Steinbach v. Aetna Cas. and Sur. Co.

• Decision Date: 25 June 1981
• Citation: 440 N.Y.S.2d 637,81 A.D.2d 382
• Parties: Morton STEINBACH, individually and as father of Steven Steinbach, an infant, Plaintiff-Appellant, v. AETNA CASUALTY AND SURETY CO., et al., d/b/a United States Aircraft Insurance Group, Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 637

440 N.Y.S.2d 637

81 A.D.2d 382

Morton STEINBACH, individually and as father of Steven Steinbach, an infant, Plaintiff-Appellant, v. AETNA CASUALTY AND SURETY CO., et al., d/b/a United States Aircraft Insurance Group, Defendants-Respondents.

Supreme Court, Appellate Division,

First Department.

June 25, 1981.

Milton H. Ellerin, New York City, for plaintiff-appellant.

William J. Junkerman, New York City, of counsel (Randal R. Craft, Jr. and John F. Pritchard, New York City, with him on the brief; Haight, Gardner, Poor & Havens and William J. Junkerman, New York City, attorneys), for defendants-respondents.

Before BIRNS, J. P., and CARRO, SILVERMAN, BLOOM and FEIN, JJ.

SILVERMAN, Justice:

This is an appeal by plaintiff from a judgment of the Supreme Court dismissing the complaint on defendants' motion for summary judgment.

In this action under Insurance Law § 167(1)(b) plaintiff, an injured party, sues defendants, liability insurers, for the amount of an unsatisfied judgment which plaintiff had obtained on stipulation against Buker Airways Inc., the party alleged to have caused the injuries to plaintiff and the insured under the liability insurance policy issued by defendants.

Defendants' motion for summary judgment is based upon the insured's, Buker's, failure to comply with certain provisions of the policy, particularly the condition requiring notice of the occurrence:

1. Notice of Occurrence. When an occurrence takes place, written notice shall be given by or on behalf of the Insured to the Aviation Managers at the nearest office or branch office whose addresses are listed on the filing back of this policy, as soon as practicable....

In a declaratory judgment action brought by the insurance companies against the insured Buker Airways Inc. and its principal Harold W. Buker, Jr., the Superior Court of New Hampshire "found that the defendants did not give notice within a reasonable time, nor as soon as practicable, and that they did not comply with the policy conditions relative to notice"; and that, accordingly, "the policy does not afford coverage relative to the accident of August 1967" (the accident here involved). In the present action, the New York Supreme Court held that by virtue of that judgment the present plaintiff, the injured party, could not bring an action pursuant to Insurance Law § 167 against the insurance companies for payment of the judgment that plaintiff had recovered against Buker, notwithstanding the fact that plaintiff was not a party to the New Hampshire action.

The underlying facts are:

Buker's insurers are United States Aircraft Insurance Group (USAIG), a joint underwriting association composed of a group of 27 insurance companies, the defendants in this action. The aviation insurance manager for USAIG is United States Aviation Underwriters, Inc. (USAU), which sets the rates and issues insurance policies. In at least two places the policy is signed by "UNITED STATES AVIATION UNDERWRITERS, INCORPORATED Aviation Managers."

On August 19, 1967, plaintiff, then 16 years old, was attending a summer camp in New Hampshire; the camp had arranged for Buker to drop leaflets over the camp from Buker's airplane. The leaflets apparently were supposed to come down loose, but for some reason, a bundle of them stuck together, came down, and struck plaintiff causing the injuries complained of. Although Buker learned of the accident within hours of its occurrence, Buker did not notify its liability insurance carriers. This appears to have been due in part to a request by an attorney representing plaintiff in New Hampshire not to notify the insurers for the time being. The first notice that the insurers received of the accident was 10 1/2 months later on July 2, 1968 when plaintiff, suing Buker in the Supreme Court, Queens County, attached the insurers' liability under the insurance policy (apparently under the former Seider v. Roth, 17 N.Y.2d 111, 269 N.Y.S.2d 99, 216 N.E.2d 312, practice).

From a contemporaneous document it is clearly established that plaintiff's representative in New Hampshire was informed as to the identity of the insurance carriers, at least as early as September 19, 1967, but plaintiff gave no notice to the insurance companies until the attachment referred to. The insurers disclaimed liability because of the lateness of notice among other things. The insurers then brought the declaratory judgment action in New Hampshire, resulting in the New Hampshire judgment to which we have referred. As we have said, the injured plaintiff was not a party to that action, apparently because he could not be served in New Hampshire.

