DiOrio v. New Jersey Manufacturers Insurance

311 A.2d 378, 63 N.J. 597, 1973 N.J. LEXIS 223

Opinions

The opinion of the Court was delivered by

Weietteatjb, C. J.

This is a declaratory judgment action to determine whether a “non-owned automobile” was covered by the “Family Automobile Policy” issued by defendant carrier. The policy expressly covered the operation of a “non-owned automobile” by the named insured or by a “relative” of his, defined as a resident of the same household. The operator was Gennaro DiOrio, the 17-year old son of the named insured, Generoso DiOrio. The son was a resident of the father’s household. The trial judge, sitting without a jury, found for the carrier, and the Appellate Division affirmed. We granted certification. 63 N. J. 262 (1973).

The appeals were prosecuted by the injured claimant. Neither the named insured nor his son participated.

“Part I” of the policy, dealing with “liability,” provides protection for the following persons:

(b) with respect to a non-owned automobile,

(1) the named insured,

(2) any relative, but only with respect to a private passenger automobile or trailer, provided his actual operation or (if he is not operating) the other actual use thereof is with the permission, or reasonably believed to be with the permission, of the owner and is within the scope of such permission.

There is no dispute that Gennaro’s operation was with the “permission” of the owner of the non-owned automobile as that word has been construed. The policy defines “non-owned automobile” to mean:

an automobile or trailer not owned by or furnished jor the regular use of either the named insured or any relative, other than a temporary substitute automobile. (Emphasis is ours.)

We have italicized the critical phrase. The carrier contended the automobile in question was “furnished for the regular use” of the son and hence there is no coverage. The trial court and the Appellate Division agreed. No member of our Court votes to uphold that finding. Two members of our Court in their dissenting opinion are “inclined” to do so but would affirm the judgment on the different ground that the automobile was “furnished for the regular use of” the father and that therefore, as they read the policy, coverage is denied the son even though the automobile was not “furnished for the regular use” of the son.¹ Neither the trial court nor the Appellate Division made any finding with respect to this alternative ground. Por the reasons which will appear, we disapprove the finding that the vehicle was “furnished for the regular use” of the son, and we remand the matter to the trial court with respect to the alternative ground we have just described.

The policy covered a Chrysler, which was not involved in the accident. The ear the son was driving was a DeSoto owned by a partnership which ran a gasoline service station. The father was one of two equal partners. The DeSoto was covered by a liability policy obtained by the partnership from another carrier, and the complaint alleged that carrier has offered the full amount of its policy, $50,000. The DeSoto was used by both partners in the regular business of the partnership. The father also used the DeSoto to travel daily between his home and the service station.

The record does not reveal the extent, if any, to which the father used the DeSoto for non-business purposes. His deposition touched the subject, on examination by the carrier’s counsel, in this hazy, conclusional way:

Q. Now, with regard to the DeSoto, you used it, as you indicated, about every day. You brought it home with you every night? A. Correct.

Q. Did you have unrestricted use of that DeSoto? I mean, you would do whatever you wished? A. Yes, surely.

Q. And you used it day to day as you have indicated? A. Yes.

Thus “unrestricted use” were the words of counsel used in the context of the trips to and from work. We cannot be sure the father’s response should be read as broadly as the carrier would read it. There was no testimony that the father used the DeSoto for personal ends (the trip to and from the service station was business oriented in our view) and no testimony as to any agreement between the partners in that regard.

With respect to the son’s use of the DeSoto, we accept the trial court’s summary of the underlying facts although not the conclusions it drew from them:

In his deposition, Generoso DiOrio testified, in substance, as follows: He is the father of Gennaro, who resided with him. At the time of the accident in question, he was the registered owner of a 1967 Chrysler which was generally for his wife’s use. At the time of its purchase in November, 1966, he also owned a 1956 De Soto which, at that time, was covered by a New Jersey Manufacturers policy. Ownership was transferred to Mike and Joe’s Texaco Service Station, to be used as a service car, and the De Soto was removed from the New Jersey Manufacturers policy. It was thereafter covered by the Reliance Policy.

After the transfer, he continued to use the car daily to drive to and from work. He did not use the Chrysler for that purpose. The De Soto was also used at the station when a customer needed a car while his was being repaired, or to pick up parts. It was also used by DiOrio’s partner.

