VanMinos v. Merkley

• Decision Date: 06 June 1975
• Citation: 48 A.D.2d 281,369 N.Y.S.2d 246
• Parties: Lydia VanMINOS, et al., Plaintiffs, v. Fred W. MERKLEY and Hazel E. Merkley, Defendants. Fred W. MERKLEY and Hazel E. Merkley, Third-Party Plaintiffs-Respondents, v. NEW HAMPSHIRE INSURANCE COMPANY, Third-Party Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 246

369 N.Y.S.2d 246

48 A.D.2d 281

Lydia VanMINOS, et al., Plaintiffs, v. Fred W. MERKLEY and Hazel E. Merkley, Defendants.

Fred W. MERKLEY and Hazel E. Merkley, Third-Party Plaintiffs-Respondents, v. NEW HAMPSHIRE INSURANCE COMPANY, Third-Party Defendant-Appellant.

Supreme Court, Appellate Division, Fourth Department.

June 6, 1975.

Nixon, Hargrave, Devans & Doyle, Rochester (James H. Morgenstern, Rochester, of counsel), for third-party defendant-appellant.

Thomas O'Connell, Rochester, for third-party plaintiffs-respondents.

Before MOULE, J.P., and CARDAMONE, SIMONS, GOLDMAN and DEL VECCHIO, JJ.

OPINION

GOLDMAN, Justice:

Third-party-defendant, New Hampshire Insurance Co. (New Hampshire) appeals from a denial of its motion to dismiss the third-party complaint of Fred W. Merkley and Hazel E. Merkley (Fred, Sr. and Hazel). Appellant urges that the third-party complaint should have been dismissed 'upon the grounds that (its) defense is founded upon documentary evidence and that the third-party complaint fails to state a cause of action, pursuant to CPLR 3211'. Special Term permitted reargument and adhered to its original denial of the motion. The principal question, among several, is a consideration of the 'temporary substitute automobile' clause of respondents' insurance policy which was written by New Hampshire.

An examination before trial conducted by appellant carrier elicited the following fact situation. On November 2, 1965 one Fred M. Merkley (Fred, Jr.), son of respondents, drove his 1964 Ford automobile to his parents' farm which is located a mile from his own residence. The purpose of the trip was to assist his father, with other helpers, to load and transport cattle to another farm. Fred, Jr. usually helped his father with the farm chores without compensation. After the cattle had been loaded, Fred, Sr. proceeded to haul the cattle in a tractor-trailer to the other farm. Fred, Jr. intended to use his mother's automobile to drive the helpers and himself to the place where they would assist Fred, Sr. unload the cattle. The mother's automobile, a 1959 Ford, which was covered by the New Hampshire liability policy, would not start, whereupon Fred, Jr. then used his own automobile, a 1964 Ford. His mother was not a passenger on this trip during which the accident occurred.

Plaintiffs (not parties to this appeal) commenced an action against Fred, Sr. and Hazel, alleging that Fred, Jr. was their employee and was performing services for them in the scope of his employment. The defendants then, by a third-party complaint, sued New Hampshire alleging liability by reason of the automobile insurance policy it had issued which covered Hazel's automobile. New Hampshire countered with a motion to dismiss, pursuant to CPLR 3211(a)(1) and (7). Special Term dismissed the complaint, a judgment was entered on January 16, 1968 and no appeal was taken. Three months later respondents served a second third-party complaint which contained the same allegations previously made in the first complaint and further asserted as new material that New Hampshire's policy covered the accident because at the time of the accident Fred, Jr.'s automobile was being used as a 'temporary substitute automobile', as defined in Section IV, subd. 3 of the policy. The second complaint additionally alleged that at the time of the accident 'the plaintiff's (Hazel) automobile was inoperable'.

In response to a notice to admit, respondents admitted that: the named insured in the policy was Hazel and the covered automobile was her 1959 Ford; Fred, Jr. was not a member of, nor a resident of respondents' household; Hazel's automobile was not involved in the accident and at the time of the accident Fred, Jr. was alone driving his own automobile. The reply denied that Fred, Jr. did not request or obtain permission from Fred, Sr. or Hazel to use the 1964 Ford automobile involved in the accident on November 20, 1965.

New Hampshire moved to dismiss the second third-party complaint on the same grounds as asserted on the first motion, or in the alternative, for the direction of a separate trial of the third-party claim. Special Term on this motion and on a reargument thereof denied dismissal of the complaint and ordered that unless the parties agree that the entire case be tried without a jury, the alternative motion for a separate trial of the third-party complaint be granted.

Appellant contends that Special Term erred in refusing to dismiss the complaint, claiming that the second third-party action is barred by Res judicata. New Hamphsire further asserts that the failure of respondents to have appealed from the dismissal of the first third-party complaint necessarily determined the rights and duties of the parties on the whole policy. We do not agree with this contention.

