On certification to the Superior Court, Appellate Division.
Chief Justice Wilentz and Justices Handler, O'hern and Coleman join in this opinion. Justice Pollock filed a separate Dissenting opinion in which Justice Garibaldi joins. Justice Stein did not participate.
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
ROBERT VERRIESTY V. INA UNDERWRITERS INSURANCE COMPANY, ET AL. (A-121/122-94)
Argued May 1, 1995 -- Decided August 23, 1995
In early November 1984, Charles Janulewicz brought his 1974 Cadillac to Throckmorton Texaco Corp. (Throckmorton), a sole proprietorship owned by James H. Pierce (James H.), in an attempt to sell the car. James Curley Pierce (Curley), James H.'s cousin who worked at Throckmorton, expressed an interest in the car but did not have enough money to buy it. James H. purchased the car for Curley, who was to repay James H. After receiving the money, Janulewicz removed the license plates from the car, signed and dated the Certificate of Ownership, leaving the name of the buyer blank, and gave the certificate and keys to James H. James H. immediately turned over the certificate and keys to Curley. The car was to remain on the Throckmorton lot until Curley had the money to pay for the car and to register it. During that time, Curley performed repair work on the vehicle.
On November 14th, James H. drove to Florida leaving Curley in charge of the business. While James H. was away, Curley went into a locked drawer in James H.'s office, removed two automobile-dealer plates registered to D'Amico Lincoln Mercury (D'Amico), and put them on the Cadillac. Curley had not received authorization to use those plates. Curley then took the Cadillac and went out all night. In the early morning hours of November 18th, while Curley was driving the Cadillac, he crossed the center lane of a roadway and collided head on with a vehicle driven by Sherry Ann Price. Price was killed and Robert Verriest, a passenger in Price's vehicle, sustained severe injuries. At the time of the accident, Throckmorton and James H. were insured under a business-automobile policy issued by INA Underwriters Insurance Company (INA), which had a $300,000 per occurrence liability limit.
Verriest and Price's parents (plaintiffs) sued Curley, Throckmorton, James H., and D'Amico, alleging negligence. INA provided a defense for James H. and Throckmorton, but did not defend Curley. Curley failed to answer the complaints, and a default judgment was entered against him. D'Amico appeared but was eventually dismissed on motion for summary judgment. A jury trial resulted in a verdict in favor of James H. and Throckmorton. However, during the trial, plaintiffs proved their damages against Curley, and the jury returned a verdict against Curley for $422,500 in the Verriest suit and $75,000 in the Price suit. Because Curley was judgment proof, he assigned his rights against INA to plaintiffs.
Plaintiffs then brought this suit against INA to determine coverage. The trial court initially granted INA's motion for summary judgment, reasoning that plaintiffs' claims were barred by the entire-controversy doctrine. On appeal, the Appellate Division reversed and remanded, finding that that doctrine did not apply.
The parties then cross-moved for summary judgment on the issue of coverage under the INA policy. Under that policy, INA agreed to pay "all sums the insured legally must pay as damages because of bodily injury . . . to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto." The policy defined a covered auto as any auto and defined an insured as either the named insured or anyone else using the auto with the named insureds' permission.
The trial court granted summary judgment in favor of plaintiffs, finding that Curley was entitled to coverage under the policy because the Cadillac had been a covered auto and Curley's use of that vehicle had been permissive. The Appellate Division reversed, finding that it had neither been established that James H. was the owner of the Cadillac nor been proven that James H. had given permission to Curley to operate the vehicle on a public highway.
The Supreme Court granted certification.
HELD: The business-automobile policy issued by INA Underwriters Insurance Company covers the driver of an insured vehicle for liability arising out of an automobile accident on November 18, 1984.
1. Janulewicz remained the owner of record of the Cadillac because he left the name of the buyer in blank, thereby failing to legally transfer title from Janulewicz to James H. Nonetheless, there may be more than one owner of the vehicle. The true owner may be one who is not the holder of the legal title to the vehicle; the true owner is the person who maintains possession and control of the automobile. Although James H. purchased the vehicle for Curley, he intended to retain control over the vehicle until Curley paid him. James H. and Curley were indifferent to the technical question about title and ownership but clearly understood that James H. would maintain ultimate control and authority over the vehicle until Curley paid him back. Thus, at the time of the accident, James H. was the owner of the Cadillac. (pp. 7-13)
2. The initial permission rule provides that if a person is given permission to use a motor vehicle in the first instance, any subsequent use short of theft or the like while it remains in his possession, though not within the contemplation of the parties, is a permissive use within the terms of the standard clause of an automobile insurance liability policy. The scope of the term "permissive use" covers a wide variety of activity other than the operation of a vehicle on a public roadway. James H. turned over the keys to Curley and observed him performing repairs on the vehicle. That conduct demonstrates that James H. implicitly granted Curley permission to work on the car while it remained on the Throckmorton lot, rendering Curley a permissive user of the Cadillac. As long as the initial use of the vehicle is with consent, express or implied, of the insured, any subsequent changes in the character or the scope of the use do not require the additional specific consent of the insured. Thus, although James H. never gave Curley permission to operate the Cadillac on a public highway, Curley's operation of the car, unless it amounts to a "theft or the like," remained a coverable permissive use. (pp. 13-16)
3. The theft component of the rule connotes willful taking of another's car with the intent permanently to deprive the owner of its possession and use. The record clearly demonstrates that Curley did not intend to steal the car. Although Curley's actions deviated from the initial permission granted by James H., they were not so inconsistent with the understanding of the parties as to rise to the level of "theft or the like." (pp. 16-18)
Judgment of the Appellate Division is REVERSED.
