Lauritano v. American Fidelity Fire Ins. Co.

Decision Date07 May 1957
Citation3 A.D.2d 564,162 N.Y.S.2d 553
PartiesPhilip LAURITANO, Plaintiff-Appellant, v. AMERICAN FIDELITY FIRE INSURANCE COMPANY, American Universal Insurance Company and Standard Accident Insurance Company, Defendants-Respondents.
CourtNew York Supreme Court — Appellate Division

William G. Mulligan, New York City, of counsel (Joshua J. Nasaw, Milton Kaplan and William Palitz, New York City, with him on the brief; Joshua J. Nasaw, New York City, atty.), for plaintiff-appellant.

William L. Shumate, New York City, of counsel (Cusack & Shumate, New York City, attys.), for defendant-respondent American Fidelity Fire Ins. Co.

Brendan C. Kelly, New York City, of counsel (Mendes & Mount, New York City, attys.), for defendant-respondent American Universal Ins. Co.

George T. Nicholson, White Plains, of counsel (John E. Asch, New York City, atty.), for defendant-respondent Standard Acc. Ins. Co.

Before PECK, P. J., and BREITEL, BOTEIN, RABIN and FRANK, JJ.

BOTEIN, Justice.

On May 21, 1952 plaintiff was seriously injured when the car in which he was riding as a passenger was struck by a large tractor-trailer. The tractor-trailer, which was owned by one Joseph Forzano, was at the time of the accident rented to S. S. D. Trucking Corp. and was then on its way to make a pick-up.

Plaintiff brought action against Joseph Forzano and S. S. D. Trucking Corp. and obtained a default judgment against them in the sum of $50,189.75. This judgment has remained uncollected. Forzano having moved out of the state and S. S. D. Trucking Corp. having gone out of business, plaintiff invoked the provisions of § 167 of the Insurance Law and brought the present action directly against their automobile liability insurers. After trial by the court without a jury the complaint was dismissed, and from the judgment thereupon entered in favor of defendant insurance companies plaintiff appeals.

The judgment in favor of defendant Standard Accident Insurance Co., Forzano's liability insurer, must be affirmed. The policy which Standard issued to Forzano, as owner of the tractor-trailer, afforded him only what was known as 'deadhead' coverage, and was denominated 'Insurance for Non-Trucking Use'. The policy specifically provided that it did not apply 'while the automobile is being used in the business of any person or organization to which the automobile is rented'. The policy language is clear and unambiguous; and it appearing without dispute that at the time of the accident Forzano's vehicle was rented to S. S. D. Trucking Corp., there can be no liability on the part of defendant Standard.

Different considerations apply to the defenses of defendants American Fidelity Fire Insurance Co. and American Universal Insurance Co., which were the primary and excess liability insurers, respectively, of S. S. D. Trucking Corp. Their policies specifically covered hired equipment being operated in the interest of S. S. D., and there would be no question of coverage of the insured under their policies were the policy provisions otherwise complied with.

However, S. S. D. gave no notice of the accident to its insurers. Plaintiff, unaware and unadvised of the fact that the vehicle had been rented to S. S. D., did not himself notify S. S. D.'s insurers of the accident and of his claim until June 12, 1953. This was almost 13 months after the date of the accident. The trial court held the delay to be excessive and dismissed the complaint.

The policies specified that no action should be maintainable 'unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy'. They called for the giving of notice of the accident 'as soon as practicable', and also required the 'immediate' forwarding of every demand, notice, summons or other process. Undeniably S. S. D., the insured, failed to comply with either condition.

At one time, the liability insurance policy was regarded as the concern only of the insured and his insurer, as exclusive parties to the contract. Any act or omission by the insured which would have released his insurer from liability would inevitably have precluded recovery by those whose claims against the insurer were wholly derivative. However, the legislature, recognizing that an injured party, while not privy to the insurance contract, had a genuine interest in it and should be enabled to invoke its protection, enacted § 109 of the Insurance Law, forerunner of the present § 167, to create, as its heading indicates, an independent right of the injured person to proceed directly against the liability insurer (L. 1917, ch. 524). Successive amendments have profoundly altered what was once commonly accepted--that the liability policy existed solely for the protection of the insured.

