Barone v. Aetna Life Ins. Co.

• Decision Date: 10 January 1933
• Parties: BARONE v. AETNA LIFE INS. CO.
• Court: New York Court of Appeals Court of Appeals

260 N.Y. 410

183 N.E. 900

BARONE

v.AETNA LIFE INS. CO.

Court of Appeals of New York.

Jan. 10, 1933.

Action by Angela L. Barone, as administratrix of James E. Barone, deceased, against the AEtna Life Insurance Company. From a judgment of the Appellate Division (235 App. Div. 759, 256 N. Y. S. 221), modifying and as modified affirming a judgment of the Trial Term for plaintiff, defendant appeals.

Affirmed.

LEHMAN and KELLOGG, JJ., dissenting.Appeal from Supreme Court, Appellate Division, Fourth department.

Frank L. Ward, of Syracuse, for appellant.

William J. Darch and George W. Watson, both of Batavia, for respondent.

POUND, C. J.

This is an action to reform a policy of compensation insurance in force until April 23, 1929. The policy in general in its terms and describes no particular place of work. Barone, the insured, was a contractor for sewer pipe and gas line jobs whose work took him from place to place as he obtained contracts. When he moved to a new job he notified the insurance agent and the insurance agent made out a slip called a declaration which contained a description of the work place, the nature of the work, and the estimated pay roll, and attached it to the policy. Insured, now deceased, had completed a job at Hamburg where he was covered by the policy and was about to move to a new job known as the Bergen-Le Roy job. He was ill in a hospital in Jamestown and he sent his wife to Batavia to see Newman L. Hawks, the insurance agent there with whom he had transacted his insurance business for some years, and have the policy cover the new job. She went to Batavia, arriving in the evening after office hours. She met Mary Underdunk, whom she knew as a clerk or bookkeeper in Mr. Hawks' office, with whom she had previously transacted insurance business, and told her of her errand. Miss Underdunk told her the office was closed but that she would take care of ‘that endorsement on that job.’ Thereafter during the term of the policy there was an accident on the job and the insurance agent then told Barone he was not covered. All this appears without dispute. When told of the conversation between Miss Underdunk and Mrs. Barone, Hawks said: ‘Well, if you told Mary [Miss Underdunk] you are covered.’ She told Mary but Mary did not tell Hawks. At the time of the accident no coverage appeared on the face of the policy.

Proceedings were instituted before the Industrial Board but it was agreed all around that the board could not permit a recovery against the insurance carrier on the policy, and this action was begun in the Supreme Court, before the Industrial Board had rendered its decision, to reform the policy so as to cover the Bergen-Le Roy job.

The defendant did not plead that a proceeding was pending before the Industrial Board. It now raises the jurisdictional question and contends that since our decision in Royal Indemnity Co. v. Heller, 256 N. Y. 322, 176 N. E. 410, the Supreme Court has been ousted of jurisdiction to reform a contract of compensation insurance and exclusive jurisdiction has been vested in the Industrial Board. No question of reformation arose in the Heller Case. It dealt with equitable defenses only. It was held that the board might consider a defense of mutual mistake and enforce the true agreement of the parties.

Workmen's Compensation Law (Consol. Laws, c. 67, § 23) says: ‘ An award or decision of the board shall be final and conclusive upon all questions within its jurisdiction,’ but there had been no decision of the board when this action was begun. The Supreme Court has general jurisdiction in law and equity (N. Y. Const. art. 6, § 1), and the reformation of contracts is a well-understood field of equitable jurisdiction. Giving additional jurisdiction to other tribunals does not take general jurisdiction away from the Supreme Court. In re Stilwell's Estate, 139 N. Y. 337, 342,34 N. E. 777;Matter of Berkovitz v. Arbib & Houlberg, 230 N. Y. 261, 274, 130 N. E. 288. We held in the Heller Case that these matters may be disposed of summarily before the Industrial Board as being within the wide scope of the powers intrustedto it. The board may make a decision thereon which is final and conclusive, except for judicial review, but it has never been held that the power to make such a decision means that the parties may not resort to the Supreme Court to adjust their difficulties in this regard if they choose and that is what they did in this case. The Industrial Board has, and can have, no exclusive jurisdiction to reform insurance contracts. To raise the point that the board had first obtained jurisdiction, it should have pleaded another proceeding pending.This it failed to do and thus it waived the only point which was open to it to make.

The defense that the risk was not covered by the policy is of a strictly technical character and is of a type that has found little support in judicial decisions. Here we have unquestionably a valid policy of compensation insurance, which by certain formalities may be shifted from job to job on notice to the...