author: Kilkenny, J. A. D.

text:
    ROBERT N. ERRINGTON, PLAINTIFF-RESPONDENT, v. MANSFIELD TOWNSHIP BOARD OF EDUCATION, IN THE COUNTY OF WARREN, DEFENDANT-RESPONDENT, AND CATHERINE D. HARSHA, WILLIAM MANNON, NORMA CREGAR, JAMES A. KNAPP, MYRTLE DARCY AND JAMES R. ALLEN, INTERVENORS-APPELLANTS.
    Superior Court of New Jersey Appellate Division
    Argued January 2, 1968
    Decided March 27, 1968.

      See also 42 N. J. 320, 200 A. 2d 492.

      Before Judges Kilkenny, Carton and Rosen.

      Mr. Thomas L. Morrissey argued the cause for appellants (Messrs. Carpenter, Bennett & Morrissey, attorneys; Mr. Michael S. Waters, on the brief).

      Mr. Wayne Dumont, Jr., argued the cause for respondent Mansfield Township Board of Education.

      Mr. Robert N. Errington, respondent, argued the cause pro se.

   The opinion of the court was delivered by

Kilkenny, J. A. D.

The six intervenors, former members of the Board of Education of Mansfield Township, who were sued individually by plaintiff in other separate suits for libel, appeal from a judgment of the Law Division in favor of plaintiff and defendant board of education, rejecting the claim of the intervenors that the board of education be directed to pay the legal fees and expenses in defending them in libel actions.

This matter is before us for the second time. In our earlier opinion, 81 N. J. Super. 414 (1963), we affirmed a summary judgment in favor of plaintiff, prohibiting the board of education from spending public funds for the legal defense of board members sued individually for libel. We deemed the allegedly tortious conduct to be the personal responsibility of the individual defendants and, under the particular facts of the case, not entitled to be defended at the public expense.

The Supreme Court granted certification, 41 N. J. 519 (1964), and thereafter reversed and remanded the matter so that a full record could be made in the libel actions. The Supreme Court deemed the meager record before it inadequate to resolve the question. The board agreed not to spend the public funds in the interim. 42 N. J. 320 (1964).

Depositions were then taken in the libel actions. Following the depositions, on January 12, 1966 a stipulation was entered into dismissing with prejudice both libel actions. Plaintiff was paid some consideration for signing the stipulation of dismissal.

The issue of the board’s power to pay for the legal defense of its members sued personally for libel was left open in the settlement between plaintiff and the intervenors. At oral argument plaintiff stated that he was under the belief that the settlement made with him included a surrender by the individual board members of their claim for payment of their legal defense by the board. He conceded that such belief is not supported by anything in the settlement papers.

On March 17, 1966 the board rejected the request of the six former members to have their legal fees paid. These six then intervened in this action since they were personally interested and the board, as now constituted, was unwilling to pay and felt that it was legally unable to expend board funds for the legal defense of its former members sued individually for the alleged libels.

Subsequent to our decision and that of the Supreme Court and before the instant action was fully tried before the Law Division sitting without a jury in November 1966, the Legislature enacted N. J. S. A. 18:5-50.20, effective July 22, 1965. It provides:

• “Whenever a civil or a criminal action has been brought against any person for any act or omission arising out of and in the course of the performance of his duties as a member of a hoard of education, and' in the case of a criminal action, such action results in final disposition in favor of such person, the cost of defending such action, including reasonable counsel fees and expenses, together with costs of appeal, if any, shall be borne by the hoard of education.”

Both sides agree that this law, although seemingly tailored to fit the instant case, is only expressive of the law existing prior thereto. Its purpose was merely to state expressly a power deemed to exist impliedly in boards of education prior to its enactment.

We may assume, therefore, that a board of education has the power and the duty, now by statute as well as under its previous implied power, to pay or reimburse a member for the legal expenses involved in defending himself for any act and omission “arising out of and in the course of the performance of his duties as a member of a board of education.” Thus, the narrow issue to be initially determined is whether the allegedly defamatory open letter which board member Catherine D. Harsha caused to be published on or about November 30, 1961 in the public press concerning plaintiff was an act “arising out of and in the course of the performance of her duties as a member of the board of education.”

The Law Division held that is was not. We need not repeat herein the detailed and extensive analysis of the evidence or the rationale of the trial judge by which that conclusion was reached. They are clearly set forth in his comprehensive opinion. In substance, he held that Mrs. Harsha had composed the letter by dint of her own effort and had caused it to be published without authorization from the board. She had read its contents over the telephone to only two other members of this nine-member board of education. The mere fact that she was then president of the hoard did not clothe her with any authority to publish the letter. Nor did her motivation, even though one could assume they were salutary as well as personal. The letter was intended to annihilate a critic of the board’s espousal of a site for a new school and thereby to influence voters at a pending referendum soon to be held. In her answer to the complaint, Mrs. Harsha asserted that she wrote the letter “for the purpose of defending her own reputation.” The trial court concluded that her allegedly defamatory act did not arise out of and in the course of the performance of her duties as a member or as the president of the board of education. We agree with that conclusion.

The referendum carried. Almost a year later, but within one year of the publication as limited by the statute of limitations (N. J. S. 2A:14-3), plaintiff sued Mrs. Harsha for libel. Then, for the first time, the board of education sought to help out in what had theretofore been the personal and unauthorized act of Mrs. Harsha. It adopted a resolution at a public meeting of the board held on November 15, 1962, in which it referred to the libel suit against Mrs. Harsha, and stated that at the time of the alleged libelous offense she “was acting on behalf of the Mansfield Township Board of Education and was acting as its chief executive officer,” and resolved that the board “shall direct its legal counsel to vigorously defend said suit” on her behalf. This resolution induced the second libel suit by plaintiff against those board members who voted for its adoption.

The trial court concluded that this belatedly adopted resolution did not cure the situation so far as Mrs. Harsha was concerned. Nor did the fact of its adoption at a board meeting on the advice of counsel warrant the expenditure of public funds to defend a libel suit against the board members who had voted for it. The trial judge reasoned that the board lacked authority under the law to ratify a “personal attack” made by one of its members upon a critic of board policy. As the trial judge expressed it, referring to Mrs. Harsha’s letter, “It was not a refutation. It was an attack upon the man.” This completely unauthorized attack was not put in the mail and sent to the voters, but was broadcast in a “Letter to the Editor.” The trial judge observed that a sympathetic board “should not have the power to saddle taxpayers’ funds with an admission of liability,” a result which would follow if the resolution declaring Mrs. Harsha’s act authorized were upheld. Thus, if Mrs. Harsha had acted as the board’s agent in publishing a libel, a judgment against her might become the board’s responsibility to pay.

The test applied to the first resolution was deemed equally applicable to the board’s second resolution, adopted at a public meeting held on December 2, 1962, whereby the employment of counsel was authorized to defend those board members who were sued for libel because of their having voted for the first resolution of November 15, 1962, authorizing the hiring of counsel to defend the libel suit against Mrs. Harsha. The trial judge concluded that the December 2nd resolution “carries no greater validity and must be set aside.”

We said in our previous opinion:

“The board members who voted for the adoption of the resolution, confirming their informal authorization previously given to Mrs. Harsha to send a letter to plaintiff and impliedly ratifying the contents of the letter sent by her, have no greater right to be defended at the public expense than does Mrs. Harsha. The fact of board action cannot alter the basic personal nature of the letter actually sent. Nor can it be said that the letter advanced any legitimate school board purpose.” (81 N. J. Super., at p. 421).

In the light of the more detailed trial record and the fact findings of the trial judge, we have reexamined those conclusions.

The proofs fail to establish that Mrs. Harsha was ever “informally authorized” by a majority of the board members to send the letter in question. As noted above, only two other members of the nine-member board were informed of its contents before it was published. The board’s resolution of November 15, 1962, whereby it authorized the hiring of an attorney to defend Mrs. Harsha, was not intended as a republication of the asserted libel but rather as legal justification for the expenditure of public funds. That justification was sought in the recital in the preamble — -albeit erroneous — that Mrs. Harsha had acted for the board.

We observe a distinction between the expenditure of board funds to defend a purely personal tort action against a board member and a similar expenditure of public funds to defend board members sued for libel, when the basis of that suit is a resolution duly adopted at a public meeting of the board. When the board members, in a proper meeting duly assembled, vote upon a resolution relating to the expenditure of the board’s funds, their act in doing so “arises out of and in the course of the performance of their duties as members of the board.” The resolution may be invalid for want of authority to spend the public funds for the designated purpose, as here. The expenditure may be enjoined and the resolution may be judicially set aside, as in the instant ease. The board members may have been legally mistaken in their belief that the resolution could be validly adopted. But the conclusion still persists that the board members, in adopting the resolution to engage counsel to defend a board member sued for libel and thereby authorizing the expenditure of public funds, were performing an act which arose out of and during the course of the performance of their duties as board members.

The trial court emphasized the word “duties” in reaching its conclusion and strictly interpreted it to exclude the adoption of a resolution to authorize the defense of a board member sued for libel. We would not construe the expression “in the performance of their duties” so narrowly. Such a strict construction of “duties” would exclude all tortious conduct by a board member, because it is never a “duty” of a board member to commit a tort. It would also exclude all invalid resolutions because it is not a “duty” of a board member to pass an invalid resolution. The purpose of the new statute is to make manifest the implied power of boards of education to provide for the legal defense of a member of the board who is sued individually for some action taken by him in furtherance of his prescribed duties. Those duties are prescribed by statute, by the rules and regulations of the board itself and of those who supervise its activities, and by resolutions of the board authorizing specific action to be taken. The adoption of the resolution which gave rise to the libel suit against the board members who voted for it was an act performed by them in the performance of their duties as board members. While the resolution may have lacked validity insofar as it provided for the legal defense of Mrs. Harsha in the first libel action against her, it was an act for which the members sued in the second libel action were entitled to be defended at the board’s expense.