It is only after a final judgment on the merits that full Res judicata effect can be given to it (Bannon v. Bannon, 270 N.Y. 484, 489, 1 N.E.2d 975, 979; Webb v. Buckelew, 82 N.Y. 555, 560; 5 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 5011.11). The first complaint was not dismissed on the merits. 'A judgment dismissing a cause of action before the close of the proponent's evidence is not a dismissal on the merits unless it specifies otherwise * * *' (CPLR 5013). (See, also, 5 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 5013.01.) Special Term's dismissal of the first third-party complaint before issue was joined by service of the third-party defendant's answer did not specify that the dismissal was On the merits. We pointed out the finality of an on the merits' dismissal in Palmer v. Fox, 28 A.D.2d 968, 283 N.Y.S.2d 216, affd., 22 N.Y.2d 667, 291 N.Y.S.2d 361, 238 N.E.2d 751. Furthermore, the second complaint was not merely a restatement of the first complaint. If it were, then the dismissal would be binding as the law of the case (see, Flynn v. Sinclair Oil Corp., 20 A.D.2d 636, 637, 246 N.Y.S.2d 360, 361, affd., 14 N.Y.2d 853, 251 N.Y.S.2d 967, 200 N.E.2d 633). The first dismissal however, for such purposes, is deemed on the merits 'as to the point it decided' (Spindell v. Brooklyn Jewish Hosp., 35 A.D.2d 962, 963, 317 N.Y.S.2d 963, 964, affd., 29 N.Y.2d 888, 328 N.Y.S.2d 678, 278 N.E.2d 912). Since the second complaint alleges grounds for indemnity not contained in the first complaint, dismissal of that complaint, not stated to be 'on the merits', whould not bar respondents from correcting the defects of the first complaint by commencing a new action withion the statutory period (Allston v. Incorporated Village of Rockville Centre, 25 A.D.2d 545, 546, 267 N.Y.S.2d 564, 565; cf. Binkowski v. General Electric Company, 25 A.D.2d 577, 266 N.Y.S.2d 829).

The issue which will ultimately be dispositive of the rights of the parties is whether the 'temporary substitute automobile' clause of Hazel's insurance policy covers an automobile owned and operated by respondents' son when the complaint alleges that respondent Hazel's automobile was inoperable and the son's automobile was being used in place ot it at the time of the accident.

The following are the relevant provisions of the insurance policy:

'III. Definition of Insured:

* * * includes any person while using the automobile * * * with the permission of (the named insured) * * *

IV. Automobile Defined * * *

(a) Automobile. * * * the word 'automobile' means: * * *

(3) Temporary Substitute Automobile--

* * * an automobile not owned by the named insured or his spouse if a resident of the same household, while temporarily used as a substitute for the described automobile when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction;

V. Use of Other Automobiles.

If the named insured * * * owns a private passenger automobile covered by this policy, such insurance as is afforded by this policy * * * applies with respect to any other automobile, subject to the folloing provisions: * * *

(d) This insuring agreement does not apply: * * *

(3) * * * to any automobile while used in a business or occupation of such named insured or spouse except a private passenger automobile operated or occupied by such named insured, spouse, private chauffeur or domestic servant;'.

We can find little decisional answer to this question in New York State law but interpretation by other jursidictions is helpful in its resolution. The purpose of the substitution clause is to provide an additional protection for the insured and should be construed liberally in his favor, if construction is necessary. '(T)he terms of a substitution provision in an automobile policy 'should be defined and given their every day 'man-on-the-street' understood meaning ". (Nationwide Mut. Ins. Co. v. Fireman's Fund Ins. Co., 279 N.C. 240, 250--251, 182 S.E.2d 571, 578; Farley v. American Automobile Ins. Co., 137 W.Va. 455, 457, 72 S.E.2d 520; 7 Am.Jur.2d, Automobile Insurance, § 103). The purpose of the substitution clause is to afford continuous coverage to the insured and at the same time limit the risk to one operating automobile at a time for a single premium (State Farm Mut. Auto. Ins. Co. v. Lietz, 122 Ga.App. 596, 178 S.E.2d 218; Home Indemnity Co. v. Godley, 122 Ga.App. 356, 177 S.E.2d 105; Central Nat. Ins. Co. of Omaha v. Sisneros, D.C.N.M., 173 F.Supp. 757, 760; 12 Couch on Insurance 2d, § 45:219).

If respondents can prove at trial that Hazel's car was inoperable and that Fred, Jr.'s was used in its stead, then Fred, Jr.'s 1964 Ford would come within the definition of Section IV(a)(3) of Hazel's policy. However, New Hampshire asserts that the only way Fred, Jr. can be deemed an additional insured within the policy's omnibus clause (Section III--Definition of Insured) is if he was driving the automobile with insured's permission and consent. This latter condition, New Hampshire argues, cannot be satisfied because obviously respondents did not give, nor indeed be satisfied need to give, permission to Fred, Jr. to drive his own car....