Aetna Cas. and Sur. Co. v. Lumbermens Mut. Cas. Co.

• Decision Date: 12 July 1989
• Citation: 543 N.Y.S.2d 806,152 A.D.2d 1003
• Parties: AETNA CASUALTY AND SURETY COMPANY, Appellant, v. LUMBERMENS MUTUAL CASUALTY COMPANY, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 806

543 N.Y.S.2d 806

152 A.D.2d 1003

AETNA CASUALTY AND SURETY COMPANY, Appellant, v. LUMBERMENS MUTUAL CASUALTY COMPANY, Respondent.

Supreme Court, Appellate Division Fourth Department.

July 12, 1989.

Michael Pilarz, Buffalo, for appellant.

Canale, Madden & Burke, P.C. by John Canale, Buffalo, for respondent.

Before DENMAN, J.P., and BOOMER, GREEN, LAWTON and DAVIS, JJ.

MEMORANDUM:

Plaintiff, Aetna Insurance Company (Aetna), and defendant, Lumbermens Mutual Insurance Company (Lumbermens), are coinsurers of John W. Cowper Co., Inc. (Cowper). Lumbermens denied contractual liability coverage for the payment of a personal injury claim against Cowper. A settlement agreement was entered into between claimant and the two insurers whereby Aetna, which admitted liability coverage, would pay the full amount of settlement and reserve the right to seek a judicial determination of the obligation of both insurers. Thereafter, Aetna commenced this declaratory judgment action. Included in its complaint was a demand for interest. This court determined that there was coverage under Lumbermens policy and that Lumbermens and Aetna were equally liable for the amount of the settlement (136 A.D.2d 246, 527 N.Y.S.2d 143, lv. denied 73 N.Y.2d 701, 535 N.Y.S.2d 595, 532 N.E.2d 101). Following entry of this court's order, Lumbermens paid Aetna $83,250 (one-half of the settlement), but refused to pay Aetna any interest. Aetna moved to recover interest on the monies it paid for that portion of the settlement which was lawfully Lumbermens' obligation. The trial court denied the motion and Aetna now appeals from that order.

The agreement between Aetna and Lumbermens may be construed as an agreement that Aetna advance to Lumbermens any share of the settlement for which Lumbermens might be found responsible. An obligation to pay interest on an advance of money must be expressed or implied in fact or else it does not exist; it is not implied as a matter of law (New York State Thruway Auth. v. Hurd, 25 N.Y.2d 150, 158, 303 N.Y.S.2d 51, 250 N.E.2d 335). When Aetna paid the full amount of the settlement, there was no express agreement that Lumbermens pay interest on any principal amount it was responsible to pay but, under the circumstances, we find that such an agreement was implied.

Here, the commercial context of the transaction supplies the necessary implication of interest (see, New York State Thruway Auth. v. Hurd, supra, at 157-158, 303 N.Y.S.2d 51, 250 N.E.2d 335...