We need not consider whether the defense of qualified privilege would have relieved the board members from personal responsibility by reason of the adoption of the resolution at a duly convened public meeting of the board. The libel actions were settled by the payment of a nominal consideration to plaintiff by the individual defendants and the execution and exchange of mutual releases.

We agree with the trial court that the intervenors are not entitled to reimbursement for any personal expenses they may have incurred by reason of their intervention in this litigation. They intervened to serve their own personal interests. Defendant board of education retained counsel to represent it in this litigation, including the original appellate proceedings, the trial on remand and the present appeal. Such counsel is entitled to be paid the reasonable value of services rendered in representing the board as a board.

The parties stipulated at the inception of trial that the damages would be $2,686.67, if judgment were recovered against the board. We assume that this figure related to the libel actions. Since we are holding that Mrs. Harsha was not entitled to legal defense at the public expense, but the board members who were sued for voting the board resolution were, the board will pay one-half of that amount for defending the second libel action, unless within 30 days of the coming down of our mandate, the parties mutually agree upon a different apportionment.

There will be no costs by any party against any other party on this appeal.

The judgment is modified as noted above.


source: Caselaw Access Project

author: Lane, J. S. C.

license: Public Domain

text:
    FRED MANNILLO AND ALICE MANNILLO, PLAINTIFFS, v. MARGARET GORSKI, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided March 14, 1968.

      Mr. George P. Ostrov attorney for plaintiffs.

      Mr. Theodore D. Parsons, Jr. attorney for defendant (Messrs. Parsons, Canzona, Blair & Warren, attorneys).
   Lane, J. S. C.

At the conclusion of the final hearing, the Court made certain findings of fact and rendered judgment for the defendant that she had acquired ownership by adverse possession of a strip of land 15 inches in width running the length of her west boundary, the record title to which strip was in the plaintiffs. The matter is now before the Court on motion by the plaintiffs for an order granting a new trial or setting aside the judgment on the grounds that the judgment is contrary to the weight of the evidence and that the judgment is contrary to the law, and as a necessary corollary, entering judgment for the plaintiffs.

In the spring of 1945, the defendant with her husband went into possession of her property under a contract dated April -, 1945. She continues to be in possession. The property, in Keansburg, is rectangular. It has a frontage of 25 feet on West Shore Street and extends 100 feet south to South Street. Under date of April 16, 1962, the defendant and her husband, who is now deceased, obtained a deed to the premises. Plaintiffs own the adjoining lot to the west, having gone into possession shortly after May 23, 1953. Their lot has the same dimensions.

It is admitted that there is a 15 inch encroachment upon the plaintiffs’ land by steps leading from the west side of the defendant’s house and a concrete walk that runs south from the steps to South Street.

In the summer of 1946, one of the defendant’s sons, who was then 14 years old, with the assistance of his father, made certain additions and changes to the defendant’s house. He extended two rooms at the rear of the house, closed in a screen porch on the front, and put a concrete platform with steps on the west side of the house for use in connection with a side door. Prior to that time there had been wooden steps at that location. In 1953, certain necessary repairs were made to both the plaintiffs’ and the defendant’s houses because of a flooding condition that had occurred. The foundations of both houses were raised. The same son who had put in the original concrete steps built new steps but on the location of the original concrete steps. It was alleged by the plaintiffs that at the time the new steps were installed in 1953, the encroachment was either begun or was increased.

Erom the platform the steps, which are of the same width, run both to the south and to the north. The platform forms a stoop for a door leading to the kitchen of the defendant’s house and extends 33 inches west from the house. The door itself is 36 inches wide. The door would not be useable if the platform and steps were cut down by 15 inches.

At the time the original concrete steps were installed, there was a concrete walk installed from the steps south to the end of the house. This concrete walk was the same width as the steps. At that time the area between the two houses was dirt. Sometime later, the concrete walk was extended further to the south from the rear of the house to South Street.

In 1965 the plaintiffs engaged a fence company to put a wire fence completely around their property. This fence was placed up to the platform in question. It is, therefore, approximately 15 inches inside the east boundary of the plaintiffs’ land. Previously there had been a fence running from approximately the location of the platform to the rear of the plaintiffs’ property, which fence was installed by the plaintiffs’ predecessor in title in late 1947 or early 1948. This fence was west of the platform and walk.

Plaintiff Ered Mannillo testified that in 1960 after the property to the west of his lot had been surveyed and staked out, he ran a tape from the easterly stake across the front of his property and at that time discovered that defendant’s walk and steps encroached. He further testified that he spoke to the defendant about the encroachment at that time; however, he made no real complaint concerning it. Eor the reasons stated at the conclusion of the trial, the Court does not believe the testimony of Mr. Mannillo that he protested to the defendant at that time or at any time until shortly before the complaint was filed.

At the conclusion of the final hearing, the Court under the authority of Poulos v. Dover Boiler & Plate Fabricators, 5 N. J. 580 (1950) ruled against the defendant’s claim to a way of necessity.

Defendant claims ownership of the 15 inch strip by adverse possession under N. J. S. 2A :14-6, which provides:

“Every person having any right or title of entry into real estate shall make such entry within 20 years next after the accrual of such right or title of entry, or be barred therefrom thereafter.”

The Court reiterates its finding that when the new concrete steps were built, they did not increase the encroachment but extended no further onto the property of the plaintiffs than had the original steps. Defendant has shown by clear and convincing evidence that she has been in possession of the 15 inch strip extending from her steps to the rear of her house for a period of more than 20 years prior to the time the complaint was filed. Such possession was exclusive, continuous, uninterrupted, visible and notorious. The encroachment was of such a nature that it should have been known by the plaintiffs and their predecessors in title.

The question presented is whether the defendant’s possession had the requisite hostility to be adverse to the true owner.

It was stipulated at the trial that neither the defendant nor her son knew that her steps and walk encroached on the plaintiffs’ property until shortly before the complaint was filed. Defendant and her son thought that the steps and walk were on her property. On the basis of this stipulation plaintiffs seek to infer that had defendant known that her steps would encroach they would not have been built. The opposite inference could also be drawn; however, this Court will not infer that the defendant and her son would have built the steps and walk in their present location had they known that there was an encroachment on their neighbor’s property. Cf. Bell v. Merchants B. & L. Assn., 132 N. J. Eq. 356 (Ch. 1942), affirmed o.b. 133 N. J. Eq. 345 (E. & A. 1943).

Plaintiffs rely upon Predham v. Holfester, 32 N. J. Super. 419 (App. Div. 1954). Under that case to establish the requisite “hostility” for adverse possession, a claimant must show that there was a subjective hostile intention — a premeditated and predesigned hostility. The most that can be said for the defendant’s claim here is that there was an honest mistake made. Had the defendant shown that she intended to trespass and to take that which was not hers, she would have been entitled to a judgment in her favor. Such principle of law offends the conscience of this Court.

Judge Jayne in Predham v. Holfester, supra, recognized that the rule followed had been vigorously criticized and that it was the minority rule. 32 N. J. Super., at pp. 426-427. That Court, however, felt bound by Folkman v. Myers, 93 N. J. Eq. 208 (E. & A. 1921).

In Folkman v. Myers, supra, the Court of Errors and Appeals in affirming a decree of the Court of Chancery adopted the opinion of Vice Chancellor Learning. The Vice Chancellor held that the respondent’s claim to a strip of land by adverse possession could not be sustained because his possession had been under a mistake and not with intent to claim beyond his own boundary. He did not necessarily adopt the rule because he thought it was the proper rule but rather he felt compelled to follow a prior decision of the Supreme Court, Myers v. Folkman, 89 N. J. L. 390 (Sup. Ct. 1916). 93 N. J. Eq., at p. 213. That action was between the same parties with the claimed adverse possessor seeking ejectment. The Supreme Court pointed out that there were “two insurmountable difficulties” preventing the plaintiff from recovering. The first difficulty was that he failed to show possession for the requisite period of time, and the second difficulty was that his possession was in fact not adverse for the requisite period because he disclaimed “any intent to claim what did not belong to him and apparently never asserted a right to land outside the bounds of his title * * *.” 89 N. J. L., at p. 393. The Supreme Court need never have reached the second question any more than Predham had to reach the question of hostility. See concurring opinion of Justice (then Judge) Francis, 32 N. J. Super., at pp. 428-429.

In fact, what Predham v. Holfester, supra, does is to make one of the elements of adverse possession in eases such as the one before the Court a knowingly wrongful taking. The great weight of authority in this country is to the contrary. Judge Jayne recognized that the rule the Court was following had been criticized as operating to deny relief to the honest possessor and rewarding only the willfully wrongful possessor. 32 N. J. Super., at pp. 426-427.