The defendants-insurers' motion for summary judgment in the New York Supreme Court was based on the insured's--Buker's--failure to comply with the notice provision of the statute. And the New Hampshire judgment was based on the same failure. Thus, there was not presented either in the New York Supreme Court or in the New Hampshire court the question of whether the injured party, the plaintiff in the present action, gave notice as soon as practicable. If this matter were governed by New York law, defendants' motion for summary judgment would have to be denied because under New York law the failure of the insured to give proper notice does not bar the injured party, at least if the injured party has given notice with as much diligence as is reasonably possible. The reason for this is that in 1939 Insurance Law § 167(1)(c) was amended to provide, among other things, that written notice may be given not only by or on behalf of the insured but "by or on behalf of the injured person." "The statute having granted the injured person an independent right to give notice and to recover thereafter, he is not to be charged vicariously with the insured's delay ..." Lauritano v. American Fidelity Fire Insurance Co., 3 A.D.2d 564, 568, 162 N.Y.S.2d 553, aff'd, 4 N.Y.2d 1028, 177 N.Y.S.2d 530, 152 N.E.2d 546. Thus "an injured third party may seek recovery from an insured's carrier despite the failure of the insured to provide timely notice of the accident ..." General Accident Insurance Group v. Cirucci, 46 N.Y.2d 862, 863-864, 414 N.Y.S.2d 512, 387 N.E.2d 223.

However, in our view, the rights of the parties under this policy are governed by the law of New Hampshire because that is the state which has the most contacts with the policy under the "grouping of contacts" rule. Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279. "This rule requires courts to apply the law of the State which the parties understood would be the principal location of the insured risk and the one most intimately concerned with the outcome of the litigation. (2 Couch, Insurance 2d, § 16:19.5; 12 Appleman, Insurance Law and Practice, § 7079.)" Colonial Penn Insurance Co. v. Minkoff, 40 A.D.2d 819, 388 N.Y.S.2d 444, aff'd 33 N.Y.2d 542, 347 N.Y.S.2d 437, 301 N.E.2d 424; accord Restatement, Second, Conflict of Laws § 193; Lumbermens Mutual Casualty Co. v. Stamell Construction Co., 105 N.H. 28, 31, 192 A.2d 616, 617. Here the location of the insured risk and most of the contacts were indisputably New Hampshire. The policy declaration gives the only address of the insured as Parlin Field, Newport, New Hampshire; states that the aircraft "will usually be based at Parlin Field located at Newport, New Hampshire"; and states the business of the insured as "fixed base operator." Thus the parties clearly understood that the principal location of the insured risk was New Hampshire. The other contacts are almost all with New Hampshire. The flight was wholly an intra-New Hampshire local flight to drop leaflets over a camp in New Hampshire at the request of the owners of the camp. The accident took place in New Hampshire. The person injured, although a resident of New York, was in fact a summer camper in New Hampshire at the time. The policy was issued through brokers apparently in New Hampshire. The insured, the only other party to the insurance policy, was located in New Hampshire. The only contacts with New York are that USAU, the aviation managers, has an office in New York and the injured plaintiff is a resident of New York.

It appears clear that under New Hampshire law, unlike New York law, failure by the insured to give timely notice in accordance with the terms of the policy bars the claim of the injured third party. Plaintiff so concedes in his brief stating:

Contrary to New York Insurance Law, Section 167(1)(c), there is no New Hampshire statute affording an injured person a right, as such, to give prompt notice of an accident to an insurance carrier.

....

This seems clearly contra the New York Rule whereby a New York injured party has the right to give such notice. (Pensky v. Aetna Life & Casualty Co. supra [84 Misc.2d 270 ]).

New Hampshire law likewise holds that any rights of an injured third person against the insurance carrier derive solely through the insurance policy (to which he was not a party) and are thus limited by the jural relationship between the contracting parties to the insurance contract. (Employers Assurance Co. v. Tibbetts, 96 N.H. 296 ).

....

.... The conclusion is thus inescapable that New Hampshire affords no rights at all to any injured third person, and under the law of that State he would appear bound by the determination in the action between the carrier and the insured whether he was a party or not to...