On appeal from the Superior Court of New Jersey, Law Division, Union County.
J.h. Coleman, Arnold M. Stein and Conley.*fn1The opinion of the court was delivered by Arnold M. Stein, J.A.D.
On September 17, 1990, Ahmed Elgohory's*fn2 vehicle broke down in the right northbound lane on the Garden State Parkway. Taher Abdel-Baset, one of the passengers, exited the vehicle and began pushing the car to the grassy area next to the right shoulder. Gary L. Ludas, driving another vehicle, struck Elgohory's vehicle. Abdel-Baset was killed in the collision. Mohammed Shams Mohammed, another passenger in Elgohory's vehicle, was injured. Mohammed and Ibrahim Abdel Rahman, Abdel-Baset's administrator ad prosequendum, filed personal injury and wrongful death/survivorship actions against Ludas and Elgohory.
Ludas filed a third-party complaint against Ohio Casualty Insurance Group asserting that Ohio was required to defend and indemnify him under the terms of an insurance policy issued by Ohio. The motion Judge granted summary judgment in Ohio's favor. We affirm.
On January 29, 1990, Ludas and his wife, Daria, applied for an automobile insurance policy with Ohio through the Oliver L.E. Soden Agency in Jamesburg. On February 7, 1990, Ohio's branch office in Union approved the policy which was issued on February 16, 1990.
Sandra Lee Latham, an examiner employed by Ohio, explained in her deposition that the branch office underwrites the policy but the "home office" sends the premium notice directly to the policyholder. The premium notice provides that "CHECKS OR DRAFTS ACCEPTED IN PAYMENT ONLY IN EVENT THEY ARE HONORED ON PRESENTATION." A copy of the
premium bill is also sent to the insurance broker but not to the branch office. According to Latham, payment is due within sixty days from the date that it is mailed to the policyholder.
When the premium is not paid in a timely fashion, another bill, the "final budget," which advises the policyholder that the policy will be canceled on a specific date for nonpayment of the premium, is sent to the policyholder. When the policyholder fails to pay the premium after the final budget is sent from the home office, the policy lapses. Two or three days after the policy lapses, a notice of cancellation, together with a notice of termination, is sent to the policyholder, the agency and the branch office.
On March 15, 1990, a second budget was sent to Ludas, due on March 30, 1990. On April 9, 1990, a second final budget was sent to Ludas, which was due on April 29, 1990. On May 4, 1990, Ohio issued a notice of cancellation advising Ludas that the policy would be canceled on May 22, 1990.
On May 18, 1990, Ludas made a payment to the insurance broker, who forwarded the payment to Ohio. Ohio received the payment on May 23, 1990. Even though the payment was received after the effective date of cancellation, the policy was reinstated because a payment is considered received when the payment is received by the insurance broker.
On June 6, 1990, a claim was reported against Ludas's policy. On June 13, 1990, a second budget was sent to Ludas which was due on June 28, 1990. Ludas did not pay this bill, and a second final budget was mailed to him on July 9, 1990, which was due on July 29, 1990.
The Soden Agency received check no. 107 for $651 from Ludas, representing $575 for the policy premium and $76 that Ohio had previously returned to defendant as unearned premium to cover the period of policy lapse. The check was dated July 30, 1990. The broker at the Soden Agency gave Ludas a receipt, dated July
2, 1990,*fn3 advising him that payment was "[s]ubject to the acceptance by the company." On July 31, 1990, a second budget lapse was issued because Ohio had ...