In criticizing this subjective approach to hostility, Professor Powell states' (6 Powell, The Law of Real Property (1965), par. 1015, at pp. 721-725) (citations omitted):

“Do the facts of his possession, and of his conduct as if he were the owner, make immaterial his mistake, or does such a mistake prevent the existence of the prerequisite claim of right? The leading case holding the mistake to be of no importance was French v. Pearce, [8 Conn. 439 (1831)] decided in Connecticut in 1831. In this case the Court said:
‘Into the recesses of his [the adverse claimant’s] mind, his motives or purposes, his guilt or innocence, no inquiry is made. * * * The very nature of the act (entry and possession) is an assertion of his own title, and the denial of the title of all others. It matters not that the possessor was mistaken, and that had he been better informed, would not have entered on the land; * * *.’ This viewpoint has gained increasingly widespread acceptance. The more subjectively oriented view regards the ‘mistake’ as necessarily preventing the existence of the required claim of right. The leading case on this position is Preble v. Me. Cent. R. Co. decided in 1893. [85 Me. 260, 27 A. 149 (1893).] This position is still followed in a few states. [Cf. citation to Predham v. Holfester, 32 N. J. Super. 419, 108 A. 2d 458 (1954)]. It has been strongly criticized as unsound historically, inexpedient practically, and as resulting in better treatment for a ruthless wrongdoer than for the honest landowner. [Citing, Bordwell, Desseisin and Adverse Possession, 33 Yale L. Jour. 1, 153 (1923); Darling, Adverse Possession in Boundary Cases, 19 Ore. L. Rev. 117 (1940), at 141; Sternberg, The Element of Hostility in Adverse Possession, 6 Temp. L. Q. 207 (1932); Walsh, Title by Adverse Possession, 31 (1939); Note, 32 N. D. L. Rev. 48 (1956).] Its harshness is substantially mitigated by a judicially accepted presumption of hostility. The problem can sometimes be sidestepped by a finding that a boundary located by mutual agreement, has been acquiesced in for a sufficient time to bar its questioning.
* * * The applied tests are generally objective, the good or bad faith of the possessor being treated as immaterial with respect to the existence of a ‘claim of right.’ The required claim of right against the true owner can suffice even though the possessor mistakenly acknowledges some other outstanding right against which he claims nothing.”

3 American Law of Property (Casner ed. 1952), points out that in adverse possession one is dealing with a statute of limitations, stating at § 15.4, pp. 773-777 (citations omitted) :

“It is to be expected that all the cases which list the elements necessary to the acquisition of title by adverse possession include that from which the method takes its name. However, a surprisingly large number of them designate it as adverse possession under claim of right or under claim of title. And a very considerable number of cases, and consequently of texts, expressly state that in order to be a source of title, adverse possession must be accompanied by claim of title. A number of decisions go on to state that these terms mean nothing more than that the actions of the occupant must show an intention to appropriate and use the land as his own, or the same as though it were his own, to the exclusion of all others, thus giving the owner a cause of action for his eviction. But most of them make no explanation of the qualifying terms and leave the impression that the occupant must not merely be in possession adversely to the owner but must by word or act proclaim during all the period of the running of the statute that he bimself is then the owner.
I-t is amazing that the courts in declaring these supposed requirements of adverse possession have so completely failed to consider the basic question involved in the acquisition of title by the running of the statute of limitations against the true owner’s action of ejectment, viz., whether the true owner had a right of action in ejectment against the wrongful possessor continuing without interruption for the statutory period. In very few cases, in applying these supposed requirements, have the courts discussed the operation of the statute in barring the true owner’s action as the sole reason why title arises by adverse possession. Do the courts mean to say in these cases that an actual wrongful possession acquired and maintained without the consent of the true owner is not wrongful and that the owner cannot maintain ejectment against the possessor unless the latter is claiming the title; that actual wrongful possession is not adverse and not subject to the ejectment action if the possessor admits that he made no claim to the title during his years of wrongful possession? If the right of action in ejectment accrues in the owner’s favor in such cases, can the courts explain why the statute of limitations restricting the time within which such actions can be brought does not apply? If the statute bars the true owner’s action to recover the property can there be any question that his title is extinguished and the possessory title of the wrongful possessor becomes absolute? These are the important questions which must be kept in mind in examining the cases.
* * * The great majority of the cases establish convincingly that the alleged requirements of claim of title and of hostility of possession mean only that the possessor must use and enjoy the property continuously for the required period as the average owner would use it, without the consent of the true owner and therefore in actual hostility to him irrespective of the possessor’s actual state of mind or intent. * * *”

The text criticizes Myers v. Folkman, supra, at pp. 781-782 (citations omitted) :

“In a New* Jersey case [Myers v. Folkman, 89 N. J. L. 390, 99 A. 97 (1916)] it was held that possession by building a house which unintentionally encroached on adjoining land was not adverse because of the absence of any assertion of title, showing an actual intent to claim ownership of the land so occupied. This position has been taken in a few cases in which the possessor, holding in a way which amounts to possession, not a mere trespass, established by continuous acts of user of an average owner, admits that he entered and occupied believing that the title was in the government, or in some third person, showing conclusively no actual claim of true title in himself. These cases cannot be sustained as the actual hostile character of his possession -with actual claim against the owner is established by his conduct, and is entirely consistent with his mistake in believing title to be in the government or other third person. The great weight of authority is against these cases, and it may be said with assurance that practically no authority sustained the position that the claim of right must be a bona fide claim of absolute ownership good against all the world.”

As to boundary disputes, the treatise comments in § 15.5, pp. 785-787 (citations omitted) :

“The notion that an actual claim of right must exist rather than the claim by wrong demonstrated by the possessor’s open and notorious acts of ownership has disappeared for the most part in the great majority of the states where boundary disputes are not involved * * * hut the notion lives on in a considerable number of states in cases of boundary disputes in which one of the parties has been in open and notorious possession of the strip of land in dispute up to a fence, hedge, or other physical boundary believing it to be the true line of division, but he admits, on cross-examination usually, that he intended to claim title only to the true line. It should be obvious, here as in the other cases involving this question of the hidden mental attitude of the possessor, that the statute runs against the owner’s right to recover from a wrongful possessor from the beginning of his wrongful possession, barring and extinguishing the title of the true owner after the required period irrespective of the possessor’s mental attitude, where such possession has not been consented to by the true owner and the possessor has not estopped himself by disclaimer of any right either to the other party personally or in so public a way as to amount to the same thing. The weight of authority strongly supports the position that the mental attitude of the possessor is immaterial, and an actual open and notorious possession which is wrongful since it is without the consent of the owner is necessarily adverse and ripens into title in the usual way where the period of the statute has run. All the cases discussed in the preceding section, which hold that ‘claim of right’ or ‘claim of title’ mean simply an actual adverse possession in fact irrespective of the fact that the possessor knows that he is a wrongdoer and has no actual title other than the title which his wrongful possession gives him and irrespective of his motive, must be added as authorities .supporting this rule, as the principle involved is exactly the same.”

See Norgard v. Busher, 220 Ore. 297, 349 P. 2d 490 (1960) (and authorities cited therein which overruled prior Oregon law, Caufield v. Clark, 17 Ore. 473, 21 P. 443 (1889); King v. Brigham, 23 Ore. 262, 31 P. 601 (1892) that had .held that mistake was a bar to asserting adverse possession). 5 Thompson on Real Property (1957 repl.), § 2548, pp. 542-548; 1 Walsh, Law of Real Property (1947), §§ 18-19, pp. 136-159. See also Annot. 80 A. L. R. 2d 1171 (1961).

It is recognized by the leading authorities that the basis of adverse possession is a limitation on the time of entry of the true owner. The result of the subjective approach to hostility followed in Predham v. Holfester, supra, is to destroy the effectiveness of the statutory mandate of N. J. S. 2A :14-6. The approach traditionally and consistently taken by our courts to statutes of limitation has been an objective approach. See, e.g. Thorpe v. Corwin, 20 N. J. L. 311, 316 (Sup. Ct. 1844); Markey v. Robert Hall Clothes of Paterson, 27 N. J. Super. 417 (Hudson County Ct. 1953).

The concurring opinion of Justice (then Judge) Francis in Predham v. Holfester, supra, would indicate that he may not have felt that the subjective approach should be followed. He stated at p. 429:

“The statute of limitations is not a club in the hands of a wrongdoer, whether a willful or an unintentional one; it is a prod in the back of the victim, the prod being powered by the conspicuous nature of the adverse use.”

Here Mr. Mannillo testified that he knew of the encroachment in 1960. At any time for a period of 20 years after the encroachment was first established, Mr. Mannillo or his predecessors in title would have had an action in ejectment against the defendant.

In none of the opinions in the following cases did it appear that the Court took a subjective approach to hostility although there was no discussion of the question. Plaza v. Flak, 7 N. J. 215 (1951); Gordon v. Lumberville Delaware Bridge Co., 108 N. J. L. 261 (E. & A. 1931); Southmayd v. McLaughlin, 24 N. J. Eq. 181 (Ch. 1873).

Eor one criticism of the rule followed in Predham, see Rullis v. Jacobi, 79 N. J. Super. 525 (Ch. Div. 1963).

The prior finding by the Court that the defendant’s possession of the 15 inch strip extended the entire length of the property for 20 years is not supported by the evidence. Defendant has produced evidence that clearly and convincingly proves (and the Court so finds) that she has been in possession of the 15 inch strip upon which the steps and platform and the concrete walk from the steps to the southwest corner of the house rest for more than 20 years before the institution of this suit and that such possession has been exclusive, continuous, uninterrupted, visible, notorious and against the right and interest of the true owner. However, this Court has no alternative but to follow the existing law as stated by the Appellate Division in Predham v. Holfester, supra. Defendant’s claim must be denied because her possession was as a result of mistake rather than an intentional taking.

