Court Opinion

ID: 5786472
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:59:53.02379+00
Date Added: 2024-06-11T08:42:07.058465
License: Public Domain

Stevens, P. J.
Plaintiff, Consolidated Edison Company of New York, Inc. (Con Ed) and Royal Indemnity Company (Royal) sue on an insurance contract to recover $3,200,000 for loss or damages as a result of a breakdown of its Ravenswood XJnit 3 (Big Allis). Royal, by its third-party complaint, impleads Allis-Chalmers Corporation (Allis) which designed and installed Big Allis, and Westinghouse Electric Company (Westinghouse) which repaired Big Allis.
The insurance policy contained the following provision: “In the event of any payment under this policy, the Company shall be subrogated to the Insured’s rights of recovery therefor against any person or organization.”
Westinghouse moved to dismiss the third-party complaint, asserting that the language above quoted precluded Royal from presently asserting subrogation rights against it. It is from a denial of its motion that Westinghouse appeals^
Essentially the question to be resolved is whether the quoted language precludes action by Royal prior to payment to the . assured. In our view it does not.
CPLR1007 provides, in part, “ after the service of his answer, a defendant may proceed against a person not a party who is of may be liable to him for all or part of the plaintiff’s claim against him, by serving upon such person a summons and complaint and all prior pleadings served in the action ” (emphasis supplied). This right of impleader exists where the acts or omissions of a third party have exposed the defendant to liability to the plaintiff.
The court is empowered to dismiss without prejudice or order & separate trial of a third-party complaint, or to make such order as may be just. ‘1 In exercising its discretion, the court shall consider whether the controversy between the third-party and the third-party defendant will unduly delay the of the main action or prejudice the substantial rights of *39any party ” (CPLR 1010). There is no claim here of prejudice or delay. Nor did the plaintiff in this case voice any objection to the third-party complaint.
It is clear that there is no statutory bar to the third-party action. The question remains whether the Boss and Krause cases (Ross v. Pawtucket Mut. Ins. Co., 13 N Y 2d 233; Krause v. American Guar. & Liab. Ins. Co., 27 A D 2d 353, affd. 22 N Y 2d 147) relied upon in the dissenting opinion dictate a conclusion contrary to that reached by us.
In Ross (supra, p. 234), the question was “ whether an insurer, upon being sued by its insured upon the policy, may implead in a negligence action the alleged tort-feasors.” The policy there provided that the. defendant insurer would be subrogated to the insured’s rights, “in the event that any payment for any collision loss is made ” (p. 235). Admittedly, the provision is similar to that in the case now before us. The court concluded, since the insurer had not made any payments under the policy, that the third-party action could not be maintained. Obviously to have permitted impleader in Ross would have frustrated the purpose of automobile insurance. Impleader in this case where the action is upon a boiler and machinery policy certainly would not frustrate the statutory objective.
Indeed, in the Krause case (supra), an action on a broker’s bond, where there was no such provision in the policy, this seems to have been a part of the rationale underlying the decision. The Court of Appeals stated that in Ross the decision involved a covenant but noted (p. 156) that Ross “ also rests on the broader ground that impleader should not be allowed to am insurer whose claim is based upon rights to be gained by subrogation, and, as has already been indicated, we do not accept this approach ” (emphasis supplied). The court (per Kbatito, J.) observed that Ross was an automobile collision case and used this significant language. ‘1 Automobile collision cases are numerous and involve minor claims, and the very purpose of collision insurance is to permit the insured to collect his damages promptly and use the funds to repair his car. Consequently, as a matter of judicial discretion, impleader cam properly be denied in such cases in order to reduce court congestion and to assure that the prime object of the collision policy is not frustrated by the judicial process ” (p. 156). It continued (p. 157), “ the primary purpose of a broker’s bond, is not quick payment of small losses, but protection from ruinous losses * * * permitting impleader here will not frustrate the main purpose for which the policy was purchased ”, The *40last quotation is particularly apt with respect to the present appeal. (See, also, 20 Syracuse L. Rev., Civil Practice 474, 475.) Over three million dollars is involved in the impleaded claims.
As a matter of justice and equity impleading should he permitted here. Otherwise, the subrogation claim of Royal might become time-barred. ‘ ‘ Logically, there is no difference in terms of maturity of an action based, on subrogation, as opposed to indemnity, because in either situation the cause of action only accrues upon payment or the determination of liability. Moreover, a subrogee has. as strong an interest in protecting its claim over as does an indemnitor ” (Krause, supra, p. 153).
The covenant in the policy was for the benefit of the assured. If the assured raises no objection, a third party which possibly caused the loss should not be allowed to benefit by its terms, and thereby successfully insulate itself from liability for its acts.
The statute contemplates the avoidance of multiplicity of actions. 'Since the courts have a right to control their calendars, and, under the statute, may in a proper case exercise their discretion as warranted, the court properly exercised its powers. The order appealed from should be affirmed, with costs.