U.S. Fidelity & Guaranty Co. v. Hotkins

• Decision Date: 23 August 1957
• Citation: 170 N.Y.S.2d 441,8 Misc.2d 296
• Parties: UNITED STATES FIDELITY & GUARANTY COMPANY, Plaintiff, v. Albert S. HOTKINS, Betty C. Hotkins, Leah Rudolph, as Administratrix of the Goods, Chattels and Credits of Barnett Rudolph, Deceased, Dinah Farrugia, Ida Halperin, Joseph Halperin and The City of New York, Defendants.
• Court: New York Supreme Court

Page 441

170 N.Y.S.2d 441

8 Misc.2d 296

UNITED STATES FIDELITY & GUARANTY COMPANY, Plaintiff, v. Albert S. HOTKINS, Betty C. Hotkins, Leah Rudolph, as Administratrix of the Goods, Chattels and Credits of Barnett Rudolph, Deceased, Dinah Farrugia, Ida Halperin, Joseph Halperin and The City of New York, Defendants.

Supreme Court, Special Term, Kings County, Part III.

Aug. 23, 1957.

John J. O'Connor, New York City, by Jas. M. Gilleran, New York City, of counsel, for plaintiff.

Peter Campbell Brown, New York City, by Edward Weiss, Brooklyn, of counsel, for defendant City of New York.

Harry Gittleson, Brooklyn, for defendant Leah Rudolph, Adm'x.

MEIER STEINBRINK, Special Referee.

On January 6, 1951, the automobile owned by the defendant Albert S. Hotkins and driven by the defendant Betty C. Hotkins was in collision with a bus owned by the City of New York. Out of that collision arose approximately twenty claims for personal injuries, property damage and wrongful death.

Some of the claims were settled before action was begun by payment by Hotkins' insurance carrier (plaintiff here) and the City of New York; some of the claims were settled before action by payment by the City of New York alone; three of the smaller claims were settled after action began and before trial, of which two were paid for equally by both the City and the insurance carrier and one for property damage was paid for entirely by the City.

Actions were pending on the balance of the claims and these were consolidated and tried. Except for one claim (Halperin) which was dismissed for failure to appear at the trial, judgment against the Hotkins and the City of New York in favor of all the plaintiffs in the consolidated action was recovered after trial. Plaintiff Farrugia recovered a judgment for $1,000 wich was thereafter paid entirely by the City of New York; plaintiffs Pomerantz recovered judgment for $15,098.64 which was paid for entirely by the City of New York and plaintiffs Cook together recovered judgment for $2,000 which, together with $20 interest, was paid entirely by the City of New York.

Plaintiff Rudolph (defendant here) recovered a verdict for $200,000 for wrongful death of Barnett Rudolph. Judgment in her favor was entered against the defendants Hotkins for $253,578.96 which included interest at 6% per annum from the date of death; judgment for $235,112.64 was entered against the defendant the City of New York, the differences in amount being due to the lower rate of interest applicable on a claim against the City under Section 3-a of the General Municipal Law. Both defendants appealed the Rudolph judgment. However, the appeal on behalf of the Hotkins was abandoned and they filed petitions in bankruptcy, were adjudicated bankrupts, scheduled these claims and have been discharged. Execution against their property had been returned unsatisfied. The City of New York prosecuted its appeal and was successful in obtaining a reduction in the verdict (on consent in lieu of a new trial) to $125,000, plus lawful interest from the date of death (4%). Of course, the reduction in the judgment obtained by the City of New York does nto inure to the benefit of the Hotkins and they would be required to pay the full amount of the judgment against them, with interest, except for the bankruptcy. Likewise the insurance carrier would be liable for the judgment against their insured in spite of the bankruptcy except for the limitations of the policy. (See Insurance Law, Section 167, subds. 1 and 7.) The coverage carried by the Hotkins was only $20,000 for each person injured, $20,000 for all persons injured and $5,000 for property damage.

On July 20, 1955, and while the appeal was pending, the insurance carrier brought a special proceeding for an order permitting it to deposit the balance of the moneys it contended remained in the coverage under its policy, together with interest on $20,000 plus one-half the costs taxed in the consolidated action. Upon such deposit it asked to be discharged from any further liability in connection with the judgment in the consolidated action. That application was denied, the Court stating that there did not appear to be any statutory authority for granting the relief requested and calling attention to Newkerk v. Santore, 204 Misc. 113, 126 N.Y.S.2d 846, where such similar relief was denied. On appeal to the Appellate Division the denial at Special Term was unanimously affirmed (In re Rudolph's Estate (Matter of United States Fid. & Guar. Co. [Paull]), 1 A.D.2d 778, 147 N.Y.S.2d 579), that Court however implying that there was authority to grant the relief sought in a proper action therefor. Leave to appeal to the Court of Appeals was denied, Application of United States Fidelity & Guaranty Co., 1 A.D.2d 892, 150 N.Y.S.2d 555.

Thereafter on or about May 29, 1956 the present action was begun, all interested parties being named as defendants. The claimants Halperin (who had brought a new action against the defendants Hotkins alone after the dismissal of their original action for failure to appear at the trial) have not appeared or answered. Answers have been interposed by the defendants Rudolph, Hotkins and the City of New York.

There are two causes of action pleaded: The first is for a declaratory judgment adjudging that plaintiff's liability for interest after entry of the judgment in the death action be limited to interest at 6% per annum on $20,000; the second is an action for interpleader in which plaintiff asks (a) to be allowed to pay into court the balance of its policy plus interest and thereafter to be discharged from all liability to the defendants; (b) that a determination of the division of such payment among the defendants be made; (c) that a final determination of its liability as to all defendants under the policy be made; (d) that defendants be required to interplead together their claims as to the policy; (e) and (f) for expenses and costs and for such other and further relief as may be proper.

The defendant Rudolph in her answer asks that plaintiff be required to pay over to her to the exclusion of any other claimant the coverage remaining in the policy, together with interest at 6% per annum from January 6, 1955 on $253,578.96.

The defendants Hotkins answered asking for a dismissal of the complaint with costs but did not appear at the trial.

The defendant the City of New York in its answer asks that a declaratory judgment be entered adjudging the liability of the plaintiff pursuant to the policy and that the City of New York be granted judgment for the full amount of the proceeds of the policy, with costs and disbursements together with such other and further relief as may be proper.

It also appears that on October 3 1956, plaintiff moved at Special Term for an order permitting it to deposit in court $17,062.50, the principal balance of moneys that it contended remained under the policy, plus interest at 6% on $20,000 from June 6, 1955 to the date of deposit, plus one-half the costs contained in the consolidated judgment. This application was granted by order dated December 12, 1956, 6 Misc.2d 1027, 158 N.Y.S.2d 580. On January...