JUSTICE POLLOCK, Dissenting, in which JUSTICE GARIBALDI joins, is of the view that James H. was neither the legal nor the true owner of the Cadillac because, by transferring to Curley the Certificate of Title and the keys, James H. also transferred effective control over the car. The only sensible reading of the record is that James H. turned over the keys to Curley for precisely the same reason that Curley worked on the car -- the car belonged to Curley. Thus, Curley was not a permissive user. However, even if one accepts the Conclusion that James H. permitted Curley to use the car by working on it, that limited permission should not lead to the further Conclusion that Curley's operation of the car on the public highway also was permitted. The majority's Conclusion that James H. permitted Curley to operate the car represents an unprecedented and unjustified extension of the initial permission rule.
CHIEF JUSTICE WILENTZ and JUSTICES HANDLER, O'HERN and COLEMAN join in this opinion. JUSTICE POLLOCK filed a separate Dissenting opinion in which JUSTICE GARIBALDI joins. JUSTICE STEIN did not participate.
On November 18, 1984, James Curley Pierce (Curley) was involved in an automobile accident that killed one person and seriously injured another. This appeal addresses whether a business-automobile policy issued by INA Underwriters Insurance Company (INA) covers Curley for liability arising out of that accident. The Law Division found that the policy afforded coverage. In an unreported opinion, the Appellate Division reversed. We granted certification. 139 N.J. 288 (1994).
The facts in this matter are essentially undisputed. Approximately two-and-one-half weeks prior to the accident, Charles Janulewicz brought his 1974 Cadillac to Throckmorton Texaco Corp. (Throckmorton), a sole proprietorship owned by James H. Pierce (James H.), in search of an interested buyer. Although Throckmorton was in the business of "detailing," which consists of washing, polishing, and waxing cars, Janulewicz assumed that James H. was an automobile dealer because he frequently had seen cars "sitting around the lot with no plates." Curley, James H.'s cousin who had moved to New Jersey approximately three weeks earlier and was working at Throckmorton, expressed interest in the car but lacked the money to buy it. James H., however, purchased the car for Curley, apparently for $150, and Curley was to repay James H. After receiving the money, Janulewicz removed the license plates from the car, signed and dated the Certificate of Ownership, leaving the name of the buyer blank, and gave the certificate and keys to James H. James H. immediately turned over the Certificate of Ownership and keys to Curley. The car, however, remained on the Throckmorton lot because, according to James H., Curley lacked the money "to pay [him] for the car" and "to get the car registered." During the two-and-one-half weeks that the Cadillac remained on the Throckmorton lot prior to the accident, Curley performed repair work on the vehicle, which James H. observed.
Shortly after purchasing the car, James H. contacted his insurance agent and arranged a meeting at which Curley was to have insured the car. That meeting was to have taken place the day after the accident. Apparently, Curley also was to have registered the car on that day.
Four days prior to the accident, James H. drove to Florida to attend a funeral, leaving Curley in charge of the business. In fact, Curley lived in a utility room in the Throckmorton premises during James H.'s absence. The day before the accident, while James H. was still away, Curley went into a locked drawer in James H.'s office, removed two automobile-dealer plates registered to D'Amico Lincoln Mercury (D'Amico), and put them on the Cadillac. Both James H. and Curley agreed that Curley had received no authorization to use those plates. Curley then took the Cadillac and went out drinking with a couple of friends "all night." Early the next morning, while Curley was driving the Cadillac, he crossed the center line of a roadway and collided head on with a vehicle driven by Sherry Ann Price. Price died as a result of the injuries she had sustained in the accident. Robert Verriest, a passenger in Price's vehicle, sustained severe injuries.
At the time of the accident, Throckmorton and James H. were insured under a business-automobile policy issued by INA, which had a $300,000 per occurrence liability limit. (Although the policy listed Throckmorton as the named insured, James H. was also a named insured under the policy because Throckmorton was a sole proprietorship, not a corporation.)
Verriest and Price's parents brought suit against Curley, Throckmorton, James H., and D'Amico, alleging negligence. INA provided a defense for James H. and Throckmorton, but did not defend Curley. Curley failed to answer the complaints, and the trial court entered a default judgment against him. D'Amico appeared in the action through separate counsel and was eventually awarded summary judgment. A jury trial resulted in a verdict in favor of defendants. In answers to specific interrogatories, the jury found that Curley had not been acting in the scope of his employment at Throckmorton at the time of the accident and that neither James H. nor Throckmorton had been negligent in employing Curley. During that trial, however, plaintiffs proved their damages against Curley, ...