New York Law Review

Tag: Contribution

  • County of St. Lawrence v. Travelers Ins. Cos., 54 N.Y.2d 482 (1981): Contribution is Not Indemnification Under Insurance Policy Exclusion

    County of St. Lawrence v. Travelers Ins. Cos., 54 N.Y.2d 482 (1981)

    An insurance policy exclusion for “any obligation of the insured to indemnify another” does not relieve the insurer of liability when the insured is sued for contribution under Dole v. Dow Chemical Co. because contribution and indemnification are distinct legal concepts.

    Summary

    St. Lawrence County was sued by a college and a tool manufacturer after a county employee was injured using a saw. The college and manufacturer sought contribution from the county. The county’s insurer, Travelers, disclaimed liability based on an exclusion for obligations to indemnify another for employee injuries. The Court of Appeals held that the exclusion did not apply to contribution claims because contribution and indemnification are distinct legal concepts. The court reasoned that insurance policies are construed against the drafter, and the exclusion’s language was unambiguous and did not encompass contribution.

    Facts

    George Donnelly, a St. Lawrence County employee, was injured while using a saw at a local college. Donnelly sued the college and Rockwell International Power Tools. The college and Rockwell then filed third-party actions against the county, seeking indemnification or contribution. St. Lawrence County had a general liability policy with Travelers Insurance Co. Travelers disclaimed liability based on Exclusion (j), which excluded coverage for “any obligation of the insured to indemnify another because of damages arising out of such injury” to an employee.

    Procedural History

    St. Lawrence County sued Travelers for a declaratory judgment, seeking a declaration that Travelers was obligated to defend and indemnify the county. The trial court ruled in favor of the county, finding the exclusion inapplicable to contribution claims. The Appellate Division, Third Department, reversed. The County appealed to the Court of Appeals.

    Issue(s)

    Whether an employer’s general liability policy containing an exclusion for “any obligation of the insured to indemnify another because of damages arising out of” personal injury to an employee relieves the carrier of liability when the employer is sued for contribution pursuant to Dole v Dow Chem. Co.

    Holding

    Yes. Because contribution and indemnification are distinct legal concepts, and insurance policies are construed against the insurer.

    Court’s Reasoning

    The court focused on the exclusion for “any obligation of the insured to indemnify another because of damages arising out of such injury”. The insurance companies argued that Dole v. Dow Chem. Co. established a right of “partial indemnification,” and the exclusion should include any obligation to reimburse a third party. The court stated, “Whatever confusion may have initially existed concerning the nature of a Dole apportionment was dispelled by the time the policies in the cases now before us were issued.”

    The court reasoned that by 1977 and 1979, when the policies were issued, contribution was not recognized as a form of indemnification. The court cited Rock v. Reed-Prentice Div. of Package Mach. Co., 39 NY2d 34, where the court discussed the distinction between contribution and indemnity. The court dismissed the insurance companies’ arguments that the history of the clause showed that it was intended to exclude coverage for Dole recoveries. The court noted that “the intent of the insurance company is not controlling when, as here, the words used in the policy do not adequately convey that intent.”

    The court also rejected the argument that the average business person would consider “indemnify” synonymous with “reimburse.” If that were the intent, the court argued, it could easily have been stated in those terms. The court concluded that the carriers’ broad reading does not accurately state the law and, at best, reveals a potential ambiguity in the contract, which must be resolved against the insurance companies, which drafted the policy. The court directly references the principle of contra proferentem.

  • Schauer v. Joyce, 54 N.Y.2d 1 (1981): Contribution Among Successive Attorneys in Malpractice Actions

    54 N.Y.2d 1 (1981)

    A defendant in a legal malpractice action may seek contribution from a subsequent attorney whose negligence allegedly contributed to the plaintiff’s damages, even in the absence of contractual privity between the attorneys.

    Summary

    This case addresses whether an attorney, sued for malpractice by a former client, can bring a third-party claim for contribution against a subsequent attorney who also represented the client in the same matter. The New York Court of Appeals held that such a third-party claim is valid if both attorneys owed a duty to the client and their negligence contributed to the same injury, even if their negligence was successive and independent. The key is whether each attorney’s actions contributed to the plaintiff’s ultimate damages. The court reversed the lower court’s dismissal of the third-party complaint.

    Facts

    Vivian Schauer hired attorney Patrick Joyce in 1975 for a divorce. Joyce obtained a default judgment for Schauer that included alimony. The husband successfully moved to vacate parts of the judgment due to a false affidavit of regularity submitted by Joyce. Schauer discharged Joyce and hired Thomas Gent in April 1977. Schauer later sued Joyce for malpractice, alleging that his negligence caused her to lose alimony. Joyce then filed a third-party action against Gent, claiming that Gent negligently failed to reinstate the vacated alimony award or promptly seek alimony payments.

