Olenick v. Government Emp. Ins. Co.

• Decision Date: 22 November 1971
• Citation: 328 N.Y.S.2d 50,68 Misc.2d 764
• Parties: Arnold L. OLENICK and Bernice Olenick, Claimants v. GOVERNMENT EMPLOYEES INSURANCE COMPANY et al., Respondents.
• Court: New York Supreme Court

Page 50

328 N.Y.S.2d 50

68 Misc.2d 764

Arnold L. OLENICK and Bernice Olenick, Claimants v. GOVERNMENT EMPLOYEES INSURANCE COMPANY et al., Respondents.

Supreme Court, Special Term, Nassau County, Part II.

Nov. 22, 1971.

[68 Misc.2d 766] O'Dwyer & Bernstien, New York City, by Howard N. Meyer, New York City, for claimants.

Cordes, Purcell, Jewell & Ingrao, Mineola, by Stephen A. Fritz, Mineola, for State Farm Mutual Automobile Ins. Co.

Rivkin, Leff & Sherman, Freeport, by Leonard L. Rivkin, Freeport, for Government Employees Ins. Co.

Walter C. Marshall, Lynbrook, by Anthony R. Bellofatto, Lynbrook, for Liberty Mutual Ins. Co.

MEMORANDUM

BERNARD S. MEYER, Justice.

Claimants, Arnold and Bernice Olenick, were involved on October 31, 1969 in an automobile accident with a 1960 Pontiac convertible operated by Lee Bryant and, according to the police report, owned by Phyllistine Bryant, both of 99 1/2 Grandview Avenue, Great Neck, New York. At the scene Lee Bryant was issued summonses for driving without a license, driving an unregistered vehicle and driving an uninsured vehicle. Those summonses have never been answered and warrants are outstanding. On March 20, 1970 a summons and complaint in an action against the Bryants was served upon them, but no appearance or other response has been made by them or on their behalf. In December 1969 the Olenicks filed claims under the uninsured motorist endorsement of their own policy, issued by Government Employees Insurance Company. GEICO moved to stay arbitration on the ground that Lee Bryant was insured by State Farm Mutual Insurance Company and State Farm was then brought in as a party. Further investigation by State Farm turned up the fact that Liberty Mutual Insurance Company may have issued a policy covering the owner of the Bryant car and Liberty was then brought in as a party. The effect of adding State Farm and Liberty Mutual as parties was to convert the motion for stay of arbitration into a declaratory judgment action, CPLR 103(c); Matter of Elman v. MVAIC, 31 A.D.2d 910, 298 N.Y.S.2d 391. At hearings held on April 20, April 29, May 27 and September 17, 1971 and by documents before the court by agreement of all parties, additional facts have been either proved or stipulated. The question for decision is whether either the 1960 Pontiac convertible or Lee Bryant was insured at the time of the accident, and if so by what company.

CANCELLATION OF PREMIUM FINANCED POLICY.

The matter can be disposed of quickly with respect to State Farm. It concedes that it issued a policy of liability insurance to Lee Bayant of 99 1/2 Grandview Avenue, Great Neck, New York on a 1960 Buick, but shows by its cancellation daily sheet and a copy of an FS--4, that the policy was cancelled effective July 17, 1969. It has also submitted proof that Liberty Mutual issued to Phyllistine Bryant of 99 Grandview Avenue, Great Neck an assigned risk policy effective September 6, 1969, which was not cancelled until December 5, 1969. The 1960 Buick insured by State Farm is shown by the State Farm declaration sheet to have been a four door in body style and to have borne serial number 7G3002384. The records (Ex. 2) of the insurance broker who handled the assigned risk policy for Liberty Mutual as well as Liberty's copy of the declaration sheet of the policy (Ex. C) show the 1960 Buick to have been a sedan bearing serial number 763002384, and show Phyllistine Bryant's address as 99 1/2 Grandview Avenue. Though the State Farm policy was issued to Lee and the Liberty Mutual policy to Phyllistine, and notwithstanding the discrepancies in the spelling of the last name and in the second character of the serial number, the court finds as a fact that the two policies covered the same motor vehicle. Not so to find would be to ignore the similarities of first names, address and car description, as well as the similarity in appearance when handwritten of a 'G' and a '6', and the high degree of improbability that the other eight characters of the serial number would be exactly the same and in the exact same sequence were there in fact two different cars.

