Morton v. Maryland Cas. Co.

• Decision Date: 29 December 1955
• Citation: 148 N.Y.S.2d 524,1 A.D.2d 116
• Parties: Donald MORTON, Respondent, v. MARYLAND CASUALTY COMPANY, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 524

148 N.Y.S.2d 524

1 A.D.2d 116

Donald MORTON, Respondent, v. MARYLAND CASUALTY COMPANY, Appellant.

Supreme Court, Appellate Division, Second Department.

Dec. 29, 1955.

Bounds & Wourms, New York City, John P. Wourms, New York City, on the brief, for appellant. Beatrice Rothhaus, New York City, Harry H. Lipsig, Joseph N. Friedman, New York City, of counsel, for respondent.

UGHETTA, Justice.

The primary question here presented is whether an action may be maintained in the courts of this State under a Louisiana statute which gives a right of direct action by an injured person against a liability insurer for the damages he has sustained, irrespective of whether or not a judgment has been first obtained against the insured.

Section 655 of title 22 of the LSA-Revised Statutes of 1950, reads as follows: 'No policy or contract of liability insurance shall be issued or delivered in this state, unless it contains provisions to the effect that the insolvency or bankruptcy of the insured, shall not release the insurer from the payment of damages for injuries sustained or loss occasioned during the existence of the policy, and any judgment which may be rendered against the insured for which the insurer is liable which shall have become executory, shall be deemed prima facie evidence of the insolvency of the insured, and an action may thereafter be maintained within the terms and limits of the policy by the injured person or his or her heirs against the insurer. The injured person or his or her heirs, at their option, shall have a right of direct action against the insurer within the terms and limits of the policy in the parish where the accident or injury occurred or in the parish where the insured had his domicile, and said action may be brought against the insurer alone or against both the insured and the insurer, jointly and in solido. This right of direct action shall exist whether the policy of insurance sued upon was written or delivered in the State of Louisiana or not and whether or not such policy contains a provision forbidding such direct action, provided the accident or injury occurred within the State of Louisiana. Nothing contained in this Section shall be construed to affect the provisions of the policy or contract if the same are not in violation of the laws of this state. It is the intent of this Section that any action brought hereunder shall be subject to all of the lawful conditions of the policy or contract and the defenses which could be urged by the insurer to a direct action brought by the insured, provided the terms and conditions of such policy or contract are not in violation of the laws of this state.' (Emphasis supplied.) Subsection E of section 983 of the same statute provides: 'No certificate of authority to do business in Louisiana shall be issued to a foreign or alien liability insurer until such insurer shall consent to being sued by the injured person or his or her heirs in a direct action as provided in Section 655 of this Title, whether the policy of insurance sued upon was written or delivered in the State of Louisiana or not, and whether or not such policy contains a provision forbidding such direct action, provided that the accident or injury occurred within the State of Louisiana. The said foreign or alien insurer shall deliver to the Secretary of State as a condition precedent to the issuance of such authority, as instrument evidencing such consent.'

Appellant is an insurance company organized under the laws of the State of Maryland, authorized to conduct business in the State of New York and also privileged and licensed to transact business in the State of Louisiana. In conformity with the last quoted statute, it executed and filed with the Secretary of State of the State of Louisiana a consent to be sued in a direct action reading as follows: 'That this said corporation does consent to its being sued in the State of Louisiana by an injured person or his or her heirs in a direct action as provided by the laws of the State of Louisiana, particularly R.S. 22:655, whether the policy of insurance sued upon was written or delivered in the State ofLouisiana or not, and whether or not such policy contains a provision forbidding such direct action, provided that the accident occurred within the State of Louisiana.' (Emphasis supplied.) Appellant issued a comprehensive automobile liability policy to the State of Louisiana and/or Louisiana State University by the terms of which it agreed to indemnify the insured should it become liable for personal injuries due to negligence in the ownership or operation of a certain motor vehicle owned by the university. This contract contained the following provision: 'Action against Company. No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company. Any person or organization or the legal representative thereof who has secured such judgment or written agreement shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by this policy. Nothing contained in this policy shall give any person or organization any right to join the company as a co-defendant in any action against the insured to determine the insured's liability.'

