(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 VERRIEST V. INA UNDERWRITERS INSURANCE COMPANY, ET AL. (A-121/122-94)
Argued May 1, 1995 -- Decided August 23, 1995
PER CURIAM
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.
SUPREME COURT OF NEW JERSEY
A-121/
122 September Term 1994
ROBERT VERRIEST,
Plaintiff-Appellant,
v.
INA UNDERWRITERS INSURANCE
COMPANY,
Defendant-Respondent,
and
JAMES CURLEY PIERCE and
THROCKMORTON TEXACO CORP.,
Defendants.
----------------------------
MARY C. PRICE, General
Administratrix, Administratrix
ad Prosequendum of the Estate
of SHERRY ANN PRICE, deceased,
and individually, and JOHN A.
PRICE,
Plaintiffs-Appellants,
v.
INA UNDERWRITERS INSURANCE
COMPANY,
Defendant-Respondent,
and
JAMES CURLEY PIERCE,
THROCKMORTON TEXACO CORP.,
THROCKMORTON'S (THROCKMORTON)
TEXACO, INC., and JAMES H.
PIERCE,
Defendants.
Argued May 1, 1995 -- Decided August 23, 1995
On certification to the Superior Court,
Appellate Division.
Patricia J. Cooney argued the cause for
appellant Robert Verriest (O'Connor &
Rathican, attorneys; Gerald B. O'Connor, of
counsel and on the joint brief).
Barbara L. Birdsall argued the cause for
appellants Mary C. Price, etc., et al. (Stout
& O'Hagan, attorneys; William S. O'Hagan,
Jr., of counsel).
Robert Gregory Leonard argued the cause for
respondent (Leonard & Butler, attorneys; John
R. Scott, on the letter brief).
PER CURIAM
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, 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 Law Division initially granted INA's motion for
summary judgment, reasoning that plaintiffs' claims were barred
by the entire-controversy doctrine. In an unreported opinion,
the Appellate Division reversed and remanded, finding "nothing in
R. 4:27-1B [predecessor to Rule 4:30A] [that] requires a personal
injury claimant to join or combine a coverage suit with a common-law negligence case."
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." (Emphases added). The
policy defined a covered auto as "ANY AUTO," and defined an
insured as either the named insured (Throckmorton or James H.) or
"[a]nyone else . . . using with your [the named insured's]
permission a covered auto you [the named insured] own, hire or
borrow."
The Law Division 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. In an
unreported opinion, the Appellate Division reversed, noting that
the trial court had improperly failed to focus on the question of
ownership. Examining the policy, the Appellate Division reasoned
that "[b]ecause Curley was not a named insured he was not an
'insured' entitled to coverage unless he was using a covered auto
owned, hired or borrowed by the named insured with the named
insured's 'permission.'"
The court initially found that James H. had not been the
"true" owner of the Cadillac, essentially because James H. had
bought the car for Curley and "[t]here [was] no indication that
he exerted any control over the vehicle after giving Janulewicz
the money." Although the court noted that "under the terms of
the policy * * * Curley's permissive use of the vehicle is
relevant only if James H. was the owner of the car," it
nevertheless reached the issue of permissive use. Somewhat
inconsistently with its observation that James H. had not exerted
any control over the vehicle, the Appellate Division concluded
that there was "no proof in this case that James H. gave actual
permission to Curley to operate the vehicle on a public highway."
Finding that such permission could not be implied based on the
circumstances, the court held that the policy did not afford
coverage.
Under the terms of the policy, Curley is covered for liability arising out of the accident if he "us[ed] with [James H.'s] permission a covered auto [James H.] own[ed]." We first address whether James H. owned the Cadillac.
INA initially argues that because Janulewicz left the name of the buyer blank on the Certificate of Ownership, he did not effectively transfer title to the Cadillac and therefore plaintiffs must turn to Janulewicz and his insurance carrier for coverage. INA points to Eggerding v. Bicknell, 20 N.J. 106 (1955), in which an automobile dealership provided a defendant, Albert Bicknell, with a Certificate of Ownership for a used Chrysler after receiving the full purchase price, but failed to insert the date of the transaction or the name of the buyer as required by the Motor Vehicle Certificate of Ownership Law, (Certificate of Ownership Law), N.J.S.A. 39:10-1 to -37, and the regulations promulgated by the Director of the Division of Motor Vehicles thereunder. Before the paperwork had been completed, Bicknell struck and injured the plaintiff while operating the Chrysler. After the plaintiff had been awarded a $15,000 judgment against Bicknell, Bicknell brought an action seeking
coverage against the automobile-dealer's insurance carrier. The
Court found coverage, reasoning that the dealer's failure to
follow the statutory requirements for transferring title, which
require strict compliance, prevented the transfer of ownership of
the car. Eggerding, supra, 20 N.J. at 112; see also Velkers v.