The motion for a new trial is denied. The findings of fact made at the conclusion of the final hearing will be reaffirmed except insofar as changed herein. Plaintiffs are entitled to a mandatory injunction compelling the defendant to remove the encroachment. Although damages were sought, no proof was adduced in support of such claim. There will be a judgment for the plaintiffs on the counterclaim. The judgment which has been entered in favor of the defendant will be vacated, and judgment will be entered in accordance with the views expressed herein, but without costs.


author: Consodine, J. C. C.

text:
    LUBOMYR E. KALYNYCZ, PLAINTIFF, v. DONNA A. KALYNYCZ, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Argued March 8, 1968
    Decided March 14, 1968.

      Mr. Harry Kay for plaintiff.

      Mr. Joseph Zeller for defendant.
   Consodine, J. C. C.

(temporarily assigned). Plaintiff moved seven months after entry to vacate the provisions of a statutory separate maintenance judgment entered on a counterclaim. Plaintiff argues that he made bona fide efforts during the last three months to effect a reconciliation.

When the maintenance judgment is based on a husband’s constructive abandonment by reason of his extreme cruelty, there is no method whereby he may alter the status quo and escape payment of support under the judgment. 10 N. J. Practice 460 (1963); Soos v. Soos, 14 N. J. Misc. 381 (Ch. 1936).

However, when the maintenance judgment is based on simple abandonment, he is entitled to vacation of the judgment upon refusal of bona fide advances. These “must be made within the two year period following the entry of the judgment or else a cause of action for divorce may vest in favor of the wife.” 10 N. J. Practice 459 (1963) citing Oertel v. Oertel, 92 N. J. Eq. 327 (Ch. Div. 1920). That case held that deserting husbands must act within two years of the time of desertion adjudged by the judgment for maintenance. Since the judgment in that case did not specify that there had been an unjustified desertion, the Court reasoned that the judgment itself implied a finding of an abandonment — so that the judgment was conclusive evidence of the desertion, at least as of the time the judgment was entered.

10 N. J. Practice 459, supra, is in error in drawing its conclusion from the Oertel case. That case did not hold that the two year period must be measured from the date of the judgment. It only made a factual holding that the date of judgment was more than two years prior to the date of motion and so was at the very least a time at which the desertion began. Its statement of law that the critical date was always the time at which desertion occurred as set out in the judgment, remained unchanged.

In the instant case the judgment did not find the date of desertion. Where such a vacuum exists the date alleged in the complaint must be regarded as the date of desertion, and the husband’s advances must occur within two years therefrom. Holst v. Holst, 101 N. J. Eq. 682 (Ch. 1927). Here that would be over forty months prior to the motion (the date set out in the counterclaim as the time of desertion). Since neither the filing of this motion nor the declared advances occurred within two years thereof, the motion is denied. The judgment may not be reopened.


author: Per Curiam. Cakton, J. A. D.

text:
    ANNA A. BRUNI, PLAINTIFF-APPELLANT, v. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued May 29, 1967
    Decided July 14, 1967.

      Before Judges Sullivan, Kolovsky and Carton.

      Mr. Frank W. Thatcher argued the cause for plaintiff-appellant (Mr. Joseph R. Moss, attorney).

      Mr. George D. Rothermel argued the cause for defendant-respondent (Mr. Samuel Kalikman, of counsel and on the brief).
   Per Curiam.

Plaintiff appeals from the dismissal of her suit for the proceeds of a life insurance policy of which she was the named beneficiary.

On October 19, 1962, defendant, The Prudential Insurance Company of America (Prudential), issued a $16,-000 policy insuring the life of Prank L. Bruni. The policy names Anna A. Bruni his wife, plaintiff herein, as beneficiary. Premiums on the policy were payable on a monthly basis at the rate of $16.15 per month payable on the 19th of each month. Under the policy a grace period of 31 days was allowed to make payment of a premium in default. If a premium remained unpaid at the end of the grace period, the policy thereupon terminated. The policy specified that no agent of the company had the authority to extend the time for payment of a premium or to waive a forfeiture of the policy. It also provided a method of obtaining reinstatement of a lapsed policy upon certain conditions.

Monthly premium payments were duly made on the policy for October, November and December of 1963 and January of 1963. The premium payment due February 19, 1963 was not paid on time nor within the 31 day grace period thereafter. On March 31, 1963 the insured signed an application for reinstatement of the policy which was approved on April 11, 1963. The application shows that premiums for the months of February and March were paid under the application.

The April premium was not paid when due nor within the 31 day grace period thereafter. On June 3, 1963 both plaintiff and her husband signed an application for reinstatement of the policy which was approved on June 11. The application shows that premiums for the months of April and May were paid under the application.

The June payment was not made when due, nor within the 31 day grace period thereafter. On August 18, 1963, the insured signed an application for reinstatement of the policy which was approved on September 16. The application shows that premium payments for the months June, July and August were made under the application.

Plaintiff testified that the September premium payment was made in cash and within time to defendant’s agent.

The October premium was not paid when due nor within the 31 day grace period thereafter. However, by check dated November 23, 1963, and enclosed in an envelope postmarked November 26, premium payments in the amount of $32.30 were forwarded to defendant.

Plaintiff testified that this check covered premiums for the months October and November. Defendant’s contentions, as set forth in the pre-trial order, were that the cheek represented premium payments for the months of September and October and that on November 29 the defendant wrote to the insured acknowledging receipt of the cheek but stated that the policy had lapsed and that defendant’s agent would get in touch with the insured regarding reinstatement.

Plaintiff testified that in the month of December, just before the holidays, defendant’s agent came to the Bruni home and asked for the December premium payment. Plaintiff tendered him the amount of the premium in cash but the agent refused to accept it. He said that he had not yet cashed the check for the October and November payments and that he wanted a single check for the premium payments for the months of October, November and December. Plaintiff told the agent that she did not have enough money in her checking account to make out a check in that amount, whereupon the agent said that he would be back after the holidays. He left with Mrs. Bruni the uncashed check for $32.30. Mrs. Bruni denied that the agent told her that another application for reinstatement would have to be filed.

Mr. Bruni died on December 30, 1963. When plaintiff made a claim for the proceeds of the policy the company refused payment on the ground that at the time of Mr. Bruni’s death the policy had lapsed for non-payment of premiums. This suit followed.

At trial, and upon the completion of plaintiff’s presentation of evidence, the trial court granted defendant’s motion for a dismissal of plaintiff’s suit on the ground that the evidence showed that the policy was in default and no evidence of waiver was presented. As heretofore noted, plaintiff appeals. i

Accepting plaintiff’s testimony at face value, it is undisputed that on December 30, 1963, when Mr. Bruni died, premiums on the policy due October 19, November 19 and December 19 remained unpaid. It is also undisputed that on November 23 or 26, when the check for $32.30 was mailed to defendant, the October payment was in default and the 31 day grace period for paying it had expired.

Plaintiff claims that defendant waived its right to a strict enforcement of the policy provisions by its conduct since on previous occasions premium payments were accepted late and beyond the grace period. Plaintiff concedes that applications for reinstatement were made by the insured and approved by defendant on these occasions. However, it is argued that according to plaintiff’s testimony defendant’s agent had these applications signed in blank without explaining their nature or meaning with the result that reinstatement was not treated by the parties as a condition precedent to the acceptance of premiums beyond the grace period, nor were the applications treated as conditions precedent to the continuation of the life of the policy.

We see no basis for a claim of waiver. On each occasion when the premium remained unpaid beyond the grace period the policy was treated as having lapsed and an application for reinstatement was required. Rather than a waiver, the proofs indicate strict adherence by defendant to the provisions of the policy.

Plaintiff argues that the October 19 and November 19 payments were properly tendered and were retained by defendant until the middle of December, continuing the policy in full force and effect until the death of the insured. This is not the fact. The grace period for making the October 19 payment expired 31 days thereafter. Even on plaintiff’s own story, no tender or payment of this premium was made by November 19. At that time the policy lapsed and premiums tendered thereafter could not revive the policy in the absence of reinstatement.

Plaintiff testified that when the agent came to her home in late December he did not tell her that another application for reinstatement would have to be filed but merely said he would be back after the holidays. However, as heretofore noted, the policy specifically provided that no agent had the authority to extend the time for payment of a premium or to waive a forfeiture.

We agree with the trial court that on plaintiff’s own proofs it appeared that the policy had lapsed prior to Mr. Bruni’s death and no competent evidence of defendant’s waiver of the lapse terms of the policy was presented.

Affirmed.

Cakton, J. A. D.

(dissenting). In my opinion the evidence created a question of fact as to waiver on the part of defendant-insurance company which required the company to interpose a defense.

Substantively the effect of the dismissal of the action at the conclusion of plaintiff’s case was to frustrate her reasonable expectations as a layman unversed in insurance provisions and to bring about a forfeiture under the policy not compelled by the evidence. Proeedurally and practically it served to camouflage the basic issue by permitting to remain undivulged relevant evidence as to conduct of the insurer and its agents which could not fail to shed light on the waiver issue, as well as on the veracity of plaintiff’s testimony.

It is conceded by both parties that the monthly premium on the $16,000 policy on the life of decedent, purchased in October 1962, was paid up to and including the month of August 1963. What happened after that date and the significance of those events is sharply disputed.

