Mason v. Allstate Ins. Co.

• Decision Date: 27 December 1960
• Citation: 209 N.Y.S.2d 104,12 A.D.2d 138
• Parties: Gerald MASON and Delphine Mason, Plaintiffs-Respondents-Appellants, v. ALLSTATE INSURANCE COMPANY, Defendant-Respondent, and Standard Accident Insurance Company, Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 104

209 N.Y.S.2d 104

12 A.D.2d 138

Gerald MASON and Delphine Mason, Plaintiffs-Respondents-Appellants, v. ALLSTATE INSURANCE COMPANY, Defendant-Respondent, and Standard Accident Insurance Company, Defendant-Appellant.

Supreme Court, Appellate Division, Second Department.

Dec. 27, 1960.

Geo. T. Nicholson, Hempstead, for appellant Standard Accident Ins. Co.; Peter T. Affatato, Hicksville, of counsel.

Wolinsky & Wolinsky, College Point, for plaintiffs-respondents-appellants Mason; Melvin Wolinsky, College Point, of counsel.

Wm. D. Van Pelt, New York City, for defendant-respondent Allstate Ins. Co.; John G. Logue, Brooklyn, of council.

NOLAN, Presiding Justice.

Plaintiffs are judgment creditors of one George W. Jervas (son of George Jervas) and one Carolee Cochrane (now Mrs. George W. Jervas). Their judgment was obtained in an action brought by them against George W. Jervas and Miss Cochrane, who was then his fiancee, to recover damages for personal injuries sustained on December 9, 1956, when their automobile collided with one operated by Mr. Jervas (the son) and owned by Miss Cochrane.

Execution on the judgment having been returned unsatisfied, plaintiffs brought the present action against the defendants Standard Accident Insurance Company and Allstate Insurance Company (hereinafter respectively referred to as Standard and Allstate), pursuant to section 167 of the Insurance Law, to recover upon two liability insurance policies, one issued by Allstate to George Jervas (the father), and the other issued by Standard to Carolee Cochrane.

The automobile owned by Miss Cochrane was a 1951 Ford, which had formerly been owned by her present father-in-law, George Jervas, to whom Allstate had issued a liability policy covering the vehicle on January 13, 1956. The term for which the policy was to run was one year. Subsequently and in November, 1956, the father, George Jervas, gave the automobile to his son, George W. Jervas, and to his future daughter-in-law, Miss Cochrane. The gift was effectuated by the father's endorsement and delivery of his registration certificate and by physical delivery of the automobile. The Allstate policy, however, was not delivered or assigned to his son or Miss Cochrane. At the time of the accident the automobile was still registered in the father's name and his license plates were on it, although there appears to be no dispute that he had completely relinquished ownership and control of it.

After the gift was completed, Standard issued a liability policy, dated November 21, 1956, for a term of one year from said date, covering the automobile. The policy was issued to Miss Cochrane, who was found, on sufficient evidence, to have been its owner at the time of the accident.

Allstate's policy was not cancelled on the transfer of ownership of the insured automobile, so that, at the time of the accident there were, apparently, two liability policies in force, covering the same vehicle. Allstate's policy, by its terms, insured George Jervas, the owner named therein with respect to the operation of the owned automobile and also insured any other person operating the automobile with his consent. Standard's policy, of course, contained a similar provision with respect to operation of the automobile by Miss Cochrane or by any other person with her consent.

Prior to the father's transfer of the automobile to him and to Miss Cochrane, George W. Jervas had used it continuously for his own purposes with his father's consent and, concededly, at the time of the accident was using it with Miss Cochrane's consent.

The present action was tried in Queens County before the court without a jury, and a judgment was entered by direction of the court in favor of plaintiffs against Standard, and dismissing the complaint against Allstate. Plaintiffs appeal from the judgment insofar as it dismisses the complaint against Allstate, and Standard appeals from the entire judgment.

