On appeal from the Superior Court, Appellate Division, whose opinion is reported at 159 N.J. Super. 373 (1978).
For reversal and remandment -- Justices Mountain, Jacobs, Clifford and Schreiber. For affirmance -- Justices Pashman and Handler. Pashman, J., dissenting. Handler, J., dissenting.
We reverse essentially for the reasons expressed in the dissenting opinion of Judge Michels below. He concluded, as do we, that "the policy of insurance issued by third-party defendant The American Insurance Company (American) to defendant and third-party plaintiff A. Tomae & Sons, Inc. (Tomae) did not provide coverage for the unscheduled contractors' equipment owned by the plaintiff Fenwick Machinery, Inc. (Fenwick) but leased to Tomae."
We emphasize the point that we are not here concerned with and hence need not pass upon the question of whether the policy language is free of ambiguity when tested by "[an] objectively reasonable interpretation of the average policyholder," DiOrio v. New Jersey Manufacturers Ins. Co., 79 N.J. 257 (1979). Here the third-party defendants Brounell, Kramer, Waldor, Insurance Brokers, held themselves out as experienced in the field. Specifically, they are "expected to possess reasonable knowledge of the types of policies, their different terms, and the coverage available in the area in which [their] principal seeks to be protected." Rider v. Lynch, 42 N.J. 465, 476 (1964); Bates v. Gambino, 72 N.J. 219, 224-25
(1977). Surely the brokers, charged with this superior knowledge, cannot take advantage of whatever deficiencies might be uncovered in the policy language when viewed from the perspective of an unschooled and unwary policyholder. Cf., e.g., Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 482-83 (1961); Bryan Const. Co. v. Employers Surplus Lines Ins. Co., 60 N.J. 375, 377-78 (1972).
Although the question has not been raised before this court, a judgment in favor of A. Tomae & Sons, Inc. against both its brokers, Brounell, Kramer, Waldor, and defendant The American Insurance Company, appears incongruous.
Reversed and remanded for reinstatement of judgment of indemnification in favor of third-party defendant, The American Insurance Company, against third-party defendants, Brounell, Kramer, Waldor.
PASHMAN, J., dissenting. I join fully in the dissenting opinion which Justice Handler has filed in this case. The insurance contract here at issue was clearly ambiguous as to whether coverage was provided for the leased equipment which was destroyed. The judgment of the Appellate Division should therefore be affirmed.
I only wish to add a few words in order to clarify the basis underlying the majority's holding. The majority correctly notes that the sole dispute in this appeal involves the insurance company and its broker, the insured having already been guaranteed compensation for his loss. Inasmuch as both parties to the controversy are insurance experts, it appears to hold that there is no need to call into play the protective rules and mechanisms which we have carefully designed to guarantee maximum coverage to the public. See, e.g., Perrine v. Prudential Ins. Co., 56 N.J. 120, 126 (1970); Allen v. Metropolitan Life Ins. Co., 44 N.J. 294, 305 (1965); Bauman v. Royal Indem. Co., 36 N.J. 12, 25 (1961); Mazzilli v. Accident & Cas. Ins. Co., 35 N.J. 1, 7-8 (1961).
Although I disagree with its conclusions in this regard, it is clear that should a subsequent controversy arise involving a direct dispute between an insured member of the public and the insurer, the latter would not likely prevail. In such a case, the "reasonable expectations" test would unquestionably be applicable. See, e.g., Perrine v. Prudential Ins. Co., supra; Allen v. Metropolitan Life Ins. Co., supra; Bauman v. Royal Indem. Co., supra; Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 482 (1961). There can be no doubt but that the contract clauses here at issue are "ambiguous" insofar as the average consumer of insurance is concerned.
HANDLER, J., dissenting. As this litigation has finally wended its way to this Court, the question remaining is which of two third-party defendants, the insurance company, American Insurance Company, (American) or the insurance brokers who sold the insured its policy, Brounell, Kramer, Waldor, (Brounell) must bear ultimate liability for the losses sustained by the insured. Directly affecting the answer to this question is whether or not American's Contractors' Equipment Floater policy provided coverage to the trial defendant, A. Tomae ...