On appeal from the Superior Court, Law Division, Monmouth County.
Morton I. Greenberg, Long and Havey. The opinion of the court was delivered by Long, J.A.D.
This appeal involves the interpretation of a policy of insurance issued by the United States Fire Insurance Company (U.S. Fire) to its insured Wilco Aviation Corp. (Wilco). The relevant policy provisions are as follows:
III. Definition of "Insured." The unqualified word "Insured" whenever used in this Policy with respect to Coverage A, B, C and D, includes not only the Named Insured but also any person while using or riding in the aircraft and any person or organization legally responsible for its use, provided the actual use is with the permission of the Named Insured. The provisions of this paragraph do not apply:
(c) to any person operating the aircraft under the terms of any rental agreement or training program which provides any remuneration to the Named Insured for the use of said aircraft.
Today we hold that the policy language is clear and the exclusion unambiguous but that where, as here, the person who actually operated the aircraft at the time of an accident is not ascertainable, the insurer cannot invoke the exclusion.
The case arose on June 27, 1981 when Stefan Bogen, a student pilot rented an airplane from Wilco. He took the plane up in the company of Herbert Dash, a licensed pilot and Richard Christian, a passenger. Bogen and Dash were in the front seats and Christian in the rear. Bogen, as a student, was not authorized to carry a passenger without a licensed pilot aboard. The plane was a dual controlled Beech Aircraft allowing operation separately or in unison from the front seats. For unknown reasons, it crashed in Manahawkin, New Jersey, killing all aboard. According to the conclusions of an investigator from the National Transportation Safety Board, although there was some evidence to show that Bogen was positioned in the left front of the plane and Dash in the right, there is no way to determine who was operating the plane or the manner of its operation prior to the crash.
Thereafter, Dash's estate (Dash) sued the estate of Bogen (Bogen) on the basis that Bogen was "in control of the aircraft," and also named as defendants Wilco and various manufacturers of the plane or its component parts including Beech Aircraft Corp.; Avco Corp.; Bendix Corp. and Mattituck Airbase, Inc. Subsequently, the estate of Richard Christian (Christian) instituted a suit against the same defendants as those named in Dash's suit except that Dash was also included as a defendant. Bogen then filed suit against the defendants named in Christian's suit (except Bogen itself) alleging that Dash was the pilot of the plane and that Bogen was only a passenger. The cases were consolidated for trial. Bogen and Dash demanded that U.S. Fire defend and indemnify them because they were additional insureds under the policy U.S. Fire had issued to Wilco. U.S. Fire denied that it had an obligation to defend and indemnify either Bogen or Dash because, at the time of the crash, the aircraft was being operated under a rental agreement, which, according to U.S. Fire, constituted a risk excluded from coverage under (c) of the policy.
At the time of the accident Dash had personal flight insurance issued by Avemco Insurance Company (Avemco). Avemco
and Dash then filed a complaint for declaratory judgment, seeking a determination that Dash was an additional insured under the U.S. Fire policy issued to Wilco. All parties to the three liability actions were named in the declaratory judgment action and answers were filed on behalf of all defendants. The answer filed on behalf of Bogen cross-claimed against U.S. Fire for coverage. Thereafter motions for summary judgment were filed on behalf of Avemco, Dash, U.S. Fire and Bogen.
The trial judge granted the motion for summary judgment in favor of Avemco and Dash and denied the motions of U.S. Fire and Bogen. He reasoned that Dash was an "additional insured" under U.S. Fire's policy, that he could not be shown to have been "operating" the aircraft within the meaning of the exclusion, and that U.S. Fire was a primary insurer as to Dash. He held Bogen, on the other hand, not to be covered by the U.S. Fire policy because he was the renter of the aircraft from Wilco, an event which the ...