Dreier, J.d.c., Temporarily Assigned.
Defendant Richard J. Carlson has moved for an order dismissing the amended complaint as to him on the ground that it fails to state a claim upon which relief may be granted. A companion motion requests severance of the claims if the first motion is denied. The case is one of novel impression in New Jersey and, for the reasons hereinafter stated, the motion for dismissal must be denied.
Plaintiff was a passenger in a vehicle which struck the rear of a tractor-trailer in Maryland. She instituted suit against the owner and operator of the car in which she was a passenger and against the owner and operator of the tractor-trailer. By third-party complaint the owner of the passenger car impleaded the liability insurer and defendant Carlson, the insurance agent or broker, alleging as to him both negligence and breach of contract, since the insurer claimed that its policy had lapsed and had been cancelled. Thereafter plaintiff amended her complaint asserting direct claims against the insurance company and defendant Carlson.
The first question in this case is whether an insurance agent or broker may be liable to an injured member of the public for the negligent failure of the agent or broker to procure requested insurance, or for the breach of a contract to procure such insurance.
In reality, both the negligence and contract claims turn on the same issue, viz., is there duty owed by the insurance agent to members of the public, which duty is breached by the failure to obtain requested coverage. Whether the breach was occasioned by negligence or constituted a failure to perform a contract must await trial.
In the contract terminology, the public can be seen as the third-party beneficiary of an agreement between the agent and the insured. There is no question that the applicant himself is a beneficiary of the contract, but the public policy of this State goes further. Our policy is to see that drivers are insured, not only for their own benefit (to protect their assets in the event of a liability claim), but also to provide a fund from which the damage claims of others may be satisfied. See Selected Risks Ins. Co. v. Zullo, 48 N.J. 362 (1966); Matits v. Nationwide Mutual Ins. Co., 33 N.J. 488, 495-496 (1960); Sneed v. Concord Ins. Co., 98 N.J. Super. 306, 321 (App. Div. 1967); Deblon v. Beaton, 103 N.J. Super., 345, 351 (Law Div. 1968). The public is a third-party beneficiary of such an agreement, whether the public's interest is classified under the common law classifications of donee, creditor or incidental beneficiary.
Our modern statutes requiring insurance or providing for coverage by an Unsatisfied Claim and Judgment Fund recognize that the public expects a source of payment beyond the means of the individual tortfeasor. When the agent or broker contracts for the insured to procure insurance, it is to satisfy this public policy of the State, as well as the desires of the insured. The beneficiaries of the agreement are not merely the insured who will have obtained coverage, and the insurance company which will obtain the premium, but also a potential injured party who will have a fund from which he can receive payment. The contract is made for his benefit as surely as if the provision appeared therein. His right of action is confirmed by N.J.S.A. 2A:15-2, which states:
A person for whose benefit a contract is made, either simple or sealed, may sue thereon in any court and may use such contract as a matter of defense in an action against him although the consideration of the contract did not move from him.
In the negligence field, in order to render the defendant liable, there must be found a breach of a duty, which duty, if observed, would have averted the plaintiff's injuries (financial in our case). Fortugno Realty Co. v. Schiavone-Bonomo Corp., 39 N.J. 382, 393 (1963). The definition of a legal duty, in the negligence sense, has been best expressed in Wytubeck v. Camden, 25 N.J. 450 (1958). Justice Heher there noted:
"Duty" is not an absolute conception; and the standard of conduct is not an absolute. Duty arises out of a relation between the particular parties that in right reason and essential justice enjoins the protection of the one by the other against what the law by common consent deems an unreasonable risk of harm, such as is reasonably foreseeable, Lokar v. Church of the Sacred Heart, 24 N.J. 549 (1957). In the field of negligence, duty signifies conformance "to the legal standard of reasonable conduct in the light of the apparent risk"; the essential question is whether "the plaintiff's interests are entitled to legal protection against the defendant's conduct." Prosser on Torts (2 d ed.), section 36. Duty is largely ...