It is clear from our analysis of the evidence that at the time the defendant-insurance company received the $32.30 cheek from the assured, dated November 23, 1963, and retained it for approximately two weeks, it did so under the impression the assured owed it three monthly premium payments for September, October and November 1963 and on the premise that he had, in fact, paid only two payments consisting of the September and October or the October and November payments. Its conduct thereafter, including the episode in December, stemmed from this conclusion that plaintiff had not, as she consistently testified, made all three payments. Solely because the company thought and acted in accordance with the premise that one payment was missing which was necessary to make the payments of premiums current was the policy not reinstated. Instead of returning the check, which it believed was insufficient, the company retained it, meanwhile instructing its agent to obtain the additional premium it deemed necessary to make the payments current and to arrange for the reinstatement.

The ensuing discussion between the assured’s widow and the insurance company’s representative Eiore early in December 1963 reflects the confusion on the part of plaintiff at the trial and was apparently the product of the agent’s demanding payment which he thought was due for September 1963, but which plaintiff believed was for the December 19 payment not yet due. As the plaintiff testified concerning that episode, the discussion between her and the agent concerned entirely the payment being demanded by Eiore and never arrived at a stage where plaintiff was required to sign the reinstatement form which Eiore had with him.

According to plaintiff, Eiore broke off the discussion without presenting any document for signature and left with the stated intention of returning after the holidays. Had the company and its agent not insisted on receipt of that additional payment as a condition of reinstatement, it is clearly inferable from defendant’s conduct that the reinstatement form would have been signed by the assured or plaintiff prior to the assured’s death in the same manner as the three others had been signed.

If plaintiff’s claim that she paid the September payment was true, there was, of course, no justification at all for the demand for an additional payment as a condition for reinstatement. Uor was there anything in the record to suggest that there was any other impediment to reinstatement except the simple failure of the assured or his wife to affix a signature to a form which Eiore had brought with him. Since, according to plaintiff, Eiore had not discussed this question with the assured or plaintiff, Eiore’s conduct deprived plaintiff of any opportunity of complying with the very condition upon which the company now relies for declaring a forfeiture.

If this analysis is correct, the crucial question in determining whether defendant’s conduct rises to the level of a waiver is whether the company was demanding as a condition for reinstatement, the payment of an additional premium which had already been made. The resolution of this dispute of fact upon which the entire issue of waiver hinged was removed from the province of the jury by the trial court’s dismissal of the plaintiff’s action, and at a stage of the trial which denied to the court and the jury an opportunity to consider evidence on the part of a party in a position most likely to shed light on the transaction. This is so irrespective of which particular payment the insurance company thought was overdue and irrespective of the confusion on plaintiff’s part that she was being asked to make a December payment rather than one for an earlier month.

Let us now review the evidence to ascertain whether it supports this conclusion.

Defendant does not dispute that on or about November 23, 1963, the decedent forwarded a check to it in the sum of $32.30 representing the premiums for two months. A letter dated November 28, 1963, which the company allegedly wrote decedent, said:

“We received your check in the amount of $32.30, but this policy has lapsed by its terms, and we will have to have our agent get in touch with your [sic] regarding the reinstatement of this policy.
He will be in touch with you shortly.”

Appended to the company’s copy of the letter was this instruction to its agent, Mr. Eiore:

“Please try to have this policy reinstated. We are enclosing the insured’s check in the amount of $32.30, hut we will need another month and a 9615 completed.” (emphasis supplied)

Plaintiff-widow denied knowledge of this letter and denied knowing whether her husband received it. However, since the letter was marked in evidence its contents may be considered as to the issue of waiver and as evidence of defendant’s conduct and intention. It is evident from this letter and the memorandum that the company itself desired the policy reinstated, intended that it be done promptly, and directed its agent to attempt to effect the reinstatement.

Of vital significance on the issue of waiver is the fact that the company retained the check for the premiums and pursued a course of conduct thereafter consistent with its announced desire to reinstate the policy if the additional payment thought to be in default was made. The statement in the memorandum to Mr. Piore, “but we will need another month,” eloquently voices the company’s position at that time that one monthly premium was unpaid and payment thereof was the prime motivating consideration for a reinstatement to become effective upon the completion of its form 9615.

Accordingly, and as also set forth in the pretrial order, when Mr. Piore called upon plaintiff and decedent early in December 1963 he reported the company’s insistence that the reinstatement “would require the payment of an additional one premium over the amount of $32.30.”

Plaintiff testified that her husband made a $16.15 payment for the month of September to Piore when they were at her mother-in-law’s home in Runnemede. She said further that, because she did not have the book with her at the time, “John said he would be around to the house to get the October payment and lie would also fill in the coupon.” Her explanation of the November 23, 1963 check was as follows:

“Because John didn’t come for September to write in on my book, I had paid him outside of my mother-in-law’s and when he didn’t come in October and November then I mailed it and made the 32 dollar, 30 cent cheek and took out the three coupons and sent them in.”

These coupons, she said, were for the months of September, October and November, but the check mailed to the insurance company was for the October and November payments.

Plaintiff declared that when Fiore came to her home in December, “he said he had come for the payment;” that “he said he had not cashed in the October and November check yet, and that he wanted a check for three payments.” Asked whether Fiore had said why he hadn’t cashed the October-November payment check, she replied: “No, he just say he wanted to send in all three payments.” She said further that she offered Fiore $16.15 in cash for the December payment but he refused it. “He wanted one check, and I didn’t have enough money in the checking account.” “He said he wanted a check for all three payments and that since I couldn’t do it he will be around after the holidays.”

When she was asked on cross-examination as to whether she was requested to sign some form in December (presumably the company’s reinstatement form 9615), she answered that Mr. Fiore “had the check with some papers. Now what the papers were, I don’t know, we never got to that.”

It is elementary that an insurer may waive any provision for its benefit and may waive any representation, warranty, condition or limitation in the policy upon which it would otherwise be entitled to rely. Since provisions for payment of premiums and reinstatement are considered to be for the benefit of the insurer, they may likewise be the subject of waiver, thus rendering the insurance company liable for loss occurring during a time when, according to its contract, it would be relieved of liability. See Graham v. Security Mutual Life Insurance Company, 72 N. J. L. 298 (E. & A. 1905); 16 J. A. Appleman, Insurance Law and Practice [hereinafter cited as Appleman], § 9083 (1944), and see Annot., 7 A. L. R. 3d 414 (1966). Cf. Ciccone v. The Colonial Life Insurance Company, 110 N. J. L. 276 (E. & A. 1933) holding that an insurer which refused the tender of a premium payment because the assured had failed to make timely payment and on this basis declared the policy had lapsed, was precluded in a later action on the policy from urging it had lapsed on another ground not asserted in declaring the default.

A waiver of a forfeiture clause is predicated upon the acts or conduct of the insurer with knowledge of a breach tending to show a recognition of the policy, or an intent to relinquish the right to declare a forfeiture for the known breach. See 16 Appleman, § 9084. Because the courts are loathe to enforce forfeitures, it is always open to the assured to show a waiver of policy provisions when the conduct of the insurer gives reasonable ground to the assured, as a layman unversed in insurance provisions, to believe that such a forfeiture will not be incurred and the assured relies thereon to his prejudice. See Allen v. Metropolitan Life Insurance Company, 44 N. J. 294, 305 (1965).

If it be assumed that the evidence established the September payment, in fact, had already been made when defendant’s agent in December requested the additional payment as a condition of reinstatement, it would seem that improper exaction should by itself and without more preclude the insurer from insisting on the completion of the reinstatement form. This is especially so in the absence of anjr suggestion by the insurer that the state of health of the insured or his wife and dependent children was such as to render them uninsurable at that time, or that he could not have truthfully replied to the inquiries contained in the form in precisely the same manner that he had answered the prior ones.

The requirements of the company’s reinstatement form cannot, of course, create obligations on the part of the insured greater than those specified in the policy since the policy and the application by the terms of the standard policy provision constitute the entire contract. In this connection, it may be noted that the portion of the reinstatement provision of the policy concerning insurability provides:

“This policy may be reinstated within three years after default in premium payment upon the following conditions:
(1) Production of evidence satisfactory to the company of the insurability of all of the insured, said wife and dependent children; * * *”

The policy contains no provision setting forth what such evidence might be nor does it contain any specific reference to the manner in which it shall be produced. Specifically, there is no indication as to which agent of the company will make this determination nor under what circumstances the company will inform the assured the policy has been reinstated. We note that in the present case only one of the three reinstatement forms which were actually completed indicates that the home office took any action towards the reinstatement, the others being “approved in the field” as the notation thereon shows.

Irrespective of whether the insurer’s denial of a premium already paid may be deemed sufficient of itself to constitute a waiver, if the test laid down in Allen is applied of viewing the acts of the insurer from the standpoint of the assured and plaintiff, there were reasonable grounds for a jury to infer from the insurer’s conduct that the company had no intention of exacting a forfeiture for the five day delay in the receipt of the premium due November 19, 1963.

According to plaintiff’s version of the course of conduct between the parties, the relationship between the agent Eiore and the assured and his wife was a friendly one, the agent sometimes calling at nine or ten o’clock at night. Payments were made (sometimes in cash) directly to Eiore who was authorized by the terms of the policy to receive such payments. The coupon receipts admitted in evidence reveal that he did, in fact, receive payments and acknowledged their receipt as the authorized company representative.

