On appeal from the Superior Court of New Jersey, Law Division, Middlesex County.
Before Judges Michels and Skillman.
The opinion of the court was delivered by
Defendant Liberty Mutual Insurance Company (Liberty Mutual) appeals from summary judgments of the Law Division that awarded plaintiffs Hermann Forwarding Co. and Hermann Leasing Co. damages in the amount of $67,611.25 and A.I. Credit Corporation (Credit Corporation) (referred to as A.I.C.C.O. in the complaint) damages in the amount of $37,840.26 for the overpayment of premiums to defendants Pappas Insurance Co., William Pappas and Thomas Pappas (collectively referred to as Pappas).
Liberty Mutual, in its capacity as a servicing carrier for the New Jersey Commercial Automobile Insurance Plan (Plan), received an application from the Plan for commercial truck insurance coverage for plaintiffs. Pappas had submitted the application to the Plan on behalf of plaintiffs. On March 1, 1992, Liberty Mutual issued its Truckers Liability Insurance Policy to plaintiffs for the period from March 1, 1992 to March 1, 1993. The total policy advance premium was $556,128, which included a New Jersey Property-Liability Insurance Guarantee Association surcharge of $1,835. Plaintiffs paid a $166,838 down payment on the premium, and plaintiffs financed the balance of $389,290 through Credit Corporation. The monthly payments were $57,247, with the first payment due on April 1, 1992 and the last payment due on October 1, 1992. The finance agreement, signed by plaintiffs and their broker, Pappas, in part, provided:
1. Payments. In consideration of the premium payment to be made by you to the above insurance company(ies), I promise to pay you as stated above in the "Payment Schedule." If I do not make a payment on time, I will pay a late charge as stated above.
The word "you" in the "Payments" provision referred to Credit Corporation and the word "I" referred to plaintiffs.
Plaintiffs remitted premium payments directly to Pappas. The checks were written to the order of Pappas and deposited by Pappas. The total amount of the checks issued between March 1, 1992 and May 1, 1992 was $174,494.*fn1 Additionally, Credit Corporation paid the financed amount of $389,290 to Liberty Mutual on March 3, 1992.
On May 20, 1992, the policy was canceled for non-payment of premium, resulting in a premium credit of $460,689 and a surcharge credit of $1,520. Liberty Mutual furnished plaintiffs with a statement of account which indicated that the total policy premium was $556,128 with a surcharge of $1,835.*fn2 The statement also indicated that Liberty Mutual had received $126,360 towards the premium. Consequently, the statement showed a credit balance of $30,606 due to plaintiffs which was paid by Liberty Mutual to Credit Corporation.
According to plaintiffs, the statement indicating a $126,360 payment on account was not accurate and did not include all payments actually made to Pappas on this policy. Plaintiffs claimed that they had paid Pappas a total amount of $174,494, but that Pappas, in turn, only paid $126,360 to Liberty Mutual, thus leaving an unaccounted sum of $48,134.*fn3 Plaintiffs claim, therefore, that they had overpaid Pappas of a total of $78,740 on the policy. Additionally, Pappas made only one credit installment payment of $57,252 to Credit Corporation prior to the cancellation. Following the cancellation, Pappas remitted $41,035.74 to Credit Corporation in June 1992, and $34,000 and $30,606 in July of 1992. These payments left a balance due to Credit Corporation of $37,840.26. In sum, plaintiffs claimed that they had overpaid Pappas by $78,740 and Credit Corporation claimed that they had overpaid Pappas by $38,840.
Plaintiffs instituted this action against Liberty Mutual, Credit Corporation and Pappas to recover the overpayment of premiums made to Pappas. Credit Corporation denied liability and counterclaimed against plaintiffs, contending that plaintiffs were liable for the unpaid balance due under the premium finance agreement. Credit Corporation also cross-claimed against Pappas and Liberty Mutual for contribution and indemnification for all sums which it may be compelled to pay plaintiffs. Liberty Mutual denied that it was under any liability to plaintiffs and Credit Corporation and cross-claimed against Credit Corporation and Pappas for contribution and indemnification for all sums it may be compelled to pay plaintiffs. Pappas did not file an answer to either the complaint or cross-claims, and apparently the Pappas Insurance Company declared bankruptcy.
Shortly after issue was joined, but before pretrial discovery had been completed, plaintiffs moved for summary judgment against Liberty Mutual. They sought to recover from Liberty Mutual the unearned premiums that were paid to Pappas on the ground that under N.J.S.A. 17:22-6.2a Pappas was acting as Liberty Mutual's agent when it received the premiums. Credit Corporation also moved for summary judgment and sought to recover the balance due under the premium finance agreement either from plaintiffs or from Liberty Mutual, as the principal of Pappas. The trial court held that under N.J.S.A. 17:22-6.2a Pappas was the agent for Liberty Mutual when it accepted premium payments from plaintiff and Credit Corporation because an insurance contract existed between plaintiffs and Liberty Mutual. Therefore, the trial court found that Liberty Mutual was liable for the repayment of all unearned premiums. Summary judgment was entered against Liberty Mutual and in favor of plaintiffs in the amount of $67,611.25 and in favor of Credit Corporation in the amount of $37,840.26. Liberty Mutual appealed both judgments and we consolidated the appeals.
Liberty Mutual seeks a reversal of the summary judgment, contending generally that the trial court erred because pretrial discovery had not yet been completed, there were genuine issues of material fact and the trial court wrongly construed N.J.S.A. 17:22-6.2a ...