Carton, Kole and Larner. The opinion of the court was delivered by Carton, P.J.A.D. Larner, J.A.D., dissenting.
Defendant Universal Underwriters Insurance Company (Universal) appeals from a final judgment upholding an arbitrator's award under the uninsured motorist endorsement of a motorcycle insurance policy issued by it to plaintiff Wilmer Grover, Jr.
On August 4, 1973 Grover was involved in a serious motorcycle accident. Patrolman Daniel Fenske of the South Brunswick Police arrived at the scene about two minutes after the accident and found Grover unconscious and underneath a split-rail fence off the roadway.
In his report of the accident Patrolman Fenske included Grover's statement, taken upon his recovery, that two motor vehicles were involved. Grover stated to Fenske that "he was eastbound on West New Road at approximately 30-35 mph, as he came to curve and began around same a vehicle coming in the opposite direction was on his side of the road. He went to the right off the road and attempted to keep going but he was unable to keep control of his vehicle and accident took place." The report indicates that Fenske found only Grover's damaged motorcycle at the scene.
In September 1975 Grover filed a demand for arbitration with the American Arbitration Association after Universal refused to honor his claim on the accident. Their dispute related to whether the losses sustained in the accident were covered by the hit-and-run, no-contact provision of the policy. The arbitration demand was acknowledged by Universal and both parties proceeded to arbitration.
The arbitration clause in the Universal policy was in the standard motor vehicle insurance policy form and provides:
If any person making claim hereunder and the company do not agree that such person is legally entitled to recover damages from the owner or operator of an uninsured highway vehicle because of bodily injury or property damage to the insured, or do not agree
as to the amount of payment which may be owing under this insurance, then, upon written demand of either, the matter or matters upon which such person and the company do not agree shall be settled by arbitration, which shall be conducted in accordance with the rules of the American Arbitration Association unless other means of conducting the arbitration are agreed to between the insured and the company, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Such person and the company each agree to consider itself bound and to be bound by any award made by the arbitrators pursuant to this insurance.
The arbitration proceeding was conducted in November 1975. Prior to the hearing the parties stipulated that if liability were found to exist the award would be for $15,000, the face amount of the policy. No recording was made of the evidence taken in the proceeding. However, it is clear that the focus of the hearing was whether Grover had carried his burden under the policy to prove that a motor vehicle, without physical conduct with Grover or his motorcycle, caused the accident. The relevant portions of the uninsured motorist endorsement provide:
The company will pay all sums which the insured * * * shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle because of bodily injury or property damage, caused by accident and arising out of the ownership, maintenance or use of such uninsured highway vehicle; * * *.
"hit-and-run vehicle" means (i) a highway vehicle which causes an accident resulting in bodily injury to an insured arising out of physical contact of such vehicle with the insured or with a vehicle which the insured is occupying at the time of the accident, or (ii) a highway vehicle which without physical contact with the insured or with a vehicle which the insured is occupying at the time of the accident causes bodily injury to an insured arising out of an accident in New Jersey, provided:
(d) with respect to subdivision (ii) the facts of such accident can be corroborated by competent evidence other than the testimony of any person having a claim under this or any other similar insurance as the result of such accident;
"uninsured highway vehicle" means: * * * a hit-and-run vehicle, but only with respect to bodily injury caused thereby; * * *.
Defendant carrier did not raise any jurisdictional objection to the first arbitration hearing on the issue of coverage. It is undisputed that the sole witness at that proceeding was Grover and that the only additional evidence factually describing the cause of the accident was the police report. Universal objected to the relevant portions of the report, including the summary of the accident given to Patrolman Fenske by Grover.
The arbitrator, in December 1975, found Universal liable and awarded $15,000 to Grover. The arbitrator failed to make any findings or state any reasons for the award.
Thereafter, Grover filed a complaint in the Chancery Division and obtained an order to show cause seeking to confirm the award with interest and counsel fees. Universal moved to vacate the award pursuant to N.J.S.A. 2A:24-7. Judge Lenox in effect conditionally vacated the award, but entered an order affording Grover the opportunity to appear before the arbitrator again "to offer, and the Arbitrator to hear, any and all evidence pursuant to Rule of Evidence 8(1), whether from plaintiff or others, which might establish the admissibility of the statement of plaintiff to the police officer following the accident."
As a result a second hearing was conducted before the same arbitrator in June 1976. In that proceeding plaintiff produced two witnesses. One of these was Patrolman Fenske of the South Brunswick Police, who signed the police report and who testified regarding the source of the information. Contradicting the report itself, which indicated the information was obtained by telephone, this witness stated that the factual description of the accident was derived from an interview with Grover at the hospital about a week after the accident. The interview was delayed because prior to that time the doctors would not permit Fenske to see Grover.
Fenske testified that, although Grover appeared to be in pain, he was calm and coherent during the interview. He also testified that while he had passed several cars coming from the scene of the accident as he drove there, he found no evidence
that the phantom car existed during his on-scene investigation. He further explained that he had issued a summons to Grover for failing to drive on the improved part of the highway because, due to internal problems in the police department, he feared that he might be brought up on charges if he acted otherwise.
Grover also testified at the second hearing. He corroborated the testimony of Patrolman Fenske regarding the hospital interview. He did not state his version of the accident because of the limited nature of the hearing. However, he did testify that he did not regain consciousness until about three days after the accident, and that the interview took place more than a day after he regained consciousness.
After the second hearing the arbitrator expressly found that Grover's statement in the police report was inadmissible under the Rules of Evidence. Nevertheless, he concluded that these rules were not applicable to an arbitration proceeding and, relying upon what we consider to be equitable considerations, ruled the police report admissible and competent on the corroboration issue. Having admitted the report, the arbitrator found adequate corroboration for Grover's claim, noting that "from all of the evidence, * * * fraud, deceit or collusion does not exist * * *."*fn1 Consequently, the arbitrator ruled in Grover's favor.
Thereafter, Grover filed an amended verified complaint and obtained from Judge Greenberg, who had in the interim replaced Judge Lenox in the Chancery Division, an order to show cause to enforce the arbitrator's ...