Durant v. Motor Vehicle Acc. Indemnification Corp.

• Decision Date: 20 January 1964
• Parties: In the Matter of Santiago DURANT, Petitioner-Appellant, v. MOTOR VEHICLE ACCIDENT INDEMNIFICATION CORPORATION, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 548

246 N.Y.S.2d 548

20 A.D.2d 242

In the Matter of Santiago DURANT, Petitioner-Appellant, v. MOTOR VEHICLE ACCIDENT INDEMNIFICATION CORPORATION, Respondent.

Supreme Court, Appellate Division, Second Department.

Jan. 20, 1964.

Seymour H. Metnick, New York City, for appellant.

Watters & Donovan, New York City, for respondent; Patrick J. Hughes, New York City, of counsel.

Before UGHETTA, Acting P. J., and KLEINFELD, HILL, RABIN and HOPKINS, JJ.

HOPKINS, Justice.

On September 4, 1959 the petitioner was injured as the result of a collision between a motor scooter on which he was a passenger and an uninsured automobile. The motor scooter was owned and operated by his employer who was insured under a liability policy containing an automobile accident indemnification endorsement issued by the Motor Vehicle Accident Indemnification Corporation (MVAIC).

That endorsement, in part, reads as follows:

'The company, on behalf of the Motor Vehicle Accident Indemnification Corporation, hereinafter called 'MVAIC', agrees with the named insured, in consideration of the payment of the premium for this endorsement and subject to all terms of this endorsement: * * *

'5. Limits of Liability:

'(a) The limit of liability of MVAIC for all damages, including damages for care or loss of services, because of bodily injury sustained by one person as the result of any one accident is $10,000, and subject to the above provision, the total limit of liability of MVAIC for all damages, including damages for care or loss of services, because of bodily injury sustained by two or more persons, whether insureds or qualified persons under the New York Motor Vehicle Accident Indemnification Corporation law, as the result of any one accident is $20,000. The application of more than one New York Automobile Accident Indemnification endorsement to any accident shall not operate to increase the limit of liability of MVAIC with respect to any and all persons sustaining bodily injury as a result of such accident.

'(b) Any amount payable under the terms of this endorsement * * * shall be reduced by (1) all sums paid to one or more insureds on account of such bodily injury by or on behalf of (a) the owner or operator of the uninsured automobile and (b) any other person or persons jointly or severally liable together with such owner or operator for such bodily injury, (2) all sums paid to one or more insureds on account of such bodily injury under any insurance similar to that provided by this endorsement and (3) the amount paid and the present value of all amounts payable on account of such bodily injury under any workmen's compensation law, exclusive of non-occupational disability benefits.

'6. Arbitration: If any person making claim hereunder and MVAIC do not agree that such person is legally entitled to recover damages * * * or do not agree as to the amount of payment which may be owing under this endorsement, then, upon written demand of either, the matter or matters upon which such person and MVAIC do not agree shall be settled by arbitration * * * and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Such person and MVAIC each agree to consider itself bound and to be bound by any award made by the arbitrators pursuant to this endorsement.'

The petitioner has received the sum of $6,710.95 in workmen's compensation benefits. In February, 1962, the petitioner served on MVAIC a demand for arbitration, claiming the sum of $20,000. At the arbitration hearing in September, 1962, MVAIC, pursuant to prior written notice, moved to dismiss the claim or to reduce it to the sum provided by the endorsement. In October, 1962, the arbitrator rendered an award in the sum of $10,000 in favor of the petitioner, ¹ finding that it was not the intent of the Legislature that the MVAIC, by the imposition of a condition in the endorsement, should have the power to reduce the amount of the award to the extent of the workmen's compensation benefits.

The petitioner moved to confirm the award. MVAIC opposed the motion and sought to modify the award on the ground that the arbitrator had exceeded his powers under the endorsement. Special Term denied petitioner's motion and granted MVAIC's motion to modify the award, holding that the endorsement limited the amount of the award to the difference between $10,000 and the sums obtained by the petitioner from workmen's compensation or to the net amount of $3,289.05. On reargument Special Term adhered to its decision.

The primary issue before us is whether the endorsement may be so enforced as to require the award made under arbitration to be reduced by the amount of workmen's compensation received by the petitioner.

