Opinion
Submitted October 28, 1932 —
Decided January 31, 1933.
1. In an action brought under the terms of an automobile liability insurance policy, plaintiff having made out a prima facie case, judgment will be in his favor, where the defense that the policy was procured by fraud is not established by a fair preponderance of the evidence.
2. Where the terms of an automobile liability insurance policy applies to the operation of the car legally, with certain excepted persons or corporations, and an accident occurred while the driver was operating the car with permission of the owner, and he was not within the exception, a refusal to nonsuit on this ground was proper.
On appeal from a judgment of the Essex County Circuit Court entered upon an order of Judge Porter, who filed the following opinion:
"Under a stipulation of the attorneys, this case was tried by the court without a jury. It was further stipulated that the court was empowered to decide any questions of equity which might arise.
"The facts, briefly, appear to be as follows:
"Ralph Schmidt, on October 21st, 1929, was the registered owner of an automobile which was being driven by Thomas Brown, who was accompanied by his employer, David Mayer. While the automobile was being so driven, Harry Asnis, the plaintiff, was struck by it and injured. Suit was brought in the Supreme Court by Asnis against Schmidt, Brown and Mayer. After being discontinued as to Schmidt, the case was tried and a verdict rendered against Brown and Mayer in the sum of $1,800 on April 2d 1931, the costs thereof amounting to $73.78.
"It further appears that the defendant Bankers Indemnity Insurance Company issued an `automobile public liability policy' under date of October 19th, 1929, to said Ralph Schmidt, indemnifying him against loss for damages on account of bodily injuries accidentally suffered by anyone by reason of the use,c., of said automobile. Schmidt applied for the policy to Porter Versfelt, an insurance broker, who made out and filed with the defendant company an application for insurance on the company's form of application, dated October 19th, 1929. The application was filled in by typewriter and not signed.
"It also appears that execution on the judgment against Brown and Mayer has been returned unsatisfied. The plaintiff brings this suit to recover the amount of the judgment from the defendant company under the terms of the insurance policy.
"At the close of the plaintiff's case the defendant moved for a nonsuit, claiming no liability under the sixth clause of the policy, subdivision `a.' Decision was reserved. From a careful reading of that section, I conclude that there is no merit in the defendant's contention, and I therefore deny the motion. An exception will be allowed to this ruling.
"The defendant company claims that the policy was issued through the fraud of the broker, Versfelt, the insured Schmidt, and Mayer. It is contended that Mayer suggested to Schmidt after the accident that he go to his broker, Versfelt, and procure a policy antedating the accident; that in accordance with such a plan Schmidt called on Versfelt on October 23d and explained that he had had an accident with his car, and applied for a policy dated October 19th; that Versfelt said he would give Schmidt an answer the next day; that the policy was delivered by Versfelt to Schmidt — dated, as requested, October 19th — on Thursday or Friday, October 25th, or 26th. The defendant asks for judgment and that the policy be set aside and canceled because of the fraud.
"Whether or not there was such fraud is the only issue raised by the testimony. The three principal witnesses on this question are the three accused persons, Versfelt, Schmidt and Mayer. The testimony of each differed sharply from that of the others.
"Versfelt made an affidavit for the defendant, under date of November 25th, 1931, entitled `In Chancery of New Jersey,' presumably to be filed in a suit to set aside the policy, in which affidavit he set forth facts quite at variance with his testimony here.
"Schmidt, according to Police Officer Foster, who investigated the accident, gave the police information, shortly after the accident, which was essentially different from that given here. He was also contradicted in many respects by other witnesses.
"Mayer, too, was contradicted not only by Schmidt as to the policy but by several other witnesses on other points.
"Even as to matters not very important to this issue there was a wide difference in the testimony of several of the witnesses; for example, as to whether or not the automobile was damaged in the accident, whether Mrs. Schmidt or Ralph Schmidt drove the car away from the Mayer garage on the day of the accident, what the arrangement was under which Schmidt left his car in the Mayer garage, c.
"The testimony of Mr. McGee, an employe of the defendant, was not very helpful, being undoubtedly based largely on surmise and conjecture, rather than on any specific knowledge of the instant transaction. He knew of Versfelt's standing with the company, he said, and yet he referred to Versfelt both as a broker and as an agent. He said that Versfelt was not authorized to act for the company and could not sign policies. When he was shown the policy in this case, signed by Versfelt as agent for the company, he was clearly surprised and gave an unsatisfactory explanation.
"Aside from the question of whether or not Versfelt was the agent of the defendant and bound it by the issuance of the policy over his signature as of October 19th, 1929, I have concluded that the defendant has not established by the fair preponderance of the testimony the truth of its affirmative defense of fraud. The plaintiff having made out a prima facie case, the judgment will be in his favor, and in the sum of $1,873.78, together with interest and costs."
For the appellant, Frank G. Turner.
For the respondent, Joseph Coult.
The judgment under review will be affirmed, for the reasons given by Circuit Court Judge Porter.
We deem it desirable to add to his conclusions that in our view the refusal to nonsuit on the ground there was no liability under the terms of the policy was justified.
The provision relied upon by the defendant below reads:
"6. This policy shall apply in the same manner and under the same conditions as it applies to the named assured, to (a) any person or persons while riding in or legally operating any of the said automobiles and to any person, firm or corporation [except an automobile garage, repair shop, automobile sales agency or service station or the agents or employes thereof] legally responsible for the operation thereof, provided such use or operation is within the permission of the named assured * * *."
The ground urged for nonsuit was that, inasmuch as Mayer was in the automobile garage business and the car was being driven by his employe, there can be no recovery.
It appears that the benefits of the policy are extended to two classes by the above-quoted clause. First, persons actually riding in or operating the car legally, which seems to be the present case since Mayer was in the car which was being driven by Brown. Second, persons, firms and corporations legally responsible for the operation of the car, except garages, c. There is no provision as to this class about riding in or operating the car. The exception as to garages, c., applies only to the second class of persons or firms covered by the policy. It seems clear that the operation of the car in the instant case falls within the first group, to which the exceptions do not apply.
For affirmance — THE CHANCELLOR, TRENCHARD, PARKER, LLOYD, CASE, BODINE, DONGES, BROGAN, HEHER, KAYS, HETFIELD, WELLS, KERNEY, JJ. 13.
For reversal — None.