When his son, Gennaro, obtained a learner’s permit shortly after his 17th birthday on January 27, 1968, the De Soto was used for instructional purposes at least four times a week. On those occasions, the father taught him how to drive or supervised the son’s operation of the automobile. It has been stipulated by counsel that Gennaro DiOrio received his driver's license on April 23, 1968. When Gen-naro desired the car thereafter, he was required to ask his father for permission, and he had to return home by 11:00 p.m.

The gist of Gennaro DiOrio’s deposition, substantially corroborating his father's testimony, is that when he obtained his learner’s permit, he generally used the De Soto to practice, accompanied by his father. I-Ie used the Chrysler for that purpose only once or twice. After passing the test and obtaining his driver’s license, he used the De Soto about four times a week after dinner, first obtaining permission from his father. His mother used the Chrysler, but she did not usually let him take it. The one he used regularly was the De Soto.

I find from the depositions that the De Soto was the automobile generally available to Gennaro DiOrio for his own purposes; that it was the one he drove, accompanied by his father, until he obtained his driver’s license; and that it was the one he used thereafter, although only with his father’s permission.

I.

As we have said, the trial court found there was no coverage because the car was “furnished for the regular use” of the son, and the Appellate Division affirmed that finding. We are satisfied the car was not “furnished for the regular use” of the son.

An insurance policy, though in form a contract, is a product prepared and packaged by the insurer. The buyer scarcely understands the detailed content of what he is buying. When a court construes a policy, it cannot be indifferent to that reality. We think it fair to read the policy with the enthusiasm of the insurer’s production department.

A liability policy may be confined to a specific automobile or it may be written for an individual without regard to any specific automobile. This policy is prominently labeled “Family Automobile Policy.” The label of course does not mean the policy covers only a “family automobile.” Rather it imports coverage for members of a family, not limited to the operation of a specified car, i. e., a “family automobile.” Indeed, as stated above, the policy expressly extends coverage to a “non-owned automobile” and does so for both the named insured and every “relative,” meaning “a relative of the named insured who is a resident of the same household.”

Thus the son was within the policy’s ostensible coverage. But “non-owned automobile” is defined to mean:

an automobile or trailer not owned by or furnished for the regular use of either the named insured or any relative. * * *

The question is, how much of the ostensible coverage was taken away by this definition?

In deciding what this insurance package includes, the courts turn to the underwriting concept they believe the Insurer had in mind. It is sometimes said the insurer must have intended only “occasional” use by an insured, so that a use which is more than “occasional” demonstrates the car was “furnished for the regular use.” The premise seems to be that the insurer charged little or nothing for the additional coverage of a “non-owned automobile.” We find no basis for that assumption. We know only that the insurer packaged a “Family Automobile Policy” which specifically offers, not only coverage with respect to a designated automobile, but also coverage for liability with respect to non-designated automobiles. The record is silent with respect to the underwriting experience the insurer took into account in fixing the premium for a policy offering the additional coverage. We should not assume the additional coverage was thrown in for nothing.

In defining a “non-owned automobile” the insurer could easily have limited the coverage to such an automobile “if it is used only occasionally” or “if it is used only on irregular occasions.” Coverage thus expressed would not be as attractive as coverage spelled out in the words the insurer chose, “not owned by or furnished for the regular use of.” The word “furnished” connotes much more than mere permission to use (a requirement the policy requires independently). It connotes some general right to use, something more than use with permission on occasions, whether recurring or isolated. The word “owned” lends color to that reading of the phrase “furnished for the regular use of.” One would expect some plenary right to use, a right so constant or continuous that the named insured would assume his policy of insurance could not fairly be understood to cover it. In terms of an underwriting concept, the named insured would readily understand that the insurer did not intend to cover him or Ms relatives with respect to an automobile which a reasonable man would know ought to be listed in the policy for a further premium allocated to it. But when the automobile is not owned by the insured and is not in fact used by him to the degree we have suggested, a denial of coverage would depart from that underwriting concept.