Today the injured party is no longer wholly dependent upon the diligence and conscientiousness of the person who caused him injury. It was precisely because accident victims could be deprived of all possibilities of recovery through the irresponsibility, obduracy or neglect of the insured that § 167 of the Insurance Law was amended (L.1939, ch. 882) to require every liability policy to contain:

'(c) A provision that notice given by or on behalf of the insured, or written notice by or on behalf of the injured person or any other claimant, to any licensed agent of the insurer in this state, with particulars sufficient to identify the insured, shall be deemed notice to the insurer.

'(d) A provision that failure to give any notice required to be given by such policy within the time prescribed therein shall not invalidate any claim made by the insured or by any other claimant thereunder if it shall be shown not to have been reasonably possible to give such notice within the prescribed time and that notice was given as soon as was reasonably possible.'

While the policies in suit did not contain such provisions, they must be construed as though they did conform to the statutory requirements (Insurance Law, § 143). Hence, it is clear that when the insured has failed to give proper notice, the injured party, by giving notice himself, can preserve his rights to proceed directly against the insurer.

All members of this court are in agreement that the standards by which the notice given by the injured party must be judged differ from those governing notice given by the insured. The statute having granted the injured person an independent right to give notice and to recover thereafter, he is not to be charged vicariously with the insured's delay (Pitts v. Aetna Casualty & Surety Co., 2 Cir., 1954, 218 F.2d 58, 62, certiorari denied 348 U.S. 973, 75 S.Ct. 535, 99 L.Ed. 757). When the injured party has pursued his rights with as much diligence 'as was reasonably possible' the statute shifts the risk of the insured's delay to the compensated risk-taker who can initially accept or reject those for whom it will bear such risks.

The injured person's rights must be judged by the prospects for giving notice that were afforded him, not by those available to the insured. What is reasonably possible for the insured may not be reasonably possible for the person he has injured. The passage of time does not of itself make delay unreasonable. Promptness is relative and measured by circumstance. Thus, in Solomon v. Continental Fire Ins. Co., 160 N.Y. 595, 55 N.E. 279, 46 L.R.A. 682, notice given a considerable time after the event insured against had occurred, but within three days after plaintiff, an assignee of the original insured, was able to ascertain the identity of the insurer, was held to be timely. In Greenwich Bank v. Hartford Fire Ins. Co., 250 N.Y. 116, 131, 164 N.E. 876, 880, it was held, although the policies required immediate notice, that notice given by a receiver of an insured corporation, as soon as he learned of the existence of insurance policies and the names of the insurers, was given within a reasonable time. And in Bazar v. Great American Indemnity Co., 306 N.Y. 481, 489, 119 N.E.2d 346, 350, it was observed that a notice given to a liability insurer over 20 months after an accident would not have been untimely in the absence of prior knowledge, had the notice been in writing. Notice can hardly be given until there is knowledge of the facts upon which notice can be predicated (Trippe v. Provident Fund Society, 140 N.Y. 23, 35 N.E. 316, 22 L.R.A. 432).

The majority finds as a fact that the notice given to S. S. D.'s liability insurers was given by plaintiff as soon as it was reasonably possible for him to do so. Plaintiff did not know at the time of the accident who was responsible for the operation of the tractor-trailer, which bore Alabama license plates. Plaintiff's original attorney and his successor constantly and aggressively pressed the search for the necessary information, following up their letters with telephone calls, personal visits, and inquiries directed to the Motor Vehicle Bureaus of New York and Alabama, the Police Department, the Public Service Commission and the Interstate Commerce Commission. The owner, Forzano, remained inaccessible despite the barrage of letters and telephone calls directed to him. It was not until seven months after the accident that plaintiff's attorney was able to communicate directly with Forzano. Only then was it learned, for the first time, that at the time of the accident Forzano's tractor-trailer had been hired out to S. S. D.

Plaintiff immediately communicated with S. S. D., moved to join it as a party defendant in the action that had been commenced, and then served it with a supplemental summons and complaint. But despite a succession of promises, S. S. D. did not divulge the identity of its insurers. Plaintiff attempted to invoke the aid of the court and moved to compel disclosure through an examination. However, S. S. D. managed to put off the examination several times, so it was not until another six months had elapsed that plaintiff finally...

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