Security Mut. Ins. Co. of New York v. Acker-Fitzsimons Corp.

Citation340 N.Y.S.2d 902,31 N.Y.2d 436,293 N.E.2d 76
Decision Date29 December 1972
Docket NumberACKER-FITZSIMONS
Parties, 293 N.E.2d 76 SECURITY MUTUAL INSURANCE COMPANY OF NEW YORK, Appellant, v.CORP. et al., Respondents, and Edward Yogert and ano., Defendants.
CourtNew York Court of Appeals

William F. McNulty and Anthony J. McNulty, New York City, for appellant.

Eugene A. Leiman and Norman S. Rein, New York City, for Norman Levy and Fernley Realty Corp., respondents.

Bernard Trencher and Andrew Perl, New York City, for Acker-Fitzsimons Corp., respondent.

Thomas F. McCarthy, New York City, for Richard Adams, Kenneth Harrington and John J. Manning, respondents.

JASEN, Judge.

The issue on this appeal is whether the insured complied with a liability insurance policy provision requiring notice to the insurer 'as soon as practicable' after the 'occurrence'. 1

On November 29, 1964, Security Mutual Insurance Company of New York (Security Mutual) issued its Owner's, Landlords' and Tenants' Liability Policy to Fernley Realty Corp. (Fernley) insuring it against liability for personal injuries arising from the operation of certain premises located at 2--10 East 196 Street, Bronx, New York. In addition to the named insured, the policy covered Norman Levy, president of Fernley, and Acker-Fitzsimons Corp. (Acker-Fitzsimons), managing agents of the property.

On May 23, 1965, a major fire occurred on the insured premises and three days later the New York City Department of Buildings lodged certain structural violations against them. The buildings were again swept by fire on October 4, 1965, during the course of which three firemen, defendants Adams, Harrington and Manning, were allegedly injured. The buildings were subsequently demolished.

Levy evidently learned of the second fire (but not the personal injuries) on the afternoon of its occurrence. On November 9, 1965, he heard 'rumors' 2 that certain unnamed firemen had been injured in the October 4 fire. He then telephoned this information to James Kannar, Fernley's insurance broker, and followed up with a letter, also dated November 9, instructing him to notify the insurer of the claimed injuries. Kannar was of the view that until a more concrete claim was made, there was no obligation to report the incident to the insurer. He also opined that since firemen go at their own risk, there was no liability anyway.

In ordinary course, the plaintiff issued a renewal policy for the premises. But on November 15, 1965, before the effective date of the renewal policy, Kannar wrote to Security Mutual advising it of the contemplated demolition of the premises. Telephone conversations followed on November 16 between Kannar and Theodore Moschitta, an employee of Security Mutual, during which Moschitta was advised of the fire of October 4, but no mention was made of any personal injuries. The policy was subsequently canceled on January 6, 1966.

On December 19, 1965, the Sunday News reported that two firemen (Adams and Manning) had filed a claim for $1,500,000 against the City of New York for injuries allegedly sustained in the fire of October 4. Mention was also made of alleged liability of the owners and operators of the premises. The article was brought to Levy's attention, who, on December 27, 1965, forwarded a copy to Kannar, together with a letter stating that he believed it should be forwarded to the liability carrier. Kannar took no action, apparently believing that, absent some more substantial basis, there was nothing to report to the carrier.

In October, 1966, the firemen, Adams and Manning, now joined by Harrington, commenced the prime action by serving a summons and complaint on the City of New York only. Service upon Fernley and Acker-Fitzsimons was effected by service upon the Secretary of State on April 28, 1967. Levy was personally served on June 23, 1967. Upon receiving the summons, the defendant Acker-Fitzsimons promptly notified Security Mutual of the pendency of the action--some 19 months after the actual occurrence.