Respondent is a resident of Brooklyn, New York, who at the time of the accident was a student in the university. On June 19, 1953, while on an assignment connected with his studies, he was a passenger in the aforesaid motor vehicle, which was being driven by an instructor employed by the university. The car became involved in an accident in the parish of Natchitoches, State of Louisiana, as a result of which he sustained personal injuries. He thereafter brought this action in the Supreme Court, Kings County. The alleged tort-feasors are not named as defendants.

A motion by appellant for summary judgment was denied by Special Term on the ground that there is a disagreement between the parties as to whether the Louisiana statute is substantive or procedural and so to whether the requirement that the action be brought in a particular parish in Louisiana is jurisdictional, and that in the circumstances the interpretation to be given to the statutes and common law of Louisiana are factual matters which should be established upon a trial.

The reasons advanced do not warrant a denial of the motion. There is no dispute about the language of the statute, which is before the court. Judicial decisions germane to the issue are presented. The discretion of Special Term should have been exercised, as is permitted by section 344-a of the Civil Practice Act, to take judicial notice of these matters. Pfleuger v. Pfleuger, 304 N.Y. 148, 106 N.E.2d 495.

The statute under consideration created a substantive right. West v. Monroe Bakery, 217 La. 189, 46 So.2d 122; Lumbermen's Mut. Cas. Co. v. Elbert, 348 U.S. 48, 75 S.Ct. 151, 99 L.Ed. 59; Miller v. Commercial Standard Ins. Co., 199 La. 515, 6 So.2d 646. The question is whether the substantive right so conferred is confined to the authorization to bring a direct action against the insurer, while the requirement that the action be brought in the parish where the accident or injury occurred or in the parish where the insured has his domicile is purely procedural so that the venue is to be governed by the law of the forum, or whether the latter requirement is a part of the substantive right. In West v. Monroe Bakery, supra, the court said, 217 La. at page 191, 46 So.2d at page 123, that the substantive rights conferred 'become vested at the moment of the accident * * * subject only to such defenses as the tort-feasor himself may legally interpose.' The determination in that case was that the insurance carrier could not escape liability because of the failure of the insured to comply with the terms of the policy by giving notice of the accident as soon as practicable after it occurred. In other words, when the court said that the substantive rights became vested at the moment of the accident, it meant that those rights were not contingent on, or subordinate to, any stipulation between the insurer and the insured contained in the policy contract. Quoting from Edwards v. Fidelity & Cas. Co., 11 La.App. 176, 177, 123 So. 162, it was pointed out, supra, 217 La. at pages 197-198, 46 So.2d at page 125:

"If the failure of Monahan to give the insurer notice of the accident operates to deprive plaintiff of such rights, as, under the statute and under the policy, he would otherwise have had, then the right, which the statute creates and which the policy recognizes, is of doubtful value because the existence of that right in one person depends upon the actions of another. (Italics mine.) * * * It is quite true that Monahan's failure to give notice to his insurer would have prevented his recovery from the insurer, had he himself paid the judgment * * * but that is because Monahan had so contracted. As between the parties to a contract, the contract itself is the law of the case. Here, however, the law of the case is not found solely within the four corners of the policy of insurance, but is contained primarily in the statute to which we have referred." There is nothing in the facts of that case or in the language of the opinion to indicate that the substantive right which vested on the happening of the accident was not the limited right to bring the action in the parishes designated by the Legislature. It is our view that the intent was that the right and the remedy are so united that the right cannot be enforced except in the manner and before the tribunal designated by the act. The Supreme Court of Louisiana so held in Miller v....