    Procedural History

    The Special Term dismissed Joyce’s third-party complaint. The Appellate Division affirmed this dismissal. The New York Court of Appeals reversed the Appellate Division’s decision, holding that the third-party complaint stated a valid cause of action for contribution.

    Issue(s)

    Whether an attorney being sued for malpractice can bring a third-party claim for contribution against a subsequent attorney who represented the same client in the same matter, alleging that the subsequent attorney’s negligence contributed to the client’s damages.

    Holding

    Yes, because CPLR 1401 allows contribution among those who are subject to liability for damages for the same personal injury or injury to property, and the key question is whether both attorneys owed a duty to the plaintiff and contributed to the same injury.

    Court’s Reasoning

    The court reasoned that under CPLR 1401 and Dole v. Dow Chem. Co., the relevant question is not whether Gent owed a duty to Joyce, but whether both Gent and Joyce owed a duty to Mrs. Schauer and whether their breaches contributed to her ultimate injuries. The court emphasized that CPLR 1401 applies not only to joint tortfeasors but also to successive and independent tortfeasors. The court found that Joyce’s third-party complaint adequately alleged that Gent’s negligence could have contributed to Mrs. Schauer’s loss of alimony. The court stated that “[t]he primary injury of which Mrs. Schauer complains is the loss of alimony.” It noted that a substantial portion of the damages occurred after Gent took over the case. The court concluded that Gent could be found at least partially responsible for the loss if he negligently failed to obtain a new hearing on alimony and support or to seek reinstatement of the vacated alimony judgment. In effect, Joyce was claiming that Gent, as an independent, successive tortfeasor, contributed to or aggravated Mrs. Schauer’s injuries. This, the court held, is “clearly the type of claim encompassed by CPLR 1401.” The court clarified that Joyce’s ability to raise the defense of failure to mitigate damages did not preclude him from asserting a third-party claim for contribution. The court directly addressed the lower court’s reasoning that there was nothing to make Gent even partially liable for Schauer’s loss of alimony as “erroneous” since, according to the pleadings, the negligence of both attorneys was responsible for the same injury.

  • Bay Ridge Air Rights, Inc. v. State, 44 N.Y.2d 49 (1978): Accrual of Claim for Apportionment of Damages Against the State

    Bay Ridge Air Rights, Inc. v. State, 44 N.Y.2d 49 (1978)

    A claim for apportionment of damages (contribution) against the State generally accrues when the party seeking apportionment makes payment to the injured party, not when the underlying injury occurs or when the action is brought against the party seeking contribution.

    Summary

    Bay Ridge Air Rights, Inc. (Bay Ridge) was sued in federal court for negligently hiring a custodian who killed a tenant. Bay Ridge sought to bring a claim against the State of New York, alleging the State was responsible for the custodian’s premature release from psychiatric care. The New York Court of Appeals addressed when such a claim for apportionment of damages accrues for the purpose of filing a claim against the State. The Court held that the claim accrues when the party seeking apportionment (Bay Ridge) makes payment to the injured party (the tenant’s estate), aligning the accrual rule with that for indemnification claims. This means Bay Ridge’s claim was premature because no judgment had been entered or paid. The court acknowledged the potential prejudice to the State due to delayed notice but stated that legislative action is required to change the accrual rule.

    Facts

    A custodian employed by Bay Ridge killed a tenant on July 2, 1972.
    The tenant’s estate sued Bay Ridge in federal court on April 1, 1974, alleging negligent hiring, because the custodian had been under psychiatric care in state hospitals.
    Bay Ridge notified the Attorney General in December 1974 of its intent to seek apportionment of damages from the State if there was a recovery in the federal action.
    Bay Ridge’s third-party complaint against the State was dismissed by the federal court for lack of jurisdiction.</n

    Procedural History

    Bay Ridge served a notice of intention to file a claim and a proposed claim on the State on June 3, 1975.
    The State moved to dismiss the claim for untimeliness under Section 10 of the Court of Claims Act.
    The Court of Claims granted the State’s motion, holding that the cause of action accrued on the date of the killing.
    The Appellate Division modified the dismissal, holding that the claim accrues when there is a recovery against the party seeking apportionment, dismissing the claim without prejudice to refiling if a claim accrues.

