BROWN v. SHAW

The opinion of the court was delivered by FRITZ, P.J.A.D.

This appeal concerns relative rights among an assigned risk insured, his apparently absconding insurance agent or broker and the firm of that individual, the organization that financed that insurance, the insurance company, a passenger in the insured's car, the driver of another car involved in an accident with the insured, and the Unsatisfied Claim and Judgment Fund. The matter is complex both procedurally and substantively. Its presentation to us is not without omissions and in some cases requires assumptions. To add to the burden inherent in the convoluted and intricate problem, important determinations in at least one of the trial courts involved arrive here without any findings by the trial judge in his grant and denial of a number of vital summary judgment motions. The ultimate irony resides in our conviction that a legal proposition neither argued nor considered below is sufficiently vital, both in the sense of its importance as a public question and with respect to essential justice in this case, that we must not ignore it. Pursuant to the authority of R. 2:10-2 and consistent with its policy pronouncement, we reverse.

In June 1973 Lee D. Brown (Brown), an assigned risk under the Motor Vehicle Security-Responsibility Law (N.J.S.A. 39:6-23 et seq.), obtained auto liability insurance from Lumbermens Mutual Casualty Company (Lumbermens) through Walter Shaw Insurance Agency, a business operated by Walter Shaw as an insurance broker or agent (Shaw). This insurance policy became effective on June 1, 1973 and was to terminate one year later on June 1, 1974. Unable to pay the full amount of the insurance premium ($137), Shaw arranged for Brown to execute a premium finance agreement with Arista Factors, Inc. (Arista). This agreement required Brown to make payments to Arista of $16.38 a month for eight months commencing on July 4, 1973. Brown testified that he also gave Shaw an initial deposit of $40 when he executed the agreement. The finance agreement authorized Arista to pay Lumbermens the full premium due.

This contract further provided that the event of default by Brown in the payment of any installment when due

Another and different result said to eventuate upon ten-day default in payment appeared elsewhere in the agreement:

Although the agreement recited Brown's promise to pay to the order of Arista at its place of business and contained an express disavowal of any agency in Shaw, Brown's testimony that Shaw told him he was "to make the payments to him until my payment book came and my insurance policy" is unrefuted.

After receiving the premium finance agreement and the July 4, 1973 payment "on or about August 4, 1973," Arista processed the agreement and "mailed the entire premium for [the] policy to [Lumbermens]." There is evidence that Arista did not receive Brown's payment due on August 4. Accordingly, on August 9 Arista mailed a "late notice letter" to Brown which stated:

Brown, who claims that he had paid Shaw the August 4 payment, took the letter to Shaw. In Brown's presence Shaw dialed a number on the telephone and talked to someone apparently from Arista. After Shaw hung up he informed Brown "that there had been a mistake" and "that [Brown's] insurance was all right and [that he] could continue driving."

On August 14 Arista had still not received the August payment from either Brown or Shaw. On that date Arista sent a "cancellation notice" to Brown which stated in pertinent part:

Brown went back to Shaw. He showed him the notice. Shaw told him "the same thing he told me the first time. He told me sometimes the finance company and the service company get mixed up and he said that the policy was all right. He had called the finance company and I could continue driving."

It is apparent that Arista exercised its power of attorney and directed Lumbermens to cancel Brown's insurance policy. It seems that this was done by forwarding to Lumbermens a copy of the "cancellation notice" containing the following preface:

We pause to observe that Arista also thus assured Lumbermens that it had complied with § 13 (obviously N.J.S.A. 17:16D-13) of "New Jersey's Insurance Premium Finance Company Act."

Lumbermens complied, cancelled the policy and returned the premium.

Four days after the purported effective date of the cancellation Brown was driving his car when it was involved in an accident with a motor vehicle being operated by Oscar Johnson (Johnson). Brown and a passenger in his car, Dorothy Jackson (Jackson), were injured. After his release from the hospital Brown took his hospital bills to Shaw and reported the accident. Shaw said nothing to Brown with regard to the fact that his insurance policy had been cancelled.

