Court Opinion

ID: 8282208
Source: CourtListenerOpinion
Date Created: 2022-10-17 05:11:45.333433+00
Date Added: 2024-06-11T16:43:41.311061
License: Public Domain

WHITAKER, J.
(concurring). Plaintiff was having a building constructed in the Bronx, and defendant had issued to him a policy of insurance against accident. The work was being done by contractors. Plaintiff had a watchman on the work, but no other employes. The contractor left an open hole on the work, into which the plaintiff’s watchman fell and was killed. The administratrix of the deceased watchman made a claim against plaintiff for damages based upon his *888alleged negligence. Plaintiff duly notified the defendant of the accident and claim, and requested it to take charge of the case and defend it according to the terms of its policy of insurance. The defendant absolutely repudiated all liability and refused to take charge, defend, or take any steps whatsoever in the matter. Thereafter the administratrix of the deceased watchman commenced an action against plaintiff and served him with a summons in the Supreme Court. Plaintiff interposed no answer, but settled the action, with the approval of the Surrogate’s Court, by the payment of $500 to the administratrix and the sum of $100 to plaintiff’s attorney therein for his services. Defendant concedes this $100 was a reasonable payment.
The final settlement was made, and the money was paid to the administratrix and to plaintiff’s attorney, on January 3, 1914. This action was not begun until December, 1915. The defendant bases its defense upon three grounds: First, that the plaintiff was not justified under the terms of the policy in settling the claim, and was required to show on this trial the legal liability of the defendant and the reasonableness of the sum paid in settlement; second, that there was a breach of warranty by reason of plaintiff having represented that he had no employés upon the work; third, that the plaintiff was required in any event to begin his action within 90 days after the money in settlement had been paid.
The provisions of the policy in so far as they are material provided as follows:
“In consideration of the premium herein provided, the Massachusetts Bonding & Insurance Company, of Boston, Massachusetts (called the company), hereby agree to indemnify the assured referred to in the schedule of warranties, and subject to the limits hereinafter provided for, against loss from the liability imposed by law upon the assured for damages on account of bodily injuries, including death resulting therefrom, accidentally suffered by any person or persons whomsoever, by reason of the prosecution of the work described in the schedule, and caused by the negligence of any contractor or subcontractor engaged in such work, or any part thereof, provided such bodily injuries or death are suffered as the result of accident within the period stated in the schedule.”
“B. It is agreed that all work mentioned in the schedule is to be done by written contract at the risk of the contractor or contractors, and that the assured has not and will not by contract or otherwise' voluntarily assume any liability for loss on account of injuries or death suffered by any person or persons. It is agreed that no employé of the assured shall be engaged on work in the premises herein described, except watchman caring for premises and material, nor shall the assured furnish any material or appliances, or assume any supervision of the work herein described, unless an agreement to the contrary is specifically indorsed thereon.”
“D. If thereafter any suit, even if groundless, is brought against the assured to enforce a claim for damages on account of an accident covered by this policy, the assured shall immediately forward to the company every summons or other process as soon as the same shall have been served on him, and the company will, at its own cost, and subject to the limitations contained in condition O hereof, defend or at its option settle such suit in the name and on behalf of assured.”
“E. No action shall lie against the company to recover for any loss or expense under, this policy, unless it shall be brought by the assured for loss or expense incurred and paid in money by the assured, after trial of the issue, nor unless such action is brought within ninety (90) days after the payment of such loss or expense; hut if any provision of this condition is in conflict with the statutes of any state within which this policy covers, the condition *889shall be inoperative within such states, in so far as the statutes conflict with such provision.”
“Q. The following warranties, numbered 1 to 10, inclusive, are hereby made a part of this contract, and are acknowledged and warranted by the assured to be true upon the acceptance of this policy, except such as are declared to be matters of estimate only:
“Warranties.
“(1) Name of assured: Gustavus L. Lawrence.
“[Description of property and unnecessary warranties omitted.]
“7. No employé of the owner is engaged in any work on the premises herein described, except as follows: No exceptions.”
[2] As to the first point raised by the defendant, it should be kept in mind that the defendant was required under the terms of its policy to defend suits brought against plaintiff even if such suits were groundless. So that its obligation to defend the plaintiff did not depend upon the question of plaintiff’s legal liability in such suit. This takes the present case out of the line of cases similar to Cornell v. Travelers’ Insurance Co., 175 N. Y. 239, 67 N. E. 578, which holds that the insurance company generally is only required to defend suits where there is a legal liability on the part of the insured, and that such policies only cover cases where there is such legal liability. I think it follows, therefore, that defendant’s refusal to comply with the plaintiff’s request to defend or take charge of the claim made against the plaintiff was a complete violation and repudiation of its contract.
This being so, the defendant waived its right to insist upon an actual trial of the issues, in the suit brought against the plaintiff. It was fully in its power to have had such a trial, it was actually requested to do so, and it refused. Defendant should not, therefore, be allowed to take advantage of its own wrong to the disadvantage of the plaintiff, who upon his part had fully lived up to the terms of the contract. The foundation of defendant’s defense in this respect is based upon its own wrong. As was held in the case of Cornell v. Travelers’ Insurance Co., supra, the defendant, by refusing to defend the suit, took its chances of any future liability that might be imposed upon the plaintiff. The defendant waived its right to insist upon a suit and judgment determining the amount of liability. Mayor, Lane & Co. v. Commercial Casualty Co., 169 App. Div. 772, 155 N. Y. Supp. 75; Matter of Empire State Surety Co., 214 N. Y. 553, 108 N. E. 825.
