeant drove the car to New Jersey contrary to the above instructions.

A police report which has been stipulated as part of the record reveals that Sarjeant was involved in an accident at about 4:22 A.M. in Clark, New Jersey, on Sunday, July 4, 1971, with plaintiff Frank Lewandowski, a resident of Clark. The report indicates that the car driven by Sarjeant,

Lewandowski brought actions against the owner Osborne, and the driver Sarjeant. The suit against Osborne was dismissed upon defendant's motion for summary judgment on the grounds that the driver was not operating the vehicle as the agent, servant or employee of the owner at the time of the accident in question. The suit against Sarjeant resulted in a $15,980 judgment for plaintiff. This action was commenced by Lewandowski, seeking to have Sarjeant

declared an insured under the liability policy issued by defendant National Grange Mutual Insurance Co. covering Osborne's car.

Whether Sarjeant is an insured under the policy depends upon the effect given the omnibus clause which states in pertinent part,

III DEFINITION OF INSURED -- (a) With respect to the insurance for bodily injury liability and for property damage liability the unqualified word "insured" includes * * * any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or * * * spouse or with the permission of either. The insurance with respect to any person or organization other than the named insured or such spouse does not apply:

(1) to any person or organization, or to any agent or employee thereof, operating an automobile sales agency, repair shop, service station, storage garage or public parking place, with respect to any accident arising out of the operation thereof, * * *

Specifically, two questions arise. (1) Is the garageman's exclusion contained in the the above subsection enforceable and, if so, does it preclude coverage here, and (2) was Sarjeant's operation of the car with "permission" as the term is used in the above section?


(1) In Selected Risks Ins. Co. v. Zullo , 48 N.J. 362 (1966), it was held that any policy submitted to obtain the advantages of registering an insured motor vehicle must have the broad form omnibus coverage set forth in N.J.S.A. 39:6-46(a), extending coverage in accordance with Matits v. Nationwide Mutual Ins. Co. , 33 N.J. 488 (1960). Purported omnibus restrictions would be automatically amended to conform to the statutory standard by N.J.S.A. 39:6-46(a). In Unsatisfied Claim & Judgment Fund Bd. v. Clifton , 117 N.J. Super. 5 (1971), the Appellate Division, following Zullo, supra , held that to the extent a clause excluding

garagemen from coverage has the effect of limiting the omnibus coverage required by N.J.S.A. 39:6-46, the clause is invalid.

Although the Motor Vehicle Responsibility Law clearly sets forth the public policy of the State, the Zullo court (48 N.J. at 374) explicitly avoided the question of whether its holding could be based upon public policy apart from the specific statutory requirements. The present case involves a policy written in New York covering a New York car. Subsequent analysis will show that the question as to whether the Clifton result could be based entirely upon the strong public policy of New Jersey need not be reached.

(2) It is well settled that New Jersey follows the "initial permission" rule in determining whether the insurer is liable for damage caused by a permissive user. Matits v. Nationwide Mutual Ins. Co., supra; Odolecki v. Hartford Acc. & Indem. Co. , 55 N.J. 542 (1970). Thus, once the driver is given permission to use the car initially, any use short of theft or the like, even though beyond the scope of permission or contrary to specific instructions, is a permissive use. See Odolecki v. Hartford Acc. & Indem. Co., supra at 496-497.

When Osborne gave a set of keys to the service station attendant, permission to drive was impliedly granted. In Butler v. Bonner & Barnewall, Inc. ...

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