Breen v. New Jersey Mfrs. Indem. Ins. Co.

• Decision Date: 02 April 1969
• Parties: John J. BREEN, Plaintiff, v. NEW JERSEY MANUFACTURERS INDEMNITY INSURANCE COMPANY, a corporation of theState of New Jersey, Defendant.
• Court: New Jersey Superior Court

Page 302

105 N.J.Super. 302

252 A.2d 49

John J. BREEN, Plaintiff, v. NEW JERSEY MANUFACTURERS INDEMNITY INSURANCE COMPANY, a corporation of theState of New Jersey, Defendant.

Superior Court of New Jersey, Law Division.

Argued March 28, 1969.

Decided April 2, 1969.

John A. Schepisi, Fort Lee, for plaintiff. (Breslin & Monaghan, Englewood Cliffs, attorneys).

John B. LaVecchia, Newark, for defendant. (Pindar, McElroy, Connell & Foley, Newark, attorneys).

MALECH, J.S.C.

This case is before the court upon motion by the defendant for summary judgment on the ground that plaintiff's claim is barred by the statute of limitations (N.J.S. 2A:14--1, N.J.S.A.).

John J. Breen, an attorney at law of New Jersey, was injured in an automobile accident which occurred on February 21, 1957, in New Jersey. The injuries were caused by the negligence of one Milton Stern in operating his motor vehicle. An automobile Policy No. 57 15107 CZ of New Jersey Manufacturers Indemnity Insurance Company, a standard family automobile policy, insuring Milton Stern was in force and effect on February 21, 1957. The insurance policy was not under seal. Immediately after the happening of the accident Milton Stern gave oral notice of the accident to the defendant insurance company. On August 15, 1957, John J. Breen advised Milton Stern that his injuries were more serious than he had realized. On August 19, 1957, Milton Stern submitted a written report to the defendant insurance company of the accident.

On February 21, 1958, one year after the date of the accident and before suit was instituted, John J. Breen was examined by Dr. Edward Dana on behalf of the defendant insurance company. On March 28, 1958, the defendant insurance company forwarded a letter to its assured, Milton Stern, advising him that it intended to disclaim coverage under its policy because of late notice given by Stern to it. Thereafter on February 13, 1959, John J. Breen instituted suit against Milton Stern in the Superior Court of New Jersey for his injuries caused by the accident on February 21, 1957.

On December 6, 1960, a jury verdict was entered in favor of John J. Breen, plaintiff, against the defendant, Milton Stern, in the sum of $9,000.00 together with costs of suit, for the injuries resulting from the accident. This judgment has never been paid.

On November 15, 1968, John J. Breen, the plaintiff herein, instituted this suit against the defendant insurance company to recover payment upon the judgment dated December 6, 1960. It is to be noted that the instant suit by plaintiff against the defendant insurance company was instituted more than seven years and 11 months after plaintiff had obtained his judgment against the defendant's insured, Milton Stern.

The only issue to be determined by the court is the applicability of the statute of limitations in a suit by a third party or beneficiary judgment creditor against the tortfeasor's insurance company. Both parties concede that this precise issue is novel in New Jersey. The parties' briefs do not disclose any case relevant to the issue involved.

Plaintiff's first contention is that the applicable statute of limitations is N.J.S. 2A:14--5, N.J.S.A., which provides for a limitation period of 20 years; plaintiff contending that the insurer undertakes to satisfy any judgment rendered against its insured. Plaintiff argues that in common understanding, such undertaking by the insurance company must be interpreted to protect the insured during the life of the judgment, which is 20 years.

Plaintiff's second contention is that if the contract period of limitations (6 years) is considered applicable, the cause of action accrued upon breach of the contract on October 1, 1968, when the defendant refused to pay the judgment. (No proofs were offered with reference to the October 1, 1968 refusal of payment.) Plaintiff contends that the accrual of a contract cause of action occurs at the time of breach, and in an analogous situation of the claim of a guarantor, the statute of limitations does not begin to run until there is a failure to pay by the principal debtor. Silverman v. Christian, 123 N.J.Eq. 506, 198 A. 832 (Ch.1938). In this connection plaintiff argues that it was entirely proper for him to exhaust every possibility of satisfaction of the judgment against the insured, Milton Stern, before proceeding to demand payment of the judgment from the defendant insurance company. Therefore, plaintiff concludes, the cause of action against the insurance company did not accrue until it refused payment of the judgment on October 1, 1968.

Plaintiff's third contention is that no rights under the insurance policy accrued to the injured party (plaintiff-Breen) until execution on the judgment against the insured is returned unsatisfied, and that it is only after the execution is returned unsatisfied can the person injured bring suit against the insurer, citing Suydam v. Public Indemnity Co., 10 N.J.Misc. 868, 872, 161 A. 499 (Sup.Ct.1932). Plaintiff further relies upon N.J.S.A. 17:28--2, which provides that no policy of insurance shall be issued by an insurer, unless it contains a provision that the insolvency or bankruptcy of the insured shall not release the insurer, and further stating that in case execution against the insured is returned unsatisfied, then an action against the insurer may be maintained by the injured person against the insurance company. Such provisions, among others, are deemed to be included in the insurance policy by statute. Therefore, the plaintiff concludes that the cause of action does not accrue and did not accrue until the return of an execution unsatisfied. At oral argument plaintiff requested a continuance of the matter to offer proof of the return of an execution unsatisfied sometime in 1968. The court deemed such proof unnecessary, inasmuch as defendant does not contend that more than six years has elapsed following return of an execution unsatisfied.

Defendant insurance company contends that a claim by a judgment creditor, a successful plaintiff in a personal injury suit, against the insurance carrier for the judgment debtor, is barred by the six year statute of limitations governing contracts not under seal. Defendant contends that the present suit involves a claim for breach of an insurance policy; that the plaintiff here is claiming in the right of defendant's insured, Milton Stern. Defendant concludes that actions based upon breach of contract must be brought within six years after the cause of action thereon accrues. N.J.S. 2A:14--1, N.J.S.A. Since the cause of action on the present insurance policy accrued on the date plaintiff recovered judgment against Milton Stern on December 6, 1960, plaintiff therefore contends that this suit should have been instituted on the insurance policy within six years from December 6, 1960. This action having been commenced on November 15, 1968, defendant contends it is barred by the provisions of N.J.S. 2A:14--1, N.J.S.A.

Defendant further contends that N.J.S.A. 17:28--2, relied upon by plaintiff, is not pertinent to the issue involved; that the statute sets forth minimal requirements of insurance policies issued in New Jersey. Defendant argues that it has fully complied with this statutory provision, and not satisfied with such minimal coverage has afforded additional rights under the policy. In fact, defendant asserts the terms of the policy require payment by defendant upon recovery of a judgment against the insured. The policy of insurance in this connection provides as follows:

'7. Action Against Company--Coverages A and B:

No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company.

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