State Farm Mut. Auto. Ins. Co. v. Westlake

• Decision Date: 14 January 1974
• Citation: 351 N.Y.S.2d 147,43 A.D.2d 314
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent, v. James WESTLAKE, Appellant, and Robert Christ et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 147

351 N.Y.S.2d 147

43 A.D.2d 314

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent, v. James WESTLAKE, Appellant, and Robert Christ et al., Respondents.

Supreme Court, Appellate Division, Second Department.

Jan. 14, 1974.

Siben & Siben, Bay Shore (Bernard M. Rosen, Bay Shore, of counsel), for appellant.

Curtis, Hart & Zaklukiewicz, Merrick (Edward J. Hart, Merrick, of counsel), for respondent State Farm Mutual Auto. Ins. Co.

No brief or appearance for respondents Christ.

Before MARTUSCELLO, Acting P.J., and SHAPIRO, BRENNAN, BENJAMIN and MUNDER, JJ.

SHAPIRO, Justice.

In this action for a declaratory judgment upon an agreed statement of facts, defendant James Westlake appeals from a judgment of the Special Term in Nassau County which declared that the plaintiff insurer is not obligated to defend or indemnify him under the automobile policy which it issued to him (State Farm Mut. Auto. Ins. Co. v. Westlake, 74 Misc.2d 604, 344 N.Y.S.2d 67).

THE FACTS.

The appellant was insured by the plaintiff under a policy of automobile liability insurance. On February 1, 1971, the appellant's wife, Wanda Westlake, was injured while a passenger in a car owned and operated by him. Mr. and Mrs. Westlake brought suit against respondents Robert Christ and Louise Christ, the respective owner and operator of the other vehicle involved in the accident, based upon personal injuries received by Mrs. Westlake. Thereafter, the Christs, as third-party plaintiffs, brought a third-party action against the appellant, alleging that he was liable in whole or in part for the injuries sustained by his wife and asking for judgment over. ¹ The appellant then requested the plaintiff to defend and, if necessary, to indemnify him for any recovery in the third-party action.

In reliance upon the terms of the insurance policy and the provisions of subdivision 3 of section 167 of the Insurance Law, the plaintiff refused the appellant's request. Subdivision 3 provides that 'no policy or contract shall be deemed to insure against any liability of an insured because of death of or injuries to his or her spouse * * * unless express provision relatingspecifically thereto is included in the policy.' It is undisputed that the subject policy contains no such express provision specifically insuring the appellant against liability for injuries to his spouse.

THE LAW.

The controversy between the parties arises out of the landmark decision in Dole v. Dow Chemical Co., 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288, which opened a veritable Pandora's box of first impression situations to be passed upon by the courts. This is one of them. The effect of Dole is to permit apportionment of damages among joint or concurrent tortfeasors in proportion to the allocable concurring fault. A concomitant of this rule allows one of several joint or concurrent tortfeasors who is sued by one suffering damages from the joint tort to counterclaim or cross claim or, as in this case, to institute a third-party action against the other joint tortfeasors, to make them subject to payment of the damages in proportion to their fault.

This case therefore requires us to determine the effect of Dole on the appellant's rights to have the plaintiff defend and indemnify him on any claim recovered against him by the Christs. That in turn requires us to pass on the relevance and applicability of subdivision 3 of section 167 of the Insurance Law to the facts in the case at bar.

The Special Term, though recognizing that the legislative purpose in enacting what is now subdivision 3 of section 167 of the Insurance Law (former Insurance Law, § 109, subd. 3--a) at the same time that it was amending section 57 of the Domestic Relations Law (now General Obligations Law, § 3--313) ², to make married women's tort rights and liabilities substantially the same as those of a single woman and to authorize tort suits by husband and wife against each other (L.1937, ch. 669, §§ 1, 2), 'was to protect insurance carriers from collusive actions between spouses arising out of automobile accidents' (New Amsterdam Cas. Co. v. Stecker, 3 N.Y.2d 1, 7, 163 N.Y.S.2d 626, 631, 143 N.E.2d 357, 360), and also recognizing that 'there is little likelihood of fraud present' in the instant action (State Farm Mut. Auto. Ins. Co. v. Westlake, Supra, 74 Misc.2d 604, 605, 344 N.Y.S.2d 67, 68), declared it was impermissible for it to consider the legislative intent in enacting subdivision 3 of section 167, in light of the situation created by Dole. It also held that ruling against the plaintiff would in effect be extending the contract of insurance to include coverage for situations which the parties did not contemplate when they entered into their agreement. We do not agree with either conclusion.