Brown alleged that "roughly a month later" he called Lumbermens to see what was holding up his claim. He testified that he was told by a Mr. Jung that his policy was "okay" and that Lumbermens was waiting to hear from Oscar Johnson's insurance company before settling his claim. Brown continued to make his regular monthly insurance payments to Shaw through December 1973, and in that month Shaw gave Brown a written statement "saying my policy was good as far as [Shaw's] office is concerned."

Apparently Brown finally called Lumbermens again and this time was told that his insurance policy had been cancelled. Thereafter Lumbermens refused to reimburse Brown for his claim and refused to defend him in this lawsuit which followed.

[The court here reviewed the complicated procedural history of the case]

From the outset of this litigation, and at all times since, the question put in issue by Brown's reply brief [the propriety of the Arista cancellation], previously raised or not, was in our judgment among the most important considerations implicit in the matter. While the different counsel Brown has had — appellate counsel did not argue the motions or try the case — should have seen and raised the issue, and the employment of a reply brief to assert new arguments is improper, State v. Smith, 55 N.J. 476, 488 (1970),1 Brown is wholly right in his averment that issues of public policy permeate the proposition. Beyond this, our concern for the proper disbursement of public funds might easily have moved us to undertake the question even had it been raised by no one. Finally, the fundamental rights of Brown, who achieved only an 11th grade education, may be deeply involved in this battle with an absconding insurance broker or agent, a sophisticated high risk money lender and an established successful insurance company. In such case, "substantial justice may require that the scope of inquiry be not thus restricted" to matters raised below. Spiegle v. Seaman, 160 N.J.Super. 471, 481 (App.Div. 1978). While ordinarily matters not raised below will not be reviewed on appeal, Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973), general public importance alone will warrant a departure from that rule. Deerfield Estates, Inc. v. East Brunswick Tp., 60 N.J. 115 (1972).

We are entirely satisfied that the matter is of considerable general public importance. In the first place, legislation affecting automobile insurance has always been considered remedial, to be construed to effect the broadest protection of auto accident victims and to limit exclusions by strict construction against the insurer. Motor Club of America v. Phillips, 66 N.J. 277, 293 (1974); Fellippello v. Allstate Ins. Co., 172 N.J.Super. 249, 261-262 (App.Div. 1979). This clear and consistent pronouncement of public policy in the State is soundly derived from legislative action determining that policy. Consistent with this, we have no doubt at all that the Insurance Premium Finance Company Act, N.J.S.A. 17:16D-1 et seq. in general and here N.J.S.A. 17:16D-13 in particular, ought to be adjudged to require exact and careful compliance and to be strictly enforced. This is no more than a matter of attention to the public policy of New Jersey and a matter of general public importance.

The significance of the presence of Fund monies in the case highlights our concern. Judge Seidman, then sitting in the Law Division, aptly described our mission in this regard in Feliciano v. Oglesby, 102 N.J.Super. 378 (Law Div. 1968):

Accordingly, we have determined to review the issue despite the fact that it was not raised except at the very last minute and then improperly. That review persuades us that Arista did not comply with N.J.S.A. 17:16D-13.

Brown was never advised of the "intent of the premium finance company to cancel the insurance contract" or of his right to cure the default within the minimum ten-day period of the required written notice of intent to cancel. N.J.S.A. 17:16D-13(b). He was told instead that Arista "would not like to cancel your insurance" and that if the policy was cancelled it could not be reinstated. He was dunned for "your check within five (5) days, so that it will not be necessary for us to take any further steps to collect this loan," and a "late charge" was imposed. But he was never advised of an intent to cancel. The next advice he received, which was also sent to the insurance company, was that "your policies [sic] listed above are cancelled" on the "Effective Date of Cancellation" fourteen days later. This document bore a title in solid capital letters: CANCELLATION NOTICE.

Thus Arista clearly did not comply with the statute.

For reasons set forth above, we believe consideration of this failure to comply is essential to a proper and just determination of the rights among the parties contested in the matters on appeal. Because the issue was not raised the judges below did not consider that dereliction. Public policy and essential justice require that this now be done.

All motion orders and judgments below in the matters on appeal are vacated.2 The matters are consolidated and remanded to the trial court for further proceedings consistent with this opinion. We do not retain jurisdiction. No costs.