Goldberg v. Lumber Mut. Cas. Ins. Co. of New York

• Citation: 77 N.E.2d 131,297 N.Y. 148
• Parties: GOLDBERG v. LUMBER MUT. CASUALTY INS. CO. OF NEW YORK.
• Decision Date: 15 January 1948
• Court: New York Court of Appeals

297 N.Y. 148

77 N.E.2d 131

GOLDBERG

v.LUMBER MUT. CASUALTY INS. CO. OF NEW YORK.

Court of Appeals of New York.

Jan. 15, 1948.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Jack Goldberg against Lumber Mutual Casualty Insurance Company of New York for alleged breach of covenant to defend contained in a public liability policy, issued by defendant. From a judgment 271 App.Div. 964, 68 N.Y.S.2d 456, entered November 18, 1947, upon the order of the Appellate Division of Supreme Court which by a divided court affirmed (1) an order of Supreme Court at Special Term (Valente, J.), entered on January 30, 1946, granting of motion by defendant for summary judgment dismissing complaint on the merits, and (2) an order of Supreme Court at Special Term (Valente, J.), denying a motion by plaintiff for summary judgment, plaintiff appeals.

Orders reversed and plaintiff's motion for summary judgment granted in accordance with the opinion. Herbert E. Hoffman and Jacob D. Fuchsberg, both of New York City, for appellant.

Herbert A. McDevitt, of New York City, for respondent.

FULD, Judge.

In October, 1939, defendant insurance company issued a public liability policy insuring plaintiff's business operations for one year, from October, 1939, to October, 1940. The policy dealt with the insurance company's duty to pay all sums for which the insured might become liable as well as with its duty to defend suits brought against the insured. As to the first, the company agreed to discharge all obligations incurred by the insured, as damages, to third persons who sustained bodily injuries as the result of an accident ‘caused by reason of the (insured's) general business operations * * * which shall have occurred before the completion of the actual course of the operations performed by the insured at the place of occurrence of such accident.’ As to the duty to defend, the company agreed to ‘defend in the name of and on behalf of the insured any suit against the insured alleging such injury and seeking damages on account thereof, even if such suit is groundless, false or fraudulent’.

Early in 1940, plaintiff entered into a contract to perform plumbing repair work at certain premises in Brooklyn; he completed most of the work in March of that year. Many months later, in December, 1940, a tenant brought suit against plaintiff, claiming that, on or about, April 13, 1940, she had been caused ‘to trip and fall over a dangerous accumulation of debris and plaster,’ left on the stairway of the premises by plaintiff and his employees. The injuries were said to be serious, and damages of $25,000 were sought. It was explicitly asserted on information and belief that on the day of the accident, April 13, 1940, ‘and prior thereto, the defendant (plaintiff herein), his agents, servants and employees were engaged in the performance of the aforementioned work’ at the premises in question and that such work ‘was not completed’ until after April 13th.

Following service of the papers, plaintiff turned the summons and complaint over to defendant insurance company ‘for a defense and for them to otherwise fulfill the obligations of their (sic) contract of insurance.’ And, says plaintiff, he advised the insurance company then and later not only that he knew nothing about the accident's having been caused by his negligence but also that he had finished the job at least a week before the date specified in the complaint. Possessed of that information, the insurance company refused to defend the action unless plaintiff signed a non-waiver agreement, providing that such defense would not constitute a waiver by either party of any provision of the policy, nor foreclose the company from asserting ‘any defense which it may choose to make’ under the policy. If the company was under a duty to defend, it was not, of course, privileged to insist on any such condition; plaintiff declined to sign the agreement and retained his own attorneys to defend him.

The negligence action went to trial, and terminated in favor of the present plaintiff. At that trial, plaintiff avers in his affidavit, ‘one of the issues which was litigated was the fact as to when my employees and myself had completed the work in connection with the stairway upon which (the tenant) claimed that she fell.’ Conflicting evidence was adduced, the tenant testifying that work had continued until April 12th, the present plaintiff, that the work had been completed ‘a considerable time before that.’

Shortly afterward, plaintiff brought this action for $3,000, the sum, he alleged, he ‘was obliged to expend * * * for counsel fees, professional services and for disbursements in connection with the aforementioned (personal injury) action’. Defendant's answer was, in effect, a general denial.

By motion and cross-motion, both parties asked for summary judgment under rule 113 of the Rules of Civil Practice.

In two orders, the court at Special Term denied plaintiff's motion and granted defendant's cross-motion, dismissing the complaint and entering judgment for defendant. The Appellate Division, two justices dissenting, affirmed both orders.

Ascribing to the terms of the policy, as we must, a natural and reasonable meaning (see e. g., Burr v. Commercial Travelers Mutual Accident Ass'n, 295 N.Y. 294, 301, 67 N.E.2d 248, 251, 166 A.L.R. 462;McGrail v. Equitable Life Assur. Soc., 292 N.Y. 419, 424, 55 N.E.2d 483, 486;Lewis v. Ocean Accident & Guarantee Corp., 224 N.Y. 18, 21,120 N.E. 56, 57, 7 A.L.R. 1129), there can be no doubt that the insurance company undertook to defend such a suit as was brought against its insured. In the clearest of terms, the insurer obligated itself to handle the defense of actions against the insured whenever the complaint served upon him alleged a state of facts covered by the policy, regardless of whether such allegations squared with objective truth or were utterly false and groundless. As previously noted, the...