Nationwide Mut. Ins. Co., Application of

Decision Date01 August 1962
Citation241 N.Y.S.2d 589,39 Misc.2d 782
Parties, 39 Misc.2d 786, 39 Misc.2d 788 Application of the NATIONWIDE MUTUAL INSURANCE COMPANY, Petitioners, for an order restraining certain arbitration attempted to be had by Willard Holbert and Blanche Holbert, Respondents, Before the Accident Claims Arbitration Tribunal of the American Arbitration Association.
CourtNew York Supreme Court

Chernin & Gold, Binghamton (Bruno Colapietro, Binghamton, of counsel), for petitioner.

Pierce & Borden, Binghamton (Willard E. Pierce, Jr., Binghamton, of counsel), for respondents.

ROBERT O. BRINK, Justice.

This is a motion by the petitioner for an order to stay arbitration under Sections 1458-a and 49 of the Civil Practice Act on the grounds that the respondents failed to give petitioner timely notice of the accident and that the statute of limitations expired before petitioner received a demand to arbitrate. Respondents claim that timely notice was given and that the six year statute of limitations of Section 48 of the Civil Practice Act, not the three year period of Section 49, applies.

It appears that on August 10th, 1958, a car in which respondents were riding was struck by a hit-and-run motor vehicle and that the collision caused damages to the respondents.

The insurance contract between petitioner and respondents contains the usual uninsured motorists coverage provisions.

The first issue presented is whether the two questions raised by petitioner in this motion, the first relating to timely notice and the second relating to the statute of limitations, may be decided by this court at all, or whether they should be left for determination by the arbitrators.

It has been held in Matter of Motor Vehicle Acc. Indemnification Corp. v. Brown, 15 A.D.2d 578 at 579, 223 N.Y.S.2d 309 at 311 (case No. 14) (2d Dept.1961), that the issue of timely notice was not within the purview of an arbitration clause almost identical to the one involved here and that the question could not be submitted to the arbitrators but must be decided by the court. Mr. Justice Fine of the Supreme Court of New York County reached the same conclusion in Matter of Granese (Motor Vehicle Acc. Indemnification Corp.), 26 Misc.2d 646, 206 N.Y.S.2d 292 (Sup.Ct., New York Co. 1960), Compare Matter of Jeanette Rosenbaum (American Surety Company of New York), 11 N.Y.2d 310, 229 N.Y.S.2d 375, 183 N.E.2d 667 (1962), which held that the factual question of whether the claimant was hit by an uninsured motorist was to be tried by a court before the parties proceeded to arbitration.

It now appears to be clear, under the reasoning applied in these cases, that a dispute relating to a claimant's having given timely notice bears on whether he is legally entitled to recover from the petitioner under the endorsement and not whether he is legally entitled to recover from the owner or operator of the uninsured automobile. This being so, the dispute is not within the scope of the arbitration clause. The dispute should not, therefore, be submitted to the arbitrators over the objection of petitioner.

A hearing should be held by the court to determine the factual issue of whether timely notice was give. Matter of Brown (MVAIC), 15 A.D.2d 578, 223 N.Y.S.2d 309 (case No. 14) (2d Dept.1961). See, also, order of Supreme Court at Special Term, reinstated by the Court of Appeals in Matter of Jeanette Rosenbaum (American Surety Company of New York), supra.

Assuming that there was timely notice given, the next issues are whether this court may consider the statute of limitations question and if so, what statute is applicable to respondents, claims.

In view of Section 1458-a of the Civil Practice Act and the legislative history leading to its adoption, it is the opinion of this court that the statute of limitations question may be brought to this court for determination. See 1959 N.Y.S. Legislative Annual at 12 and 27.

It is the opinion of this court, further, that both Section 49, subd. 6 and Section 48 of the Civil Practice Act are applicable, here, but that since the three-year limitation of Section 49, subd. 6 is tolled, for the reason discussed below, the six-year period of Section 4, governs respondents' claims.

By the insurance policy petitioner stands in the shoes of the hit-and-run driver for the purpose of determining whether it will be liable to respondents. In order to recover, under the polity, from petitioner, respondents must prove the traditional elements of a negligence cause of action against the hit-and-run driver. In re McGuinness & M.V.A.I.C., 32 Misc.2d 949, 225 N.Y.S.2d 361 (Sup.Ct., Queens Co.1962). The time such action can be commenced against the hit-and-run driver is, therefore, governed by Section 49, subd. 6 of the Civil Practice Act--3 years. See Blessington v. McCrory Stores Corp., 305 N.Y. 140, 111 N.E.2d 421, 37 A.L.R.2d 678 (1953).

