Court Opinion

ID: 5834042
Source: CourtListenerOpinion
Date Created: 2022-01-12 22:33:12.349473+00
Date Added: 2024-06-11T08:43:32.636450
License: Public Domain

Sullivan and Bloom, JJ.,
dissent in part in a memo by Bloom, J. Plaintiffs, a joint venture, entered into a contract to build the Morgan Station Post Office Facility. To comply with their contract, they were required to obtain certain types of insurance. These were to cover plaintiffs and all of their subcontractors and were to remain in effect for a period of two years after final completion of the project and acceptance thereof by the architect and owner. Plaintiffs obtained the insurance through National Preferred Risks, Inc., (National), which, in turn, placed the insurance with companies affiliated with defendant. By an indorsement to the policy, the 10-day cancellation clause for nonpayment of premiums contained in the printed portion of the policy was amended to 30 days. By agreement set forth in the policy, premiums were to be paid in stipulated installments. On January 20, 1977, defendant transmitted to the State Insurance Fund and to plaintiffs a notice that it was canceling the coverage of plaintiffs for the project in question to become effective 30 days after receipt of the notice of cancellation. As a result, plaintiffs were required to obtain substitute coverage. Since the project was, at that time, approximately 70% complete, the premium cost of the replacement coverage was substantially higher than the balance due to defendant. It is this excess premium which plaintiffs seek to recover in this action. Although the notice of cancellation does not spell out the specific reason therefor, defendant’s affidavits make it abundantly clear that it is based on the claim of nonpayment. Plaintiffs, on the other hand, insist that all premiums due had been paid. While the papers are less than precise in this regard, it is fairly inferable that payments were made by plaintiffs to National but that National failed to pay over to defendant. We are not unaware that a broker is, under certain conditions, deemed to be authorized by the insurer to collect premiums on its behald (Insurance Law, § 121). Hence, proof of payment by plaintiffs to National would be sufficient to bar cancellation for nonpayment. However, under the terms of the policy, it could be canceled for any or no reason. In these circumstances, the relationship of National to defendant, i.e., whether it was a broker or defendant’s agent is critical to a determination of whether this open ended right of cancellation was somehow limited. While no signed agency agreement is presented to us, the profit sharing agreement entered into between National and defendant on July 5, 1973, refers to National as the "Agent”. So, too, does the "Agency Performance Report” for the period ending June, 1976. Furthermore, the letters of November 19, 1976 and December 6, 1976, relative to the termination of the agency relationship between defendant and National, specifically refer to such relationship. Thus, sufficient is shown to raise a fact question as to that issue. The form agency agreement *561used by defendant provides that the agent is authorized to "collect, receive and receipt for on behalf of Company, premiums on insurance policies and bonds”. It also provides that, except at the agent’s request, no policy of insurance shall be canceled after it has been in effect for 60 days unless for nonpayment of premiums or for other reasons not here germane. Whether this form contract governed the relationship between defendant and National is a critical question of fact which must be determined at trial. In these circumstances, the grant of summary judgment is not warranted. I would modify accordingly.