National Superlease Inc. v. Reliance Ins. Co. of New York

• Decision Date: 06 October 1986
• Citation: 507 N.Y.S.2d 16,123 A.D.2d 608
• Parties: NATIONAL SUPERLEASE INC., Appellant, v. RELIANCE INSURANCE COMPANY OF NEW YORK, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 16

507 N.Y.S.2d 16

123 A.D.2d 608

NATIONAL SUPERLEASE INC., Appellant, v. RELIANCE INSURANCE COMPANY OF NEW YORK, et al., Respondents.

Supreme Court, Appellate Division,

Second Department.

Oct. 6, 1986.

Dollinger, Gonski, Grossman & Permut, Carle Place (Matthew Dollinger, of counsel), for appellant.

Jones, Hirsch, Connors & Bull, and Blair C. Fensterstock, New York City (Ira H. Block and Mark Ian Binsky, of counsel), for respondents (one brief filed).

Before LAZER, J.P., and BRACKEN, WEINSTEIN and EIBER, JJ.

MEMORANDUM BY THE COURT.

In an action to enforce policies of insurance issued by Reliance Insurance Company of New York (hereinafter Reliance) to National Superlease, Inc. and to recover damages for an alleged wrongful cancellation of said policies, the plaintiff appeals from an order of the Supreme Court, Queens County (Lerner, J.), dated January 28, 1985, which granted the defendants' motion for summary judgment.

Order affirmed, without costs or disbursements.

The facts underlying this action have been fully set forth in the opinion of Special Term (see, National Superlease v. Reliance Ins. Co. of N.Y., 126 Misc.2d 988, 484 N.Y.S.2d 776). On appeal to this court, the plaintiff contends that the policies in issue were valid and enforceable inasmuch as the plaintiff had an insurable interest in the vehicles which were covered thereunder. As an alternative ground, the plaintiff maintains that these policies should be held enforceable since they had been ratified by the defendant Reliance.

Insurance Law § 3401 provides:

"No contract or policy of insurance on property made or issued in this state, or made or issued upon any property in this state, shall be enforceable except for the benefit of some person having an insurable interest in the property insured. In this article, 'insurable interest' shall include any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage."

Generally, a party possesses an insurable interest in the subject matter which is insured where he has such a relation or connection with, or concern in, such subject matter that he will derive pecuniary benefit or advantage from its preservation, or will suffer pecuniary loss or damage from its destruction, termination, or injury by the happening of the event insured against (see, Scarola v. Insurance Co. of North Amer., 31 N.Y.2d 411, 413, 340 N.Y.S.2d 630, 292 N.E.2d 776). Applying the foregoing principle to the facts here extant, we conclude that the plaintiff did not have an insurable interest in the vehicles covered under the policies issued by Reliance. The only pecuniary benefit which the plaintiff could possibly derive from the preservation of the vehicles was the continued ability to collect "membership fees" which, in actuality, constituted nothing more than insurance premiums. Similarly, the only pecuniary loss which the plaintiff would sustain from the destruction of or damage to the vehicles would be the loss of these membership fees.

With respect to the plaintiff's claim that it possessed an insurable interest in these vehicles by virtue of its status as the beneficiary under a trust executed by its members, we find that Special Term properly concluded that the "short-form trust agreement" and leaseback arrangement did not provide the plaintiff...