Hence it is not surprising that Travelers Indemnity Co. v. Hudson, 15 Ariz. App. 371, 488 P. 2d 1008, 1012 (Ct. App. 1971), said:

* * * The phrase “regular use” is undefined in the policy. However, the term connotes continuous use; uninterrupted normal use for all purposes; without limitation as to use; and customary use as opposed to occasional use or special use.

or that Pacific Automobile Ins. Co. v. Lewis, 56 Cal. App. 2d 597, 132 P. 2d 846, 848 (D. Ct. App. 1943), said:

It is unnecessary to hold that the words “regular use” as used in these policies referred to an exclusive- use. But “regular use” reasonably suggests a principal use as distinguished from a casual or incidental use.

or that George B. Wallace Co. v. State Farm Mutual Automobile Insurance Co., 220 Or. 520, 349 P. 2d 789, 792 (Sup. Ct. 1960), said:

We are of the opinion, therefore, that the phrase “furnished for regular use” as used in context does not imply the manner of use, that is, putting the automobile to the same uses to which an insured would use his own automobile, but implies a right to the regular use of the automobile in the sense that there is an expressed or implied understanding with the owner of an automobile that the insured could have the use of the particular automobile * * i! at such times as he desired, if available.

or that State Farm Mutual Insurance Co. v. Smith, 206 Va. 280, 142 S. E. 2d 562, 568 (Sup. Ct. 1965), agreed the phrase contemplates:

ears under his control that he could use at will and might use often.

Other cases reflecting one or another of these definitions of “regular use” are: Lumbermen’s Mutual Casualty Co. v. Pulsifer, 41 F. Supp. 249, 251 (D. Me. 1941); Safeco Insurance Company of America v. Thomas, 244 Cal. App. 2d 204, 52 Cal. Rptr. 910, 912 (D. Ct. App. 1966); Government Employees Insurance Co. v. Bernstein, 263 A. 2d 259 (D. C. Ct. App. 1970); Allstate Insurance Co. v. Government Employees Ins. Co., 263 A. 2d 78, 82 (Me. Sup. Jud. Ct. 1970); Ricci v. U. S. F. & G. Co., R. I., 290 A. 2d 408 (Sup. Ct. 1972).

It is clear to us that the automobile was' not furnished to the son for his regular use. The automobile was owned by the partnership and used in the partnership business. The son’s use was wholly occasional, and depended upon the father’s permission in each instance. There was nothing resembling a general privilege to use the car at the son’s initiative and when he pleased. We therefore disagree with the basis of decision in the trial court and in the Appellate Division.

II.

As already noted, neither the trial court nor the Appellate Division dealt with the alternative position which the dissenting opinion in our Court accepts, (1) that coverage is denied all insureds if the vehicle was furnished for the regular use of any insured even though not furnished for the regular use of the insured who claims coverage, and (2) the automobile was furnished for the regular use of the father and hence the son is not covered.

The policy may be read literally to support the first proposition, for it says

“non-owned automobile” means an automobile or trailer not owned by or furnished for the regular use of either the named insured or any relative * * *. (Emphasis is ours.)

The dissenting opinion finds no ambiguity here. It does note that like provisions were found to be ambiguous in the majority opinions in Travelers Indemnity Co. v. Pray, 204 F. 2d 821 (6 Cir. 1953), and Jusefski v. Western Casualty and Surety Co., 173 Cal. App. 2d 118, 342 P. 2d 928 (D. Ct. App. 1959), but agrees with criticisms of that view.

Literally, the provision seems unambiguous. A sense of ambiguity arises from a sense of surprise when its terms are applied literally, for under a literal reading, it would follow that the named insured himself would never be covered, even on an isolated occasion, while driving a car owned by a relative living with him. Thus a most common familial situation is excluded from the coverage of a “family” insurance policy. That exclusion so undercuts the coverage the buyer of a policy would expect under a non-owned automobile provision as to raise a doubt that the insurer could have so intended. We could readily understand an insured’s dismay if we recur to the underwriting concept mentioned above, that the “regular use” provision is intended to deny coverage in circumstances in which a reasonable man would expect protection only if the non-owned car was specifically listed in his policy. Surely no one would expect every member of a household to buy specific coverage for every automobile owned by every other member of the household. The more natural expectation is that each driver would carry his own policy, which policy would be excess insurance as to his operation of the other car or cars. (The policy before us of course contemplates excess coverage, saying “the insurance with respect to a * * * non-owned automobile shall be excess insurance over any other valid and collectible insurance.”) The named insured, and his relative too, would not expect coverage as to an additional car owned by the named insured and not specifically insured. But ¡here there was no purpose to overreach the insurer; the automobile was owned by a business partnership which carried liability insurance on the car. It would be extraordinary to expect the father to take out a second policy on that car.

