Auerbach v. Maryland Cas. Co.

• Decision Date: 13 July 1923
• Citation: 236 N.Y. 247,140 N.E. 577
• Parties: AUERBACH et al. v. MARYLAND CASUALTY CO.
• Court: New York Court of Appeals Court of Appeals

236 N.Y. 247

140 N.E. 577

AUERBACH et al.

v.MARYLAND CASUALTY CO.

Court of Appeals of New York.

July 13, 1923.

Action by Henry G. Auerbach and another against the Maryland Casualty Company. From an order of the Appellate Division of the Supreme Court (205 App. Div. 131,199 N. Y. Supp. 351), reversing a judgment for the defendant, entered upon an order of the Special Term (119 Misc. Rep. 812,198 N. Y. Supp. 309), granting a motion by the defendant for judgment on the pleading, and denying such motion, the defendant, by permission, appeals.

Order of Appellate Division reversed, and that of Special Term affirmed.

Appeal from Supreme Court, Appellate Division, Second Department.

Frank C. Laughlin and Stewart W. Bowers, both of New York City, for appellant.

Meier Steinbrink and Frank E. Johnson, both of Brooklyn, for respondents.

McLAUGHLIN, J.

According to the allegations of the complaint, the defendant, on the 10th of December, 1918, issued to the plaintiffs a policy of automobile insurance indemnifying them to the extent of $5,000 against loss by reason of an accident resulting in injuries or death ot any one person; that the policy provided, among other things, if an accident occurred, immediate notice of the same should be given to the insurance company, and if an action were brought against the assured to enforce a claim on account of such accident, they would forward to it the summons or other process served; that the company would, at its own cost, investigate all accidents and defend all actions, even if groundless, of which notice was given, unless it elected to settle the claim or action; that it would not be responsible for any settlement made or any expenses incurred by the assured, unless such settlement or expenditures were first specifically authorized in writing, except that the assured might provide, at the time of the accident, at the expense of the company, such immediate surgical relief as was imperative; that thereafter, while the policy was in force and the plaintiffs were driving or in control of the automobile mentioned therein, it ran into one Jane O'Neill and caused her personal injuries, to recover for which she brought an action for $40,000 damages alleged to have been sustained, and her husband, James O'Neill, also brought an action to recover $10,000 for loss of her services; that the assured complied with the conditions of the policy by giving the company notice of the accident and delivering to it the summons and other papers served for the commencement of the actions; that the company thereupon took charge of the defense of the actions, appeared for and represented the plaintiffs herein (the defendants therein), prepared the actions for trial, and assumed entire charge of the defense; that after the actions had been commenced, and prior to the trial of the same, these plaintiffs made a full and fair statement to the company of all the circumstances known to them concerning said accident, which facts were verified by its own investigation, and these plaintiffs and this defendant reached the conclusion that the actions ought to be settled; that the injuries sustained by Mrs. O'Neill were much more serious than had at first been thought; that before the trial of the actions, and after this defendant had ascertained the facts connected with the accident, these plaintiffs were informed that a settlement of both actions could be had for $6,500, and the insurance company was advised of that fact; that it agreed with these plaintiffs that the actions should be settled and that the offer made for that purpose ought to be accepted; that if such settlement were made it would pay $3,500, if these plaintiffs would pay the balance, which they refused to do, insisting that the insurance company should pay the full amount of its liability under the policy ($5,000) and they would pay the balance ($1,500); and that the insurance company declined the proposition and insisted upon a trial. The complaint further alleged that both actions were tried and a verdict rendered in favor of Mrs. O'Neill for $20,000 and in favor of Mr. O'Neill in the sum of $500.

The insurance company paid the full amount of its liability, $5,000, and these plaintiffs, in order to prevent their property being levied upon under an execution, paid the balance of the judgments $15,500, and then instituted this action to recover...