Government Emp. Ins. Co. v. Employers Commercial Union Ins. Co.

• Decision Date: 08 May 1978
• Citation: Government Emp. Ins. Co. v. Employers Commercial Union Ins. Co., 404 N.Y.S.2d 652, 62 A.D.2d 123 (N.Y. App. Div. 1978)
• Court: New York Supreme Court — Appellate Division
• Parties: GOVERNMENT EMPLOYEES INSURANCE COMPANY, Appellant, v. EMPLOYERS COMMERCIAL UNION INSURANCE CO. et al., Respondents.

Page 652

404 N.Y.S.2d 652

62 A.D.2d 123

GOVERNMENT EMPLOYEES INSURANCE COMPANY, Appellant, v. EMPLOYERS COMMERCIAL UNION INSURANCE CO. et al., Respondents.

Supreme Court, Appellate Division,Second Department.

May 8, 1978.

Rivkin, Leff & Sherman, Garden City (John F. Morrison, Garden City, of counsel), for appellant.

Francis B. A'Hearn, Hempstead (Furey & Mooney, Clifford B. Keller, Hempstead, of counsel), for respondent Employers Commercial Union Ins. Co.

Nathan Light, New York City, for respondents Megale.

Before HOPKINS, J. P., and MARTUSCELLO, RABIN and HAWKINS, JJ.

HAWKINS, Justice.

In an action to declare that the plaintiff, Government Employees Insurance Company (hereafter GEICO), did not insure a vehicle owned by the defendant Andrew Risucci on the date the vehicle was involved in an accident, plaintiff appeals from a judgment of the Supreme Court, Nassau County entered October 27, 1976, which vacated a prior decision of the same court and declared that it was the insurer of the vehicle and, hence, was obligated to defend and indemnify the said defendant against all claims within the policy's limits asserted against him arising out of an accident which occurred on April 18, 1972.

The judgment should be affirmed, with costs.

Andrew Risucci owned a 1965 Volkswagen which was insured by GEICO in Florida under an extension of Nicholas Risucci's New York GEICO policy. (Nicholas Risucci is the father of Andrew Risucci.) The Florida policy was separately written, but the number it bore was the same as the number of the New York policy, with the suffix "-3" added. When Andrew returned to New York in September, 1971, the Florida policy was terminated and coverage on the Volkswagen was obtained by adding it as a third car to the New York policy. An FS-1 form was issued by GEICO to the son, at about the same time, so that he could register the car in New York. A few days before the policy renewal date of January 1, 1972, the father wrote to GEICO asking that coverage on the Volkswagen not be renewed. GEICO complied, but did not notify either the son, who owned the car, or the Commissioner of Motor Vehicles, of the deletion. On April 18, 1972 the Volkswagen was involved in an accident.

A judgment was issued staying the owners of the second car, the respondents Megale, from arbitration under the uninsured motorist provision of their policy with respondent Employers Commercial Union Insurance Company on the ground that the Megales had failed to establish that GEICO, which had not been named a party in the proceeding, had canceled its insurance on the Volkswagen.

GEICO subsequently commenced this action. After the first trial, without a jury, the court determined that GEICO had "slip(ped) through" "a statutory loophole", to wit, that section 313 of the Vehicle and Traffic Law requires notice of cancellation by an insurer only to the named insured. Moreover, that statute only comes into play if the insurer cancels, not if an insured has elected to cancel his own policy (see Matter of Orefice (MVAIC), 28 A.D.2d 854, 281 N.Y.S.2d 512). Additionally, valid termination of automobile insurance is not affected by an insurer's failure to file a notice of termination with the Commissioner of Motor Vehicles (see Capra v. Lumbermen's Mut. Cas. Co., 31 N.Y.2d 760, 338 N.Y.S.2d 437, 290 N.E.2d 438). Special Term declared that GEICO did not insure the vehicle on the date of the accident.

The decision and judgment entered after the first trial were thereafter vacated and the matter opened for further evidence on the question of who was the "named insured". Following the further hearing, Special Term declared that GEICO was obligated to indemnify Andrew Risucci, the son. GEICO appeals from the judgment entered upon that declaration.

We affirm on the ground that although Nicholas Risucci and not Andrew Risucci was the named insured on the three-car policy, by its conduct GEICO knew, or should have known, that Andrew was the owner of the third car and that he was entitled to notice of the cancellation.

Firstly, GEICO issued an FS-1 form to Andrew Risucci, certifying that "it has issued a policy complying with the Financial Security Act to: Andrew Risucci (address)", in September, 1971. This form enabled Andrew to register the car in New York (see Vehicle and Traffic Law, § 312). Both the State of New York and any person injured by Andrew's negligent driving could...