The opinion of the court was delivered by: DUSEN
This action is brought by plaintiffs as third-party beneficiaries under a written agreement between defendant and North American Acceptance Corporation (hereinafter 'NAAC'), a Pennsylvania corporation, for an injunction, an accounting, and damages for breach of contract. Plaintiffs assert that under a contract dated January 17, 1959, the defendant agreed that, for a period of two years from that date, it would place all insurance in connection with contracts financing mobile homes which it should acquire from any source other than NAAC through Rush and Halloran, Inc. (hereinafter 'R & H'), a District of Columbia corporation, or such other insurance company or agency as may be designated in writing, from time to time, by NAAC. In consideration of such agreement, NAAC agreed to pay a 20% commission on the gross premium to the designee of defendant. NAAC designated Consolidated Insurance Agencies, Inc. (hereinafter 'Consolidated'), a Georgia corporation, as the agency through which the defendant should place all insurance in connection with transactions originating in the Commonwealth of Pennsylvania for the financing of mobile homes. R & H and Consolidated are wholly-owned subsidiaries of NAAC.
Defendant has moved to dismiss on two grounds. The first is that plaintiffs have failed to join an indispensable party plaintiff, namely, NAAC. It asserts that since NAAC is a Pennsylvania corporation, its joinder would destroy diversity of citizenship and accordingly require dismissal of the Complaint. The second is that plaintiffs have failed to state a claim upon which relief can be granted, since they have never been licensed to act as insurance brokers in the Commonwealth of Pennsylvania. Defendant claims this is a condition precedent to their right to maintain this action. Similarly, plaintiffs have never been licensed as insurance agents in Pennsylvania, which defendant asserts also bars recovery for business transacted in Pennsylvania. Since this part of the motion raises facts outside the Complaint, defendant has requested the court, pursuant to Rule 12(b), 28 U.S.C.A., to consider those facts and treat the motion as one for summary judgment.
The right of the plaintiffs to institute this suit as donee beneficiaries of a contract between NAAC and the defendant depends upon that law which is the source of the substantive rights on which their claim is based. It is not disputed that this is the law of Pennsylvania in the instant case. The right of a donee third-party beneficiary to bring suit to enforce his rights under a contract in Pennsylvania cannot be challenged. Logan v. Glass, 1939, 136 Pa.Super. 221, 7 A.2d 116, affirmed 1940, 338 Pa. 489, 14 A.2d 306; 8 P.L.E. Contracts § 164, pp. 210-212. Defendant asserts, however, that NAAC has an interest in the controversy 'of such a nature that a final decree cannot be made without neither affecting that interest or leaving the controversy in such a doubt that its final termination may be wholly inconsistent with equity and good conscience,' and is, therefore, an indispensable party. Shields v. Barrow, 1854, 17 How. 129, 139, 58 U.S. 129, 15 L. Ed. 158, cited with approval in Brodsky v. Perth Amboy National Bank, 3 Cir., 1958, 259 F.2d 705. See, also, the discussion in State of Washington v. United States, 9 Cir., 1936, 87 F.2d 421.
This court is also of the opinion that it would be improper to dismiss this suit as to either plaintiff on the present record for failure to state a claim upon which relief can be granted. A fair reading of paragraph 7 of the contract seems to indicate that it requires defendant's designees, but not NAAC's designees, to be properly licensed insurance brokers or agencies. The meaning of this clause is certainly open to dispute and cannot be resolved on the record at this time. Furthermore, it is possible to conceive of situations in which the defendant might be obligated under the contract to place insurance with each of the plaintiffs and plaintiffs could place it without doing insurance business in Pennsylvania. Plaintiffs are entitled to an opportunity to show such situations in the absence of anything unchallenged in the record eliminating these possibilities.
Finally, the fact that the contract between NAAC and the defendant, on which the plaintiffs' claims are based, was made in Pennsylvania does not alone indicate that they were doing business in that state in violation of the insurance laws. See American Universal Ins. Co. v. Sterling, supra, at page 161.
And now, January 22, 1960, it is ordered that defendant Delaware Valley Financial Corporation's motion to ...