Verriest v. Ina Underwriters Insurance

POLLOCK, J.,

dissenting.

Defendant James Curley Pierce (Curley) lived and worked at a gas station owned by his cousin, James H. Pierce (James H.). Curley caused an automobile accident resulting in the death of Sherry Ann Price and injuries to Robert Verriest. INA Underwriters Company (INA) insured James H. through a business-automobile policy. Curley is uninsured and judgment-proof. Verriest and Mary C. Price, as General Administratrix and Administratrix ad Prosequendum of the estate of Sherry Ann Price, have sued Curley, James H., and INA.

The majority concludes that INA is liable because James H. was the “true” owner of the car and Curley used the car with James H.’s permission. In my opinion, the record does not justify either conclusion. I would affirm the judgment of the Appellate Division granting summary judgment for INA.

I

Ordinarily, the party liable for injuries caused by the permissive use of a motor vehicle is the record holder of title. In limited *416circumstances, the true owner of a motor vehicle also may be liable for purposes of providing insurance coverage. American Hardware Mut. Ins. Co. v. Muller, 98 N.J.Super. 119, 236 A.2d 182 (Ch.Div.1967), aff'd o.b., 103 N.J.Super. 9, 246 A.2d 493 (App.Div.), certif. denied, 53 N.J. 85, 248 A.2d 437 (1968). From my reading of the record, James H. was neither the legal nor the true owner of the car. The facts are crucial.

James H. owned Throckmorton Texaco Corp. (Throckmorton), which was in the business of washing and waxing cars. Three weeks before the accident, Curley started working for Throckmorton. A few days after Curley started working, he agreed to buy a 1974 Cadillac from Charles Janulewicz. James H. agreed to lend Curley the purchase price. Accordingly, James H. paid Janulewiez, and Curley agreed to repay James H. On receiving payment, Janulewicz gave James H. the keys and the title to the car. Aware that James H. was paying on behalf of another, Janulewicz did not enter James H.’s name on the certificate of ownership. James H. immediately turned over both the keys and the title to Curley.

During the two and a half weeks before the accident, the unregistered and uninsured Cadillac remained on the Throckmorton lot. Curley kept the keys and worked on the car. James H. arranged for Curley to meet with James H.’s insurance agent, so Curley could obtain insurance. The meeting was scheduled for the Monday after the accident.

When James H. left to attend a funeral in Florida, he gave Curley the keys to the gas station. In James H.’s absence, Curley opened a locked drawer in James H.’s office and removed dealer license plates registered to D’Amico Lincoln Mercury, which is not a defendant in this action. Curley knew that he was not authorized to use the plates. Nonetheless, he affixed them to the Cadillac. While driving the car, Curley caused the accident.

INA had issued to James H. an insurance policy that provided coverage for damages resulting from the permitted use of any automobile owned by him. See ante at 405-07, 662 A.2d at 969. *417In determining that James H. owned the Cadillac, the majority concludes that James H. and Curley agreed that “James H. would maintain ultimate control and authority over the vehicle until Curley paid him back.” Ante at 411, 662 A.2d at 972. It draws that conclusion from James H.’s explanation that the car was not registered and insured before the accident because “Curley didn’t have money to pay me for the car. Plus the fact he didn’t have money to get the car registered.” Ante at 410, 662 A.2d at 971.

I view the facts differently. By transferring to Curley the certifícate of title and the keys, James H. also transferred effective control over the car. See American Hardware Mut. Ins. Co., supra, 98 N.J.Super. 119, 236 A.2d 182 (individual who primarily used and maintained vehicle deemed true owner for insurance purposes, even though owner of record and his wife occasionally used vehicle). I can find no case — and the majority cites none — in which someone who was not the registered owner of the car, who never intended to own it, who possessed neither the certificate of title nor the keys, and who never used the car, has been held to be the owner. It seems to me that the majority’s conclusion that James H. was the true owner of the car is an emotional response to a tragic set of facts. Compassion has a vital role in the law. But, for me, so tortured a reading of the facts exceeds the bounds of fairness and reason. Consequently, I would find that James H. was not the owner of the car.

II

I also disagree with the majority’s conclusion that Curley used the car with James H.’s permission. In disagreeing, I recognize that any use of a vehicle following an initial permissive use, “short of theft or the like,” is deemed permitted for purposes of determining insurance coverage. Matits v. Nationwide Mut. Ins. Co., 33 N.J. 488, 496-97, 166 A.2d 345 (1960). I also recognize that courts define “use” broadly. Motor Club Fire & Casualty Co. v. New Jersey Mfrs. Ins. Co., 73 N.J. 425, 436, 375 A.2d 639, cert. *418denied, 434 U.S. 923, 98 S.Ct. 402, 54 L.Ed.2d 281 (1977); Indemnity Ins. Co. of N. Am. v. Metropolitan Casualty Ins. Co., 33 N.J. 507, 513, 166 A.2d 355 (1960).

Too facile for me, however, is the majority’s conversion of Curley’s acts of ownership into evidence of James H.’s permission to use the car. The majority writes:

We note that after purchasing the vehicle 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.
[Ante at 412, 662 A.2d at 972.]

I suggest that 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.

Accepting, however, the majority’s 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 cites several cases in which this Court has found liability under an owner’s insurance policy although the insured vehicle was used in a manner inconsistent with the initial permission. Matits, supra, 33 N.J. 488, 166 A.2d 345 (holding that driving to several taverns did not vitiate initial permission to use vehicle to visit operator’s sick mother); Indemnity Ins. Co., supra, 33 N.J. 507, 166 A.2d 355 (finding coverage when wholesale-beer distributor’s employee allowed customer to drive car while returning from sales promotion program to visit brewery); Small v. Schuncke, 42 N.J. 407, 201 A.2d 56 (1964) (holding that initial permission was not vitiated when owner permitted nephew to use his automobile to assist owner’s wife, and nephew picked up hitchhikers and allowed them to drive); Odolecki v. Hartford Accident & Indem. Co., 55 N.J. 542, 264 A.2d 38 (1970) (holding that owner’s son did not vitiate initial permission by allowing friend to use vehicle to pick up his girl friend); Motor Club, supra, *41973 N.J. 425, 375 A.2d 639 (holding that initial permission was not vitiated when mentally-disturbed passenger operated vehicle after expelling owner).

In all of those cases, both the initial use and the subsequent use involved the operation of the car. The deviation in the subsequent use involved a change in the route, the time of operation, or in the identity of the driver or passengers. In no case cited by the majority has a court converted permission for a strictly nonoperational purpose into permission for a subsequent use involving operation of the vehicle.

Twenty-five years ago, in State Farm Mutual Automobile Insurance Co. v. Travelers Insurance Co., 57 N.J. 174, 270 A.2d 625 (1970), this Court extended coverage to an automobile dealer’s employee who drove a customer’s car when the dealer had permitted the employee to test drive the car in connection with certain repairs. The Court stated that “[s]ince it was undenied that [the owner] acquiesced in [the salesman’s] use of the car, any subsequent use thereof for his own purposes would still be within the initial permission. Once the permission was given, the scope of that permission was unrestrictable.” Id. at 178, 270 A.2d 625. Even in that case, however, the initial permission included authority to operate the vehicle.

If James H. is deemed the true owner, a conclusion with which I disagree, he did no more than permit Curley to work on the car while it remained on the Throckmorton lot. Such limited authorization hardly justifies the imposition of risks associated with the operation of the car. In sum, the majority’s conclusion that James H. permitted Curley to operate the car represents an unprecedented and unjustified extension of the initial permission rule.

I reach that conclusion notwithstanding the proposition that only “theft or the like” will terminate initial permission to use the vehicle. Small, supra, 42 N.J. at 413, 201 A.2d 56; Matits, supra, 33 N.J. at 495, 166 A.2d 345; Motor Club, supra, 73 N.J. at 433, 375 A.2d 639. To disagree with the majority, I need not go so far as so respected an authority as Appleman, who characterizes the *420New Jersey decisions as unbelievable and “strange.” Appleman writes:

Unbelievably however New Jersey even has held that as long as the initial use of a vehicle is with the consent, express or implied, of the insured, any subsequent changes in the character or scope of use, such as from a passenger to a driver, do not require the additional specific consent of the insured; only where deviation from the use consented to amounts to “theft or the like” will the coverage be precluded under the insured’s policy.
Following the same strange desire to award a converter, New Jersey has held that the “theft” components of “theft or the like” exception to the “implied permission” rule regarding coverage under an omnibus clause of an automobile liability policy connotes nothing less than the wilful taking of another’s car with the intent permanently to deprive the owner of its possession and use.
[6C John A. Appleman & Jean Appleman, Insurance Law and Practice § 4366 (Supp.1994) (criticizing Motor Club).]

A fair reading of the initial-permission rule should deny coverage in this case. On the assumption that James H. was the owner, Curley’s operation of the vehicle is so inconsistent with James H.’s limited authorization to work on it as to be tantamount to “theft or the like.” See Motor Club, supra, 73 N.J. at 442-43, 375 A.2d 639 (Clifford, J., dissenting) (construing “or the like” to mean something less than theft).

I would affirm the judgment of the Appellate Division.

GARIBALDI, J., joins in this dissent.

For reversal — Chief Justice WILENTZ, and Justices HANDLER, O’HERN and COLEMAN — 4.

For affirmance — Justices POLLOCK and GARIBALDI — 2.