Seider v. Roth, 17 N.Y.2d 111

Lead Opinion

Chief Judge Desmond.

This appeal, taken by leave of the Appellate Division, brings us a question new to this court — in a personal injury action against a nonresident defendant, is defendant’s liability insurer’s contractual obligation to defend and indemnify defendant a 11 debt ’ ’ owing to defendant and as such subject to attachment under CPLR 6202? Both courts below answered that question in the affirmative. We think that is the correct answer.

The two plaintiffs, husband and wife, residents of New York, were injured in an automobile accident on a highway in Vermont, allegedly through the negligence of defendant Lemiux who lives in Quebec (the.other defendant, Roth, was the driver of a third car involved in the collision). The order of attachment directed the Sheriff to levy upon the contractual obligation of Elartford Accident and Indemnity Company to defend and indemnify defendant Lemiux under a policy of automobile liability issued by Hartford to Lemiux. Hartford is an insurer doing business in New York State and the attachment papers were served on it in New York State. The Hartford-Lemiux liability policy was issued in Canada. Lemiux was personally served in Quebec.

Defendant Lemiux moved to vacate the attachment and the service of the summons and complaint on Lemiux. Special Term denied the motion on the ground that he was bound by the Second Department decision in Fishman v. Sanders (18 A D 2d 689) where a similar contractual obligation of a liability insurer was held to be attachable. Fishman v. Sanders came to this court but we did not pass on the particular question (15 N Y 2d 298). On defendant’s appeal in the present case, the same Appellate Division affirmed with one Justice dissenting alone. The majority noted that defendant-appellant was arguing for vacatur on the ground that the purported attachment was an attempt to levy “upon an obligation which is limited, conditional and dependent upon several contingencies, and is neither absolutely payable at present nor in the future ”. The court said, however, that the attachment had actually been made upon the insurer’s existing contractual obligation under the policy. The dissenting Justice said that the insurer’s obligation is not subject to attachment because it is not an indebtedness which is absolutely payable, and that nothing is or will be owing under the policy until plaintiffs recover a judgment, etc.

The controlling statutes are CPLR 5201 and 6202. While these simplify more elaborate provisions found in old sections 912 to 916 of the Civil Practice Act there does not seem to be any change in meaning. The whole question, therefore, is whether Hartford’s contractual obligation to defendant is a debt or cause of action such as may be attached. The Hartford policy is in customary form. It requires Hartford, among other things, to defend Lemiux in any automobile negligence action and, if judgment be rendered against Lemiux, to indemnify him therefor. Thus, as soon as the accident occurred there was imposed on Hartford a contractual obligation which should be considered a “ debt” within the meaning of CPLR 5201 and 6202. In fact, the policy casts on the insurer several obligations which accrue as soon as the insurer gets notice of an accident, and whether or not a suit is ever brought. For instance, under the “Insuring Agreements” and under “Additional Agreements” “ No. 2 ”, the insurer agrees upon receipt of notice of loss or damage to investigate and if expedient to negotiate or settle with the claimant. Furthermore, under “ Section B ” the insurer agrees to pay necessary medical and similar expenses of the insured and any other injured person.

A pertinent decison which cannot be distinguished away is Matter of Riggle (11 N Y 2d 73). The late Robert Biggie, who had been a resident of Illinois, was the driver of an automobile which, in an accident in Wyoming, had injured a New York resident named Mabel Wells. Mrs. Wells, in order to sue Biggie in New York State, moved to have appointed in this State an administrator with the will annexed of Biggie’s property. The only property claimed to belong to Biggie’s estate in New York State was “ the personal obligation of an indemnity insurance carrier to defend him”. Section 47 of the Surrogate’s Court Act provided that, for the purpose of conferring jurisdiction upon a Surrogate’s Court, “ a debt owing to a decedent by a resident of the state ” is regarded as personal property. The careful and convincing majority opinion in this court concluded, with ample citation of precedent, that within the broad meaning of section 47 this liability insurance policy, even though no judgment had been obtained against the insured, made decedent’s estate a “ creditor ” and the insurer a “ debtor ” sufficient for the purposes of the statute. It is interesting to note that the dissenting Judge in Matter of Biggie conceded that the insurance company’s obligation “ to defend and contingently indemnify ’ ’ was a debt, but he was of the opinion, contrary to that of the majority, that the insurer was not a resident of the State within the meaning of section 47. The reasoning of the Biggie case is sound and calls for an affirmance here. Decisions just like Biggie, some of them quite old, are found in other States (Gordon v. Shea, 300 Mass. 95 [1938]; Furst v. Brady, 375 Ill. 425 [1941]; Robinson v. Carroll, 87 N. H. 114).

