Boss v. Marine Midland Trust Co., 16 N.Y.2d 249 (1965)
An insurer’s right to subrogation does not arise until the insurer has made payment to the insured under the policy; an attempt to prosecute the insured’s cause of action in negligence prior to payment is premature.
Summary
Nat Boss sued Marine Midland Trust Co.’s insurer after a disagreement about damages to Boss’s car. The insurer then filed a third-party complaint against Maurice and Tillie Moss, alleging their negligence caused the accident. The court dismissed the third-party complaint, stating the insurer couldn’t sue for negligence before paying Boss’s claim. The Court of Appeals affirmed, holding that the insurer’s subrogation rights were contingent upon payment to the insured, making the third-party action premature, aligning with precedent that an insurer needs to have made payment before claiming subrogation rights.
Facts
Nat Boss’s car was damaged in a collision with a car owned by Tillie Moss and driven by her husband, Maurice Moss.
Boss had an insurance policy with Marine Midland Trust Co. covering collision damage.
Boss and the insurance company disagreed on the amount of damages.
Procedural History
Boss sued the insurance company for the collision damage.
The insurance company filed a third-party complaint against Maurice and Tillie Moss, alleging their negligence caused the collision.
The Special Term dismissed the third-party complaint.
The Appellate Division affirmed the dismissal.
The Court of Appeals granted permission to appeal.
Issue(s)
Whether an insurer, when sued by its insured on a policy, can implead the alleged tortfeasors in a negligence action before making any payment to the insured.
Holding
No, because the insurer’s right to subrogation is contingent upon payment to the insured under the policy. The insurer has no present cause of action until payment is made.
Court’s Reasoning
The court emphasized that the insurer’s right to subrogation is explicitly conditional: it only arises “in the event that any payment for any collision loss is made” to the insured. The court relied on previous cases such as American Sur. Co. v. Diamond and Glens Falls Ins. Co. v. Wood, which held that insurers who haven’t made payments under their policies lack standing to press cross-complaints. The court reasoned that allowing an insurer to claim subrogation rights before payment would be premature because the right to subrogation is contingent. The court emphasized that without payment, the insurer lacks a present cause of action. Therefore, the insurance company’s attempt to prosecute its insured’s negligence claim as a third-party plaintiff was not yet ripe. The court stated, “Since the insurer in this case has not made any payments under the policy, it has not acquired the right or color of a present cause of action.”