Case Name: Helen E. Kaste, Appellant, v. Hartford Accident & Indemnity Company, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1958-02-18
Citations: 5 A.D.2d 203
Docket Number: 
Parties: Helen E. Kaste, Appellant, v. Hartford Accident & Indemnity Company, Respondent.
Judges: Babin, J. P., YalbNte and Stevens, JJ., concur with McNally, J.; Frank, J., concurs in result in opinion.
Reporter: Appellate Division Reports
Volume: 5
Pages: 203–207

Head Matter:
Helen E. Kaste, Appellant, v. Hartford Accident & Indemnity Company, Respondent.
First Department,
February 18, 1958.
Alfred W. Bressler of counsel (Horace Michelson with him on the brief; Moses & Singer, attorneys), for appellant.
Joseph L. Schilling of counsel (Harold Schaffaer, attorney), for respondent.

Opinion:
McNally, J.
In this action predicated on an express covenant to defend contained in a policy of liability insurance, the question presented on this appeal from an order denying plaintiff-appellant's motion for summary judgment is whether the covenant, under the circumstances of this case, includes the obligation to prosecute an appeal from a judgment adverse to the insured. The liability action was instituted against the appellant's assignor, the insured, and other defendants; it was defended in behalf of the insured jointly by the insured and the defendant-respondent herein, through their respective attorneys. During the trial of the liability action, discussions were had with a view of settlement. The insured's codefend-ants were prepared to contribute towards a settlement on condition that the insured did likewise; the defendant herein offered towards that end to pay the limit of its liability which was $1,000. The insured offered what is described as a "a trifling sum"; consequently, the attempt to settle foundered. However, the respondent does not charge the insured with bad faith in respect of the negotiations for settlement. After the said negotiations had failed, the respondent, jointly with the insured, continued with the defense of the liability action, which terminated in a verdict for the plaintiffs therein against the insured, and in favor of its codefendants and against the plaintiffs, and the dismissal of the insured's cross claims against its codefendants. The insured thereafter demanded that the respondent prosecute and pay the expenses of an appeal from the judgment entered in the liability action but this the respondent refused to do. The insured thereupon prosecuted the appeal which resulted in an order granting the motion to set aside the verdict against the insured, which had been denied by the trial court, setting aside the verdict in favor of the insured's codefendants, vacating the dismissal of the insured's cross claims, and directing a new trial. (Grote v. Jonbert Realty Corp., 1 A D 2d 111.) This action, as alleged in the complaint, is to recover the reasonable expenses of the insured consequent on the respondent's breach of its covenant to defend resulting from its refusal to prosecute said appeal.
We have held that the covenant to defend embraces the duty to prosecute an appeal from a judgment against an insured " where there are reasonable grounds for appeal." (Grand Union Co. v. General Acc., Fire & Life Assur. Corp., 254 App. Div. 274, 281, affd. 279 N. Y. 638.) The successful prosecution of the appeal is conceded in the respondent's answer. In the light of the result of the appeal, it would seem that the issue relative to the presence of reasonable grounds for appeal has been determined. In Grand Union Co. v. General Acc., Fire & Life Assur. Corp. (supra, pp. 281-282), this court said: " Such damages include the expense of appeals as well as trials, at least where there are reasonable grounds for appeal and here there were such grounds since plaintiff's appeals resulted in the final dismissal of the Ford complaint." We have an analogous situation in Weidlich v. Richards (276 App. Div. 383) where we had under consideration the standard to be applied in determining the existence of reasonable grounds for bringing a separation action justifying a claim for legal services therein rendered to the wife. We there said (p. 384): "While an application may be made pendente lite in the marital action, and only a reasonable probability of success in the action need be shown and failure or success at the trial does not affect the allowance made, it does not follow that the same rule should apply after trial." Again, at page 386: " To hold that the attorney or any tradesman could require a retrial of the marital litigation on a lesser standard of judgment, viz., whether there was reasonable grounds for bringing an action which demonstrably fell short of a carrying conviction to the trier of the facts, would be to duplicate or multiply actions on an illusive issue."
Injury to the insured flowing from respondent's failure to prosecute the appeal is demonstrated by the direction for a new trial consequent on the appeal prosecuted by the insured. (McAleenan v. Massachusetts Bonding & Ins. Co., 232 N. Y. 199.)
The insured's refusal to settle the liability claim under the circumstances of this case does not operate to relieve the respondent of its covenant to defend. Respondent does not advert to and we do not perceive any provision of the policy of insurance requiring the insured to settle under the circumstances of this case. Moreover, if in any aspect of the case the insured was under a duty to adjust and settle the liability claim, after the insured had refused to do so, compliance therewith was waived by the respondent in continuing with the defense of the liability action. That the covenant to defend survived the insured's refusal to settle is manifest from the letter of the attorney for the insurer dated April 11, 1955, which states, in part: " If your appeal is successful, and we sincerely hope it will be, rest assured we will participate in the re-trial of the issues in question." The sole remaining issue is as to the quantum of damages, which may be ascer tained on an assessment in accordance with, rule 113 of the Buies of Civil Practice. (Goldberg v. Lumber Mut. Cas. Ins. Co., 297 N. Y. 148, 154-155.)
The order appealed from should he reversed on the law, with costs, and the motion granted, with costs to the appellant.