Summary
In Continental Casualty Co. v. Lanzisero, 119 N.J. Eq. 166 (E. A. 1935), the court held that an automobile liability insurer was entitled to rescind a policy obtained by fraudulent concealment of the fact that an accident had occurred before the application for the policy was made.
Summary of this case from Greater N.Y. Mutual Ins. Co. v. AmbrosioOpinion
Decided October 9th, 1935.
1. Defendant obtained an automobile accident insurance policy from complainant by fraudulently concealing from the complainant the fact that the insured auto truck had been involved in an accident a short while before, and sought by this scheme to secure financial protection against loss for which he feared he was liable. Held, the policy ordered canceled.
2. Complainant company cannot be held under P.L. 1931 ch. 169. It had a right to refuse at once to be bound by a policy contract fraudulently obtained, upon learning of the fraud.
3. There was no policy in existence or even contemplated at the time the accident occurred, and hence section 10 of P.L. 1931 ch. 169, does not apply. Although an insurer may assume a risk to commence previous to the date of the policy and will be liable for a loss occurring before the actual policy date, this is only so where there is no fraud or concealment of the loss by the insured.
4. Cancellation of the policy in question will not deprive the injured infant defendant, and her parents, of any right they had against the owner of the truck at the time their cause of action accrued.
On appeal from a decree of the court of chancery, advised by Vice-Chancellor Fielder, who delivered the following opinion:
"At the conclusion of the hearing of this cause I stated I would advise a decree for complainant and, should an appeal be taken, I would file reasons for my decision. Having been advised that notice of appeal has been filed I now state those reasons.
"This is a suit to cancel, on the ground of fraud, complainant's policy of casualty insurance issued to the defendant Lanzisero, insuring him against loss for damages for bodily injury suffered by any person by reason of his ownership or use of a certain auto truck. The policy bears date October 25th, 1933, and the period of insurance therein described is from October 24th, 1933, to October 24th, 1934, commencing and ending at twelve-one A.M.
"About three-thirty P.M. on October 24th, 1933, said auto truck was involved in an accident while being operated by Lanzisero's employe, in which accident it is claimed the infant defendant herein, Helen Anzovino, was seriously injured. Suit for damages resulting from such injuries was commenced by said infant and her parents against Lanzisero and his driver and is pending. Prior to the issuance of said policy Lanzisero had carried no casualty insurance on his auto truck and up to the hour of the accident complainant's policy had not been issued, nor had application for it been made to complainant's agent. The evidence leaves no doubt in my mind that Lanzisero learned of the accident a few hours after it had occurred and thereupon, on October 24th, 1933, hastened to the office of his friend, Kravetz, who conducted a collection agency and did insurance business, and told Kravetz about it and induced Kravetz to call complainant's agent on the telephone and request the issuance of a policy on Lanzisero's truck, which Kravetz did about six P.M. on the day of the accident, making no disclosure of the fact that prior to the telephone call the truck had been in an accident. Complainant's agent at once issued a binder which, according to complainant's usual insurance practice, was made effective from twelve-one A.M. of the binder's date and the following day the policy itself was written and delivered to Kravetz, still without notice to complainant, or its agent, of the accident. Clearly Lanzisero obtained the policy by fraudulently concealing information from complainant that the insured truck had been involved in an accident and he was endeavoring to secure by such fraudulent conduct, financial protection against loss for which he feared he was liable.
