Court Opinion

ID: 5779531
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:47:49.237005+00
Date Added: 2024-06-11T08:41:56.647830
License: Public Domain

Benjamin, J. (dissenting).
The defendant has paid $13,333.33 to the Rotsettis estates and does not dispute its liability to Panteloglu for $6,666.67. In my opinion, no judgment against the defendant in excess of the total of these amounts, $20,000, is here warranted; and the $259,058.87 judgment on the third and fourth causes of action, which is the subject of this appeal, consequently is unjustified, regardless of whether it be deemed based on tort or breach of contract. In either case the only allowable sum would be compensatory damages; and that, of course, would be measured by the true loss suffered by the insured, ■ Louis Porter, as a result of the defendant’s acts. While the third and fourth causes of action are by Gerald Gordon, as receiver of Porter’s assets in supplementary proceedings, that does not change the rule, because Gordon’s rights are derived through Porter and consequently cannot exceed them.
In this case, Porter’s true loss is no more than the unpaid balance of the $20,000 coverage afforded by his policy. The record shows that Porter is a gas station attendant, living in a basement apartment in a low-cost area, and his car was an eight-year-old sedan worth at most several hundred dollars. When the defendant refused to defend the Rotsettis and Panteloglu actions against him, he did not attempt to secure private counsel and defend them himself, but instead let them go to inquest by default. The Rotsettis and Panteloglu counsel were unable to collect from Porter any part of the judgments obtained against him on the inquests and they had to -resort to appointment of a receiver of his assets and this action against his insurer.
In view of these facts, it seems clear that Porter was a de facto bankrupt at the times of the accident and the entry of judgments against him. In light of his patent inability to pay any part of the Rotsettis and Panteloglu judgments, in light of the fact that a de jure adjudication of his bankruptcy would have formally wiped out his liability on those judgments, and in light of the fact that he apparently had no real credit standing in a business community which could have been impaired by the existence of the Rotsettis judgment against him, it seems plain to me that he did not suffer any real damage because of the judgments obtained against him by the Rotsettises and *274Panteloglu. That being so, the true measure of the compensatory damages to which he (and, therefore, his receiver) is entitled in this action is not the amount of the Rotsettis and Panteloglu judgments, but only the unpaid balance of the defendant’s $20,000 obligation under its policy (cf. Harris v. Standard Acc. & Ins. Co., 297 F. 2d 627, cert. den. 369 U. S. 843). In a case like this, the mere entry of the judgments against the insured should not be considered proof of damage suffered by him. In my view, more is required—namely, proof that he has paid them, or can pay them, or, at the very least, that their existence has materially impaired his credit in his business or the community; and, absent such showing, the award against the insurer should be limited to the amount of its obligation under the policy (cf. Harris, supra); and here the insurer has already paid $13,333.33 and does not dispute its liability for the additional $6,666.67. The reasoning and result in Harris strike me as sound and I think we should follow it. I disagree with the reasoning and result in Henegan v. Merchants Mut. Ins. Co. (31 A D 2d 12 [which held that in a case like this the mere entry of a judgment against an insured established his damage]) and I think we should not follow it, because what it really does is impose punitive damages in the guise of compensatory damages; that we cannot and should not do.
Therefore, the judgment should be reversed and the third and fourth causes of action dismissed.
Hopkins, Acting P. J., and Christ, J., concur with Gulotta, J.; Shapiro, J., dissents and votes to reverse the judgment and grant a new trial, with a separate dissenting opinion; Benjamin, J., dissents and votes to reverse the judgment and dismiss the third and fourth causes of action, with a separate dissenting opinion.
Order-judgment (one paper) of the Supreme Court, Westchester County, entered April 10, 1970, affirmed, with costs to respondent-appellant.