Goldmann, Kolovsky and Carton. The opinion of the court was delivered by Carton, J.A.D.
Defendant Grillon appeals from a declaratory judgment determining plaintiff Allstate Insurance Company to be under no obligation to defend one George Bradley as an additional assured under its policy, or to pay any judgment obtained against him in a pending negligence action brought by Grillon in the Law Division.
Allstate had issued a liability policy to one Douglas as owner of the automobile which Bradley was operating with his permission on August 13, 1964. The automobile ran over a catch basin on the side of the highway, skidded some 200 feet and struck a parked car, which pinned Grillon against a diner situated about 70 feet off the roadway.
It is undisputed that the accident was reported to Allstate the next day. It is also conceded that during the two-week period following the accident Allstate completed its investigation as to liability, during the course of which the investigator obtained a four-page statement from Bradley and a copy of the police report. He also got in touch with the police officer mentioned in the latter report.
Allstate's investigator communicated with Grillon's wife the day after the accident and learned from her that her husband, who was a soldier, was at the Patterson General Hospital at Fort Monmouth. Although the investigator was unable to interview Grillon at that time because he was being operated on, the records of Grillon's hospitalization were available. Allstate's claim manager conceded that, although the investigator was able to determine the names of the persons treating Grillon from an examination of those records, no effort was made to interview any of those persons.
Grillon filed his Law Division action in February 1966 against Bradley and Douglas. Bradley alone was served in that action. No answer was filed by him or on his behalf. Grillon, not having entered a default judgment, served notice through his present attorneys, returnable November 3, 1967, upon Bradley and upon Allstate Insurance Company, Douglas' liability insurer, that he would apply for
leave to proceed and for an order allowing ten days to file answer to the complaint.
Thereupon, Allstate brought this action in the Chancery Division, claiming that the conditions of the policy were breached and it was thereby relieved of all liability. The Law Division action was stayed. After a trial in the Chancery Division, the trial judge, in upholding Allstate's contention, filed a written opinion detailing the factual background and the reasons for his determination. Allstate Ins. Co. v. Grillon, 101 N.J. Super. 322 (Ch. Div. 1968).
The trial judge found that Bradley was operating the vehicle with the owner's permission and was therefore an additional assured under the policy and that there was a breach of the policy condition requiring the summons and complaint to be forwarded immediately to Allstate. However, he held (and the parties agree) that the case was controlled by the principle enunciated in Cooper v. Government Employees Ins. Co., 51 N.J. 86, 94 (1968), that an insurer is not entitled to be relieved from liability for breach of a policy condition requiring notice unless it shows both a breach and a "likelihood of appreciable prejudice" to the insurer.
In Cooper Chief Justice Weintraub pointed out that although liability policy provisions requiring notice refer to conditions precedent, what is actually involved is a forfeiture. We observe that usually such notice provisions require notice of the occurrence of the accident, notice of claim for damages and notice of the bringing of an action thereon. The Chief Justice also stated:
"* * * This is not to belittle the need for notice of an accident, but rather to put the subject in perspective. Thus viewed, it becomes unreasonable to read the provision unrealistically or to find that the carrier may forfeit the coverage, even though there is no likelihood that it was prejudiced by the breach. To do so would be unfair to insureds. It would also disserve the public interest, for ...