It is said that by affirmance here we would be setting up a ‘ ‘ direct action ’ ’ against the insurer. That is true to the extent only that affirmance will put jurisdiction in New York State and require the insurer to defend here, not because a debt owing by it to the defendant has been attached but because by its policy it has agreed to defend in any place where jurisdiction is obtained against its insured. Jurisdiction is properly acquired by this attachment since the policy obligation is a debt owed to the defendant by the insurer, the latter being regarded as a resident of this State, as Riggle holds in so many words at pages 76 and 77 of 11 N Y 2d.

Not only has the law question in this case been decided by Riggle but there is no policy reason against requiring the insurer to come in to New York and defend as to an accident which occurred in Vermont injuring New York residents, any more than there was in Oltarsh v. Aetna Ins. Co. (15 N Y 2d 111) where for the first time we held that when New York residents were injured outside the State we would allow a direct action in Hew York against the insurer although there was nothing in previous Hew York law permitting it.

The order appealed from should he affirmed, with costs, and the certified question answered in the affirmative.

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Dissenting Opinion

Burke, J. (dissenting).

This attachment, levied upon an automobile liability policy issued in Canada to a Canadian motorist in a case where the accident occurred in Vermont, ought to be vacated as there was nothing in this State to which the levy could apply. The so-called “ debt ” which is supposed to be subject to attachment is a mere promise made to the nonresident insured by the foreign insurance carrier to defend and indemnify the Canadian resident if a suit is commenced and if damages are awarded against the insured. Such a promise is contingent in nature. It is exactly this type of contingent undertaking which does not fall within the definition of attachable debt contained in CPLR 5201 (subd. [a]), i.e., one which “ is past due or which is yet to become due, certainly or upon demand of the judgment debtor ”. The bare undertaking to defend and indemnify is not an obligation “ past due ” and it is not certain to become due until jurisdiction over the insured is properly obtained. In Hew York “ It is well settled that an indebtedness is not attachable unless it is absolutely payable at present or in the future, and not dependable upon any contingency. ’ ’ (Herrmann & Grace v. City of New York, 130 App. Div. 531, 535, affd. on opn. of Appellate Division 199 N. Y. 600; italics supplied.)

Paced with this long-established rule the plaintiffs indulge in circular ratiocination. The jurisdiction, they assert, is based upon a promise which evidently does not mature until there is jurisdiction. The existence of the policy is used as a sufficient basis for jurisdiction to start the very action necessary to activate the insurer’s obligation under the policy. In other words, the promise to defend the insured is assumed to furnish the jurisdiction for a civil suit which must be validly commenced before the obligation to defend can possibly accrue. “ This is a bootstrap situation.” (Professor D. D. Siegel, Supplementary Commentary to CPLR 5201, McKinney’s Cons, Laws of N. Y., Book 7B, 1965 Pamphlet, pp. 10-13.) It is indisputable that prior to the commencement of the suit the insurer owed no “ debt ” to the insured. The facts in Matter of Riggle (11 N Y 2d 73) and Gordon v. Shea (300 Mass. 95) illustrate the fallacy of plaintiff’s reasoning. The defendant in Riggle had been personally served and in both cases in personam jurisdiction over the defendants had been properly obtained before they died. There the obligation to defend had accrued and the insurers were actually defending the suit brought against the insured. At thaf time there was a “ debt ” within the meaning not only of estate law but also within the meaning of CPLR 5201. Moreover, where the defendants have been personally served there is no question of a “direct action” being instituted against the insurer.

