Utica Mut. Ins. Co., Matter of

• Citation: 95 A.D.2d 150,465 N.Y.S.2d 553
• Parties: In the Matter of UTICA MUTUAL INSURANCE COMPANY, Respondent, (Patricia Lahey, Respondent-Appellant; Liberty Mutual Insurance Company, Appellant-Respondent). In the Matter of GOVERNMENT EMPLOYEES INSURANCE COMPANY, Respondent, (John Edge, Respondent-Appellant; Liberty Mutual Insurance Company, Appellant-Respondent).
• Decision Date: 01 August 1983
• Court: New York Supreme Court Appellate Division

Page 553

465 N.Y.S.2d 553

95 A.D.2d 150

In the Matter of UTICA MUTUAL INSURANCE COMPANY, Respondent,

(Patricia Lahey, Respondent-Appellant;

Liberty Mutual Insurance Company, Appellant-Respondent).

In the Matter of GOVERNMENT EMPLOYEES INSURANCE COMPANY, Respondent,

(John Edge, Respondent-Appellant;

Liberty Mutual Insurance Company, Appellant-Respondent).

Supreme Court, Appellate Division,

Second Department.

Aug. 1, 1983.

Rider, Drake, Sommers & Loeb, P.C., Newburgh (Joseph A. Catania, Jr., Newburgh, of counsel), for appellant-respondent.

Cline, MacVean, Lewis & Sherwin, P.C., Middletown (Ronald E. Helhoski, Middletown, of counsel), for respondents Utica Mut. Ins. Co. and Government Employees Ins. Co.

Finkelstein, Mauriello, Kaplan & Levine, Newburgh (Benjamin J. Fried, Newburgh, of counsel), for respondents-appellants Lahey and Edge.

Before MOLLEN, P.J., and TITONE, WEINSTEIN and RUBIN, JJ.

WEINSTEIN, Justice.

The instant proceedings emanate from an automobile accident which occurred on December 14, 1979 when a rented vehicle operated by Daniel Deligne struck two pedestrians, Patricia Lahey and Laura Edge. The subject vehicle was owned by the Miller Auto Leasing Company. On November 30, 1979 it was rented by Miller Auto Leasing to one James H. Woolard for a one day period. Pursuant to the testimony of Miller Auto Leasing's general manager, the vehicle was to have been returned by the lessee on December 1, 1979. The car was not returned to the lessor's facility, however, until December 22, 1979. It was conceded by the attorney for Liberty Mutual Insurance Company that there was a valid policy covering the subject vehicle which was in full force at the time of the accident.

In the interim, certain actions were taken on behalf of Miller Auto Leasing in an attempt to obtain the return of the vehicle. After December 3, 1979 the rental manager made telephone calls to Mr. Woolard's relatives, sent letters to him via certified mail (which were returned undeliverable), contacted the local police in both New York and New Jersey concerning the vehicle and drove to Long Beach Island, New Jersey, in an attempt to physically locate the vehicle. On December 10, 1979, Miller Auto Leasing filed a criminal complaint in the State of New Jersey regarding Woolard's failure to have returned the vehicle in accordance with the rental agreement (after unsuccessful attempts to notify him by certified mail to do so within 72 hours). A warrant dated December 10, 1979 was issued for defendant's arrest and a court appearance was set for January 8, 1980. At no time did the lessor alter its position that the vehicle was being operated without its consent after December 1, 1979.

By letter dated March 10, 1980, Liberty Mutual denied coverage of the subject vehicle on the ground that it was being driven, on the date of the accident, without the knowledge and consent of its policyholder, the owner thereof. The injured claimants thereafter commenced arbitration proceedings pursuant to the uninsured motorist provisions of their respective policies against the Utica Mutual Insurance Company and the Government Employee's Insurance Company (GEICO). Each of the carriers then applied for a judgment staying arbitration and for a hearing on the question of whether or not the vehicle owned by Miller Auto Leasing was being operated with the owner's consent pursuant to section 388 of the Vehicle and Traffic Law. By orders dated December 1, 1980 the petitions to stay arbitration were granted and the matters were set down for a hearing on the issue of coverage. A subsequent motion to have Liberty Mutual added as a party respondent in the carriers' proceedings was granted.

After a hearing conducted before Justice ISSEKS, the court concluded that the subject vehicle had not been uninsured at the time of the accident and ordered that arbitration be stayed. In its decision the court stated in pertinent part:

"Under section 388 of the Vehicle and Traffic Law, proof of ownership of a motor vehicle creates a rebuttable presumption that the driver was using the vehicle with the owner's permission, express or implied, and that presumption continues until there is substantial evidence to the...