Thrasher v. U.S. Liability Ins. Co.

Decision Date23 February 1967
Parties, 225 N.E.2d 503 Julius THRASHER, Appellant, v. UNITED STATES LIABILITY INSURANCE COMPANY, Respondent. Duaine MORGAN, as Administratrix of the Estate of James Morgan, Deceased, Appellant, v. UNITED STATES LIABILITY INSURANCE COMPANY, Respondent.
CourtNew York Court of Appeals Court of Appeals

Sheridan Albert, Brooklyn, for Duaine Morgan, appellant.

Oliver Sutton, New York City, for Julius Thrasher, appellant.

William Glatzer and Mendel White, New York City, for respondent.

SCILEPPI, Judge.

Defendant, United States Liability Insurance Company, insured one Henry Kelley under a New York standard, minimum liability, automobile policy. Kelley loaned his automobile to plaintiff Morgan's intestate, James Morgan, who, in turn, invited plaintiff Thrasher for a ride during which Kelley was not present. During the course of this ride, the car crashed into an embankment on the Bronx River Parkway, injuring both Thrasher and Morgan.

In September, 1962 Thrasher commenced an action against Kelley alleging Morgan's negligence in the operation of the car. The insured, Kelley, was contacted in December, 1962 by one of the defendant's investigators at 981 Teller Avenue Bronx, New York. Kelley signed a statement admitting that he had loaned his car to Morgan, and he executed a nonwaiver agreement. Thereafter, on April 24, 1963, the law firm of Glatzer, Glatzer & Evans sent Kelley a letter by certified mail informing him that they had been retained by the defendant to represent him. The letter also stated that it may be necessary for the defendant to contact Kelley on short notice, so it was important for him to keep them informed of any change of address. This letter was received by Kelley at 981 Teller Avenue.

In April, 1963 Morgan commenced an action against Kelley alleging that Kelley had loaned him a vehicle with defective brakes and had neglected to warn him of the same.

The action of Thrasher against Kelley was placed on the nonjury calendar of the Supreme Court, New York County, in June, 1963.

Late in November, 1963, when the Thrasher action reached the ready day calendar, Kelley's attorneys made a motion to consolidate the Thrasher and Morgan actions. The motion was unopposed by plaintiffs' attorneys, and the actions were consolidated on December 27, 1963. In the meantime, all parties stipulated that the consolidated actions should be tried before a jury.

On December 13, 1963 an investigator was assigned to contact Kelley and have him come to his attorneys' office for a conference. The investigator's efforts to locate the insured were limited to visiting Kelley's last known address at 981 Teller Avenue on two different occasions; telephoning Kelley's last known employer and obtaining from him an address at 317 E. 162nd Street; visiting that 317 E. 162nd Street address; telephoning Morgan and his attorney to ask their help in locating Kelley, and checking some bars in the area of 169th Street and Boston Road. The investigator visited the Department of Motor Vehicles and asked a clerk for Kelley's address. He was told that such information was supplied only pursuant to written requests. No written request was ever submitted by the investigator.

On the 14th of January, 1964, Kelley's attorneys sent a letter to him at 981 Teller Avenue and 317 E. 162nd Street by certified mail informing him that the trial in the actions of Thrasher v. Kelley and Morgan v. Kelley would commence on January 15, 1964, and it was essential that he appear and testify. These letters were returned marked 'Undeliverable' and 'Unclaimed'.

On the day the trial commenced, Kelley's attorneys requested the Gillman Service to serve a subpoena on Kelley. Gillman returned the subpoena to Kelley's attorneys on January 17 marked 'Correct address 317 E. 162 Not home 3 tries'.

The trial of the consolidated actions commenced on January 15, 1964. At this time, Kelley's attorneys requested an adjournment to give them more time to locate Kelley. They also stated that, if the case were tried and a verdict returned against them, the insurance company would disclaim liability. Plaintiffs' counsel objected to an adjournment on the ground that the defendant had until now marked the calendar ready. Furthermore, they requested Kelley's counsel to immediately disclaim liability on behalf of the insurance company if they were going to disclaim, rather than wait until the trial was completed. This request was refused. The motion for an adjournment was denied and the case proceeded to trial.