The distinction between the definition of “ property ” in cases where an attachment is sought and in cases such as Riggle dealing with the appointment of an administrator is clearly set forth in Robinson v. Carroll (87 N. H. 114) and Furst v. Brady (375 Ill. 425).

In Bobinson, where no action on the insurance policy had yet been commenced, the court stated (p. 117) that the promise of the insurer even though “it is not yet due * * * until its conditions are fulfilled ’ ’ — thus contingent in nature — is nevertheless “ estate ” of the decedent within the limited meaning of the statute governing the appointment of an administrator. On the contrary, under our statutes " a contingent right which did not ripen into an obligation ’ ’ may not be the basis for an attachment to supply jurisdiction. (Dutch-Amer. Mercantile Corp. v. Safticraft Corp., 17 A D 2d 421, 423; Sheehy v. Madison Sq. Garden, 266 N. Y. 44, 47.) In Furst v. Brady (375 Ill. 425), another “ estate ” case which followed the rationale of the New Hampshire court in Bobinson, the court pointed out that no rights are adjudicated simply by the appointment of an administrator and that such an appointment is based on the existence of an “ estate ” in the narrow sense attributed to that word within the meaning of statutes governing administrators. Accordingly, the standard for determining whether there is any property in the State for the purposes of appointment of an administrator differs considerably from the criteria set down by the language of our attachment statutes. In the estate administration cases, where personal service on the defendant was not made, the promise even though admittedly contingent in nature was deemed sufficient property to constitute “ estate ” because no rights were determined by such an appointment. Under our statute, however, all rights in question are dependent on the debt being past due or certain to become due so as to constitute property that may be attached. To base jurisdiction on the mere existence of an automobile liability policy, even though the promises in it are not yet due, is to allow a direct action against the insurer.

The argument is made that several debts do accrue as soon as the insurer receives a notice of an accident. The first alleged obligation—the agreement “ to investigate and if expedient to negotiate or settle with the claimant ’ ’— cannot be construed to impose a duty on the carrier which would amount to a “ debt ” under CPLR 5201 (subd. [a]). It is not an absolute commitment but one left solely within the discretion of the carrier as it necessarily must be because of the enormous number of notices of accident filed. The second alleged obligation under Insuring Agreement B, dealing with medical payments, has no relation to the third-party liability agreement under which these plaintiffs claim. The medical payment insuring agreement, like the collision insuring agreement, is a separate agreement and runs only in favor of the insured and the passengers in his car. It is also contingent upon submission of acceptable written proof, oftentimes required to be under oath, together with executed authorizations from each injured person to scrutinize his medical reports and permission for a personal physical examination of each person. Apart from the undeniable fact that this section of the policy has no relevance to the gravamen of plaintiffs’ cause of action, the obligation to the insured is a conditional type, not absolute as specified by the statute and thus not attachable for jurisdictional purposes.

Not only does the text of CPLR and the contingent nature of an automobile liability policy dictate a vacatur of the warrant of attachment but, where the grounds to obtain jurisdiction are tenuous, public policy should restrain us from approving, under the guise of “ in rem ’ ’ jurisdiction over a nonresident motorist, “a direct action” against a foreign insurer licensed to do business in this State on a policy issued in Montreal to a resident of Quebec, Canada, for damages resulting from, a .Vermont accident.

The order appealed from should be reversed and the certified question answered in the negative.

Judges Fuld, Van Voorhis and Keating concur with Chief Judge Desmond; Judge Burice dissents in an opinion in which Judges Scileppi and Bergan concur.

Order affirmed, etc.

Case Details

Case Name: Seider v. Roth

Court Name: New York Court of Appeals

Date Published: Mar 24, 1966

Citations: 17 N.Y.2d 111; 216 N.E.2d 312; 269 N.Y.S.2d 99; 1966 N.Y. LEXIS 1494

Court Abbreviation: N.Y.