Glens Falls Ins. Co.,
93 N.J. Super. 501 (Ch. Div.) (holding that
person who traded in car to dealer, but provided incomplete
Certificate of Ownership, remained owner of vehicle and therefore
his insurer provided coverage for liability arising from accident
involving his son, who had been driving trade-in vehicle after
initial exchange because newly purchased vehicle required
repairs), aff'd o.b.,
98 N.J. Super. 166 (App. Div. 1967),
certif. denied,
51 N.J. 388 (1968); Martin v. Nager,
192 N.J.
Super. 189, 199 (Ch. Div. 1983) (noting that common thread in
Eggerding, supra, and Velkers, supra, "is that the courts were
looking to the title owner to find insurance coverage").
On the record before us, it would appear that Janulewicz
remained the record owner of the Cadillac because "the incomplete
assignment did not legally serve to transfer title from
[Janulewicz] to [James H.]." Eggerding, supra, 20 N.J. at 112
(citing N.J.S.A. 39:10-2, -5, -9). Despite that conclusion, INA
is not necessarily absolved from liability because, for
insurance-coverage purposes, there may be more than one "owner"
of a vehicle. Under our cases, "the true owner of an automobile
may be one other than the holder of legal title to that vehicle."
American Hardware Mut. Ins. Co. v. Muller,
98 N.J. Super. 119,
129 (Ch. Div. 1967), aff'd o.b.,
103 N.J. Super. 9 (App. Div.),
certif. denied,
53 N.J. 85 (1968).
In Muller, Ernest Muller, an automobile dealer, purchased a
Ford Cortina but could not obtain financing. He therefore
transferred title to the vehicle to his son, David Muller, who
was able to finance the car. Ernest, however, made the loan
payments and maintained control of the vehicle. The vehicle was
used at Ernest's business "primarily for demonstration, display
and advertisement purposes," id. at 122-23, although occasionally
Ernest, and with Ernest's permission, David and David's wife,
Donna Lee, used the car for personal reasons. Donna Lee was
involved in an accident while driving the vehicle and sought
coverage under Ernest's garage liability policy.
The court framed the issue as
whether transfer of the legal title of the
station wagon by Ernest Muller to his son
David for the sole purpose of financing that
automobile, is sufficient under the
applicable law to preclude Ernest from being
the true owner of the automobile and thus
bringing it under the insurance policy issued
to him by [the] insurance company.
The court reasoned that the Certificate of Ownership Law did not "change[] the common law concept and meaning of the term 'owner.'" Id. at 128; see also Dobrolowski v. R.C. Chevrolet, Inc., 227 N.J. Super. 412, 415 (Law Div. 1988) ("Although the motor vehicle laws state that the owner of a vehicle is the person who holds the legal title of a vehicle, case law holds that the true owner of an automobile may be one other than the
holder of legal title." (citation omitted)). Because "the
vehicle was purchased, paid for and maintained by Ernest Muller,"
Muller, 98 N.J. Super. at 127, "Ernest Muller was the true owner
of the station wagon," id. at 128, and therefore the court found
that Ernest's policy provided coverage for liability arising from
Donna Lee's accident, "notwithstanding the fact that legal title
was in David Muller." Ibid.
Despite the lack of legal title, the true owner is the
person who maintains "possession and control of the automobile."
