Court Opinion

ID: 5300196
Source: CourtListenerOpinion
Date Created: 2022-01-08 03:05:29.948933+00
Date Added: 2024-06-11T08:29:03.933812
License: Public Domain

Martin, J.
The plaintiff Long Island Coach Company, Inc., seeks to recover from defendant insurance company $600 paid on judgments recovered against plaintiff. The coach company holds defendant’s policy. It provides: “ 1. The Insurers agree to indemnify the Assured against loss arising from the liability imposed by law upon the Assured for damages on account of death or bodily injuries * * *, resulting from or caused by the operation, maintenance, use or the defective construction of the motor vehicles described in the schedule annexed hereto, * *
The defendant contends that under the policy and section 282-b of the Highway Law (added by Laws of 1922, chap. 612, as amd. by Laws of 1927, chap. 278), its liability on all judgments resulting from one “ transaction ” is limited to $5,000 to be apportioned ratably among the judgment creditors according to the amounts of their respective judgments.
The policy was in force on August 20, 1927, when a collision occurred between two automobiles owned, operated and controlled by the plaintiff, in which many passengers received personal injuries. Actions were commenced in the Supreme, City and Municipal Courts. Settlement was made of twenty-two claims, and there are twelve other known claims unsettled on which no legal action has been taken.
The policy contains the following: “ 3. The liability of the Insurers for loss resulting from any one judgment is limited to Two Thousand Five Hundred Dollars ($2,500) for bodily injuries or death, and Five Hundred Dollars ($500) for damage to or destruction of property, and on all judgments recovered upon claims arising out of the same transaction or transactions connected with the same subject of action to Five Thousand Dollars ($5,000) *333for bodily injuries or death, and One Thousand Dollars ($1,000) for damage to or destruction of property, to be apportioned ratably among the judgment creditors according to the amount of. their respective judgments * *
The insurance company settled twenty-two cases for the total sum of $3,298.50. This would seem to indicate a practical construction of the contract and to show that when the policy was made the defendant considered it one purely of liability or indemnity insurance.
In City of New York v. N. Y. City Railway Co. (193 N. Y. 543) the court said: “ When the parties to a contract of doubtful meaning, guided by self-interest, enforce it for a long time by a consistent and uniform course of conduct, so as to give it a practical meaning, the courts will treat it as having that meaning, even if as an original proposition they might have given it a different one.”
The policy is to be construed liberally in favor of the insured and strictly as against the insurance company. In the case of Bushey & Sons v. American Insurance Co. (237 N. Y. 24) the court said that if the language is “ fairly susceptible of two interpretations, one of which being that contended for by the insured, it should be most strongly construed against the insurer.”
In this case the ambiguity, if any, is brought about by the clause which states that the liability of the insurance company is limited to $5,000 on all judgments for personal injuries or death arising out of the same transaction, to be apportioned ratably among the judgment creditors according to the amount of their respective judgments.
It is the defendant’s contention that, though the contract is to indemnify plaintiff against liability imposed by law, defendant’s liability is limited to a stated amount and that this amount is to be apportioned ratably among the judgment creditors according to the amount of their respective judgments. The defendant’s contention is in effect that until all claims have been reduced to judgment or outlawed by the Statute of Limitations there exists no liability on its part.
If one of the injured persons were less than a year old, the Statute of Limitations would not run for over twenty years. (See Civ. Prac. Act, §§ 48, 49, 60.) Surely it cannot be said that it was the intention of the parties to deprive the assured of the stipulated protection for such a period of time. Such a policy would be worthless.
Again, the contract provides for continuing liability on the one hand, and, on the other hand, for continuing protection against loss. Should the assured be so unfortunate as to have its vehicles *334involved, in' a series of accidents its resources might be exhausted in making payment of judgments secured against it before the last possible claim was barred by the Statute of Limitations. Such a result would leave the insured without protection. An innocent third party might find itself in the same position, although given the right by section 109 of the Insurance Law (added by Laws of 1917, chap. 524, as amd. by Laws of 1924, chap. 639) to proceed against the insurer in case of insolvency or bankruptcy of the judgment debtor.
We do not agree that section' 282-b of the Highway Law so defines and directs the manner in which the insurer’s liability shall be discharged as to require us to adopt defendant’s construction of the provisions for limitation on its liability. The statute is addressed not tó the defendant but to the plaintiff, telling the latter what it shall do; and it was passed for the benefit and protection of the public, a purpose which such a construction might defeat.
The statute must receive a reasonable interpretation, keeping in mind at all times its purpose. The defendant demands a most unreasonable and unworkable interpretation based on a theory that would often exempt it from liability.
Until there is bankruptcy or insolvency the provisions of the statute relied on by defendant do not apply. When the law says that the amount that the company is hable for is to be apportioned ratably among the judgment creditors according to the amount of their respective judgments, it clearly contemplates a case where due to insolvency the amount of the bond must be distributed ratably among the creditors.
Judgment should, therefore, be directed in favor of plaintiff against the defendant for $600, with interest from October 20, 1927, and with costs.
Dowling, P. J., and Proskauer, J., concur; Merrell and O’Malley, JJ., dissent.