On at least three separate occasions, it was Eiore who brought the reinstatement forms for signature, which, according to plaintiff, were submitted in blank. Plaintiff asserted that no cancellation notice or notice of lapse was ever received from the company, nor any notification or explanation that the payment had to be approved by the home office in order to keep the policy in force.

According to plaintiff, she paid Eiore for the September payment in cash when he called at the home of her mother-in-law and she expected him to receipt the September payment when he came around to collect the October payment. When he failed to call for the October and November payments, she mailed the November 23 check with the three coupons to the Haddon Heights office. Not having heard either from the insurance company or its representative Eiore, and not receiving a return of the check until Eiore brought it back in December, an assumption that the three payments were received and retained by the company without regard to a literal insistence upon the completion of the reinstatement forms seems entirely reasonable. There can be no question that she believed she was covered by the policy during this period.

It should not be overlooked that when Eiore visited the Bruni household early in December the decedent, a man 27 years of age, was still alive and apparently still in good health and the company anxious to have the policy reinstated. Looking at this episode also from her viewpoint, although she had paid the premium for September in cash, the insurance company was demanding another payment of premium in a check form which she was unable to provide. Here again, if plaintiff is believed, Eiore refused to take in cash payment of the premium he requested and insisted on a check for $48.45 representing the check which the company had and deemed satisfactory in form, plus another check which the company was not entitled to demand.

We do not have the benefit of Eiore’s testimony on this crucial phase of the ease, nor the benefit of the inspection of the reinstatement form he brought with him according to the company’s records. If that form was filled in in the same fashion as the other reinstatement forms which were introduced into evidence, it should affirmatively establish the due date the company actually asserted as the basis for lapse for non-payment. It may well explain also the obvious misunderstanding between the agent and plaintiff as to what payment he sought as a prerequisite to reinstatement and provide an explanation for his leaving the check with the plaintiff without having the reinstatement form executed. In any event, if plaintiff’s story is believed, Eiore’s departure and failure to present the reinstatement form for signature prevented the plaintiff and the assured from fulfilling these conditions upon which defendant now predicates its right to forfeit the policy. Under the doctrine of waiver as it is interpreted by our courts the insurer may not relieve itself of a liability which arises by reason of the assured’s death thereafter.

The majority conclude that there exists no basis for a claim of waiver because the proofs show that the company required an application for reinstatement on each occasion the premium remained unpaid beyond the grace period. The majority assert that since there was no tender or payment of premium by November 19, “At that time the policy lapsed and premiums tendered thereafter could not revive the policy in the absence of reinstatement.” This statement poses the issue whether the company’s retention of the premium and its course of conduct thereafter was such as to constitute a waiver of the company’s right to declare a forfeiture. However, it does not provide an answer to that inquiry.

The thesis of the majority that there was no waiver seems to rest heavily on the policy provision that no agent had the authority to extend the time for payment of a premium or to waive a forfeiture. This argument likewise fails to come to grips with the waiver issue. As we read the record, there can be no dispute that he had authority to follow the course of conduct attributed to him. Here, if plaintiff's version of the December episode is believed, the agent whose demand for the additional payment created the controversy existing at the time of the insured's death acted at the specific direction of the insurer. The company cannot escape responsibility for the agent's conduct arising out of that agent’s compliance with its directive. It therefore becomes critical to determine whether he failed to have the reinstatement form signed because of the company's insistence upon performance of a condition to which it was not entitled or for some other reason which may be ascribed to plaintiff's action.

I would reverse the judgment below and remand the matter for a new trial.

       From the record it is not entirely clear whether the defendant contended it was the September payment of $16.15 which was unpaid or the payment for another month. In its answer it asserted that the September and October payments were not paid. In the pretrial order, however, it took no affirmative position as to which payment was in default, alleging merely that the defendant’s representatives, in the early part of December 1963, called upon plaintiff and decedent regarding the lapse “and stated it was necessary again to apply for reinstatement which would require the payment of an additional one premium over the amount of $32.30.” The company's letter of November 29, 1903 to the assured contains the notation, “Due September 19, 1963.” Counsel for the insurance company on the motion for dismissal asserted that perhaps the September payment could be called in dispute.


author: Mintz, J. S. C.

text:
    AMERICAN POLICYHOLDERS’ INSURANCE COMPANY, A CORPORATION, PLAINTIFF, v. WILEY MC CLINTON, WILEY MC CLINTON, JR., ESTATE OF GLADYS MEDINA, NICHOLAS MEDINA, ADMINISTRATOR OF THE ESTATE OF GLADYS MEDINA AND AS ADMINISTRATOR AD PROSEQUENDUM OF THE ESTATE OF GLADYS MEDINA, CARMEN DE LEON, ROSALIE VELASQUEZ LAMBERTY, RAPPAPORT OIL CO., ABRAHAM BLUMSTEIN AND STANLEY BLUMSTEIN, T/A SLOAN & COMPANY, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided March 21, 1968.

      Mr. Alfred F. Carolonza, Jr. for plaintiff (Mr. Joseph S. Montalbano, attorney).

      Mr. John J. Smyth for defendants Wiley McClinton and Wiley McClinton, Jr.

      Mr. Allan J. Naishuler for defendant Rosalie Velasquez Lamberty (Messrs. Greenstone & Greenstone, attorneys).

      Mr. Bartholomew T. Zanelli for defendants Abraham Blumstein and Stanley Blumstein, T/A SLOAN & COMPANY (Messrs. Stryker, Tams & Dill, attorneys).
   Mintz, J. S. C.

This cause was submitted for determination upon a stipulation of facts read into the record at the final hearing. In addition thereto exhibits were introduced into evidence, briefs were submitted and oral argument was heard. Some of the named defendants did not appear at the final hearing but have agreed to abide by the judgment of the court.

Defendant Wiley McClinton was issued a Manufacturers’ and Contractors’ Liability Policy, MCS 5-1782, by plaintiff American Policyholders’ Insurance Company for the one-year period beginning February 15, 1963. During such period Wiley McClinton was engaged in the plumbing business.

In April or May of 1963, the defendant Wiley McClinton installed a boiler at the premises of Crest Jewelry Company, 160 Mt. Pleasant Avenue, Newark, N. J. On November 4, 1963 Wiley McClinton, Jr., who was apparently employed by and working for his father, changed the thermostat on the boiler previously installed by his father. Sometime later the same day, after the thermostat had been changed, the boiler exploded causing personal injury to the employees of Crest Jewelry Company. A number of suits in the Law Division arose out of these events, Wiley McClinton, Sr. and his son both being named as defendants.

Following plaintiff’s timely notice of the accident and its conduct of an investigation, plaintiff disclaimed liabilty on the two grounds that the insurance purchased under Policy MCS 5-1782 did not afford coverage for “Products Liability” or “Completed Operations,” and that another provision expressly excluded this kind of accident from the “Premises-Operations” coverage of said policy. Consequently, plaintiff believes it has no duty under the policy to defend the McOlintons in the Law Division actions.

This declaratory judgment action is brought to determine whether or not plaintiff is obligated to defend Wiley Mc-Clinton and Wiley McClinton, Jr. in the various Law Division actions instituted against them, and whether or not the policy affords coverage to the McOlintons for any liability which may arise out of the accident of November 4, 1963.

The “Declarations” appear on the front page of this standard form “Manufacturers’ and Contractors’ Policy” and include a number of sub-headings entitled “Item[s].’’ Item 1 contains the name of the insured, Wiley McClinton, and his address. Item 3 reads:

“The insurance afforded is only with respect to such and so many of the following coverages and divisions thereunder as are indicated hy specific premium charge or charges. The limit of the company’s liability against each such coverage and division shall be as stated herein, subject to all the terms of this policy having reference thereto.” (Emphasis supplied).

Advance premiums are listed opposite only Division 1 “Premises-Operations” for coverages A and B in said policy. “Premises-Operations” is defined under Division 1 of “Definition of Hazards” as “[t]he ownership, maintenance or use of premises and all operations.” (Emphasis supplied).

“Products-Completed Operations” is defined under Division 4 of “Definition of Hazards” as follows:

“(1) Goods or products manufactured, sold, handled or distributed by the named insured or by others trading under his name, if the accident occurs after possession of such goods or products has been relinquished to others by the named insured or by others trading under his name and if such accident occurs away from premises owned, rented or controlled by the named insured * * *.
(2) operations, including any act or omission in connection with operations performed by or on behalf of the named insured on the premises or elsewhere and whether or not goods or products are involved in such operations, if the accident occurs after such operations have been completed or abandoned and occurs away from premises owned, rented or controlled by the named insured; provided, operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to an agreement; * * *.”

The Insuring Agreement obligates the insurer to pay all sums for bodily injury (Coverage A) and property damage (Coverage B) for which the insured shall become legally obligated to pay as damages sustained by any person caused by accident and arising out of the hazards therein defined, “subject to the limits of liability, exclusions, conditions or other terms of this policy * * *.”

There is attached to the policy an endorsement containing four horizontal columnar divisions designated “Description of Hazards”; “Premium Bases”; “Rates” and “Advance Premiums.” The “Rates” and “Advance Premiums” divisions are subdivided vertically into two vertical columns entitled “Coverage A” and “Coverage B”. Vertically under the first heading appear five columns entitled respectively “(1) Premises-Operations”; “(2) Elevators”; “(3) Independent Contractors”; “(4) Products (Completed Operations)”; “(5) Contractual.” Underneath “(1) Premises — Operations” in the first horizontal column appears the following typewritten insertion:

“Plumbing N.O.C. — gas, steam, hot water or other pipe fitting— including house connections, shop and retail stores or display rooms.”

