Tyrnauer v. Travelers Ins. Co.

• Decision Date: 29 December 1961
• Parties: Ignatz TYRNAUER and David Tyrnauer, Appellants, v. TRAVELERS INSURANCE COMPANY and Travelers Indemnity Company, Respondents.
• Court: New York Supreme Court — Appellate Division

Page 151

223 N.Y.S.2d 151

15 A.D.2d 293

Ignatz TYRNAUER and David Tyrnauer, Appellants, v. TRAVELERS INSURANCE COMPANY and Travelers Indemnity Company Respondents.

Supreme Court, Appellate Division, Second Department.

Dec. 29, 1961.

Moses M. Zelig, Brooklyn, for appellants.

Terhune, Gibbons & Mulvehill, New York City, for respondents; John G. Donovan, New York City, of counsel.

Before NOLAN, P. J., and UGHETTA, CHRIST, PETTE and BRENNAN, JJ.

ARTHUR D. BRENNAN, Justice.

In this declaratory judgment action, plaintiffs, Ignatz and David Tyrnauer, seek an adjudication that, at the time of an automobile accident on August 6, 1956, they were insured by the defendants, The Travelers Insurance Company and The Travelers Indemnity Company (hereinafter referred to as insurers) under a certain policy of liability insurance, and that the insurers are obligated to defend certain actions arising from such accident.

Plaintiffs are brothers and Rabbis who teach at the Yeshiva Tora Vejire, Brooklyn, New York, which conducts a charitable summer camp for its students at Napanoch, New York, known as Camp Rav Tov, Inc. Ignatz is vice-president and his brother David is secretary-treasurer of the camp corporation, and both are directors. While this camp commenced operations in July, 1955, it was not incorporated until sometime in November, 1955.

On July 8, 1955, plaintiff, Ignatz Tyrnauer, purchased a Chevrolet station wagon. On the same day, as the named insured, he obtained a liability policy from defendant, Travelers Insurance Company, through a broker, Ernest Rosenfeld; the policy being in the 1A risk class.

On January 19, 1956, Ignatz transferred title to the vehicle to the camp corporation, which thereupon registered it in its own name. Subsequently, the defendants, who were unaware of this transfer, issued a renewal policy to Ignatz, as the named insured, for a one-year period commencing July 8, 1956.

With respect to such transfer, upon the trial Ignatz testified: 'I wanted to give it [the station wagon car] to the camp, to donate it to the camp. I wanted to buy a new car. That was in January of 1956. Meanwhile I wanted to buy another car and somehow I couldn't manage, so I still kept the car.'

On August 3, 1956, David received permission from his brother Ignatz to drive the vehicle to the camp from their home in Brooklyn. Thereafter further permission was received by David to drive six Rabbis, who were visiting the camp, to Ellenville; and, from there, David was to continue on to Brooklyn. On August 6, while en route to Ellenville, an accident occurred; one passenger was killed and two sustained injuries.

That same day (August 6, 1956) Ignatz gave the broker the first quarter insurance premium and informed him of the accident and the registration change. By letter dated August 10, the insurers informed Ignatz that they were canceling the policy as of August 22, 1956 (the policy provided for ten days' notice of cancellation). Thereafter, the insurers requested and received the earned premium of $17.47 for the period July 8 to August 22, which was paid by the broker. Ignatz refused the broker's tender of the unearned first quarter premium.

The insurers refused to defend plaintiff, David Tyrnauer, in a suit emanating from the accident, stating in a letter, dated January 6, 1958, that there was no coverage because Camp Rav Tov, Inc., was the owner and also because Ignatz had breached material declarations in the policy relating to the ownership of the vehicle.

Examination of the policy reveals that the insurers agreed, in consideration of the payment of the premium and in reliance upon the statements in the declarations, 'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, * * * sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile.'

The policy defines an insured as including: 'the named insured * * * and any person or organization legally responsible for the use thereof [the automobile], provided the actual use of the automobile is by the named insured * * * or with * * * [his] permission' (emphasis supplied).

The automobile is defined as 'the motor vehicle [i. e., Chevrolet] * * * described in this policy' and that 'Except with respect to bailment lease, conditional sale, purchase agreement, mortgage or other encumbrance, the named insured is the sole owner of the automobile, unless otherwise stated herein' (emphasis supplied). It states further that 'this policy applies only to accidents which occur * * * while the automobile * * * is owned, maintained and used for ['Pleasure and Business']' (emphasis supplied).

The policy also provides that 'Assignment of interest under this policy shall not bind the company until its consent is endorsed hereon;' and that the insured's declarations are representations, and the policy is issued in reliance thereon.