Bohannon v. Aetna Casualty & Sur. Co.,
212 Cal. Rptr. 848, 850
(Ct. App. 1985); see also Hicks v. W. W. Land,
117 So.2d 11, 12
(Fla. Dist. Ct. App.) (noting that beneficial owner of vehicle is
person who has "control and authority over its use"), cert.
denied,
120 So.2d 617 (Fla. 1960); Pagel v. Eckman,
428 N.W.2d 136, 139 (Minn. Ct. App. 1988) (finding beneficial ownership
where title owner "had relinquished all control over the vehicle
prior to the accident"); 73 C.J.S. Property § 25, at 204, 207
(1983) ("[A]n 'owner' is one who has dominion over property
[that] is the subject of ownership[,]" including "the person in
control of a vehicle, either mediately or immediately, and not
the literal and technical owner."). More specifically, the
Supreme Court of Washington, addressing an analogous issue -
whether the true owner of a car was an unemancipated minor or his
parents -- noted the following factors to consider:
(a) Who paid for the car, (b) who had
the right to control the use of the car, (c)
the intent of the parties who bought and sold
the car, (d) the intent of the parents and
the child relative to ownership, (e) to whom
did the seller make delivery of the car, (f)
who exercised property rights in the car from
the date of its purchase to the date of the
accident, and (g) any other circumstantial
evidence [that] may tend to establish the
fact of ownership.
[Coffman v. McFadden,
416 P.2d 99, 102
(1966).]
In finding that James H. was not the true owner, the
Appellate Division noted that Janulewicz had understood that
James H. was purchasing the vehicle "for a relative," that James
H. had never considered himself to be the owner of the vehicle,
that Curley had understood that James H. had to deal with
Janulewicz to consummate the sale, that James H., after
purchasing the vehicle from Janulewicz, had turned over the keys
and Certificate of Ownership to Curley, and that James H. had not
exerted control over the vehicle after that point. In effect,
INA contends that the most accurate characterization of the
transaction is that of an immediate transfer of ownership from
James H. to Curley, subject only to Curley's obligation to repay
James H.
A contrasting view of the transaction initially focuses on
the fact that while Janulewicz understood that James H. was
purchasing the car "for a relative," when asked whether he sold
the car to that relative, Janulewicz testified, "I sold it to
[James H.] and then he took it from there." Thus, despite
Janulewicz's understanding of what James H. intended to do with
the Cadillac, Janulewicz dealt only with James H. and sold the
car to James H.
We note that the Cadillac remained on the Throckmorton lot
for two-and-one-half weeks prior to the accident, and Curley and
James H. did not anticipate insuring and registering the Cadillac
in Curley's name until the day after the accident. Explaining
the reason for that delay, James H. testified that "Curley didn't
have money to pay me for the car. Plus the fact he didn't have
money to get the car registered." James H.'s testimony implies
that he retained the authority to impose on Curley the condition
that he could not take title and insure the vehicle until he had
paid James H. The record demonstrates that although James H.
purchased the vehicle for Curley, James H. intended to retain
effective control over the vehicle until he was paid.
The testimony on the issue of ownership was inconsistent at
best. For example, during depositions James H. stated that the
car was Curley's, and at trial James H. testified in response to
a question asking whether he had purchased the car: "We got the
car. . . . We paid the guy for the car. And Curley was
suppose[d] to pay me back." Furthermore, Curley testified that
at the time of the accident he had been "in the process of
buying" the car, but that he had "never signed anything." When
Curley was asked whether he had "ever pa[id] any money on account
of the car," he responded that he had "never put any money on
it."
The testimony supports the conclusion that James H. and
Curley were indifferent to the technical questions about title
and ownership. But their clear understanding was that James H.
would maintain ultimate control and authority over the vehicle
until Curley paid him back. Presumably, by the day after the
accident, Curley would have secured the cash necessary to pay
James H. and register the car. Neither of those events, however,
came to pass. Accordingly, although James H. unquestionably had
purchased the car with the intention of turning it over to
Curley, we conclude that at the time of the accident James H. was
the owner of the Cadillac.
We next address whether, within the context of the INA policy provision, Curley was using the Cadillac with James H.'s permission at the time of the accident. In Mattis v. Nationwide Mutual Insurance Co., 33 N.J. 488, 496-97 (1960), this Court adopted the so-called "initial permission" rule, which 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 a standard omnibus clause in an automobile liability insurance policy.
The Court declined to adopt the "minor deviation" rule, which provides "that the permittee is covered under the omnibus clause so long as his deviation from the permissive use is minor in nature" or the "conversion" rule, which states "that any deviation from the time, place or purpose specified by the person granting permission is sufficient to take the permittee outside the coverage of the omnibus clause." Id. at 493. The Court
reasoned that the initial-permission rule, which represented the
broadest interpretation of the clause at issue, "best effectuates
the legislative policy of providing certain and maximum
coverage." Id. at 496. The narrower rules "render coverage
uncertain in many cases, foster litigation as to the existence or
extent of any alleged deviations, and ultimately inhibit
achievement of the legislative goal." Ibid.