Hence when the additional car is not owned by the named insured, it is understandable that a court would seek, if possible, the sensible result that coverage as to each insured be determined on the basis of his own utilization of the car. In this connection it may be noted that Part I of the policy, which contains the insurer’s positive covenants for coverage, says:

The insurance afforded under Part I applies separately to each insured against whom claim is made or suit is brought, but the inclusion herein of more than one insured shall not operate to increase the limits of the company’s liability.

We noted the problem in Butler v. Bonner & Barnewell, Inc., 56 N. J. 567, 577 (1970):

The terminology of the previously quoted Ohio policy provisions relating to non-owned automobile coverage is confusing with respect to the application of the “regular use” exception to Mrs. Buenaga. * * * And does the policy not cover even if the car was furnished only for the “regular use” of the policyholder, but his wife was driving it at the time of the accident? She is the person seeking coverage and should she, as a matter of policy and law and regardless of the terminology and definitions in the contract, be entitled to protection since under this hypothesis the car was furnished, not for her “regular use”, but for that of her husband? These questions we do not find adequately presented in the briefs before us.

The issue is probably one of law to be resolved in the light of a full record.

Turning to the second proposition, that in fact the automobile was furnished for the regular use of the father and that the son is thereby barred, we find the record to be unsatisfactory. One difficulty is that the father, a layman, was asked in conclusional terms whether his use of the car was “unrestricted” and in response he agreed it was. We cannot know whether, if he intended the thrust the carrier would find, the father was stating only an assumption as to his authority. A mere assumption to that effect would not suffice for a finding that the DeSoto was in fact furnished for the father’s regular use. Supporting facts were not elicited. We know the car was used in the partnership business and that in driving to and from work the father was pursuing that business. But we do not know the extent, if any, of his use of the ear for personal ends and hence we cannot weigh whether he had a general right of use within the definitions we quoted above. And in this connection, see the following cases holding that a use beyond the “regular use” for which the car is furnished remains within the policy coverage: Safeco Insurance Co. of America v. Thomas, supra, 244 Cal. App. 2d 204, 52 Cal. Rptr. 910; Schoenknecht v. Prairie State Farmers Ins. Ass’n, 27 Ill. App. 2d 83, 169 N. E. 2d 148 (Ct. App. 1960); Pacific Automobile Ins. Co. v. Lewis, 56 Cal. App. 2d 597, 132 P. 2d 846 (Ct. App. 1943); American Universal Ins. Co. v. Dykhouse, 219 F. Supp. 62 (N. D. Iowa 1963), affirmed 326 F. 2d 694 (8 Cir. 1964); cf. Government Employees Ins. Co. v. Bernstein, supra, 263 A. 2d 259. There of course are cases the other way as one would expect in this area. See, for example, Grantham v. United States Fidelity and Guaranty Co., 245 S. C. 144, 139 S. E. 2d 744 (Sup. Ct. 1964); Iowa Mutual Insurance Co. v. Addy, 132 Colo. 202, 286 P. 2d 622 (Sup. Ct. 1955).

As we have said, the facts were not adequately developed and the trial court made no finding upon this aspect of the case. Indeed the issue was relatively unnoticed in the argument before us. In these circumstances, this aspect of the ease should be remanded for further proceedings.

The judgments of the Appellate Division and of the trial court are reversed. The issue dealt with in Part I of this opinion is adjudged in favor of the insureds and the injured claimant. The issue discussed in Part II is remanded to the trial court for proceedings in accordance with this opinion.

Footnotes

1

We assume the carrier took that stand in the trial court although the record is unclear. The carrier’s answer was unrevealing, and the pretrial order said the defendant denied liability “because it [the automobile] was furnished for the regular use of both Generoso DiOrio and his son, Gennaro DiOrio.” The trial court’s opinion recognized or suggested the issue.