DiOrio v. New Jersey Manufacturers Insurance

*609Mountain, J.,

dissenting. The trial court determined there was no liability under the policy, finding that the DeSoto was furnished for the regular use of the son, Gen-naro DiOrio, the driver of the car at the time of the accident. This factual determination brought the case within the exclusion as to certain nonowned vehicles. It was upon this thesis that the Appellate Division affirmed. While I am inclined to agree with this conclusion, which the majority of the Court rejects, I think the decision can better be made to rest upon an alternative and more substantial ground, i. s., that the DeSoto was furnished for the regular use of Generoso DiOrio, the father, and that a finding to that effect brings the case within the terms of the exclusion relating to certain non-owned automobiles.

There appear to be four categories of factual situations which result in a finding of exclusion as to non-owned automobiles. Coverage as to non-owned vehicles is not available if,-

(1) The vehicle involved in the accident is owned by the named insured.

(2) It is furnished for the regular use of the named insured.

(3) It is owned by a relative of the named insured, who is a resident of the same household as the named insured.

(4) It is furnished for the regular use of a relative of the named insured, the relative being a resident of the same household as the named insured.

The holding below rests upon a finding that the facts of this case bring it within category (4) above. I think it more certainly and clearly falls within category (2).

The testimony disclosed — in my opinion unequivocally —• that the DeSoto was furnished for the regular use of the named insured, Generoso DiOrio. He originally owned the car and transferred title, without consideration, to a partnership of which he was one of two equal partners. He used the automobile for both business and personal purposes at any *610time and at will. He employed the car as a means of daily transportation between home and his place of business. The car was available for his use during evening hours and over weekends. He testified that he had “unrestricted use” of the DeSoto. His son used the car only with his permission and within limits of activity which he prescribed. The fact that the car was also used by his partner and for general partnership purposes would not, in the light of this extensive and unrestricted use on the part of Generoso, affect the result. It is settled that “regular use” does not necessitate a finding of unrestricted use. Home Insurance Co. v. Kennedy, 52 Del. 42, 152 A. 2d 115 (1959); Moutry v. American Mutual Liability Ins. Co., 35 Wis. 2d 652, 151 N. W. 2d 630, 633 (1967); 1 Long, The Law of Liability Insurance (1972), § 4.11, p. 4-26.1. The facts bring the case squarely within category (2) set forth above.

It is urged, however, that the provision is ambiguous and accordingly should be so read as to confine the exclusionary conditions of “ownership” and “furnished for regular use” to the person actually driving the “non-owned automobile” at the time of the accident. The plain and clear meaning of the policy provision itself, as well as the overwhelming weight of authority both in this State and elsewhere are to the contrary.

To come within the exclusion the vehicle must be “not owned by or furnished for the regular use of either the named insured or any relative . . .” (Emphasis added) It would be difficult to express in more unambiguous language what was clearly the intended meaning. The same argument as to ambiguity, directed to an identical policy provision was made in Cox v. Santoro, 98 N. J. Super. 360 (App. Div. 1967). The court rejected the contention and said,

The policy definition of a non-owned automobile is clear and unambiguous. Carr v. Home Indemnity Company, 404 Pa. 27, 170 A. 2d 588, 83 A. L. R. 2d 922 (Sup. Ct. 1961) ; cf. Fidelity and Casualty Company of New York v. Jackson, 297 F. 2d 230, 232 (4 Cir. 1961) ; Hamilton v. Maryland Casualty Co., 368 F. 2d 768 (5 Cir. 1966). To *611hold otherwise would be to rewrite the policy. Although the issue here presented was not raised there, a similar definition was held not to afford coverage in Rider v. Lynch, 42 N. J. 465, 474-475 (1964). Cases such as Gerhardt v. Continental Ins. Cos., 48 N. J. 291 (1966), and Kievit v. Loyal Protect. Life Insurance Co., 34 N. J. 475 (1961), on which plaintiffs principally rely, are clearly distinguishable. The facts here do not involve technical encumbrances, hidden pitfalls or concealed exclusions. The extent of the company’s liability for the operation of non-owned automobiles is plainly set forth as a separate subsection of the policy under the heading “Persons Insured.” The definition of a non-owned automobile is included in the definitions which immediately follow it. [98 N. J. Super. at 364-365, 237 A. 2d at 494]

Typical of many other like statements is the following:

We conclude it [non-owned automobile clause] is not ambiguous and excludes from coverage the insured’s use of any other automobile (1) owned by the insured or a member of the same household, or (2) furnished for regular use to the insured or a member of the same household. [Giokaris v. Kincaid, 331 S. W. 2d 633, 638 (Mo. 1960)]

Consonant with what I believe to be the clear import of the language of the policy, the great weight of authority throughout the country has held that the exclusionary conditions apply with respect to all persons falling within the classes specified in the policy, whether or not operating the non-owned vehicle at the time of an accident. These classes of persons are (1) the named insured1 and (2) a relative of the named insured living in the same household. Thus ai valid reason for exclusion exists if at the time of the accident any person falling within either of these classes either-owned the car involved in the accident or had been furnished the vehicle for his regular use.