"Under the initial permission rule only two questions must
be answered to determine coverage. Was there permission to use
the car initially? Did the subsequent use, while possession was
retained, constitute 'theft or the like?'" Small v. Schuncke,
42 N.J. 407, 413 (1964).
Addressing the first question, we note that "the scope of
the term 'use' is broad," covering a wide variety of activity
other than operating a vehicle on a public roadway. Motor Club
Fire & Casualty Co. v. New Jersey Mfrs. Ins. Co.,
73 N.J. 425,
436, cert. denied,
434 U.S. 923,
98 S. Ct. 402,
54 L. Ed.2d 281
(1977); see Indemnity Ins. Co. of N. Am. v. Metropolitan Casualty
Ins. Co.,
33 N.J. 507, 513 (1960) ("The use of an automobile
denotes its employment for some purpose of the user; the word
"operation" denotes the manipulation of the car's controls in
order to propel it as a vehicle. Use is thus broader than
operation.").
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. See Selected Risks Ins. Co. v. Nationwide Mut. Ins.
Co.,
133 N.J. Super. 205, 216 (App. Div. 1975) (finding that
examination of insured's vehicle by garage owner was permitted
use); Unsatisfied Claim & Judgment Fund Bd. v. Clifton,
117 N.J.
Super. 5, 9 (App. Div. 1971) (concluding that gas-station
employee's repairing of insured's car was permitted use); Liberty
Mut. Ins. Co. v. O'Rourke,
122 N.J. Super. 68, 75 (Ch. Div. 1973)
(holding that repair activity conducted by two men assisting
driver in stalled vehicle was permitted use under driver's
policy).
The Appellate Division, instead of focusing on whether the
initial use of the Cadillac was permissive, addressed whether
James H. had granted "permission to Curley to operate the vehicle
on a public highway." However, because we have determined that
James H. gave Curley permission to repair the vehicle, that line
of inquiry is not determinative. The initial-permission rule "is
not concerned with the scope of use for which permission is
granted." Small, supra, 42 N.J. at 413-14. "[A]s long as the
initial use of the vehicle is with the consent, express or
implied, of the insured, any subsequent changes in the character
or scope of the use, such as from a passenger to a driver, do not
require the additional specific consent of the insured." Motor
Club, supra, 73 N.J. at 437; see Mattis, supra,
33 N.J. 488
(holding that initial permission was not vitiated where person
with permission to use neighbor's automobile to visit her ill
mother deviated from that purpose by visiting several taverns);
Indemnity Ins. Co., supra,
33 N.J. 507 (finding coverage where
employee of wholesale-beer distributor, who had been instructed
by employer that only he was to operate employer's car, allowed
customer to drive car when returning from sales-promotion-program
visit to brewery because car was being used for purpose permitted
by employer); Small, supra,
42 N.J. 407 (holding that initial
permission was not vitiated where owner permitted nephew to use
his automobile to assist owner's wife, and nephew deviated from
that purpose by picking up hitchhikers, traveling overnight to
New York with automobile, and allowing friend to drive); Odolecki
v. Hartford Accident & Indem. Co.,
55 N.J. 542 (1970) (holding
that initial permission was not vitiated where owner permitted
only her son to use automobile, and son deviated from that
purpose by allowing friend to use vehicle to pick up his girl
friend); Motor Club, supra,
73 N.J. 425 (holding that initial
permission was not vitiated where mentally disturbed passenger
forced driver/owner from vehicle and proceeded to operate
vehicle). 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 "theft or the like," remained a
coverable permissive use.
We note that the initial-permission rule "contemplates a
situation in which the subsequent use of a car may be
inconsistent with and even frustrate the intentions and plans of
the person granting permission." Small, supra, 42 N.J. at 414-15. The breadth of the rule is designed to assure "that all
persons wrongfully injured have financially responsible persons
to look to for damages" because "a liability insurance contract
is for the benefit of the public as well as for the benefit of
the named or additional insured." Odolecki, supra, 55 N.J. at
549.
