For reversal -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Burling, Jacobs and Brennan. For affirmance -- Justice Wachenfeld. The opinion of the court was delivered by Jacobs, J.
The Appellate Division, in an opinion reported at 32 N.J. Super. 373 (1954), held that the defendant United States Casualty Company was not liable under its automobile accident indemnity policy because the assureds had not sent to the home office of the company, the suit papers in the action instituted against them by the plaintiffs Yannuzzis. We granted certification under R.R. 1:10-2.
The Casualty Company is a New York corporation with its home office at 60 John Street, New York City, and it has a Philadelphia branch managed by John G. Harkins. Under date of May 1, 1950 the Casualty Company entered into an agency contract with Morris H. Zackowitz of Englishtown, New Jersey, which designated Zackowitz as its agent in the following territory -- "Englishtown and elsewhere in the State of New Jersey" -- and authorized him to solicit applications
for insurance, deliver policies, endorsements and binders which the company authorized to be issued and delivered, collect premiums and receipt therefor, cancel policies in his discretion where cancellation was legally possible, and retain his commissions from premiums collected in accordance with specified rates. The contract stipulated that the agent should have the right in his discretion "to designate sub-agents of the Company in the above described territory, who shall report through him, but the Agent shall be answerable to the Company in respect of business placed with the Agent by such sub-agents and accepted by the Company as if such business had been produced directly by the Agent under this Agreement."
The agency contract was signed by Harkins on behalf of the company and by Zackowitz as agent and after its execution Zackowitz duly acted as agent for the company, performing all of the functions normally incident to his position. He solicited business and, in regular course, delivered the policies which were sent to him by the company. These policies were completely filled in at the company's Philadelphia branch in accordance with his directions but they provided that they "shall not be binding upon the Company until countersigned on the declarations page by a duly authorized representative of the Company"; Zackowitz countersigned them as "Authorized Representative" and delivered them to the assureds. Whenever the assureds had accidents covered by their policies they sent the notices thereof and any later suit papers to Zackowitz and he in turn forwarded them to the company's Philadelphia branch. Zackowitz testified that suit papers invariably came to his office at Englishtown and that in no instance did any of his assureds ever send them to the company's home office in New York or branch office in Philadelphia.
In 1951 George and Steve Cherefko of Oldbridge, New Jersey ordered an automobile accident insurance policy from Zackowitz; in due course they received policy No. AP848170 issued by the defendant casualty company effective June 20, 1951 and countersigned by Zackowitz as authorized representative
of the company. On December 9, 1951 one of the automobiles covered by the policy was involved in an accident and the Cherefkos notified Zackowitz who in turn sent the customary written notice to the company's Philadelphia office and received its customary acknowledgment. On October 16, 1952 the Cherefkos were served with suit papers in a Middlesex County Court action by the plaintiffs Yannuzzis who claimed damages for injuries allegedly suffered in the December accident. On the following day the Cherefkos delivered the suit papers to the Englishtown office of Zackowitz but by mistake they were forwarded by Zackowitz or his employee to the wrong insurance company.
In the meantime the defendant Casualty Company had terminated Zackowitz' agency effective January 1, 1952, although admittedly no notice of the termination had been given to the Cherefkos or, indeed, to other assureds. On the contrary, even after January 1, 1952 Zackowitz continued, with the company's approval, to process matters relating to policies originally delivered through his office; thus an endorsement effective January 17, 1952 was countersigned and delivered by Zackowitz to the Cherefkos for attachment to their policy and comparable endorsements were likewise countersigned and delivered by Zackowitz to other assureds long after January, 1952. Zackowitz testified that although he sent the notice of the Cherefko accident in December to the company, it never thereafter suggested to him that he notify the Cherefkos that he was no longer the company's agent or that any ensuing suit papers should be sent directly to the company rather than to him.
On January 29, 1953 the plaintiffs Yannuzzis entered a default judgment in the Middlesex County Court action against the Cherefkos who had failed to file answer. The defendant Casualty Company caused application to be made on Cherefkos' behalf to have the judgment reopened, but the application was denied. The plaintiffs Yannuzzis then filed their action in the Superior Court seeking judgment against the defendant Casualty Company for the amount due on the judgment against the Cherefkos which was well within
the policy limits. Trial was duly held and at the close of the testimony cross motions were made for the entry of judgment. The material facts were not in dispute and the trial judge, being of the opinion that the delivery of the suit papers to Zackowitz constituted delivery to the company within the policy ...