Jackson v. Citizens Cas. Co.

• Decision Date: 12 April 1938
• Citation: 277 N.Y. 385,14 N.E.2d 446
• Court: New York Court of Appeals Court of Appeals
• Parties: JACKSON v. CITIZENS CASUALTY CO. et al.

277 N.Y. 385

14 N.E.2d 446

JACKSON

v.CITIZENS CASUALTY CO. et al.

Court of Appeals of New York.

April 12, 1938.

Action by Winifred D. Jackson, as administratrix of the estate of James L. Jackson, deceased, against Brown & Kleinhenz, Inc., and others, for damages for death of James L. Jackson. Plaintiff recovered judgment against two defendants, which was assigned to Martin C. Schaus, together with plaintiff's cause of action against the Citizens Casualty Company, and Martin C. Schaus moved to revive the action against defendant the Citizens Casualty Company of New York and substitute himself as plaintiff. From an order of the Appellate Division, Fourth Judicial Department, 252 App.Div. 393, 299 N.Y.S. 644, affirming on the law an order of Special Term denying the motion, Martin C. Schaus appeals by leave granted, and the following question was certified, 253 App.Div. 869, 1 N.Y.S.2d 857:‘On the record in this case was the motion of the appellant Martin C. Schaus properly denied as matter of law.’

Order affirmed, and certified question answered in the affirmative. Appeal from Supreme Court, Appellate Division, Fourth Department.

Frank Cibbons, of Buffalo, for appellant.

Manly Fleischmann, of Buffalo, for respondent.

FINCH, Judge.

Whether the person injured may assign the cause of action given by subdivision 1 of section 109 of the Insurance Law, Consol. Laws, c. 28, either before or after judgment against the insured, is the question of law presented for decision.

The facts, in so far as necessary to present this question, are as follows: James L. Jackson died as the result of injuries received by him from an automobile operated on the highway by one Juan Lord. The plaintiff, his widow, brought a statutory death action against Brown & Kleinhenz, Inc., Forbes Motor Agency, Inc., and Juan Lord, to recover damages alleged to have been caused by the negligence of the defendant Juan Lord, as operator, and Brown & Kleinhenz, Inc., and Forbes Motor Agency, Inc., as owners. At Trial Term a verdict was rendered in favor of defendant Brown & Kleinhenz, Inc., of no cause of action and in favor of plaintiff against the defendants Forbes Motor Agency, Inc., and Juan Lord for approximately $18,000. Forbes Motor Agency, Inc., appealed to the Appellate Division, where the judgment of the Trial Term was reversed and the complaint as to it dismissed. Jackson v. Brown & Kleinhenz, 246 App.Div. 445, 284 N.Y.S. 44. On appeal to the Court of Appeals, the judgment of the Appellate Division was reversed and that of Trial Term reinstated. Id., 273 N.Y. 365, 7 N.E.2d 265. Juan Lord did not appeal, and execution issued against him has been returned wholly unsatisfied. The defendant Citizens Casualty Company had issued an automobile liability policy, obligating payment of the judgment recovered against Juan Lord, and the plaintiff commenced an action against this surety company. Following the decision of the Court of Appeals, reinstating the judgment against Forbes Motor Agency, Inc., the judgment in favor of plaintiff was assigned to Martin C. Schaus, as was also the cause of action which the administratrix had against the defendant by virtue of the liability insurance policy. Schaus thereupon moved to revive the action against the defendant insurance company and substitute himself as plaintiff. This motion was denied, and upon appeal the Appellate Division affirmed on the law and not in exercise of discretion, thus presenting squarely the question of law, whether the cause of action provided by section 109 of the Insurance Law was assignable. The Appellate Division granted leave to appeal to this court and certified the question, ‘On the record in this case was the motion of the appellant Martin C. Schaus properly denied as matter of law?’

Prior to the enactment of section 109 of the Insurance Law, an injured person possessed no cause of action against the insurer of the tort-feasor because of the lack of privity of contract. Burke v. London Guarantee & Accident Co., 47 Misc. 171, 93 N.Y.S. 652, affirmed 199 N.Y. 557, 93 N.E. 1117. In consequence, if the insured was insolvent, so that the person injured or the estate of one killed was unable to satisfy the judgment against him, the insurer in effect would be released. The policy being one of indemnity against loss suffered by the principal, it followed that, the insured having suffered no damage, there was no loss for the insurer to indemnify. For the purpose of correcting this situation with its attendant injustice the Legislature enacted this remedial statute which became section 109 of the Insurance Law. Coleman v. New Amsterdam Casualty Co., 247 N.Y. 271, 160 N.E. 367, 72 A.L.R. 1443. Since a new cause of action was created, the initial step in determining the intention of the Legislature must be a careful analysis of the wording of the statute. For convenience the pertinent portions of section 109 follow: ‘No policy of insurance against loss * * * resulting from accident to * * * an employee or other person * * * shall be issued * * * unless there shall be contained within such policy a provision that the insolvency or bankruptcy of the person insured * * * shall not release the insurance carrier from the payment of damages for injury sustained * * * and a provision stating that in case judgment against the insured * * * shall remain unsatisfied * * * then an action may be maintained by the injured person, or his or her personal representative, against the insurer.’

The above section was attacked as offending the Constitution. Because the issuance of a policy coming within the purview of the provisions required by section 109 was entirely voluntary on the part of the insurer, the section was upheld. Merchants' Mut. Automobile Liability Ins. Co. v. Smart, 267 U.S. 126, 45 S.Ct. 320, 69 L.Ed. 538; affirming Smart v. Merchants' Mut. Automobile Liability Ins. Co., 236 N.Y. 577, 142 N.E. 290;Id., 206 App.div. 630, 198 N.Y.S. 949.

In the light of the common law before the enactment of section 109 of the Insurance Law, the attendant injustice and the mischief which the Legislature was seeking to cure, we must conclude that the statute was drawn for the protection of injured plaintiffs. The words of the section give express protection to ‘the...