There was only one other manner in which to determine the amount and liability of plaintiff and that was by the plaintiff using a reasonable care and discretion in such determination, and I think the facts disclosed by the record are ample to show that such reasonable care and discretion were used. At least there was, in my opinion, ample proof shown upon the trial to have cast the burden upon the defendant of showing the settlement was not a proper one. It would certainly be impracticable, if not impossible, upon this trial for the plaintiff to establish his legal liability in the action brought against him. by the administratrix of Eilardo, the decedent. He admitted his liability after advice of counsel, and if the defendant waived the right to have plaintiff’s liability settled by a trial in that action there is no reason why the waiver should not apply to this action. If there was *890a waiver (and the Appellate Division and Court of Appeals have held there was), the right waived must have been the right to have the liability and amount settled by a judgment of a court of law. To hold that in this action such a legal liability must be determined by a judgment of the court would in effect be to hold that there was no waiver.
I do not think, therefore, that when the court in the case of Mayor, Lane & Co. v. Commercial Casualty Co., supra, used the phrase, “When however, the assured saw fit to settle before recovery, he assumed the risk in an action against the insurer of showing, not only a liability covered by the policy, but the amount of the liability,” it meant to hold that such liability and the amount thereof must be determined by requiring the plaintiff in this action to virtually try the case against himself in the other action in the same manner that it would have been tried had no settlement been made. To quote tire phrase used by Mr. Justice Holmes, and which was approved by the Court of Appeals in the Matter of the Empire State Surety Co., supra:
“The defendant by its abdication put the plaintiff in its place with all its rights.”
I think, therefore, the plaintiff was justified in settling the claim, and that there was sufficient evidence to show plaintiff’s legal liability, and that the amount paid on the settlement was a reasonable amount, and that the plaintiff used sufficient care and discretion in the settlement, to sustain the verdict directed by the court.
Concerning the second ground of defendant’s defense, that there was a breach of warranty by reason of plaintiff having represented that there were no employés: The body of the policy expressly states that it was agreed that no employé of the assured shall be engaged in work in the premises described “except watchman caring for the premises and material.” This provision expressly eliminates watchmen, and shows clearly a plain intention to exclude watchmen from the term “employés.” Furthermore, there was no evidence that at the time the policy was issued there was ,a watchman on the premises employed by plaintiff. Therefore the warranty may have been perfectly true when made, and it only relates to the time when made. Mayor, Lane & Co. v. Commercial Casualty Co., supra. I do not think that this defense is maintainable.
[1] The third defense, which alleges plaintiff’s failure to bring his action within 90 days after the money in settlement had been paid, is a more plausible one, concerning which differences of opinion may well be maintained. This action as matter of fact was not brought until about a year after the payments in settlement of the suit against plaintiff by Filardo’s administratrix were made, and the learned justice of the Municipal Court has written a strong opinion holding that the 90-day limitation was in force and applicable, and barred the plaintiff from bringing this action. I am unable to agree with the learned justice for the following reasons:
My first reason for differing with him is that the decisions of the Court of Appeals and the Appellate Division are direct authority for holding that there was a clear waiver of the requirement that there *891should be a trial of the issues, and if a trial of the issues was waived it seems to me for the same reason the limitation of 90 days was waived; it being in pari materia.
My second reason is I do not agree with the construction given the policy by the Municipal Court. The provision in question is paragraph E of the policy and reads as follows:
“No action shall lie against the company to recover for any loss or expense under this policy, unless it shall be brought by the assured for loss or expense incurred and paid in money by the assured, after trial of the issue, nor unless such action is brought within 90 days after the payment of such loss or expense.”
There are certain well-recognized rules of interpretation and construction which apply and which must be observed: First, the intention of the parties must govern, if ascertainable; second, the contract having been drawn by the defendant, it must be construed most strongly against it; third, insurance contracts, where there is any ambiguity, must be given a meaning most favorable to the assured. The actual reading of this clause shows that no provision is made for money paid in settlement of a claim, unless the “issues have been tried,” and discloses clearly that there is no limitation placed upon actions to recover for loss or expense, where there has been no “trial of the issues.” As matter of fact it is perfectly clear that the defendant never intended that there should be any such' limitation, because it expressly repudiates the claim that an action is maintainable at all where there has been no such trial. And the defendant is inconsistent when it says, under the terms of the policy, no action will lie to recover for a settlement where there has been no “trial of the issues.” Nevertheless you must, under the terms of the policy, bring such an action within 90 days. The policy contains no 90-day limitation which is applicable to the case at bar, and the defendant never intended that it should contain any such limitation. Its limitation is only against actions to recover “loss and expenses” where there has been a “trial of the issues.”
Inasmuch, however, as there is apparently considerable divergence of opinion upon the proper construction to be placed upon this provision, two courts and two able members of the bar having differed, under the rules of interpretation above referred to, the question should, I think, be resolved in favor of the appellant, and that the order should be reversed, with $30 costs to appellant, and the verdict in favor of plaintiff reinstated, with costs.