In the instant case there is little likelihood of fraud in the action between the Westlakes and the Christs because Mrs. Westlake would have to be successful in her action against the Christs before the latter would have any right of indemnification against Mr. Westlake. Hence, the situation created by the Dole rule in cases such as this carries a built-in safeguard against any collusion between spouses directed against the insurer of one of the spouses. It is also obvious that when the Legislature enacted what is now subdivision 3 of section 167 of the Insurance Law it did not envision the judicial development of the rule of apportionment embodied in Dole; nor did it contemplate that it would, some 20 years later, enact legislation to require motor vehicle owners to establish financial security against claims for injury based on negligence by requiring owners to obtain auto liability insurance (see Vehicle and Traffic Law, art. 6; Insurance Law, art. 17--A).

We are aware of the fact that, for the most part, our courts have consistently ruled against any device, however indirect, to avoid the provisions of subdivision 3 of section 167. The statutory provision that no policy shall be deemed to insure against 'any' liability of an insured because of injury to his spouse, unless the policy contain an express provision to that effect, has led to holdings that the legislative intent thus manifested requires exclusion from the coverage of the policy whenever indemnification is asked by a husband who is sought to be held liable for injuries sustained by his wife (see Peka, Inc. v. Kaye, 208 Misc. 1003, 145 N.Y.S.2d 156, revd. on other grounds 1 A.D.2d 879, 150 N.Y.S.2d 774; Fuchs v. London & Lancashire Ind. Co. of Amer., 258 App.Div. 603, 17 N.Y.S.2d 338; Feinman v. Rice Sons, Inc., 2 Misc.2d 86, 133 N.Y.S.2d 639, affd. 285 App.Div. 926, 139 N.Y.S.2d 884, mot. for lv. to app. dsmd. 309 N.Y. 750, 128 N.E.2d 797). In Peka the court said (208 Misc. p. 1007, 145 N.Y.S.2d 156, 159):

'Courts may not lend themselves to an indirect avoidance of, or a flank attack upon, a law whose purpose is to protect against collusive actions between husbands and wives. One may not do indirectly what he should not do directly; to permit Dr. Kaye to claim over against Lloyd's because it is Peka, Inc., rather than his wife, who happens to be the plaintiff in the action against him for the negligent causation of her injuries, would be to honor form over substance. Such procedure, which would abet the frittering away of the law, may not be upheld.'

But this line of cases is distinguishable from the situation here, because in each of them The injured wife's claims were based directly on the negligent conduct of the other spouse. Here, the wife is not directly or indirectly making a claim against her spouse to recover for the injuries she sustained. On the contrary, her claim is predicated solely on the negligent conduct of third parties (the Christs). It is their negligence upon which the wife's right of recovery depends.

The plaintiff here is not being called upon to defend its insured against an action brought against him by his spouse, but rather to defend him against a claim by the Christs in which they seek to be indemnified for their payment of that portion of his wife's injuries which is attributable to his negligence. Subdivision 3 of section 167 of the Insurance Law never contemplated such an exclusion and its intended purpose should not be so extended, particularly in view of the provisions of the Motor Vehicle Financial Security Act (now article 6 of the Vehicle and Traffic Law), enacted some 20 years after the adoption of what is now subdivision 3 of section 167 of the Insurance Law, which declared in section 310 (of the Vehicle and Traffic Law) 'that it is a matter of grave concern that motorists shall be financially able to respond in damages for their negligent acts' and which barred registration in our State of any motor vehicle without proof of the owner's financial security (Vehicle and Traffic Law, § 312). Proof of financial security was defined in the statute as 'proof of ability to respond in damages for liability arising out of the ownership, maintenance or use of a motor vehicle as evidenced by an owner's policy of liability insurance' (Vehicle and Traffic Law, § 311, subd. 3). That legislative declaration, an implementation of a public policy of compulsory liability insurance to secure the right of one injured by the negligent operation of a motor vehicle to recover damages for the injuries he has suffered in spite of the inadequate financial responsibility of the tortfeasor, was further strengthened by the enactment in 1958 of the Motor Vehicle Accident Indemnification Corporation Law (Insurance Law, art. 17--A). Subdivision 2 of section 600 of the Insurance Law, part of that enactment, declared:

'The legislature finds and declares that the motor vehicle financial security act as enacted in nineteen hundred fifty-six, which requires the owner of a motor vehicle to furnish proof of financial security as a condition to registration, fails to accomplish its full purpose of securing to innocent victims of...