Callahan v. American Motorists Ins. Co.

• Decision Date: 16 April 1968
• Citation: 56 Misc.2d 734,289 N.Y.S.2d 1005
• Parties: Cornelius A. CALLAHAN and Aileen P. Callahan, Plaintiffs, v. AMERICAN MOTORISTS INSURANCE CO., Joseph X. Mullin, Estelle Dabrusin and Sam Dabrusin, Defendants.
• Court: New York Supreme Court

Page 1005

289 N.Y.S.2d 1005

56 Misc.2d 734

Cornelius A. CALLAHAN and Aileen P. Callahan, Plaintiffs, v. AMERICAN MOTORISTS INSURANCE CO., Joseph X. Mullin, Estelle Dabrusin and Sam Dabrusin, Defendants.

Supreme Court, Orange County.

April 16, 1968.

McCann, Ahern & Sommers, Newburgh, for plaintiffs.

George F. Roesch, III, Middletown, for American Motorists Ins. Co.

Raymond H. Bradford, Newburgh, for Joseph X. Mullin.

CLARE J. HOYT, Justice.

This action for a declaratory judgment is brought to determine whether defendant American Motorists Insurance Co., hereinafter called American, and/or its agent defendant Mullin, hereinafter called Mullin, should defend a personal injury action pending against plaintiffs herein by defendants Dabrusin, whether American and/or Mullin should pay within the limits of the policy of insurance issued to plaintiffs any judgment recovered by defendants Dabrusin against plaintiffs and any counsel fees incurred by plaintiffs in defense of this action by defendants Dabrusin and in the prosecution of this action.

The plaintiffs, both of whom are licensed real estate brokers, purchased their home in the Town of Newburgh in 1954. It is a one story ranch type house, the residence portion being joined to a two car garage by a breezeway. In 1955 the breezeway was converted into a real estate office in which plaintiffs conducted their business. Separate entrances served the breezeway and the residence.

In March of 1958 plaintiff Cornelius Callahan went to the office of Mullin, a real estate broker and insurance agent, and discussed with him insurance coverage for plaintiffs' property. Mullin, as an agent for American, procured a Homeowner's Policy covering the period from March 19, 1959 to March 19, 1962. The policy excluded from its liability coverage 'any business pursuits of the insured, other than activities therein which are ordinarily incident to non-business pursuits'. There was no discussion between plaintiff and Mullin concerning this exclusion or whether plaintiffs' coverage would or would not include business pursuits. Mullin knew that plaintiffs were conducting a real estate brokerage business at their residence.

On March 26, 1961 defendant Estelle Dabrusin, also a real estate broker, visited plaintiffs' residence. Although her visit was not in furtherance of plaintiffs' business, it resulted from that business. The plaintiffs and defendant Dabrusin each had open listings on a property that was listed for sale. The owner had delivered the key to plaintiffs, and upon defendant Dabrusin's request for the key, the owner suggested she pick it up from plaintiffs. Defendant Dabrusin called the plaintiff Aileen Callahan and arranged to come to the plaintiffs' house to get the key. Defendant Dabrusin drove to plaintiffs' house, alighted from her car and was going up on the porch to get the key when she allegedly tripped and fell. For her resultant injuries she and her husband brought the action against plaintiffs which has been stayed pending the disposition of this action.

Immediately after the accident, plaintiffs notified Mullin of the accident and he in turn promptly notified American. Within a week or so of the occurrence American commenced its investigation and secured signed statements from defendant Dabrusin and plaintiff Aileen Callahan. Thereafter and in November of 1961 American arranged to have defendant Dabrusin examined by American's physician who sent his report to American.

Meanwhile and within a month after the accident defendant Dabrusin engaged counsel to represent her and on April 20, 1961 her attorney wrote plaintiffs advising that he was representing defendants Dabrusin and asked them to turn this letter over to their insurance carrier. Plaintiffs sent this letter at once to Mullin who promptly forwarded it to American.

Not until May 15, 1962 did American notify plaintiffs by registered letter that the 'policy does not cover this situation. We regret that we can not furnish coverage to you in this case'. Reference was made to the exclusion regarding non business pursuits. In December of 1962 when the summons and complaint in the Dabrusin suit were served on plaintiffs it was promptly forwarded to Mullin and by him to American. On December 26, 1962 American returned the summons and complaint to plaintiffs with the recommendation that it be referred to personal counsel since there was no coverage.

Plaintiffs claim American is liable on the policy for three reasons. First because Mullin, an authorized agent of American, knew of the business use on plaintiffs' premises and, it is argued, he should have afforded them liability coverage for that use. Next plaintiffs aver that Mrs. Dabrusin's claim was not excluded from the policy's coverage. Finally, plaintiffs argue that American's disclaimer was not timely and American should be estopped from asserting the defense of non coverage.

The first two points require little discussion. Even though Mullin knew of plaintiffs' business use of the premises, he was not bound, by reason of that knowledge, to be sure that plaintiffs were covered for all risks incident to the use of the premises. In the first place there is nothing in the record to sustain a finding that plaintiffs made any request for liability coverage in connection with their business use of the premises. Nor is there any evidence that Mullin was in fact or believed that he was the only agent or broker from whom plaintiffs sought insurance. Under the circumstances none of his actions--whatever his agency with American--bound American to issue a policy not containing the business exclusion. Compare Miller Farms, Inc. v. Smith, 24 A.D.2d 776, 263 N.Y.S.2d 627. The policy as issued clearly contained the business exclusion. Plaintiffs had the policy and an opportunity to read it and to seek additional coverage if they felt it advisable. This was not done. On the second point there is no question that Mrs. Dabrusin's accident was excluded from the policy's coverage. Her visit to the plaintiffs' premises was brought about by plaintiffs' having a key in connection with their business. She needed the key for her business. Had plaintiffs' business office been elsewhere the key would have been too and Mrs. Dabrusin's trip to plaintiffs' property to pick up the key would not have occurred. The increased risk attendant upon traffic that a business office generates was what American sought to and did exclude.

Estoppel will not, in this case, serve to extend the coverage afforded by American's policy beyond what it contracted for. American contracted to insure plaintiffs against personal liability arising from the use of the insured premises only to the extent that such liability arose from...