Since the hit-and-run driver fled the scene of the accident before his identity could be ascertained and failed to comply with Section 70(5a) of the Vehicle and Traffic Law 1 he was guilty of a misdemeanor and prevented respondents, here, from commencing any proceeding against him. People v. Leigh, 19 Misc.2d 675, 676-677, 189 N.Y.S.2d 573, 575-576 (Police Ct., Village of Mt. Kisco 1959).

In all of the circumstances it is inequitable to permit the statute of limitations to run against such a person. The cases of Lightfoot v. Davis, 198 N.Y. 261, 91 N.E. 582, 29 L.R.A.,N.S., 119 (1910); Clarke v. Gilmore, 149 App.Div. 445, 133 N.Y.S. 1047 (1st Dept.1912); and Dodds v. McColgan, 229 App.Div. 273, 241 N.Y.S. 584 (1st Dept.1930), evidence a trend away from the rigors of Engel v. Fischer, 102 N.Y. 400, 7 N.E. 300 (1886), decided before the 1888 false name amendment (L.1888, ch. 498) to what is now Section 19 of the Civil Practice Act. These cases hold, in effect, that there is an implied exception to the statute of limitations where a party wrongfully conceals material facts which prevent discovery of his wrong and that such a person will not be allowed to take advantage of his own wrong by setting up the statute.

Certainly the principal rule of these cases is just as applicable to the instant case, where the hit-and-run driver violates a penal statute in failing to reveal his identity, as it is to the foregoing cases, where the defendants had concealed facts which would have permitted a suit against them. See 2 Wood, Limitations of Actions §§ 249 et seq. and §§ 276(f)(1) et seq. (4th Ed.1916).

Section 49, subd. 6, while applicable, is tolled during the period the hit-and-run driver conceals his identity.

Respondents' claims against petitioner arise out of contract. They are, therefore, limited by the six-year period of Section 48. Inasmuch as their claim against it was commenced within this six-year period, they are not barred by any statute of limitations.

Petitioner's motion is denied pending the outcome of a hearing on the issue of timely notice, which may be had upon application of either party.

On Motion to Stay Arbitration.

On August 1, 1962, this Court rendered a Decision denying the application of the above-named Petitioner for an Order to stay Arbitration under Section 1458-a and 49 of the Civil Practice Act on the ground that the Statute of Limitations expired before Petitioner received a demand to arbitrate. The Petitioner also moved to stay arbitration proceedings on the ground that the Respondents had failed to serve a verified Notice of Claim within 30 days pursuant to the provisions of the policy.

On the latter question, the Court reserved decision pending a Hearing. Such a Hearing was held on August 28, 1962, attended by counsel for both parties. Proof was submitted by the Respondents from which this Court finds as follows:

1. That on August 19, 1958, respondent Willard Holbert notified by telephone Mr. Commodore P. Seger, the Nationwide Agent from whom the policy was purchased, of the occurrence of the collision and the resulting injuries to respondent Blanche Holbert.

2. That after August 19, 1958, and prior to September 2, 1958, Mr . Wilson, a Nationwide Adjuster, made a telephone call to respondent Willard Holbert asking that the bills for medical care and treatment of respondent Blanche Holbert be sent to petitioner after the discharge of the said Blanche Holbert.

3. That after August 19, 1958, and prior to September 2, 1958, respondent Willard Holbert, having heard of uninsured hit-run coverage, made a telephone call about such coverage to the said Mr. Wilson who expressed doubt that respondents had such coverage.

4. That immediately thereafter respondent Willard Holbert called Mr. Seger, the Nationwide Agent, who said that respondents did indeed have such coverage and that he had so advised Mr. Wilson.

5. That about a week after September 2, 1958, when she was discharged from hospital care, respondent Blanche Holbert was interviewed at her home by the said Mr. Wilson concerning the circumstances of the accident and her injuries.

6. That approximately one month after the accident respondent Blanche Holbert, at the request of the said Wilson, signed certain blank forms which Wilson said were necessary to process the claim of respondent and to be filled in later by Wilson.

7. That from the time of her first interview with the said Wilson in September of 1958 through to and including February of 1960, respondent Blanche Holbert and the said Wilson were in touch with each other concerning the injuries and condition of the said Blanche Holbert about once a month either by telephone or by interview at the Holbert home.

8. That at some time during the year of 1959 and probably during the Summer thereof, respondents Blanche Holbert and Willard Holbert and the said Mr. Wilson conferred at the home of respondents concerning the possibilities of settlement, that the said Wilson stated that they had...

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