The determination that the same car was insured by both State Farm and Liberty Mutual is important because there is no proof that notice of cancellation of the State Farm policy was actually received by the Department of Motor Vehicles and the policy premium was financed. The premium finance agreement is not before the court and it, therefore, is not clear that it contains the power of attorney necessary to bring Banking Law § 576 into play, see Johnson v. General Mut. Ins. Co., 48 Misc.2d 219, 264 N.Y.S.2d 494, affd. 26 A.D.2d 602, 271 N.Y.S.2d 428, mod. on other grounds 24 N.Y.2d 42. If, however, it be assumed that the section is applicable and that the Department of Motor Vehicles never received notice of cancellation. State Farm's cancellation was nonetheless, effective. The court has not overlooked the holding of Orisini v. Nationwide Mut. Ins., 35 A.D.2d 238, 240, 315 N.Y.S.2d 390, 392, that under Section 576 'cancellation is not effective unless the notice is filed as prescribed by the statute,' see also MVAI Corp. v. Davidson, 56 Misc.2d 246, 288 N.Y.S.2d 304, affd. 35 A.D.2d 785; Theodore v. Hartford Acc. & Ind. Co., 60 Misc.2d 991, 304 N.Y.S.2d 688; Pitts v. Travelers Ins. Co., 59 Misc.2d 142, 298 N.Y.S.2d 209. Its holding is predicated on the fact that while paragraph (e) of subdivision 1 of Section 576 states that Vehicle and Traffic Law § 313 is not applicable to cancellation of insurance by a premium finance agency, paragraph (g) of subdivision 1 of § 576 requires filing of notice with the Commissioner of Motor Vehicles 'where such a filing is required pursuant to . . . section three hundred thirteen of the vehicle and traffic law' and the latter section expressly provides (subd. 1) that 'if another insurance contract has been procured, such other insurance contract shall, as if its effective date and hour, terminate the insurance previously certificated with respect to any motor vehicles designated in both contracts' and (subd. 2) that 'no insurer shall be required to file a notice of cancellation or other termination . . . (with the commissioner) where the insurer has been advised by the commissioner that such insurance has been superseded by another insurance contract which took effect at or prior to the time at which the termination became effective . . .' Though State Farm was never advised by the Commissioner of the Liberty Mutual policy (indeed the Commissioner's records, despite multiple inquiries, never disgorged information about the Liberty policy) and that policy took effect some seven weeks After the termination of the State Farm policy, the court would be ignoring the purpose of the compulsory insurance law (to provide 10--20--5 coverage against damage resulting from the operation of a motor vehicle, see Capra v. Lumbermens Mut. Cas., 37 A.D.2d 190, 323 N.Y.S.2d 242) were it, applying the literal language of the statute, to hold that State Farm's cancellation was not effective and the Buick was in fact covered by two 10--20--5 policies on the date of the accident, see Great American Ins. Co. v. Cosmopolitan Mutual Ins. Co., 22 A.D.2d 859, 254 N.Y.S.2d 207, Matter of Martinez v. Ficano, 28 A.D.2d 215, 284 N.Y.S.2d 270, mot. for lv. to app. den. 21 N.Y.2d 642, 287 N.Y.S.2d 1027, 234 N.E.2d 717 is authority that the cancellation provisions of the Workmen's Compensation Law need not be applied so literally, and it is but a specific manifestation of the principle of statutory construction, many times declared by the Court of Appeals, that the intent of the legislature rather than the literal language used is what governs, Matter of Hogan v. Culkin, 18 N.Y.2d 330, 274 N.Y.S.2d 881, 221 N.E.2d 546; Matter of Petterson v. Daystrom Corp., 17 N.Y.2d 32, 268 N.Y.S.2d 1, 215 N.E.2d 329; 1 McKinney's Consolidated Laws of N.Y., Statutes § 111. The court holds, therefore, that the State Farm policy was effectively cancelled and that State Farm is entitled to a judgment so declaring and stating that it is not obligated either to provide a defense or pay any damages recovered by the Olenicks.

TIMELINESS OF DISCLAIMER.

As between GEICO, Liberty and the Olenicks, the problems are more difficult. Liberty's first notice of the accident and the Olenicks' claim was a telegram sent by the Olenicks' attorney on the day of the second hearing, April 29, 1971, and received by Liberty on Friday, April 30, 1971. Investigation was begun within a few days thereafter but not until June 4, 1971 did Liberty forward a reservation letter to Phyllistine Bryant, the named insured, and not until June 28th did it send disclaimer letters to the Bryants. All three letters were returned by the post office undelivered. The disclaimer was on the grounds of noncoverage, failure to give proper notice and failure to cooperate. A copy of each letter was sent to the Olenicks' attorney. Whether Liberty or GEICO must respond to the Olenicks' claims turns, then, on the timeliness of the disclaimer and if found timely, upon its validity.

Subdivision 8 of section 167 of the Insurance Law requires that 'an insurer . . . disclaim liability or deny coverage for . . . injury arising out of a motor vehicle accident occurring within this state . . . (by giving) written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant.' Allstate Ins. Co. v. Gross, 27 N.Y.2d 263, 269, 317 N.Y.S.2d 309, 310, 265 N.E.2d 736, 737 makes clear that a reservation letter is meaningless against a defense of untimeliness under the statute; that prejudice to the injured claimant need not be shown, the sole question under § 167(8) being whether there was undue delay; and that (p. 270, 317 N.Y.S.2d p. 314, 265 N.E.2d p. 739) '. . . the question of unreasonableness becomes a question of fact, or if extreme,...