Logan v. Exchange Mut. Ins. Co.

• Decision Date: 23 May 1974
• Citation: 355 N.Y.S.2d 855,44 A.D.2d 886
• Parties: James W. LOGAN, Appellant, v. EXCHANGE MUTUAL INSURANCE COMPANY, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 855

355 N.Y.S.2d 855

44 A.D.2d 886

James W. LOGAN, Appellant, v. EXCHANGE MUTUAL INSURANCE COMPANY, Respondent.

Supreme Court, Appellate Division, Fourth Department.

May 23, 1974.

Flaherty & Shea, James P. Shea, Buffalo, for appellant.

Miles, Cochrane, Grosse & Rossetti, J. Couper, Lord, Buffalo, for respondent.

Before MARSH, P.J., and WITMER, MAHONEY, GOLDMAN and DEL VECCHIO, JJ.

MEMORANDUM:

Since Cole v. Dow Chemical Co., 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288, the courts are required to take a new look at the traditional holding that under subdivision 3 of section 167 of the Insurance Law, originally enacted in 1937, an insurance company may not be required to defend or pay a claim in negligence by a person against her spouse unless the insurance policy has a special endorsement providing for such defense and payment. The law was enacted when the Legislature gave the right to a person to sue his spouse in negligence, and the avowed purpose of subdivision 3 of section 167 was to protect insurers from fraud and collusion between husband and wife in such cases. The Legislature, of course, had no thought then of third party indemnify actions under the Dole principle. Since that time the Legislature has espoused compulsory automobile insurance and has evidenced its intent that members of the public be given financial protection against injury from automobiles. We think that a fair interpretation of subdivision 3 of section 167 of the Insurance Law today requires a holding that an insurer must defend an insured in a case where the insured and his wife sue a defendant who then interposes a counterclaim for indemnity against the insured. The action is not by one spouse against the other, nor is it grounded on a charge of negligence on the part of one spouse as against the other as in Glens Falls Ins. Co. v. Wood, 9 A.D.2d 201, 193 N.Y.S.2d 147, affd., 8 N.Y.2d 409, 208 N.Y.S.2d 978, 171 N.E.2d 321 and United States Fire Ins. Co. v. Gould, 43 A.D.2d 462, 352 N.Y.S.2d 541, but is an action by a third party defendant against the insured. The claim, therefore, is not precisely of the nature which the Legislature originally intended to relieve an insurer from defending, and if need be, paying. Although we recognize the efficacy of opposing arguments (see Pro, U.S. Fid. & Guar. Co. v. Franklin, 74 Misc.2d 506, 344 N.Y.S.2d 251 and Aetna Cas. & Sur. Co. v. De Losh, 73 Misc.2d 275, 341 N.Y.S.2d 465; and, Con, Perno v. Exchange Mut. Ins., 73...