At the conclusion of plaintiffs' case, plaintiff Thrasher made a motion to amend his pleadings to the proof. The motion was granted and Thrasher amended his complaint to allege that the cause of the accident was defective brakes rather than Morgan's negligent operation of the vehicle. At the conclusion of defendant's case, the court requested the insurance company to disclaim immediately if they were going to disclaim. This request was refused by Kelley's attorneys on the ground that the insurance company had no reason for disclaiming at that point.

On January 20, 1964 a verdict was rendered in favor of Thrasher for $40,000 and in favor of Morgan for $10,000. Plaintiffs' counsel served notice of entry of judgment upon Glatzer, Glatzer & Evans on February 5, 1964. On February 6, 1964 Glatzer, Glatzer & Evans wrote to plaintiffs' counsel informing them that the United States Liability Insurance Company was disclaiming liability because of Kelley's failure to co-operate.

On June 11, 1964 plaintiffs, Morgan and Thrasher, instituted this action pursuant to section 167 (subd. 1, par. (b)) of the Insurance Law, Consol.Laws, c. 28 * against the defendant, United States Liability Insurance Company.

The defendant, represented by the same firm of Glatzer, Glatzer & Evans, interposed the single defense of a valid disclaimer of liability based upon Kelley's failure to co-operate.

The validity of the disclaimer was tried without a jury. The trial court held that the defendant's attempts to locate Kelley were superficial and, therefore, the disclaimer was not valid. A judgment in the sum of $10,075 was entered in favor of Thrasher and one for the sum of $10,000 was entered in favor of Morgan.

These judgments were unanimously reversed by the Appellate Division. The Appellate Division held that the record amply established that Kelley 'violated the co-operation agreement contained in the insurance policy and that the defendant's efforts to effect his co-operation were sufficient to sustain its disclaimer'. In addition, the Appellate Division reversed the judgments on the ground that the plaintiffs failed to serve notice of entry upon the defendant as required by section 167 (subd. 1, par. (b)).

The Appellate Division was of the opinion that the service of notice of entry on Glatzer, Glatzer & Evans did not constitute service on the defendant, and, therefore, the plaintiffs' complaint was Jurisdictionally defective. Other courts have also taken the position that the failure to serve notice of entry of judgment, as required by section 167 (subd. 1, par (b)), leaves the courts without Jurisdiction to entertain the suit (Fortis v. Glens Falls Ins. Co., 23 A.D.2d 88, 258 N.Y.S.2d 753, affd. on other grounds 18 N.Y.2d 779, 275 N.Y.S.2d 265, 221 N.E.2d 807; McNamara v. Allstate Ins. Co., Chicago Ill., 3 A.D.2d 295, 160 N.Y.S.2d 51; Clark v. Utica Mut. Ins. Co., 31 Misc.2d 105, 222 N.Y.S.2d 239; Lang v. Merchants Mut. Cas. Co., 203 Misc. 258, 116 N.Y.S.2d 638). These cases exemplify an improper use of the term jurisdiction.

Subject matter jurisdiction has been defined as the 'power to adjudge concerning the general question involved, and is not dependent upon the state of facts which may appear in a particular case, arising, or which is claimed to have arisen, under that general question' (Hunt v. Hunt, 72 N.Y. 217, 229). The Supreme Court is a court of general jurisdiction, and it is competent to entertain all causes of actions unless its jurisdiction has been specifically proscribed (N.Y.Const., art. VI). A direct action suit against an insurer provided for by section 167 (subd. 1, par. (b)) of the Insurance Law is a cause of action which was unknown to the common law (Royal Ind. Co. v. Travelers Ins. Co., 244 App.Div. 582, 280 N.Y.S. 485, affd. 270 N.Y. 574, 1 N.E.2d 337). Once the Legislature created the cause of action, jurisdiction to entertain it automatically vested in the Supreme Court by virtue of article VI of the Constitution. The plaintiffs' failure to plead and prove that notice of entry of judgment had been served on the insured and the insurer did not affect the Supreme Court's Competence to entertain the suit. The plaintiffs' failure to do so only affected the Supreme Court's power to Render a judgment on the merits in plaintiffs' favor because they failed to state a cause of action upon which relief could be granted (CPLR 3211, subd. (a), par. 7). In other words, notice of entry of judgment is a substantive element of the cause of action and not a jurisdictional element (Price v. Allstate Ins. Co., 12 A.D.2d 911, 210 N.Y.S.2d 945; Sandak v. Allstate Ins. Co., Sup., 202 N.Y.S.2d 47). Therefore, if the Appellate Division was correct in its judgment that the service of notice of entry upon Glatzer, Glatzer & Evans did not comply with the statutory requirement that the insurance company be served, it should have reversed the judgment of the Supreme Court on the grounds that the plaintiffs failed to state a complaint upon which relief can be granted, rather than on the ground that the complaint was jurisdictionally defective.

