Gaulkin, Foley and Collester. The opinion of the court was delivered by Gaulkin, S.j.a.d.
[87 NJSuper Page 270] Plaintiffs are licensed by the Division of Motor Vehicles as motor vehicle dealers, under the Motor Vehicle Act, and by defendant Commissioner of Banking and Insurance (Commissioner) as motor vehicle installment sellers, under N.J.S.A. 17:16C-1 et seq. The Commissioner takes the position that plaintiffs must also obtain an insurance agent's or broker's license, pursuant to N.J.S.A. 17:17-12, and threatens prosecution if they fail to comply. Plaintiffs seek a declaratory judgment that their operations do not require them to be so licensed.
Plaintiffs say they operate as follows and, for the purposes of this case, the State does not deny it. The buyer of a motor vehicle who does not pay cash executes a conditional sales contract or other purchase money lien on the vehicle to plaintiffs. Plaintiffs require insurance on the vehicle against risk of physical damage to it, to protect the lien. The buyer is permitted to choose the insurance company and to purchase the policy. If he is unable or unwilling to do so, and authorizes plaintiffs to obtain it, plaintiffs order a policy from an agency or company of their own choice, covering the buyer and themselves (or their assignees) as their respective interests may appear. Plaintiffs pay the premium in full to the company and receive no commission, compensation or reward for obtaining the insurance.
The Commissioner's contention is set forth in his brief as follows:
"There is, of course, no question that single interest physical damage insurance may be purchased by a security holder to cover his own interest without the necessity of licensing; but the Commissioner strongly urges that the mere purchase of insurance by the security holder on behalf of the vendee to cover the vendee's interest in and of itself constitutes soliciting, negotiating or effecting insurance within the meaning of the statute. * * * The mere act of calling an insurance agent or broker and telling that person to obtain or write a policy naming the vendee as an insured according to his interest would constitute effecting insurance."
The statute upon which the Commissioner relies is N.J.S.A. 17:17-12, which provides:
"No person * * * shall solicit, negotiate or effect any contract of insurance of any kind * * * or sign, deliver or transmit, * * * any policy, * * * or receive any premium, commission, fee or other payment thereon, or maintain or operate any office in this State for the transaction of the business of insurance, or in any manner, directly or indirectly, transact the business of insurance of any kind whatsoever, within this State, unless specifically authorized under the laws of this State. * * *."
N.J.S.A. 17:22-6 et seq. provides for the licensing of insurance agents, brokers and solicitors. N.J.S.A. 17:22-6.20
forbids unlicensed persons to "solicit, negotiate or effect" contracts of insurance, and N.J.S.A. 17:22-6.18 forbids all insurance companies and licensees to "pay any money or commission or brokerage or give or allow any valuable consideration" to those not licensed "for or because of service rendered or performed * * * in negotiating or effecting * * * a contract of insurance * * *."
We hold that the above-mentioned statutes do not require plaintiffs to obtain an insurance license to carry on their above-described activities.
The Commissioner concedes that an automobile dealer needs no license to obtain insurance covering his own interest. That being so, we do not understand why the dealer's ordering the policy written to cover the interest of the buyer as well should constitute soliciting, negotiating or effecting insurance within the meaning of said statutes. When the dealer obtains a policy to cover his own interest, or the interest of the buyer as well, he orders it after consultation with the buyer and upon the buyer's promise to pay for it. There is as much solicitation and negotiation in one case as in the other, and insurance is effected in both cases.
What plaintiffs do is expressly authorized by the Retail Installment Sales Act, N.J.S.A. 17:16C-1 et seq. ...