As a creature of the Legislature, MVAIC manifests the continuing concern of the State for the protection of injured victims of an automobile accident (cf. Aetna Cas. & Sur. Co. v. O'Connor, 8 N.Y.2d 359, 364, 207 N.Y.S.2d 679, 682, 170 N.E.2d 681, 684, 83 A.L.R.2d 1099). Hence, MVAIC derives its rights and liabilities from the statute giving it corporate life (Insurance Law, art. 17-A). ²

The avowed purpose of the statute is to close the gaps in the Motor Vehicle Financial Security Act (Vehicle and Traffic Law, art. 6), and to provide the same recompense to a person injured by an uninsured motorist as he would obtain if he had been injured by an insured motorist (McCarthy v. MVAIC, 16 A.D.2d 35, 38, 224 N.Y.S.2d 909, 912, affd. 12 N.Y.2d 922, 238 N.Y.S.2d 101, 188 N.E.2d 405).

The statute identifies two classes of beneficiaries: (1) the qualified person and (2) the insured person (Insurance Law, § 601). The qualified person is one not covered by a liability insurance policy and without rights under the MVAIC endorsement; the insured person is one covered by a liability insurance policy, and therefore pursues his rights under the endorsement, which is prescribed by MVAIC subject to the approval of the Superintendent of Insurance (Insurance Law, § 606, subd. b).

A qualified person is relegated to an action against the uninsured motorist, and, after obtaining a judgment which remains unsatisfied, seeks payment from MVAIC through filing a verified petition in the court in which the judgment was entered (Insurance Law, § 610). The payment may not exceed $10,000 where only one person was injured in an accident. The statute reduces the payment, however, to a qualified person by the amount '(a) of any other valid and collectible liability insurance afforded to, and the available assets or contribution of, the financially irresponsible motorist and (b) of any settlement or payment received by the qualified person from, or on behalf of, any person or persons jointly or severally liable, together with the financially irresponsible motorist' (Insurance Law, § 610).

The insured person, on the other hand, under the terms of the MVAIC endorsement quoted above, is bound to the remedy of an arbitration proceeding, and the equivalent maximum sum of $10,000 stipulated for his benefit is reduced not only by the payments described above as applicable to a qualified person under the provisions of section 610 of the Insurance Law, but also by workmen's compensation benefits.

The petitioner, as an insured person, has been accordingly placed in a disadvantageous position vis-a-vis a qualified person. MVAIC argues that the disadvantage flows inevitably and rightfully from the language of the endorsement defining the limits of the petitioner's recovery. We find the language of the endorsement clear in its direction that the damages be reduced by the amount of workmen's compensation, but we do not think that the endorsement may be so enforced against the petitioner.

To accept the view advanced by MVAIC results in the disquieting and inconsistent conclusion that two equally innocent victims of uninsured motorists collect disparate recoveries, merely because of the use in the statute of an identifying epithet. We do not believe that the Legislature intended such a result.

There is no evidence in the statute or the underlying legislative history preceding its enactment that a distinction of this character was ever contemplated (cf. N.Y.Legis.Annual, 1958, pp. 244, 299, 436, 473). Indeed, the distinction arises not because of the statute, but out of the exercise of the power delegated to MVAIC to draw the endorsement (Insurance Law, § 167, subd. 2-a; § 606, subd. b)--an act presumed to have been done with its own interests in view (Matthews v. American Cent. Ins. Co., 154 N.Y. 449, 456, 48 N.E. 751, 752, 39 L.R.A. 433). That power, in the words of the Insurance Law (§ 606, subd. b), is strictly limited as follows: 'To prescribe, subject to the approval of the superintendent [of insurance], the policy or endorsement form to be issued by the members embodying the coverage required by section one hundred sixty-seven, subsection two-a' [emphasis supplied]. Subsection 2-a of section 167 of the Insurance Law does no more than state that no policy insuring against loss resulting from liability arising out of the ownership and use of a motor vehicle shall be issued, unless it contains an endorsement embodying the limits of payment by MVAIC of $10,000 for the injury or death of one person in any one accident, and $20,000 for the injury or death of more than one person under the circumstances of an accident involving an uninsured motorist or unidentified motor vehicle, 'subject to the terms and conditions set forth [in such policy] to be prescribed by the board of directors' of MVAIC and approved by the Superintendent of Insurance.

The power delegated to MVAIC by these provisions is thus confined to the drafting of an endorsement which carries out the spirit and intent of the statute. That power cannot be enlarged unilaterally by MVAIC arrogating to itself the prerogative to debase the insured person's right of recovery in contrast to the same right granted to a...