S.&E. Motor Hire Corp. v. New York Indem. Co.

• Decision Date: 18 November 1930
• Citation: 255 N.Y. 69,174 N.E. 65
• Parties: S. & E. MOTOR HIRE CORPORATION v. NEW YORK INDEMNITY CO.
• Court: New York Court of Appeals Court of Appeals

255 N.Y. 69

174 N.E. 65

S. & E. MOTOR HIRE CORPORATION

v.NEW YORK INDEMNITY CO.

Court of Appeals of New York.

Nov. 18, 1930.

Action by S. & E. Motor Hire Corporation against the New York Indemnity Company. From a judgment of the Appellate Division, First Department (229 App. Div. 232, 241 N. Y. S. 417), reversing as matter of law a judgment (134 Misc. Rep. 514, 235 N. Y. S. 626) entered on a judgment directed by the court in favor of defendant dismissing the complaint, jury trial having been waived, defendant appeals.

Reversed, and judgment of the Trial Term affirmed.

Appeal from Supreme Court, Appellate Division, First Department.

Everett W. Bovard, of New York City, for appellant.

George H. Engelhard, of New York City, for respondent.

LEHMAN, J.

By the terms of a policy of insurance issued to the plaintiff, the defendant bound itself to indemnify the plaintiff against ‘loss from the liability imposed by law upon the Assured on account of bodily injuries * * *suffereddd * * * by any person or persons by reason of the ownership, maintenance or use of the automobiles described in the policy,’ and also ‘to defend in the name and on behalf of the Assured suits for damages * * * brought on account of such injuries.’ From the coverage of the policy, loss occasioned by ‘accidents occurring while the automobiles are being operated * * * by any person in violation of law as to age’ was expressly excluded.

An accident occurred while one of the automobiles described in the policy was being operated by an employee of the plaintiff who was under eighteen years of age. Since, under the statute (Highway Law [Consol. Laws, c. 25] § 282, as then in force), no license might be granted to an operator under the age of eighteen, the defendant under the terms of the policy was not obligated to indemnify the plaintiff against liability for damages occasioned by the accident or to defend suits brought for such damages.

The defendant nevertheless did undertake to defend a suit brought by a party injured in the accident. When the case was called for trial, counsel for the injured party informed the defendant's trial counsel that the chauffeur was under eighteen years of age at the time of the accident. Then the insurance company abandoned the defense. The suit for the injuries caused by the accident was settled by the assured for about $10,000, under a stipulation made with the insurance company that such settlement might be made without prejudice to the rights of either party. The insured now seeks reimbursement from the insurance company for the amount paid under the settlement.

The issue in the case is narrow. The plaintiff can recover only upon proof that the insurance company waived the benefit of the clause excluding from the coverage of the policy accidents which occur while an automobile is operated by a chauffeur under the age of eighteen. This court has frequently pointed out that waiver is an intentional relinquishment of a right, and ordinarily must be predicated upon full knowledge of all the facts upon which the existence of the right depends. Kiernan v. Dutchess County Mutual Ins. Co., 150 N. Y. 190, 44 N. E. 698;Clark v. West, 193 N. Y. 349, 86 N. E. 1; Williston on Contracts, § 697. The trial court has decided that the insurance company, by undertaking the defense of the suit, did not waive its right to limit its contractual obligation in accordance with the terms of its contract, for at that time it had no knowledge of the fact that the chauffeur was under the age of eighteen. The Appellate Division reversed that decision, and held as a matter of law that, even if the insurance company did not have actual knowledge of the chauffeur's age, it did have knowledge sufficient to put it on inquiry as to the chauffeur's true age.

We may assume that, when the insurance company undertook the defense, it had notice of facts sufficient, at least, to arouse suspicions that the chauffeur might be under the lawful age. The chauffeur had never been granted a license to operate the car. He had in his possession a license granted to a person of different name, and he was employed under that assumed name. The insured furnished the insurance company with a statement made by the chauffeur in which he represented his age as eighteen. To the investigator for the company the chauffeur represented his age as twenty. The company accepted that statement and acted upon it until further information, received on the day the case was called for trial, showed its falsity. Perhaps even while acting upon it the insurance company may have harbored suspicions of its falsity. Even then the question remains whether as matter of law it was bound to reject the statement furnished by the defendant and the subsequent...