U.S. Fidelity & Guar. Co. v. Annunziata

• Court: New York Court of Appeals Court of Appeals
• Writing for the Court: HANCOCK; WACHTLER; SIMONS
• Citation: U.S. Fidelity & Guar. Co. v. Annunziata, 501 N.Y.S.2d 790, 67 N.Y.2d 229, 492 N.E.2d 1206 (N.Y. 1986)
• Decision Date: 01 April 1986
• Parties: , 492 N.E.2d 1206 UNITED STATES FIDELITY & GUARANTY COMPANY, Respondent, v. Saverio L. ANNUNZIATA, Defendant, and Anthony D. Maresca, Appellant.

Page 790

501 N.Y.S.2d 790

67 N.Y.2d 229, 492 N.E.2d 1206

UNITED STATES FIDELITY & GUARANTY COMPANY, Respondent, v. Saverio L. ANNUNZIATA, Defendant and Anthony D. Maresca, Appellant.

Court of Appeals of New York.

April 1, 1986.

James E. Cullum for appellant.

Francis J. Holloway and Michael Jon Longstreet, Albany, for respondent.

OPINION OF THE COURT

HANCOCK, Judge.

A mortgagee named in a fire insurance policy containing a standard mortgagee clause is not obligated to comply with the provisions of the policy requiring the named insured to submit to an examination under oath. In reaching this conclusion we reject the contrary rule stated in Mortgagee Affiliates Corp. v. Commercial Union Ins. Co., 27 A.D.2d 119, 121, 276 N.Y.S.2d 404.

The narrow question concerning a mortgagee's obligation to submit to oral questions arises in a dispute over coverage for a fire loss occurring in a summer home in the Village of Fort Ann, Washington County. Defendant Annunziata owned the home. Defendant Maresca, the mortgagee, who sold the property to Annunziata, held a purchase-money mortgage. Plaintiff insured the home in a policy containing a New York standard mortgagee clause. ¹ After both the owner and mortgagee had filed proofs of loss and the owner had submitted to an oral examination pursuant to the policy, plaintiff sought to examine the mortgagee Maresca. Upon Maresca's refusal, plaintiff commenced the instant declaratory judgment action seeking a declaration that Maresca was barred from any recovery. Maresca counterclaimed for the amount of the loss he had sustained and, thereafter, plaintiff moved for summary judgment in the declaratory judgment action and for a dismissal of the counterclaim. Special Term denied plaintiff's motion but the Appellate Division, 112 A.D.2d 557, 491 N.Y.S.2d 493, modified by granting the motion, dismissing the counterclaim and declaring that plaintiff was not liable under the policy to Maresca because of his failure to submit to the examination. There should be a reversal.

Because this case turns on the construction of the policy, we briefly restate the well-established rules which apply. Where the provisions of the policy "are clear and unambiguous, they must be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement (State Farm Mut. Auto. Ins. Co. v. Westlake, 35 N.Y.2d 587, 364 N.Y.S.2d 482, 324 N.E.2d 137; Johnson v. Travelers Ins. Co., 269 N.Y. 401, 199 N.E. 637)." (Government Employees Ins. Co. v. Kligler, 42 N.Y.2d 863, 864, 397 N.Y.S.2d 777, 366 N.E.2d 865.) The policy must, of course, be construed in favor of the insured, and ambiguities, if any, are to be resolved in the insured's favor and against the insurer (see, Government Employees Ins. Co. v. Kligler, supra; Austrian v. Equitable Life Assur. Socy., 39 N.Y.2d 477, 479, 384 N.Y.S.2d 418, 348 N.E.2d 893).

Turning to the policy in question, we note first that the term "Insured" as defined in the policy means the named insured (in this case, the owner of the property, Annunziata), and not the mortgagee. ² While the policy contains a provision requiring the insured to submit to examinations under oath, there is no provision requiring the mortgagee to do so. The single clause pertaining to examinations is as follows: "The insured, as often as may be reasonably required, shall * * * submit to examinations under oath * * * at such reasonable time and place as may be designated by this Company."

In contrast with the foregoing clause, which omits any reference to the mortgagee, is the policy provision specifically requiring the mortgagee to render proof of loss upon the insured's failure to do so. The proof of loss clause is as follows: "If the insured fails to render proof of loss such mortgagee, upon notice, shall render proof of loss in the form herein specified within sixty (60) days thereafter and shall be subject to the provisions hereof relating to appraisal and time of payment and of bringing suit."

When the policy is construed as required by giving the words their plain meaning (see, Government Employees Ins. Co. v Kligler, supra), there is no question that only the named insured--not the mortgagee--is required to submit to an examination under oath. Moreover, the drafters of the policy in writing the proof of loss clause included a provision specifying the particular conditions under which a mortgagee would be required to submit proof of loss. Their omission of any similar reference to the mortgagee in the clause pertaining to examinations under oath must be assumed to have been intentional under accepted canons of contract construction (see, 151 W. Assoc. v. Printsiples Fabric Corp., 61 N.Y.2d 732, 734, 472 N.Y.S.2d 909, 460 N.E.2d 1344; see generally, 22 N.Y.Jur 2d, Contracts, General Rules of Construction, §§ 187-199). This is especially true inasmuch as the standard fire insurance policy specifically provides that the parties may add to the "obligations of such mortgagee * * * by agreement in writing" (Insurance Law § 3404, Second Page of Standard Fire Policy, lines 83-85). The parties added no such obligation here.

As authority for its position that the policy should be read as including the omitted requirement for examination under oath of the mortgagee, plaintiff cites Mortgagee Affiliates v. Commercial Union Ins. Co., 27 A.D.2d 119, 276 N.Y.S.2d 404, supra--the decision followed by the Appellate Division here. The Mortgagee Affiliates court, in dismissing the complaint of the mortgagee because of its refusal to submit to an examination under oath, relied on Syracuse Sav. Bank v. Yorkshire Ins. Co., 301 N.Y. 403, 94 N.E.2d 73.

Our holding in Syracuse Sav. Bank was an application of the...