2 N.Y.2d 584, Phoenix Ins. Co. v. Guthiel

Citation:2 N.Y.2d 584, 161 N.Y.S.2d 874
Party Name:Phoenix Ins. Co. v. Guthiel
Case Date:April 11, 1957
Court:New York Court of Appeals

Page 584

2 N.Y.2d 584

161 N.Y.S.2d 874

PHOENIX INSURANCE COMPANY, Respondent,

v.

William GUTHIEL et al., Defendant.

New York Court of Appeals

April 11, 1957.

Page 585

[161 N.Y.S.2d 876] Melvin H. Zurett, Rochester, for Harold Shoemaker, appellant.

Paul Reed Taylor, Penn Yan, for Arthur Buckle, appellant.

Page 586

Stephen V. Lines and Donald F. Hathaway, Rochester, for respondent.

BURKE, Judge.

Defendants, with the exception of Greenlea, appeal from a judgment declaring that plaintiff, an insurer, is not legally obligated under its policy to defend and indemnify defendants Buckle, the insured, and Shoemaker, who purchased a vehicle from Buckle, against the claims of the other defendants for personal injuries and property damage, allegedly sustained as a result of a collision between the aforesaid vehicle while being driven by Shoemaker and two other vehicles.

Twenty-three days prior to the accident, Shoemaker purchased the automobile from Buckle. At the time of the accident, the vehicle operated by Shoemaker carried the registration plates issued by the State of New York to Buckle, who, in

Page 587

violation of section 61 of the Vehicle and Traffic Law, Consol.Laws, c. 71, did not remove the number plates upon the transfer of ownership.

Under these circumstances it is settled that if sued in tort Buckle would be estopped from denying ownership of the vehicle involved. Switzer v. Aldrich, 307 N.Y. 56, 120 N.E.2d 159; Reese v. Reamore, 292 N.Y. 292, 55 N.E.2d 35; Shuba v. Greendonner, 271 N.Y. 189, 2 N.E.2d 536.

Insofar as pertinent the policy issued to Buckle reads as follows:

'Coverage A Bodily Injury Liability

'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile.

'Coverage B Property Damage Liability

'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident and arising out of the ownership, maintenance or use of the automobile.'

The question presented by this appeal is whether, under the circumstances presented and despite the provisions of coverage in its insurance [161 N.Y.S.2d 877] policy, the plaintiff insurer is also estopped from denying ownership of the vehicle by Buckle, and is, therefore, required to defend Buckle, the named insured and Shoemaker, Buckle's vendee, and to satisfy claims against them within the limits of its insurance policy.

Both Special Term and the Appellate Division found that 'Ownership and possession passed from Buckle to Shoemaker' and that at the time of the accident Buckle, the insured, 'had no title, lien upon or other interest, in the car'. (206 Misc. 3, 132 N.Y.S.2d 480) The Appellate Division, however, reversed and granted judgment for the plaintiff. We think that decision was correct.

Our courts, as we stated, have as a matter of public policy estopped a former owner from denying ownership of the vehicle bearing his registration plates at the time of an accident in violation of the statutes regulating the use of such plates, but only when he is sued in tort by an injured party as the owner of

Page 588

such vehicle. Switzer v. Aldrich, supra; Shuba v. Greendonner, supra; Reese v. Reamore, supra. There can be no question as to the soundness of the law enunciated in these cases as applied to the circumstances and facts giving rise to the litigation in each case. However, it is the application of the governing facts which support the legal principle therein. Analysis of those cases shows that if estoppel were not applied, one who had made its possible for another to commit a tort would be insulated from personal liability as a consequence of that tort. Sound public policy dictated a contrary result.

The only case where the insurer was required to defend and indemnify the vendor and the vendee who used the vendor's registration plates on the purchased vehicle was not decided on the basis of public...

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