The only question remaining is whether James H.'s use of the
vehicle constituted "theft or the like." The Court has reasoned
that "the 'theft' component of the exception connotes nothing
less than the willful taking of another's car with the intent
permanently to deprive the owner of its possession and use."
Motor Club, supra, 73 N.J. at 438. With respect to the "or the
like" language, faced with the bizarre factual context in Motor
Club involving a mentally disturbed passenger forcing the driver
from a vehicle and taking over operation of the automobile, the
Court stated that "the author of Mattis and Small contemplated
conduct much more like traditional theft than the conduct here
involved." Ibid. But see id. at 442-43 (Clifford, J.,
dissenting) (interpreting "or the like" to constitute "an
unlawful taking" less than traditional theft and concluding that
unauthorized seizure of vehicle satisfied that standard).
Here, the record clearly demonstrates that Curley did not
intend to steal the car. Curley testified that he had driven the
car because he "was in the process of buying it" and "wanted to
try it and see how it operates and everything." Moreover,
although Curley was not authorized by James H. to use the dealer
plates or to drive the car, his actions do not approach the
unlawful seizure that occurred in Motor Club. James H. gave
Curley the keys to the vehicle and permitted Curley to perform
repairs while the vehicle remained on the Throckmorton lot.
Curley was to have taken title to the vehicle the day after the
accident occurred. Although Curley's actions deviated from the
initial permission granted by James H., they were not so
inconsistent with the understanding of the parties to rise to the
level of "theft or the like."
The judgment of the Appellate Division is reversed.
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. SUPREME COURT OF NEW JERSEY
A-121/ 22 September Term 1994
ROBERT VERRIEST,
Plaintiff-Appellant,
v.
INA UNDERWRITERS INSURANCE
COMPANY,
Defendant-Respondent,
and
JAMES CURLEY PIERCE and
THROCKMORTON TEXACO CORP.,
Defendants
_____________________________
MARY C. PRICE, General
Administratrix, Administratrix
ad Prosequendum of the Estate
of SHERRY ANN PRICE, deceased,
and individually, and JOHN A.
PRICE,
Plaintiffs-Appellants,
v.
INA UNDERWRITERS INSURANCE
COMPANY,
Defendant-Respondent,
and
JAMES CURLEY PIERCE,
THROCKMORTON TEXACO CORP.,
THROCKMORTON'S (THROCKMORTON)
TEXACO, INC., and JAMES H.
PIERCE,
Defendants.
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.
Ordinarily, the party liable for injuries caused by the permissive use of a motor vehicle is the record holder of title. In limited circumstances, 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 (Ch. Div. 1967), aff'd o.b., 103 N.J. Super. 9 (App. Div.), certif. denied, 53 N.J. 85 (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
Janulewicz, 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 ___ (slip op. at 5-6). In
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 (slip op. at 12-13). 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 ___ (slip op. at 12).
I view the facts differently. By transferring to Curley the certificate 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 (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.
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 (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, cert. denied, 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 (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.
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 (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 (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 (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 (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,
73 N.J. 425 (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 non-operational purpose into permission for a subsequent
use involving operation of the vehicle.
Twenty-five years ago, in State Farm Mutual Insurance Co. v. Travelers Insurance Co., 57 N.J. 174 (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 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. 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 ssociated
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; Matits, supra, 33
N.J. at 495; Motor Club, supra, 73 N.J. at 433. To disagree with
the majority, I need not go so far as so respected an authority
as Appleman, who characterizes the New 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.
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 (Clifford, J., dissenting) (construing "or the
like" to mean something less than theft).
I would affirm the judgment of the Appellate Division.
Justice Garibaldi joins in this dissent.
NO. A-121/122 SEPTEMBER TERM 1994
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
ROBERT VERRIEST,
Plaintiff-Appellant,
v.
INA UNDERWRITERS INSURANCE COMPANY,
Defendant-Respondent,
and
JAMES CURLEY PIERCE and
THROCKMORTON TEXACO CORP.,
Defendants.
--------------------------------------
MARY C. PRICE, etc., et al.,
Plaintiffs-Appellants,
v.
INA UNDERWRITERS INSURANCE
COMPANY,
Defendant-Respondent,
and
JAMES CURLEY PIERCE, et al.,
Defendants.
DECIDED August 23, 1995
Chief Justice Wilentz PRESIDING
OPINION BY Per Curiam
CONCURRING OPINION BY
DISSENTING OPINION BY