Dean Const. Co. v. Agricultural Ins. Co.
| Decision Date | 09 November 1964 |
| Citation | 254 N.Y.S.2d 196,22 A.D.2d 82 |
| Parties | DEAN CONSTRUCTION COMPANY, Inc., et al., Respondents, v. AGRICULTURAL INSURANCE COMPANY et al., Defendants; and Empire Mutual Insurance Company, Appellant. |
| Court | New York Supreme Court — Appellate Division |
Lawrence Isaacs, New York City (Michael A. Schwartz, New York City, on the brief) for Empire Mut. Ins. Co., appellant.
Leo Fixler, New York City, for Dean Const. Co., Inc., and others, respondents.
No brief of appearance for defendants-respondents.
Before UGHETTA, Acting P. J., and BRENNAN, HILL, RABIN and HOPKINS, JJ.
In January, 1963 plaintiffs commenced the action at bar against defendant Empire Mutual Insurance Company, a Pennsylvania insurance corporation not licensed to do business in New York, by serving a summons and complaint upon the New York Superintendent of Insurance (Insurance Law, § 59-a, subd. 2).
In May, 1963 plaintiffs obtained an order requiring Empire to furnish a bond in the sum of $65,000 as a condition to answering the complaint (Insurance Law, § 59-a, subd. 3). Thereafter Empire deposited $65,000 with The Stuyvesant Insurance Company and filed the latter's bond under which it (Stuyvesant) promised to pay any final judgment, not in excess of $65,000, entered against Empire.
In answer to plaintiffs' amended complaint (the twelfth cause of action), Empire alleged abatement in defense, asserting that in January, 1964 it had been 'legally dissolved, and its corporate existence ended, pursuant to an order of the Court of Common Pleas of Dauphin County, State of Pennsylvania'--such order having been issued in accordance with the Pennsylvania statute (40 Purdon's P.S. § 206; Act of May 17, 1921, P.L. 789, § 506).
Thereafter Empire moved for summary judgment, relying primarily on the New York common-law rule that the dissolution of a foreign insurance corporation by its domiciliary state abates an action pending against it. Plaintiffs crossmoved to strike out Empire's defense. Special Term denied Empire's motion and granted plaintiffs' cross motion, holding that subdivision 19 of section 977-b of the former Civil Practice Act (now § 1218 of the Business Corporation Law) prevented an abatement here.
In our opinion, Special Term's reliance upon subdivision 19 of section 977-b of the former Civil Practice Act was erroneous; that statute was applicable only to receivership actions, whereas the action against Empire is one for breach of a contract of insurance. Nevertheless, for other reasons the Special Term's order should be affirmed.
In our opinion, the State of New York, by its adoption of the Uniform Insurers Liquidation Act (Insurance Law, §§ 517-524), in which it expressly confined to reciprocal states the operation of its common-law rule of abatement, effectively limited the rule's operation to such reciprocal states (cf., Martin v. General American Casualty Co., 226 La. 481, 76 So.2d 537, 46 A.L.R.2d 1178). Pennsylvania, having thus far failed to adopt the Uniform Act, is not a reciprocal state (Insurance Law, § 517, subd. 7).
Under the common law of this State, and prior to the enactment of both section 59-a of the Insurance Law and the Uniform Insurers Liquidation Act (Insurance Law, §§ 517-524), the dissolution of a foreign corporate insurer served to abate all actions pending against it (Matter of National Surety Co. [Pink], 286 N.Y. 216, 36 N.E.2d 119; Matter of National Surety Co. [Laughlin], 283 N.Y. 68, 27 N.E.2d 505, cert. den., Laughlin v. Pink, 311 U.S. 707, 61 S.Ct. 175, 85 L.Ed. 459; Martyne v. American Union Fire Ins. Co. of Philadelphia, 216 N.Y. 183, 110 N.E. 502). However, this common law rule, as enunciated in Martyne and to which resort was had in the National Surety cases, was imbedded in a statutory similarity between New York and Pennsylvania--a similarity which no longer exists, but which at the time of Martyne made comity sensible and practicable.
Thus, in Martyne (supra, 216 N.Y. p. 191, 110 N.E. p. 505), referring to the statutes in New York, the court stated:
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