Section 167 (subd. 1, par. (b)) requires the service of notice of entry of judgment upon the insured Or his attorney And upon the insurer. The Appellate Division noted that, while the statute provides for alternative service in the case of the insured, it makes no such provision in the case of the...

To continue reading

Request your trial
234 cases
  • Glusband v. Fittin Cunningham Lauzon, Inc., 80 Civ. 7387 (JES).
    • United States
    • U.S. District Court — Southern District of New York
    • 8 Marzo 1984
    ...party such as Associates has no right of action directly against an insurer, see, e.g., Thrasher v. U.S. Liability Insurance Co., 19 N.Y.2d 159, 166, 225 N.E.2d 503, 506, 278 N.Y.S.2d 793, 798 (1967); Spier v. American Surety Co., 270 N.Y. 596, 597, 1 N.E.2d 347, 347 (1936), because there i......
  • Bailey v. Universal Underwriters Ins. Co.
    • United States
    • Oregon Supreme Court
    • 23 Septiembre 1970
    ...good faith will not be reversed on appeal, if supported by substantial evidence. Thrasher v. United States Liability Insurance Co., 19 N.Y.2d 159, 278 N.Y.S.2d 793, at 808, 225 N.E.2d 503, at 508 (1967); Cohen v. East Coast Insurance Co., 54 Misc.2d 813, 283 N.Y.S.2d 371, 373 (1967); Wallac......
  • Columbus Mckinnon Corp. v. Travelers Indem. Co.
    • United States
    • U.S. District Court — Southern District of New York
    • 28 Septiembre 2018
    ...Trucking Servs. Corp. , 22 N.Y.3d 571, 576, 983 N.Y.S.2d 460, 6 N.E.3d 578 (2014) (quoting Thrasher v. United States Liab. Ins. Co. , 19 N.Y.2d 159, 168, 278 N.Y.S.2d 793, 225 N.E.2d 503 (1967) (internal quotation marks omitted) ); see also W. St. Properties, LLC v. Am. States Ins. Co. , 15......
  • Columbus Mckinnon Corp. v. Travelers Indem. Co.
    • United States
    • U.S. District Court — Southern District of New York
    • 28 Septiembre 2018
    ...Trucking Servs. Corp. , 22 N.Y.3d 571, 576, 983 N.Y.S.2d 460, 6 N.E.3d 578 (2014) (quoting Thrasher v. United States Liab. Ins. Co. , 19 N.Y.2d 159, 168, 278 N.Y.S.2d 793, 225 N.E.2d 503 (1967) (internal quotation marks omitted) ); see also W. St. Properties, LLC v. Am. States Ins. Co. , 15......
  • Request a trial to view additional results
2 books & journal articles
  • A nullity or not? The status of a default judgment entered absent compliance with CPLR 3215(f).
    • United States
    • Albany Law Review Vol. 73 No. 3, March 2010
    • 22 Marzo 2010
    ...Fry v. Vill. of Tarrytown, 89 N.Y.2d 714, 718, 680 N.E.2d 578, 580, 658 N.Y.S.2d 205, 207 (1997))); Thrasher v. U.S. Liab. Ins. Co., 19 N.Y.2d 159, 166, 225 N.E.2d 503, 506, 278 N.Y.S.2d 793, 798 (1967) ("Subject matter jurisdiction has been defined as the power to adjudge concerning the ge......
  • CHAPTER § 5.09 When a Claim Arises: Handling of Claims Negotiations
    • United States
    • Full Court Press Regulation of Pharmaceutical Manufacturers Title CHAPTER 5 Insurance Coverage
    • Invalid date
    ...426 (1992)).[230] Dyno-Bite, Inc. v. Travelers Cos., 439 N.Y.S.2d 558, 560 (App. Div. 1981).[231] Thrasher v. U.S. Liab. Ins. Co., 225 N.E.2d 503, 508 (N.Y. 1967) (citations omitted).[232] 2 Kalis, N.198 supra, § 24.03[A].[233] Id. (citing Shelter Mut. Ins. Co. v. Page, 873 S.W.2d 534 (Ark.......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT