Seligman v. Tucker

• Decision Date: 09 January 1975
• Citation: 46 A.D.2d 402,362 N.Y.S.2d 881
• Parties: Marcia SELIGMAN, Respondent, v. Norman E. TUCKER, Appellant. Marguerite D. VOGT, as Administratrix of the Estate of Geraldine A. Vogt, Deceased, Respondent, v. John WOODFIN, as Administrator of the Estate of Eugene Murphy, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 881

362 N.Y.S.2d 881

46 A.D.2d 402

Marcia SELIGMAN, Respondent, v. Norman E. TUCKER, Appellant.

Marguerite D. VOGT, as Administratrix of the Estate of Geraldine A. Vogt, Deceased, Respondent, v. John WOODFIN, as Administrator of the Estate of Eugene

Murphy, Appellant.

Supreme Court, Appellate Division, Fourth Department.

Jan. 9, 1975.

Miller, Bouvier, O'Connor & Cegielski, Buffalo, for appellants (Gerald Bouvier, Buffalo, of counsel)

Eugene C. Tenney, Buffalo, for respondent Seligman (Richard Scott, Buffalo, of counsel).

Grimm & Grimm, Buffalo, for respondent Vogt (Richard A. Grimm, Jr., Buffalo, of counsel).

Before WITMER, J.P., and MOULE, CARDAMONE and SIMONS, JJ.

OPINION

WITMER, Justices Presiding.

The sole issue presented on the appeals in these two cases is whether New York courts must give full effect to a provision in a casualty insurance policy issued in another state that the insurer shall have no obligation thereunder in a state where the presence of an insurer-obligor provides the sole basis of jurisdiction over the insured.

In the Seligman case plaintiff Marcia Seligman is a resident of Erie County, New York. An automobile owned by defendant, Norman E. Tucker, of the District of Columbia and operated by his son, Amos W. Tucker (then of Suffolk County, Massachusetts, but now deceased), struck the plaintiff, a pedestrian, in Suffolk County, Massachusetts in February, 1971, injuring her. Nationwide had issued a policy of casualty insurance to defendant Tucker upon said vehicle, which policy was in effect at the time of the accident. Nationwide was duly authorized to do business and had offices for doing business in the State of New York. In January, 1973 plaintiff procured an order of attachment on that insurance policy as property of the defendant in New York and instituted this action by service of the order upon Nationwide in New York and of the summons and complaint upon the defendant Tucker in the District of Columbia.

In the Vogt case plaintiff's intestate was a resident of Erie County, New York, as is plaintiff, Marguerite D. Vogt, the administratrix of the estate of that dededent. On April 14, 1973 the decedent was a passenger in a vehicle owned by defendant Viola M. Lozo (also a resident of Erie County, New York) and operated by defendant Kenneth A. Lozo in the State of Florida when it collided with an automobile owned and operated by Eugene Murphy, now deceased, who then resided in Nashville, Tennessee. Defendant John Woodfin has been duly appointed in Tennessee as administrator of the estate of said Eugene Murphy, deceased, and he resides in Murfreesboro, Tennessee. Plaintiff's intestate was seriously injured in the collision and died because thereof. Nationwide, of Columbia, Ohio, had issued a policy of casualty insurance to Eugene Murphy upon the vehicle he was operating at the time of this collision, which policy was in effect at that time. As in Seligman it is alleged and not denied that Nationwide is authorized to do business and is doing business in the State of New York. In October, 1973 plaintiff obtained an order of attachment of property (to wit, the above-mentioned insurance policy) of the estate of Eugene Murphy in New York. This action was instituted by service of the order of attachment upon Nationwide in New York and of the summons and complaint upon defendant John Woodfin, as administrator of the estate of Eugene Murphy, deceased, in Tennessee.

Defendants-appellants appeared in the respective actions. In Seligman defendant-appellant moved to vacate the order of attachment of the policy on the ground that no Res exists in New York for such attachment. In Vogt defendant-appellant interposed an answer in which he alleged as an affirmative defense that the court lacks jurisdiction over him because to has no property in New York subject to attachment under the order of attachment, and he moved to vacate the attachment because thereof.

Each policy contains the following provision:

'The Company shall have no obligation to indemnify, pay to or on behalf of, or defend any person entitled to protection under this policy where such obligations or this policy provide the sole basis of jurisdiction of the court over said persons, such obligations, or this policy.'

