Peka, Inc. v. Kaye

• Citation: 145 N.Y.S.2d 156,208 Misc. 1003
• Parties: PEKA, Inc., Plaintiff, v. A. Stanley KAYE, defendant. A. Stanley KAYE, defendant and third-party plaintiff, v. John DOE, Richard Roe and others, parties intended being underwriters, doing business as Lloyd's of London, Ltd., third-party defendants.
• Decision Date: 14 October 1955
• Court: New York Supreme Court

Page 156

145 N.Y.S.2d 156

208 Misc. 1003

PEKA, Inc., Plaintiff, v. A. Stanley KAYE, defendant.

A. Stanley KAYE, defendant and third-party plaintiff, v. John DOE, Richard Roe and others, parties intended being

underwriters, doing business as Lloyd's of London,

Ltd., third-party defendants.

Supreme Court, Bronx County.

Oct. 14, 1955.

Shirley P. Thau, New York City, by Alfred S. Julian, New York City, of counsel, for third-party plaintiff, opposed.

Mendes & Mount, New York City, by George W. Clark, New York City, of counsel, for third-party defendants, for the motion.

EDER, Justice.

This is a motion by the underwriters, doing business as Lloyd's of London, Ltd. (herein referred to as Lloyd's), to dismiss pursuant to Rule 106 a third-party complaint as insufficient in law. The motion is directly based on subdivision 3 of section 167 of the Insurance Law, excluding from insurance coverge 'any liability of an insured because of death of or injuries to his or her spouse * * * unless express provision relating specifically thereto is included in the policy.'

Since 1937, when this enactment went into effect simultaneously with the amendment of section 57, Domestic Relations Law, granting either spouse a right of action for personal injuries sustained as a result of the other's negligence, there have been numerous cases wherein the spouses endeavored in more or less ingenious fashion to avoid the impact of the exclusionary provision. But the courts have consistently refused to sanction any maneuver, however indirect, to evade the plain intendment of the law. The guiding principle was thus stated in Fuchs v. London & Lancashire Indemnity Co., 258 App.Div. 603, 605, 17 N.Y.S.2d 338, 440: 'These simultaneous enactments disclose a considered legislative intent to create a right of action theretofore denied, and at the same time to protect insurance carriers against loss through collusive actions between husband and wife.'

Here we have a rather interesting variation in factual background and procedural steps taken by the parties from the usual situation encountered in this field.

The policy was issued by Lloyd's, which is not licensed to conduct an insurance business in this state, through its Montreal office and delivered to the assured, a New York resident. It was a standard certificate of aircraft and aviation insurance which, among other terms, provided for indemnification of the insured against all sums which he should become legally liable to pay as compensation for injuries to passengers while being carried in the small airplane owned by the insured. Some tiem thereafter, by proper indorsement, the insured's title was changed to 'Dr. A. Stanley Kaye and Peka, Inc.,' and Dr. Kay's home address in New York City stated as the address of both. Peka, Inc., was a New York corporation and Dr. Kaye an officer thereof.

On August 16, 1948, the plane, piloted by De. Kaye, crashed at a Pennsylvania airport, causing serious injuries to Dr. Kaye's wife, a passenger at the time. In January, 1949, she commenced an action in this state against Peka, Inc., as owner of the plane, to recover damages for personal injuries. Lloyd's defended on behalf of Peka, Inc. After trial judgment was entered in her favor on May 5, 1953, and said judgment was affirmed on appeals to the Appellate Division, 283 App.Div. 865, 130 N.Y.S.2d 13, and the Court of Appeals, 307 N.Y. 894, 123 N.E.2d 89. In December, 1954, Lloyd's paid on behalf of Peka, Inc., the sum of $27,703.99 in satisfaction of the judgment.

Thereafter Lloyd's attorneys instituted this action in the name of Peka, Inc., against Dr. Kaye for recovery of the sum paid by the corporation to Mrs. Kaye, together with the sums paid as fees and expenses in the defense of her action. The complaint of Peka, Inc., alleged that the accident was due entirely to the negligence of the pilot, Dr. Kaye, and that the trial court's decision in Mrs. Kaye's action contained such a finding Dr. Kaye requested Lloyd's to defend on his behalf as an assured under the policy, but it disclaimed any obligation to defend this action. He then interposed an answer to the complaint and served Lloyd's with a thirdparty summons and complaint. Lloyd's has brought on the present motion to dismiss that third-party complaint.

Dr. Kaye alleges therein the foregoing facts as to the policy, the accident (omitting naturally any reference to his claimed negligence), ensuing legal proceedings, and the refusal to defend on his behalf. He then concludes that, in the event judgment is recovered by Peka, Inc., against him, Lloyd's would be obligated to indemnify him with respect thereto by virtue of the terms of the policy issued to Peka, Inc., and him, and would also be liable to him for his expenses in defending this suit and prosecuting this third-party action.

Here, then, is the fortunate, for the wife, circumstance that the vehicle was owned by a corporation, whose insurance carrier was compelled to indemnify it and pay her, despite the fact that her husband operated it. The only remedy then open to the carrier would be as subrogee by way of a third-party action in the name of the corporation against the husband in her original action or, as was here done, by suit brought against him after payment of her judgment. In either event the basis of such claim against him would be proof that the accident was caused solely as a result of his active negligence, the liability of Peka, Inc., as owner, to Mrs. Kaye having arisen in consequence of such negligence.

It will be noted, of course, that if Dr. Kaye should sustain his third-party complaint against Lloyd's, there would be no point in Lloyd's continuing this action in Peka's name against him, for it would then be required to indemnify him for the very liability it seeks to assert against him in Peka's action, an even stand-off result, except, of course, that it would have to reimburse him for his legal fees and expenses.

The motion to dismiss the third-party complaint is claimed to be based squarely upon the provisions of section 167, subd. 3 of the Insurance Law: That the liability for which Dr. Kaye seeks indemnity under the policy, while asserted directly against him by Peka, Inc., as the one whose active negligence caused it to be liable to Mrs. Kaye, actually is a liability 'because of * * * injuries to his * * * spouse.'

The subdivision does state in all-inclusive language that no policy shall be deemed to insure against 'any' liability of an insured because of injury to his spouse unless otherwise expressly stated therein. In view of the clear legislative intent underlying its enactment it must be held that such exclusion from policy coverage results whenever indemnification is asked by a husband whose liability, regardless of the form in which or person by whom asserted,...