Notice provisions in insurance policies afford the insurer an opportunity to protect itself (Utica Sanitary Milk Co. v. Casualty Co. of Amer., 210 N.Y. 399, 104 N.E. 918; 31 N.Y.Jur., Insurance, § 1261), and the giving of the required notice is a condition to the insurer's liability. (Rushing v. Commercial Cas. Ins. Co., 251 N.Y. 302, 167 N.E. 450.) Absent a valid excuse, a failure to satisfy the notice requirement vitiates the policy (Deso v. London & Lancashire Ind. Co., 3 N.Y.2d 127, 164 N.Y.S.2d 689, 143 N.E.2d 889; Insurance Law, Consol. Laws, c. 28, § 167, subd. 1, par. (d)), and the insurer need not show prejudice before it can assert the defense of noncompliance. (31 N.Y.Jur., Insurance, § 1262.)

There may be circumstances, such as lack of knowledge that an accident has occurred, that will explain or excuse delay in giving notice and show it to be reasonable. (Rushing v. Commercial Cas. Co., 251 N.Y. 302, 167 N.E. 450, Supra; Woolverton v. Fidelity & Cas. Co. of N.Y.,190 N.Y. 41, 82 N.E. 745.) But the insured has the burden of proof thereon. (Rushing v. Commercial Cas. Co., 251 N.Y. 302, 167 N.E. 450, Supra.) Moreover, he must exercise reasonable care and diligence to keep himself informed of accidents out of which claims for damages may arise. (Woolverton v. Fidelity & Cas. Co. of N.Y., 190 N.Y. 41, 82 N.E. 745, Supra; American Sur. Co. of N.Y. v. Mariani, 130 N.Y.S.2d 755 (Sup.Ct., New York County), affd. 286 App.Div. 1083, 147 N.Y.S.2d 668; 13 Couch, Insurance (2d ed., Anderson), § 49:334.)

Then, too, a good-faith belief of nonliability may excuse or explain a seeming failure to give timely notice. (875 Forest Ave. Corp. v. Aetna Cas. & Sur. Co., 37 A.D.2d 11, 322 N.Y.S.2d 53, affd. 30 N.Y.2d 726, 332 N.Y.S.2d 896, 283 N.E.2d 768; Woolverton v. Fidelity & Cas. Co. of N.Y., 190 N.Y. 41, 82 N.E. 745, Supra; 31 N.Y.Jur., Insurance, § 1281.) But the insured's belief must be reasonable under all the circumstances, and it may be relevant on the issue of reasonableness, whether and to what extent, the insured has inquired into the circumstances of the accident or occurrence. (Haas Tobacco Co. v. American Fid. Co., 226 N.Y. 343, 123 N.E. 755; Woolverton v. Fidelity & Cas. Co. of N.Y., 190 N.Y. 41, 82 N.E. 745, Supra; Marallo v. Aetna Cas. & Sur. Co., 148 N.Y.S.2d 378 (Sup.Ct., Westchester County); American Sur. Co. of N.Y. v. Mariani, 130 N.Y.S.2d 755, affd. 286 App.Div. 1083, 147 N.Y.S.2d 668, Supra; 31 N.Y.Jur., Insurance, § 1281; 8 Appleman, Insurance Law and Practice, § 4744.)

Finally, a provision that notice be given 'as soon as practicable' after an accident or occurrence, merely requires that notice be given within a reasonable time under all the circumstances. (Deso v. London & Lancashire Ind. Co., 3 N.Y.2d 127, 164 N.Y.S.2d 689, 143 N.E.2d 889, Supra; Vanderbilt v. Indemnity Ins. Co. of North Amer., 265 App.Div. 495, 39 N.Y.S.2d 808; Insurance Law, § 167, subd. 1, par. (d).)

The Appellate Division, 39 A.D.2d 34, 330 N.Y.S.2d 865, was of the view that the insureds had no direct knowledge that injuries had resulted from the fire of October 4, 1965, and that the insureds' belief of nonliability was reasonable. The majority concluded that the notice given upon receiving the summons in the prime action (some 19 months after the occurrence) was, therefore, given as soon as practicable. We disagree.

On December 19, the Sunday News reported that two firemen had filed claims against the City of New York for injuries allegedly sustained in the October 4 fire. Mention was also made in the article of the possible liability of the owners and operators of the premises. This article was brought to the attention of the insureds, Levy and Acker-Fitzsimons, in late December. While this information was, in our view,...

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