To the right of this notation figures are inserted in the corresponding columns under Premium Bases, Rates and Advance Premiums. All the remaining columns on the endorsement relating to hazard descriptions and premium calculations contain no typewritten insertions.

Plaintiff’s main argument is that an insured should receive coverage only for those risks for which he has purchased insurance. Since the front page and endorsement of the subject policy list premiums opposite the “Premises-Operations” hazard only, plaintiff contends its exposure is limited to such liability as might be imposed under that hazard in the policy. It is urged that a careful reading of Item 3 of the “Declarations” and the “Definition of Hazards” discloses that McClinton’s coverage on accidents arising from plumbing operations is confined to those occurring during the doing of the act. Conversely, since McClinton did not buy coverage for “Products-Completed Operations,” he is not insured for accidents occurring after the completion of his work.

Additionally, plaintiff urges that Exclusion (c) of the policy pares down the seemingly inclusive “all operations” coverage afforded by Division 1. Exclusion (c) states that:

“This policy does not apply:
******* *
(e) under division 1 of the Definition of Hazards, and under coverage O, to (1) the Independent Contractors Hazard or (2) the Products-Completed Operations Hazard; * * *.”

On the other hand, defendants contend that the insurance policy should be liberally construed to find coverage, so that the reasonable expectations of the insured are realized. Engaged in the plumbing business, the insured McClinton’s purpose in obtaining the policy was to protect himself against liability for claims arising out of the conduct of this business. The insured, it is argued, did not intend to draw any distinction between explosions occurring in the course of his work and those occurring after the operation is completed, nor did he understand the policy to be so framed. The layman insured, it is urged, was justified in placing his reliance upon the Insuring Agreement and the definition of the hazard, “Premises-Operations,” which purports to afford coverage for “all operations.” Thus, defendants urge that the insured’s reasonable expectations should not be frustrated and that the ambiguities in this complicated policy should be resolved against the insurance company.

In construing an insurance policy presumably the insurer intended to have the insured understand that in the event of loss he will be protected to the full extent that any fair interpretation will allow. Danek v. Hommer, 28 N. J. Super. 68, 76 (App. Div. 1953), affirmed per curiam 15 N. J. 573 (1954). An insured justifiably places heavy reliance on the knowledge and good faith of the company in the preparation of its varied and complex instruments and his reasonable expectations in the transaction may not justly be frustrated. Courts have properly molded governing interpretative principles with that uppermost in mind. Thus, courts have consistently construed policy terms strictly against the insurer and where several interpretations were permissible have chosen the one most favorable to the insured. Allen v. Metropolitan Life Ins. Co., 44 N. J. 294 (1965); Mazzilli v. Accident & Casualty Ins. Co. of Winterthur, 35 N. J. 1 (1961). Moreover, in order to fulfill the insured’s reasonable expectations he should not be subjected to technical encumbrances or to hidden pitfalls. Gerhardt v. Continental Ins. Cos., 48 N. J. 291, 297 (1966). However, plaintiff contends that the instant policy, fairly interpreted, affords no coverage to the insured for liabilities arising from the accident of November 4, 1963. Since the insured paid no premium for coverage against a “completed operation” accident, as is discernible from Item 3 in the policy’s Declarations and the attached endorsement, the insurer is not liable to the insured under the policy. In The Ohio Cas. Ins. Co. v. Flanagin, 44 N. J. 504, 516-518 (1965), the court recognized that the format of the same policy’s Declarations page gave notice to the insured that he was not covered for an “Independent Contractors” hazard, because he had not paid a premium for such exposure, although the “Premises-Operations” hazard for which he paid purported, as in the instant policy, to cover “all operations.” Hence, it may be argued that no coverage should be afforded the insured in this case, unless the policy’s differentiation between the active operations hazard and the completed operations hazard is considered so ambiguous as to thwart an insured’s reasonable expectations, or the policy so framed is found inapplicable to the insured’s business.

Defendants urge that the ruling in McAllister v. Century Indemnity Co., Hartford, Conn., 24 N. J. Super. 289 (App. Div. 1953), affirmed per curiam 12 N. J. 395 (1953), supports their contention that the subject policy is vague and ambiguous, and that the policy should be construed so as to make the insurer liable for accidents arising from McClinton’s operation, whether the accident occurred during or after the thermostat was changed.

In McAllister, supra, an excavator purchased liability insurance coverage for his business operations under a “Manufacturers’ and Contractors’ Liability Policy.” He paid for coverage under Division 1, “Premises-Operations,” the scope of the risk being defined in substantially the same broad manner as in the instant case. McAllister installed an oil tank under a sidewalk but failed to barricade properly a depression that remained after the work was completed. An accident subsequently occurred for which McAllister was sued. The insurer refused to defend the suit on behalf of McAllister, contending that the accident arose out of a “completed operation.” The Appellate Division held that both the exclusion clause and a purported definition of “completed operations” (inserted under the heading “Products”) were vague and ambiguous and, in any event, an excavator’s liability insurance was not offered under the heading “Products”, notwithstanding the description of “completed operations” therein. The accident claim in question was deemed to be covered by Division 1, “Premises and Operations,” of the Definition of Hazards as set forth in the policy. The court said:

“The obvious object of the plaintiff in procuring this policy was indemnity against liability on tort claims growing from his operations as an excavator. * * * Except as particular provisions of the policy so curtail its scope that an ordinarily intelligent man would understand that the policy does not cover certain risks which come within its general scope — with that exception, the policy should be construed to cover all liability for accidents arising from plaintiff’s operations, whether the accidents happened before or after the excavation job was finished. * * *” (at p. 294)

McAllister, supra, is factually distinguishable from the instant ease. An excavator normally does not deal in “products” and his attention is not likely to be drawn to a hazard entitled “Products”, or to its definition which purported to restrict his coverage. Also the ambiguous language of that definition could have led McAllister to believe that only “completed operations” in which products had been involved — not applicable to him — -were excluded from the “all operations” coverage for which he had paid. As for Mc-Clinton, he is a plumber who as part of his trade deals in products, e. g. installation of a boiler and replacement of a thermostat. Furthermore, in the policy sub judice, the uninsured risk is entitled “Products-Completed Operations”, thus putting the insured on notice that a premium is required in order to buy coverage for a “completed operation.” Were a layman to pursue the notice offered in the instant policy’s front page by the “Products-Completed Operations” heading and the prefatory language of Item 3, he would find that the definition of completed operations applied to his activities and clarified his limited coverage under Division 1. A reading of that definition in the policy issued by plaintiff, in conjunction with Item 3, discloses to any plumber that unless he pays a premium charge for the “Products-Completed Operations” risk, he is not covered inter alia for operations “* * * whether or not goods or products are involved in such operations, if the accident occurs after such operations have been completed * * *” This precise clause was not present in the policy in McAllister, supra.

The reasoning behind Gerhardt v. Continental Ins. Cos., supra, is inapplicable to the case sub judice. There, the insured sought coverage under a comprehensive homeowner’s policy for a workmen’s compensation claim against him. The policy actually excluded workmen’s compensation coverage, but the exclusion was found in fine print following broad statements of coverage. The exclusionary clause was neither conspicuous nor plain and clear. In the instant case limitations on plaintiff’s “all operations” coverage can be discerned from a reading of the policy’s front page. The court held in Gerhardt, supra, that the policy was prepared unilaterally by the insured and was sold on a mass basis as affording broad coverage to homeowners. If the carrier had acted fairly in excluding coverage of workmen’s compensation claims, it would have given the insured clear notice to that effect on the face page of the policy or by a slip attached to the face of the policy. Having failed to do so, the insured was entitled to coverage. But see Inductotherm Corp. v. New Jersey Mfrs. Cas. Ins. Co., 83 N. J. Super. 464 (Law Div. 1964). There the insurer was absolved from liability for personal injuries arising out of a defective product since the accident occurred away from the insured’s premises and after the insured had completed operations. The court ruled that an exclusion provision in a comprehensive public liability policy for “Products Hazard” which included completed operations was effective despite its cutting away of the initially broad coverage offered the insured.

Generally, an insured is chargeable with knowledge of the contents of a policy, in the absence of fraud or unconscionable conduct on the part of the carrier. Heake v. Atlantic Casualty Ins. Co., 15 N. J. 475, 483 (1954). And as observed, in Merchants Indemnity Corp. v. Eggleston, 37 N. J. 114, 121 (1962) “* * * This rule does not reflect a judicial belief that the average purchaser reads the contract in full or understands all that he reads. Rather the rule rests upon business utility.” Nevertheless, in dealing with a layman unfamiliar with the subtleties of law and underwriting, the insurer should present a reasonably comprehensible policy to the insured, free of ambiguity.

The policy under consideration is complicated, but if an “ordinarily intelligent” insured had read it, paying particular attention to its front and most conspicuous page, he would have realized he was not covered for accidents arising from completed plumbing operations because he had not paid a premium for that hazard. In view of this determination, it is unnecessary to pass upon the legal effect of exclusion (c) in said policy.

Accordingly, plaintiff is not obligated to defend the McClintons in the several negligence actions instituted against them arising out of the accident of November 4, 1963, and coverage is not afforded them under the terms of said policy.