Insofar as the appeal by Standard is from the provision of the judgment which dismisses the complaint against Allstate, it may be disposed of quickly. The theory upon which Standard claims the right to challenge that dismissal is not disclosed, nor are we aware of any right of appeal by Standard from that portion of the judgment (cf. Nekris v. Yellen, 302 N.Y. 626, 97 N.E.2d 356; Baidach v. Togut, 7 N.Y.2d 128, 130, 196 N.Y.S.2d 67, 68; Hilton v. Steinman, 276 App.Div. 1089, 96 N.Y.S.2d 274). Hence, Standard's appeal from that portion of the judgment should be dismissed. The issue is presented, however, by plaintiffs' appeal, and we are required in any event to decide it. We shall first consider, therefore, the question of Allstate's liability. By its policy Allstate agreed to pay for the insured all damages which the insured should be legally obligated to pay because of bodily injuries arising out of ownership, maintenance or use of the automobile which was involved in the accident. The word 'insured' included the named insured George Jervas and any other person 'legally responsible for its use, provided the actual use of the automobile' was by 'the named insured or spouse or with the permission of either.' If George W. Jervas, therefore, was operating the automobile with his father's permission within the meaning of the policy provisions or of section 167 of the Insurance Law, at the time of the accident, Allstate was liable to plaintiffs for the damages they sustained, within the limits provided by its policy.

In our opinion, however, the complaint against Allstate was properly dismissed. We find no provision of Allstate's policy, other than that above mentioned, which could conceivably support a claim by plaintiffs against that defendant, and, as has been stated, there is ample support in the record for the trial court's determination of the question of ownership of the automobile, at the time of the accident. It is urged that Allstate's liability is established by its report to the Bureau of Motor Vehicles after the accident, in which it stated that its policy applied to the operator but not the owner of the Jervas automobile. That statement was, of course, relevant and competent proof, as an admission by Allstate, but was no more conclusive against it than any other extrajudicial admission, and was presumably considered by the trier of the facts, who found to the contrary on contradictory evidence.

Allstate's liability under its policy was limited by certain conditions which applied to all coverages thereby provided. One of them, No. 4, prohibited assignment of any interest in the policy without its consent. Consequently, the coverages would not follow a transfer of title to the automobile, unless Allstate had agreed to accept the new owner as a party insured (cf. Truglio v. Zurich General Accident & Liability Ins. Co., 247 N.Y. 423, 160 N.E. 774). There was no evidence that Allstate had given any such consent on the transfer of title of the automobile from George Jervas to his son or future daughter-in-law. Condition No. 7 provided that the insurance afforded by the policy applied only to accidents and occurrences happening '(3) as respects the owned automobile, while it is owned as stated on the Supplement Page' (emphasis added).

Paragraph 6 on the Supplement Page declared, with certain exceptions not here relevant, that the named insured was the sole owner of the automobile. Reading that declaration with the above-mentioned portion of Conditions 4 and 7, we think that the conclusion is inevitable that, according to its policy, Allstate's coverage ceased upon the transfer of ownership from George Jervas, the named insured, to his son and Miss Cochrane.

The result would be no different if the Allstate policy had not contained the conditions above referred to, unless it had contained specific provisions continuing the coverage. As we have stated, the only theory on which Allstate could be held liable is that George W. Jervas was operating the owned automobile with his father's permission (see in addition to policy provisions, Vehicle and Traffic Law, § 388, formerly § 59; Insurance Law, § 167). But once we accept, as we must, the finding that the father had parted with title, possession and control, and the right to control the 'owned automobile', it follows that the clause in the policy which covered the son while operating the car with his father's consent, ceased to be effective as a matter of law. That clause is inserted in policies of liability insurance to meet statutory requirements (see Insurance Law, § 167) and to give protection to owners affected by laws which provide that the owner of a car may not escape liability for the negligence of the operator on the ground that he was not operating the automobile on the owner's business if he was operating it with the owner's permission (see Vehicle and Traffic Law, § 388, formerly § 59). The clause was never intended to extend the liability of the insurer of an owner of an automobile to cover the negligence of one to whom the automobile had been sold or otherwise transferred any more than statutes such as our Vehicle and Traffic Law were intended to make the owner of an automobile liable for negligence in its operation after he had parted with title and control. The owner of an automobile does not operate it with the permission of the person from whom he has purchased it within the meaning of the Vehicle and Traffic Law or the Insurance Law, nor does he so operate it within the meaning of a liability policy provision insuring against loss from such operation, unless the policy specifically covers such a situation.

The rule with respect to policy provisions such as those here involved is clearly stated in the dissenting opinion of Fuld, J., in Switzer v. Merchants Mut. Cas. Co., 2 N.Y.2d 575, at page 583, 161 N.Y.S.2d 867, at page 873, as follows:

'That provision was designed to render the insurer responsible if the automobile was within the actual...