It is apparent, and acknowledged by appellants, that such provision was incorporated into Nationwide's policies for the purpose of avoiding the operation of the principle of law declared and adopted in the State of New York in Seider v. Roth, 17 N.Y.2d 111, 269 N.Y.S.2d 99, 216 N.E.2d 312 and adhered to in Simpson v. Loehmann, 21 N.Y.2d 305, 287 N.Y.S.2d 633, 234 N.E.2d 669. In Seider the court held that a New York resident, injured in a negligence accident in another state by an owner of an automobile insured (against damage to others) by an insurance company authorized to do business in the State of New York and having an office therefor in New York, could procure an order against the insurer for the attachment of the policy as an asset of its insured in this State; and that this order of attachment, served on the insurer, gives the New York resident Quasi in rem jurisdiction over the insured upon service of the summons and complaint upon the insured outside of this State in an action in New York for damages for injury caused by the letter's negligence. The adoption of this jurisdictional principle followed years of extension of the bases for acquisition by New York residents of jurisdiction over nonresidents with respect to out-of-state contracts and torts (see, Internat. Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95; McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223; Longines-Wittnauer v. Barnes & Reinecke, 15 N.Y.2d 443, 261 N.Y.S.2d 8, 209 N.E.2d 68; Harris v. Balk, 198 U.S. 215, 25 S.Ct. 625, 49 L.Ed. 1023; Morgan v. Mutual Benefit Life Ins. Co., 189 N.Y. 447, 82 N.E. 438; Baumgold Bros. v. Schwarzschild Bros., 276 App.Div. 158, 93 N.Y.S.2d 658, affd. 302 N.Y. 628, 97 N.E.2d 357; Matter of Riggle, 11 N.Y.2d 73, 226 N.Y.S.2d 416, 181 N.E.2d 436; Oltarsh v. Aetna Ins. Co., 15 N.Y.2d 111, 256 N.Y.S.2d 577, 204 N.E.2d 622). In Seider and Simpson this was done in the interests of 'a more realistic and reasonable evaluation of the respective rights of plaintiffs, defendants and the State in terms of fairness' (21 N.Y.2d at p. 311, 287 N.Y.S.2d at p. 637, 234 N.E.2d at p. 672). The court concluded that, in light of interests of New York residents in such actions and the control which the insurers, present and doing business in New York, have over the defense of the litigation, New York public policy justifies such extension of jurisdiction.

Nationwide, through appellants, contends that the quoted provision in the policies renders the Seider principle inapplicable because, it is urged by that provision a policy ceases to be an asset of the insured in New York the moment an effort is made to seize it for the purpose of acquiring In rem jurisdiction of the insured. The difficulty with this argument is that it does not fit the facts. As Chief Judge Desmond observed in Seider v. Roth (supra, 17 N.Y.2d p. 113, 269 N.Y.S.2d p. 101, 216 N.E.2d p. 314), the moment the accident occurred the insurer's policy obligated it to do several things for its insured, which constitute elements of a debt owing to the insured within the meaning of CPLR 5201 and 6202, to wit, 'to investigate (the accident) and if expedient to negotiate or settle with the claimant' and 'to pay necessary medical and similar expenses of the insured and any other injured person', and then, if action is brought against the insured, to defend and indemnify him. These obligations of the insurer constitute an attachable asset or Res in New York, in existence at the time the order of attachment is obtained. They are not removed from the State by the provision in the policy that they should miraculously disappear and be non-existent if attached for purposes of acquiring jurisdiction over a non-resident insured.

In Minichiello v. Rosenberg (410 F.2d 106 and 117, cert. den. 396 U.S. 844, 90 S.Ct. 69, 24 L.Ed.2d 94 and rehearing den. 396 U.S. 949, 90 S.Ct. 370, 24 L.Ed.2d 254), wherein the constitutionality of the Seider v. Roth (supra) principle was attached, Judge Friendly reviewed the factual and policy aspects of Seider. He took special note of Judge Keating's concurring opinion therein and upheld the constitutional right of the State of New York, as a matter of public policy in the protection of its residents, to permit its residents to attach in New York the obligation of insurer (doing business in New York) under its policy insuring an out-of-state tort-feasor. The court concluded that the procedure was in the nature of a judicially authorized direct action against the insurer, and that even direct action, if state-authorized, would be constitutional (410 F.2d pp. 109--110; and see Oltarsh v. Aetna Ins. Co., 15 N.Y.2d 111, 256 N.Y.S.2d 577, 204 N.E.2d 622, supra).

In Benson v. Eastern Bldg. & Loan Assn., 174 N.Y. 83, 66 N.E. 627 Judge Cullen, writing for the court, quoted (p. 85, 66 N.E. p. 628) from Chief Judge Shaw's opinion in Nute v. Hamilton Mutual Ins. Co., 6 Gray, 174, at p. 181 as follows: "But the remedy does not depend on contract, but upon law, generally the Lex fori, regardles of the Lex loci contractus, which regulates the construction and legal effect of the contract"; and at page 86, 66 N.E. at page 628 Judge Cullen stated, 'nothing is better settled than that agreements of the character mentioned (i.e., to exclude jurisdiction until found by arbitrators) are void.' Consonant with that decision Judge Cardozo wrote in Meacham v. Jamestown F. & C.R.R. Co. (211 N.Y. 346, at p. 354, 105 N.E. 653 at p. 656), 'The jurisdiction of our courts is established by law, and is not to be diminished, any more than it is to be increased, by the...