An appropriate form of judgment will be submitted, consented to as to form or to be settled on notice.


author: Furman, J. S. C.

text:
    ATLANTIC MUTUAL INSURANCE COMPANY, A CORPORATION, AND SAPOLIN PAINTS INC., A CORPORATION, PLAINTIFFS, v. MARY A. RICHARDS, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF EDWARD RICHARDS, DECEASED, NATIONAL LEAD COMPANY, A CORPORATION AND THE EMPLOYERS’ LIABILITY ASSURANCE CORPORATION, LTD., A CORPORATION, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided March 20, 1968.

      Mr. Richard J. Badolato for plaintiff Atlantic Mutual Insurance Company (Messrs. Schneider & Morgan, attorneys).

      Mrs. Sonia Napolitano for defendant Employers’ Liability Assurance Corporation, Ltd. (Messrs. Pindar, McElroy, Connell & Foley, attorneys).
   Furman, J. S. C.

This litigation is to determine whether there is insurance coverage under a loading and unloading clause in an automobile liability policy. The facts are undisputed on motion and cross-motion for summary judgment (R. R. 4:58).

Edward Richards was unloading a 50-pound bag of Bentone from the truck of his employer, National Lead Company, at the loading platform of Sapolin Paints, Inc. He fell into an open stairwell and sustained injuries which resulted in his death next day. No eye witness to his fall is known. A Sapolin employee had directed the National Lead truck driver, William Tappen, where to pull up at the loading platform. Tappen and the decedent were unloading the truck without the assistance or participation of any Sapolin employee. Tappen testified by deposition, which was stipulated, that he heard the decedent fall, turned about, saw a three-foot slat of wooden dunnage, which was not used in the unloading process, “rocking back and forth” next to the open stairwell and the decedent sprawled at the bottom. He testified that his truck had not carried dunnage that day. Inferentially, Richards tripped over the slat of dunnage and fell backwards into the open stairwell.

After recovery of workmen’s compensation death benefits, Mary Richards, the widow, brought a tort action against Sapolin for wrongful death and survivor damages (N. J. S. 2A:31-1 et seq). The present plaintiff, Atlantic Mutual Insurance Company, filed an answer in that action as general liability carrier for Sapolin. It requested by letter that the present defendant, Employers’ Liability Assurance Corporation, Ltd., undertake the defense as automobile liability carrier for National Lead. Employers’ Liability refused on the ground that the claim did not “fall within the coverage” of the automobile liability policy. Atlantic Mutual replied that it would hold Employers’ Liability responsible for any judgment, costs and expenses. Atlantic Mutual negotiated the settlement of Richards versus Sapolin Paints, Inc. for $30,000.

Mary Richards’ contentions in the death action are concisely stated in the pretrial order:

“The defendant was negligent, individually and by an [sic] through its servants and agents in that it failed to provide decedent with a safe place to work, negligently left pieces of wood on the loading platform causing a nuisance, dangerous and hazardous condition and maintained a stairwell without guard rails as a direct and proximate result of which the decedent sustained the injuries which resulted in his death.”

The loading and unloading clause in the automobile liability policy issued by Employers’ Liability is in standard form. The insurer undertakes to pay damages which the insured becomes legally obligated to pay because of bodily injury or death caused by accident and arising out of use of the automobile. The definition of “insured” extends to any person using the automobile with the permission of the named insured. Use of the automobile includes “the loading and unloading thereof.”

Relying upon Maryland Casualty Co. v. N. J. Mfrs. Cas. Ins. Co., 48 N. J. Super. 314 (App. Div.), affirmed 28 N. J. 17 (1958) and Drew Chem. Corp. v. Amer. Fore Loyalty Group, etc., 90 N. J. Super. 582 (App. Div. 1966), Atlantic Mutual argues that because Edward Richards sustained the accident leading to his death while unloading the named insured’s truck, ipso facto the burden of coverage must be borne by the automobile liability carrier.

This argument brushes past distinguishable factual backgrounds in the Maryland Casualty and Brew Chemical cases. Both stemmed from litigation in which an employee of the general liability carrier’s named insured was charged with negligence: in unloading in Maryland Casualty and in preparing to unload in Drew Chemical. Judge Goldmann in the latter ease quotes favorably from Employers’ Liability Assur. Corp. v. Indemnity Ins. Co., 228 F. Supp. 896, 900 (D. Md. 1964) : “* * * all that is required to establish coverage is that the act or omission which resulted in the injury was necessary to carry out the loading or unloading.”

In the tort case leading to the case sub judice the negligence alleged was breach of Sapolin’s duty to its business invitee to maintain a reasonably safe place to work. The regular inspection of the loading platform, the remedying of a hazardous condition or the communication of an adequate warning may be viewed broadly as necessary for safe unloading. But the fulfillment of such duty was not a step in the specific operation of unloading the National Lead truckload. To construe the maintenance of the loading platform as a “use of the automobile” in unloading would be to extend automobile liability coverage to negligence occurring prior to the arrival of the truck, that is, failing to remove dunnage from proximity to the open stairwell, and to a nuisance grounded in negligence, that is, the stairwell without guardrail. No New Jersey reported opinion has so held.

Out-of-state reported opinions tend to divide in their holdings according to whether the tort charged was an act or omission in the process of loading or unloading or in the maintenance of the loading or unloading premises.

Liability was imposed on the automobile liability carrier in McCloskey And Company v. Allstate Insurance Companies, 123 U. S. App. D. C. 177, 358 F. 2d 544 (D. C. Cir. 1966) (negligent operation of a crane preliminary to unloading) ; Federal Insurance Co. v. Michigan Mutual Liability Co., 277 F. 2d 442 (3 Cir. 1960) (negligent operation of a crane in replacing rear wheels after unloading); Red Ball Motor Freight v. Employers Mut. Liability I. Co., 189 F. 2d 374 (5 Cir. 1951) (negligence in not closing valve safely after fueling truck on premises for loading); Maryland Casualty Co. v. Dalton Coal & Material Co., 184 F. 2d 181 (8 Cir. 1950) (negligence in failing to replace manhole cover safely after delivering coal); Connecticut Indemnity Co. v. Lee, 168 F. 2d 420 (1 Cir. 1948) (negligence in leaving open elevator in sidewalk preliminary to unloading); Maryland Casualty Co. v. Tighe, 115 F. 2d 297 (9 Cir. 1940) (negligence in bumping into pedestrian while running back to truck during unloading); Travelers Insurance Co. v. Employers’ Liability Assur. Corp., 242 F. Supp. 627 (D. Md. 1965) (negligence in maintainanee of wire cord used in loading); Employers’ Liability Assur. Corp. v. Indemnity Ins. Co., 228 F. Supp. 896 (D. Md. 1964) (negligence in raising overhead door, used in loading, above safety catch); Kings County Trust Co. v. Tudor Construction Corp., 28 App. Div. 2d 853, 281 N. Y. S. 2d 642 (App. Div. 1967) (negligence in construction or maintenance of a debris chute which collapsed during unloading); Wagman v. American Fidelity & Casualty Co., 304 N. Y. 490, 109 N. E. 2d 592 (1952) (negligence in bumping into pedestrian while walking back to truck during unloading).

Liability was imposed on the general liability carrier in Southern California Petro. Corp. v. Royal Indem. Co., 70 N. M. 24, 369 P. 2d 407 (1962) (negligence in allowing gas to be trapped in oil well); Cosmopolitan Mut. Ins. Co. v. Baltimore & Ohio R. Co., 18 App. Div. 2d 460, 240 N. Y. S. 2d 88 (App. Div. 1963) (negligence in not remedying defective flooring on railroad pier); General Accident Fire And Life Assur. Corp. v. Brown, 35 Ill. App. 2d 43, 181 N. E. 2d 391 (Dist. Ct. App. 1962) (negligence in not remedying unsafe loading dock); see Bouleris v. Cherry-Burrell Corporation, 45 Misc. 2d 318, 256 N. Y. S. 2d 537 (Sup. Ct. 3964) (negligence in crating machinery, crate breaking during loading).

Implicit in Atlantic Mutual’s argument is that certainty in resolving insurance coverage disputes can be achieved by imposing liability on the automobile liability carrier whenever the accident occurred during loading or unloading. According to this argument, the particular tort charged may be contingent on the vagaries of pleading. For example, in Richards versus Sapolin Paints, Inc. an additional count might have been added for negligence in directing the delivery truck to an unsafe area of the loading platform. Whether recovery is on a count for negligence in maintenance or on a count for negligence in the process of loading or unloading may hinge on an election between inconsistent factual theories at the time of trial (see Ajamian v. Schlanger, 14 N. J. 483, 490 (1954); Shapiro v. Solomon, 42 N. J. Super. 377, 386 (App. Div. 1956)), or both counts may go forward to the jury as negligent acts or omissions which may have contributed independently to the proximate causing of the accident.

Although some trial problems are foreseeable because of initial uncertainty and the resolution of the insurance coverage dispute may require special interrogatories (R. R. 4:50-2), the sounder result favored by most courts is that automobile liability insurance under a loading and unloading clause should not cover damages sustained as a result of negligent maintenance of the premises where the loading or unloading was carried out. The risk insured against should be limited to negligence in loading or unloading the automotive vehicle, including preliminary and subsequent measures proximate in time related to its loading or unloading.

Judgment is therefore granted in favor of the defendant The Employers’ Liability Assurance Corporation, Ltd.