40 Misc. 2d 409 | N.Y. Sup. Ct. | 1963
Plaintiff issued its automobile liability policy under the New York Automobile Assigned Eisk Plan on January 29, 1958 to one Daniel Matthows as owner of a 1950 Eoadmaster Buick automobile. On April 21,1958 George Koslab, an eight-year-old boy, was seriously injured when struck by the insured automobile. Plaintiff initiated an investigation of that accident and discovered that its policy had been procured by the assured by fraud. In this action the insurance company seeks a judgment declaring the policy void ah initio and a complete nullity from its inception. As alternative relief, it seeks to be declared entitled to disclaim liability because of failure of the assured to co-operate with the company.
The facts are undisputed. On January 25, 1958 Morris Eiley falsely represented himself to be Daniel Matthows, signed Matthows ’ name to an application for insurance under the plan, and falsely stated that Matthows was the owner of a 1950 Eoadmaster Buick. Actually the Buick was owned by Morris Eiley, imposter who posed as Matthows when he purchased and registered the car in Matthows’ name. Apparently no investigation was undertaken by the plaintiff until after the happening of the accident referred to, April 21, 1958. After ascertaining the fraudulent representations, and on July 1, 1958, plaintiff notified Daniel Matthows that it elected to declare the policy null and void effective as of January 29, 1958, the date of issuance.
The question for decision on the first cause of action is: Does the New York Automobile Assigned Eisk Plan of insurance,
In AEtna, Judge Ftjld, writing for a unanimous court, reviews the history of the Assigned Bisk Plan, its purposes and enactment. It would serve no useful purpose to quote at length from the opinion of our learned Judge Ftjld. After an exhaustive analysis of the plan, the court said (p. 364): “ That there is no right to rescind the assigned risk policy does not mean that the carrier is deprived of all reasonable redress against the insured who misrepresents material facts in order to obtain coverage, since the Plan expressly provides for cancellation under these circumstances. The effect of the Plan is to enforce upon the insurer the necessity to discover fraud at the earliest possible moment, before an accident occurs and the rights of innocent injured third parties have intervened. In this respect, the Plan merely reflects the oft-repeated legislative recognition that liability insurance is not the concern solely of the insured and his insurer. (See, e.g., Insurance Law, § 167, subd. 1, par. [d]; Vehicle and Traffic Law, § 345, subd. [i], par. [1]; Lauritano v. American Fid. Fire Ins. Co., 3 A D 2d 564, 567-568, affd. 4 N Y 2d 1028.)
“ AEtna did, in this case, actually conduct an early investigation of O’Connor and, if that investigation had been performed properly, the insured’s misrepresentation would have been discovered and Afina could have cancelled, pursuant to section 18 of the Plan, long before the Hamiltons were injured. While, therefore, Afína may ultimately be held on a policy obtained by fraud, its liability is in a very real sense attributable to its own fault, and the true beneficiary is not the wrongdoer, but his innocent victims.”
Had Allstate conducted a proper investigation within a reasonable time of the issuance of the policy, it would have, or should have, discovered the fraud and it could have cancelled the policy long before an innocent third party was injured by the insured automobile. Having failed to do so, I hold that Allstate is not entitled to rescind the contract ab initio.
As to the second cause of action, I find no evidence of lack of co-operation with regard to the happening of the accident, notice thereof, statements, etc. The lack of co-operation complained of was the attempt to conceal and further perpetrate Biley’s fraud upon the plaintiff. Plaintiff has not established its right to a declaratory judgment in its favor, either under the first or second causes of action. Judgment will be entered dismissing the complaint, with costs.