"If he alone were concerned with the policy protection, I could have no doubt that the relief of cancellation sought by complainant should be granted, but on behalf of the injured infant and her parents, all of whom are defendants herein, it is argued that notwithstanding Lanzisero's fraud, chapter 169 of the laws of 1931, amending an act entitled `An act concerning financial responsibility for damages caused by the operation of motor vehicles' ( P.L. 1929 p. 195) applies to make the policy enforceable in favor of said defendants. The act, as amended, provides generally that the commissioner of motor vehicles shall require from every person holding a license for the operation of a motor vehicle who shall have been concerned in any motor vehicle accident resulting in injury to person or damage to property to the extent of $100, proof of financial responsibility to satisfy any claim for damages, which proof may be by a certificate of an insurance agent that a policy against public liability has been issued to the operator, and section 2 of the act, as amended, provides that the policy so issued shall not be canceled except after ten days' written notice to the commissioner. Section 10 of the act, as amended ( P.L. 1931 p. 343), provides that such policy shall be subject to the following provisions:
"`(a). The liability of any company under a motor vehicle liability policy shall become absolute whenever loss or damage covered by said policy occurs * * *. No such policy shall be canceled or annulled as respects any loss or damage by any agreement between the carrier and the insured after the said insured has become responsible for such loss or damage and any such cancellation or annullment shall be void. Upon the recovery of a final judgment against any person for any such loss or damage if the judgment-debtor was at the accrual of the cause of action insured against liability therefor under a motor vehicle liability policy, the judgment-creditor shall be entitled to have the insurance money applied to the satisfaction of the judgment * * *.'
"Lanzisero's motor truck was concerned in an accident resulting in damage, prior to the accident here in question but complainant's policy was not obtained pursuant to a demand by the commissioner because of such prior accident. Nevertheless I think that a policy such as complainant's, taken out voluntarily by an owner of a motor vehicle who is liable to be called upon for one, comes within the provisions of the act. Such an owner may anticipate such call and provide himself with a policy which would come within the terms of the act ( Steliga v. Metropolitan Casualty Insurance Co., 113 N.J. Law 101), but the mere fact that such a policy exists, does not make the insurer liable to an injured third person in all events. It cannot be believed that our legislature intended to deprive an insurer of every legal defense which might be interposed against liability on the policy. Lorando v. Gethro (Mass.), 117 N.E. Rep. 185; Stacey v. Fidelity and Casualty Co. ( Ohio), 151 N.E. Rep. 718; Guerin v. Indemnity Insurance Co. (Conn.), 142 Atl. Rep. 268.
"When complainant learned of the fraud practiced on it, it could not be required to continue possible liability under the policy by waiting ten days after giving notice to the commissioner, before cancelling it. It was entitled to refuse at once to be bound by a policy contract fraudulently obtained.
"Section 10 purports to make the liability of an insurer absolute when loss or damage covered by the policy occurs. When the loss or damage in this case occurred, there was no policy in existence or even contemplated. True, an insurer may assume a risk to commence previous to the date of the policy and will be liable for a loss occurring before the actual policy date, but only in case there is no fraud or concealment of the loss by the insured. Hallock v. Commercial Insurance Co., 26 N.J. Law 268; affirmed, 27 N.J. Law 645. The section bans cancellation or annullment of a policy by agreement between insurer and insured after the insurer has become responsible for loss or damage under it, which indicates that at the moment the loss occurs there must be a policy in existence covering the loss or damage. The further provision of the section is that if the infant defendant and her parents should obtain a judgment in their damage suit against Lanzisero, they would be entitled to collect from his insurer, if Lanzisero was insured at the accrual of the cause of action. Accrual of the cause of action means the time of the happening of the accident but Lanzisero was not then insured. He held no policy when the loss or damage occurred to which the injured persons could look for indemnity and to hold, as I do, that the infant defendant and her parents should have no standing in a court of equity to object to the cancellation of complainant's policy, will not deprive them of any right they had at the time their cause of action against Lanzisero accrued."
Messrs. Solomon Miller ( Mr. Maximilian T. Rosenberg, of counsel), for the appellant.
Messrs. McCarter English ( Mr. Ward J. Herbert, of counsel), for the respondent.
The decree appealed from will be affirmed, for the reasons expressed in the opinion delivered by Vice-Chancellor Fielder in the court of chancery.
For affirmance — THE CHIEF-JUSTICE, TRENCHARD, PARKER, LLOYD, CASE, BODINE, DONGES, HEHER, PERSKIE, VAN BUSKIRK, HETFIELD, DEAR, WELLS, WOLFSKEIL, RAFFERTY, JJ. 15.
For reversal — None.