Decided: March 30, 1989.
LEROY DANCY, PLAINTIFF-RESPONDENT,
EVELYN R. POPP, THE NATIONAL SURETY CORPORATION AND FIREMAN'S FUND INSURANCE COMPANY, DEFENDANTS-APPELLANTS
On appeal from the Superior Court, Appellate Division, whose opinion is reported at N.J. Super. (1988).
For affirmance -- Chief Justice Wilentz and Justices Handler, O'Hern, and Stein. For reversal -- Justices Clifford, Pollock and Garibaldi. Clifford, Pollock and Garibaldi, JJ., dissenting.
[114 NJ Page 571] This case arises from a dissent in the Appellate Division over the question whether the recital in plaintiff's application for auto insurance that he had been informed of the availability of additional uninsured and underinsured motorist coverage (UIM) precluded a claim for reformation of the policy or damages against the agent for failing to inform him of the availability of UIM coverage in the amount of $100,000. Plaintiff's policy insured him for $35,000 of UIM coverage. He has suffered injuries alleged to have caused damages substantially in excess of that amount due to the negligence of an underinsured motorist. In support of a summary judgment motion, defendants relied solely on the fact that Dancy's signature appeared below the contrary recital. The trial court granted summary judgment, but on appeal a majority of the panel voted to reverse.
[114 NJ Page 572]
We are satisfied to affirm the judgment of the Appellate Division's majority that there is a sufficient basis in law to permit plaintiff to assert factual claims in conflict with the policy's recital. Its opinion, to be published herewith, sets forth in detail the competing factual and legal claims. 232 N.J. Super. 1 (App.Div.1988).
Of course, we agree that a party "is bound by the instrument he signs in the absence of evidence showing that he was misled or that there were other circumstances excusing him from scrutinizing the document." Hansen v. Western Home Ins. Co., 89 Or.App. 68, 72, 747 P. 2d 1007, 1010 (1987) (quoting Knappenberger v. Cascade Ins. Co., 259 Or. 392, 399, 487 P. 2d 80, 87 (1971)), review den., 305 Or. 576, 753 P. 2d 1387 (1988). Absent "evidence of fraud or other legal excuse which would have relieved the [party] of the[ ] duty to read the disclosure statement" on a policy, the party is bound. Gilliard v. Fulton Fed. Sav. & Loan Ass'n, 182 Ga.App. 678, 678-79, 356 S.E. 2d 734, 735-36 (1987). These principles of law are easily stated; the difficult task is drawing the line where "other circumstances" or "other legal excuse" relieve a party of the preclusive effect of the legal norm. See Calamari, "Duty to Read -- A Changing Concept," 45 Fordham L.Rev. 341 (1974). Thus,
[w]hile we have said that, in general, an insured is chargeable, for reasons of business utility, with knowledge of the contents of a policy in the absence of fraud or inequitable conduct on the part of the insurer * * *, where such fraud or inequitable conduct does appear, * * * the insured is bound only to make such examination as would be reasonable for the average person under the particular circumstances * * *. [ Harr v. Allstate Ins. Co., 54 N.J. 287, 309-10 (1969).]
Although the asserted breach of duty on the part of the agent does not here rise to the level of fraud, it was conceded at oral argument that the conduct would be a breach of the agent's fiduciary responsibility and present a conflict with the legislative policy set forth in N.J.S.A. 17:28-1.1(b) that UIM coverage "shall be provided as an option by an insurer," up to a limit of $250,000, but not more than the owner's bodily-injury
[114 NJ Page 573]
and property-damage coverage. (Dancy had $100,000 in bodily-injury coverage.)
This is not meant to suggest in any sense that plaintiff did not have a duty to read his policy, nor that a factfinder should not weigh that strongly against plaintiff in ascertaining whether there has been a breach of the agent's responsibility. Nor do we mean to imply that plaintiffs must or should win at trial. "Defendant's proofs may be so substantial when all the evidence is in that plaintiff[ ] will not be entitled to a judgment." Harr, supra, 54 N.J. at 308. Defendants assert that they informed the plaintiff of the availability of the coverage, and that his election of a $35,000 coverage for UIM evidences this informed choice. See Whatley v. Universal Sec. Ins. Co., 177 Ga.App. 424, 339 S.E. 2d 398 (1986) (judgment for insurer when insured admitted that agent filled in the form "with an 'x' in the 'rejected' column" for the uninsured motorist option after agent questioned him and he answered on each option). None of those issues is before the Court. All that we hold is that sufficient facts have been shown to raise a question whether the plaintiff made such examination of his policy as would be reasonable under the circumstances and whether defendant knew that no such examination had been made. There is some evidence in this case that the agent was aware of plaintiff's asserted inability to read the declarations language; and there is a claim that the fine print of the provision was inconspicuous in its placement in the policy. See Heake v. Atlantic Casualty Ins. Co., 15 N.J. 475 (1954) (applicant for auto insurance policy not bound by inconspicuous policy language inconsistent with his statement to agent). These factors, in addition to the legislative mandate that greater coverage be provided as an option, mitigate in favor of the limited departure from the usual rule that "an insured is chargeable, for reasons of business utility, with knowledge of the contents of a policy * * *." Harr, supra, 54 N.J. 309.
The judgment of the Appellate Division is affirmed.
[114 NJ Page 574]
CLIFFORD, POLLOCK and GARIBALDI, JJ., dissenting:
We would reverse the judgment below substantially for the reasons set forth in the dissenting opinion of Judge Gruccio, reported at 231 N.J. Super. 598 (1988).