Chatham Corp. v. Argonaut Ins. Co.

• Court: New York Supreme Court
• Writing for the Court: B. THOMAS PANTANO
• Citation: Chatham Corp. v. Argonaut Ins. Co., 334 N.Y.S.2d 959, 70 Misc.2d 1028 (N.Y. Sup. Ct. 1972)
• Decision Date: 02 June 1972
• Parties: CHATHAM CORP., Plaintiff, v. ARGONAUT INSURANCE COMPANY, Defendant.

Page 959

334 N.Y.S.2d 959

70 Misc.2d 1028

CHATHAM CORP., Plaintiff, v. ARGONAUT INSURANCE COMPANY, Defendant.

Supreme Court, Special Term, Nassau County, Part I.

June 2, 1972.

Richard S. Wolfeld, Garden City, for plaintiff.

Eckhaus, Eckhaus, Butler, Scheiner & Levy, New York City, for defendant.

MEMORANDUM

B. THOMAS PANTANO, Justice.

Motion by plaintiff for summary judgment in an action for declaratory judgment brought to determine the rights of the respective parties under a products liability insurance policy. Plaintiff seeks an adjudication that defendant is obligated to undertake, on its behalf, the defense of a third-party action; to pay any judgment awarded therein, and to reimburse plaintiff for the costs and expenses incurred in defense of that lawsuit. Defendant disclaims issuance of a policy of insurance to plaintiff, and its opposing affidavit requests that summary judgment be granted in its favor.

The plaintiff Chatham Corp. is the successor by merger to Duraluminum Ladder Mfg. Co., Inc., which was named as an insured under a products liability policy issued by defendant, Argonaut Insurance Company. While this policy was in effect, and prior to Duraluminum's merger with plaintiff, one Helen Gerdes allegedly sustained injury as the result of the collapse of a ladder manufactured by Baldwin Brush and Tools, Inc. Mrs. Gerdes sued the manufacturer, which, in turn, commenced a third-party action against plaintiff claiming the injury to Mrs. Gerdes was caused by a defective component part of the ladder supplied by plaintiff. In the third-party action, the plaintiff is sued as American Ladder Division of Chatham Corp., but neither party raises any issue that the named corporation and plaintiff are not the same entity.

The defendant, Argonaut, concededly never issued a policy to plaintiff. On the other hand, Argonaut, admittedly, insured Duraluminum at the time of Mrs. Gerdes' accident, which took place before the merger between plaintiff and Duraluminum. Duraluminum, however is not named as a party to the main or third-party action, and no cause of action is alleged against it in either action.

The question presented is one of identity of the insured rather than the usual issue of whether coverage is afforded under the policy. Argonaut's issuance to Duraluminum of the liability policy cast upon the insurer contingent contractual obligations which constitute an indebtedness owing to the insured (Seider v. Roth, 17 N.Y.2d 111, 269 N.Y.S.2d 99, 216 N.E.2d 312). This asset of Duraluminum, upon its merger with plaintiff, automatically vested in plaintiff as the surviving corporation by virtue of the provisions of subd. (b), paragraph 2 of section 906 of the Business Corporation Law. It may be said, under the construction given this statute, that nothing is lost by a merger of corporations and that any right lawfully belonging to any of the constituent corporations merged together can be asserted by the surviving corporation (Platt Corporation v. Platt, 21 A.D.2d 116, 120, 249 N.Y.S.2d 75, 79, affirmed 15 N.Y.2d 705, 256 N.Y.S.2d 335, 204 N.E.2d 495). Viewed in this light, the failure to include Duraluminum as a defendant in the third-party action or to name it in the pleadings is not fatal, provided it can be ascertained that Duraluminum, rather than some other party, is the subject of the complaint...