Plaintiffs contend that they must be considered as insureds within the meaning of the policy. Defendants contend that the transfer of ownership of the car ended all coverage.

The general proposition is clear: that liability coverage, born of the ownership, maintenance or use of a stated automobile, terminates upon the transfer of said vehicle unless the insurer approves the extension of coverage (Phoenix Ins. Co. v. Guthiel, 2 N.Y.2d 584, 161 N.Y.S.2d 874, 141 N.E.2d 909; Lavine v. Indemnity Ins. Co. of North America, 260 N.Y. 399, 183 N.E. 897; Ireland v. Firemen's Fund Indem. Co., 281 App.Div. 1007, 121 N.Y.S.2d 364, affd. 1 N.Y.2d 655, 150 N.Y.S.2d 22, 133 N.E.2d 511). Approval cannot be inferred from mere silence or a failure to disclaim (Truglio v. Zurich Gen. Acc. & Liability Ins. Co., 247 N.Y. 423, 160 N.E. 774).

However, in Abrams v. Maryland Cas. Co., 300 N.Y. 80, 89 N.E.2d 235, one Cohen, a truck driver employed by Linden, purchased a truck to be used in Linden's business and registered it in his (Cohen's) name. Linden, apparently, had supplied the consideration and Cohen transferred the registered ownership to Linden as security for this indebtedness. Linden received a policy of liability insurance on the truck which required the insurer to pay to an injured party within policy limits any sum (p. 83, 89 N.E.2d p. 236) 'which 'the insured shall become obliged to pay by reason of the liability imposed upon him by law for damages * * * sustained by any person or persons, caused by accident and arising out of the ownership, maintenance or use of the automobile.'' Cohen subsequently satisfied his indebtedness to Linden and the registered ownership was returned to him. The insurer was without knowledge of these facts. Thereafter, while Cohen was driving the truck delivering Linden's products an accident occurred. The policy provided that it did not apply to an accident which occurred "after the transfer * * * of the interest of the named insured" (emphasis supplied) without defendant's written consent.

The Court of Appeals held (in the Abrams case) that the interest of the named insured (Linden) was more than mere ownership and that the transfer to Cohen (for a consideration) did not divest it (Linden) of an insurable interest. The policy continued to protect Linden, 'the named insured,' for any liability arising from the maintenance and use of the truck. The court stated (p. 85, 89 N.E.2d p. 237): 'Since, then, Linden continued to have the truck used in its business, it retained an interest that was insured by the policy, and the transfer of ownership did not relieve defendant of its obligation.'

The record is clear here, and the trial court so found, that following the transfer to the camp, Ignatz retained the exclusive control and possession of the vehicle. He had the sole use thereof and paid, individually, all maintenance, insurance and operating expenses arising therefrom.

Not only did Ignatz continue to have an interest in this vehicle based upon his exclusive possession and control thereof (Abrams v. Maryland Cas. Co., supra), but he also remained liable under section 59 (now § 388) of the Vehicle and Traffic Law which makes the 'owner' of an automobile liable for injury caused by any person whether or not he is using the vehicle in the owner's business. In 1958, the Legislature defined 'owner' as 'any person, other than a lien holder, having the property in or title to a vehicle, and also any lessee or bailee having the exclusive use thereof, under a lease or otherwise, for a period greater than thirty days' (emphasis supplied). (L.1958, ch. 577; Vehicle and Traffic Law, § 59). This amendment recommended by the Law Revision Commission, was intended only to clarify the definition of an owner (see Leg.Doc. [1958] No. 65[G]; L.1958, ch. 577 [note]); but it gives added support to our conclusion that Ignatz was responsible for the operation of the vehicle at the time of this accident.

The cases of Phoenix Ins. Co. v. Guthiel, 2 N.Y.2d 584, 161 N.Y.S.2d 874, 141 N.E.2d 909, supra, and Mason v. Allstate Ins. Co., 12 A.D.2d 138, 209 N.Y.S.2d 104 are inapposite. In those cases, not only did the registered owners transfer title, but they also relinquished their possession, and all right to control said vehicles. Indeed, in the Mason case (at p. 143, 209 N.Y.S.2d at p. 109) we wrote that: 'The rule with respect to policy provisions such as those here involved in clearly stated in the dissenting opinion of Fuld, J., in Switzer v. Merchants Mut. Cas. Co., 2 N.Y.2d 575, at page 583, 161 N.Y.S.2d 867, at page 873 as follows: 'That provision [the provision defining an 'insured' as the named insured or one using the automobile 'with his permission'] was designed to render the insurer responsible if the automobile was within the actual control of the insured, for, it may not be gainsaid, the grant of permission to use an automobile by one having no control over it would be meaningless. Once an owner...