The following cases are among the many decisions holding that where the policy in question contains language identical or substantially similar to the clause we are considering here, *612there will be no coverage if a reason for exclusion is present with respect to an “insured” or “relative” other than the driver of the car at the time of the accident. These authorities reject the view that we look only to the driver of the vehicle to determine whether a reason for exclusion exists. Carr v. Home Indemnity Co., 404 Pa. 27, 170 A. 2d 588 (1961); Aler v. Travelers Indemnity Co., 92 F. Supp. 620 (Dist. Ct. Md. 1950); Hamilton v. Maryland Casually Company, 368 F. 2d 768 (5th Cir. 1966); Alabama Farm Bureau Mut. Cas. Ins. Co. v. Preston, 287 Ala. 493, 253 So. 2d 4 (Ala. 1971); Ransom v. Fidelity & Casualty Co. of N. Y., 250 N. C. 60, 108 S. E. 2d 22 (1959); Lontkowski v. Ignarski, 6 Wis. 2d 561, 95 N. W. 2d 230 (1959) ; Home Indemnity Co. v. Alday, 213 So. 2d 13 (Dist. Ct. App. Fla. 1968); Farber v Great American Insurance Co., 406 F. 2d 1228 (7th Cir. 1969).

The only cases I have found holding to the contrary are Travelers Indemnity Co. v. Pray, 204 F. 2d 821 (6th Cir. 1953) and Juzefski v. Western Casualty and Surety Co., 173 Cal. App. 2d 118, 342 P. 2d 928 (Cal. App. 1959). The latter decision has recently been criticized as containing “strained reasoning.” Heard v. Farmers Insurance Exchange Co., 17 Ariz. App. 193, 496 P. 2d 619, 622 (1972). Each of these cases is a two-to-one decision with a strong dissent. Furthermore they appear to have been uniformly rejected.2

*613The reasonable and wholly legitimate purpose for including in an automobile liability policy this exclusion with respect to certain non-owned automobiles is well stated in American Casualty Co. v. Lattanzio, 78 N. J. Super. 404 (App. Div. 1967),

An exclusionary clause or definition, such as the one here involved, manifests an intention on the part of the insurer to protect itself from a situation whereby an insured could purchase a policy covering one automobile and be covered without qualification as to all automobiles available for his use. Annotation, 173 A. L. R. 901, 904 (1948) ; see also Rodenkirk for Use of Deitenbach v. State Farm Mut. Automobile Ins Co., supra, [325 Ill. App 421, 60 N. E. 2d 269 (Ct. App. 1945)] and Vern v. Merchants Mut. Casualty Co., 21 Misc. 2d 51, 118 N. Y. S. 2d 672 (Sup. Ct. 1952). Thus, this type of policy extends coverage to the casual or occasional driving of automobiles other than those specifically covered without payment of an extra premium, while excluding the use of automobiles which are furnished for the regular use of the insured. Cf. Travelers Indemnity Company v. Hyde. 232 Ark. 1020, 342 S. W. 2d 295 (Sup. Ct. 1961). The clause in question represents an attempt on the part of the insurer to strike a balance between the desire of the insured to be covered, even though not always using the owned automobile, and its own right to receive payment of premiums based upon the risk presented by the number of automobiles operated. Cf. Lumbermen’s Mut. Casualty Co. v. Pulsifer, 41 F. Supp. 249, 251 (D. Me. 1941). It has been held that the general effect of such a clause is to give coverage to the insured while engaged in only infrequent or merely casual use of the non-owned automobile, but not in respect to the operation of another automobile which he frequently uses or has the opportunity of using. Aler v. Travelers Indemnity Co., 92 F. Supp. 620 (D. Md. 1950). [78 N. J. Super. at 410-411]

See also Keeton, Insurance Law (1971), § 4.9(b), pp. 239— 40) 7 Appleman, Insurance Law and Practice (1962), § 4455, pp. 495-97) Long, The Law of Liability Insurance (1972), § 4.07, p. 4081.1.

It must be apparent that where an automobile is owned by or furnished for the regular use of any member of a family, the chances are very great, that it will also be used by other members of the family, thus substantially increasing the risk of accident and injury. Consequently, if general family coverage is intended for such automobiles, they should jus*614tifiably be listed on the family policy so that a separate premium can be charged. The purpose of the exclusion in the “non-owned automobile” clause is to prevent an insured from obtaining coverage for some or all ears regularly used or owned by the insured by merely listing only one automobile on the family policy and paying a premium calculated upon the risk created by the ownership, maintenance and use of only that one automobile. See, e. g., Carr v. Home Indemnity Co., supra, 170 A. 2d at 589.

Furthermore, the clear intent of this clause is to exclude other cars that will probably be used more than casually. As was stated in Aler v. Travelers Indemnity Co., supra:

The general purpose and effect of this provision of the policy is to give coverage to the insured while engaged in the only infrequent or merely casual use of an automobile other than the one described in the policy, but not to cover him against personal liability with respect lo his use of another automobile which he frequently uses or has the opportunity to do so. More specifically the evident intent of the limitation with respect to the automobiles is to prevent a situation in which members of one family or household may have two or more automobiles actually or potentially used interchangeably but with only one particular automobile insured.
[92 F. Supp. at C23; Emphasis supplied]

In most of the pertinent decisions the reason for exclusion pursuant to the non-owned vehicle clause is that the automobile is owned by either the named insured or a relative. There are, however, several cases where the factual situation is the same as that we find here, i. e., the automobile has been furnished for the regular use of one other than the driver, and the person to whom it has been so furnished is either the named insured or a relative residing in the same household.

In Farber v. Great American Insurance Co., supra, the facts disclosed that at the time of the accident Henry Farber was driving a Chevrolet Corvair which was owned by his wife’s uncle, Sam Levy. Levy had furnished the car to his niece, Mrs. Earber, for her general use. Earber owned a Dodge automobile, not involved in the accident, which was *615covered by a policy of insurance containing non-owned automobile coverage stated in identical language to that now before us. The court held that this policy afforded no coverage to Earber while driving a car furnished for the regular use of the wife.

Similar facts were before the court in Alabama Farm Bureau Mut. Cas. Ins. Co. v. Preston, supra. Arch Preston was driving a Dodge car at the time of the accident. The car was owned by his son-in-law who was in the Marine Corps. It had been left with Preston’s daughter for her regular use while her husband was away from home. The daughter was living with her parents. Preston owned two cars of his own, both of which were covered by policies affording non-owned automobile coverage with exclusions substantially like the one we are considering. The court concluded that these facts brought the case within the exclusion of each policy and that hence there was no coverage.

Finally, our own decision in Rider v. Lynch, 42 N. J. 465 (1964) is to the same effect. Although the main thrust of the opinion is directed to a different issue, yet the facts presented are substantially the same as we have here and the opinion includes a holding of no liability on the part of the carrier on the ground that the identical exclusionary provision applied. In that case a serviceman, Gerald Day, left his automobile with his fiancee, Tomiko Lynch, for her regular use while he was away in the service. Tomiko, a Japanese girl who did not speak or understand English well, sought appropriate coverage to protect against liability arising from the use of the car. The insurance agent, however, did not issue a policy which afforded the protection she sought. Instead he issued a standard family automobile policy in which the named insured was Tomiko Lynch. Under this policy the insurer agreed to pay on behalf of the insured all sums the insured would become legally obligated to pay as damages because of bodily injury sustained by any person “arising out of the ownership, maintenance or use of the owned automobile or *616any non-owned automobile.” The term “non-owned automobile” was defined as “an automobile * * * not owned or furnished for the regular use of either the named insured or any relative.” Tomiko’s father was involved in an accident while driving the car. This Court specifically held that the automobile was furnished for the regular use of Tomiko Lynch and that therefore it did not qualify for coverage under the “non-owned automobile” clause, and that therefore Tomiko’s father, Yernon Lynch, the driver of the car, did not come within the protection of the policy at the time of the accident. 42 N. J. at 474. The judgment in favor of the insurance company was thus affirmed because the automobile was furnished for the regular use of Tomiko Lynch, and accordingly, although she was not driving at the time of the accident, the exclusion controlled.

It having been clearly established to my satisfaction that the DeSoto was furnished for the regular use of the father, Generoso DiOrio, I would not reach the question as to whether it was also furnished for the regular use of the son, Gen-naro DiOrio.

I would affirm the judgment of the Appellate Division for the reasons set forth above.

Proctor, J., joins in this dissent.

For reversal — Chief Justice Weintraub and Justices Jacobs, Hall and Sullivan — 4.

For affirmance — Justices Proctor and Mountain — 2.

“Named insured” may properly be spoken of as a class since the term includes, by definition, not only the owner of the car but also his or her spouse.

Cases which have specifically criticized and refused to follow one or both of these decisions include Leteff v. Maryland Casualty Co., 91 So. 2d 123, 138-140 (La. App. 1957) ; Hamilton v. Maryland Casualty Co., supra, 368 F. 2d at 772-773; Simon v. Milwaukee Automobile Mutual Insurance Co., 262 Minn. 378, 115 N. W. 2d 40, 45 (1962) ; Ransom v. Fidelity & Casualty Co. of N. Y., supra, 108 S. E. 2d at 25-26 ; Giokaris v. Kincaid, supra, 331 S. W. 2d at 636-638. Cf. Annot., “Exclusion from ‘drive other cars’ provision of automobile liability insurance policy of other automobile owned, hired, or regularly used by insured or member of his household,” 86 A. L. R. 2d 937, 945 (1962).