    Issue(s)

    Whether a claim for apportionment of damages under Dole v. Dow Chemical Co. and CPLR Article 14 accrues on the date of the underlying injury, the date action is brought against the party seeking contribution, or the date judgment or settlement is recovered.

    Holding

    No, because a claim for apportionment of damages, like a claim for indemnification, generally accrues when payment is made by the party seeking apportionment. Therefore, until Bay Ridge makes payment to the tenant’s estate, it need not serve notice of claim upon the State.

    Court’s Reasoning

    The Court reasoned that there’s insufficient support for the Court of Claims’ view that a claim for contribution accrues at the time of the underlying injury, because a defendant might lose their claim against the State if they are unaware of any right they have against the State before the applicable 90-day or 6-month time period expires.
    While the State argues that the onset of the main action should trigger the statutory time limitations, the court notes that there is nothing in Dole v. Dow Chem. Co. or CPLR article 14 that justifies distinguishing claims for apportionment from those for indemnity. The court stated, “It is not the role of the court, however, without benefit of legislative authority, to cut off abruptly a cause of action good until then under conventional law.”
    The court acknowledged the potential disadvantage to the State due to the delayed accrual date, but stated that the remedy lies with the Legislature, which could explore alternatives such as establishing an earlier accrual date, at least for notice of claim purposes. The court suggests allowing the State to be impleaded as a third party in the main action when the action is brought in the State courts, so that all claims could be tried in a single action.
    Under conventional principles, no judgment in the Federal action against Bay Ridge having been entered, let alone paid, its claim for indemnity and contribution has not yet accrued.

  • Rock v. Reed-Prentice Div. of Package Mach. Co., 39 N.Y.2d 34 (1976): Enforceability of Contribution Judgment After Settlement

    Rock v. Reed-Prentice Div. of Package Mach. Co., 39 N.Y.2d 34 (1976)

    A settlement between a plaintiff and one tortfeasor does not preclude the settling tortfeasor from enforcing a previously obtained judgment for contribution against another tortfeasor, but the amount of contribution is limited to the non-settling tortfeasor’s equitable share of the settlement amount.

    Summary

    David Rock sued Reed-Prentice for injuries sustained while using their machine. Reed-Prentice then sued Rock’s employer, Westbury Plastics, for contribution. The jury apportioned liability. Reed-Prentice settled with Rock for $250,000 after a $400,000 verdict. Reed-Prentice sought to enforce its judgment against Westbury. The New York Court of Appeals held that Reed-Prentice could enforce the contribution judgment, but only to the extent of Westbury’s equitable share of the settlement amount, not the original judgment amount. The court reasoned that the settlement satisfied the judgment, entitling Reed-Prentice to contribution, and that General Obligations Law § 15-108 was intended to promote settlements, not nullify existing judgments.

    Facts

    David Rock was injured operating a plastic molding machine manufactured by Reed-Prentice while employed by Westbury Plastics. Rock sued Reed-Prentice for negligence and breach of implied warranty. Reed-Prentice initiated a third-party action against Westbury Plastics, claiming Westbury’s negligence caused the injury.

    Procedural History

    The trial court instructed the jury to determine the proportionate share of liability if both defendants were negligent. The jury found both Reed-Prentice and Westbury negligent, awarding Rock $400,000 against Reed-Prentice and Reed-Prentice $50,000 against Westbury. Reed-Prentice settled with Rock for $250,000 while appealing to the Appellate Division. Westbury declined to join the settlement, and both defendants proceeded with the appeal concerning the third-party judgment. The Appellate Division affirmed. Westbury appealed to the New York Court of Appeals.

    Issue(s)

    Whether the settlement between Rock and Reed-Prentice precludes Reed-Prentice from enforcing the judgment for contribution against Westbury.

    Holding

    No, because the settlement does not extinguish Reed-Prentice’s right to enforce the contribution judgment, but the amount is limited to Westbury’s equitable share of the settlement amount.

    Court’s Reasoning

    The Court of Appeals reasoned that Reed-Prentice’s judgment against Westbury was based on contribution within the meaning of CPLR 1402 and General Obligations Law § 15-108, which codified the apportionment rule from Dole v. Dow Chem. Co. The court distinguished between contribution and indemnity, noting that contribution involves proportional reimbursement, while indemnity involves a shifting of culpability. While CPLR 1402 states the amount of contribution is the excess paid over the defendant’s equitable share, Reed-Prentice did fully satisfy the judgment. The court found that General Obligations Law § 15-108 aims to promote settlements by defining their effect on collateral rights, not to nullify existing judgments. The court stated the intent of the statute was to alter rules that inhibited settlements. Specifically, the court noted, “The overall scheme and purpose of the section is to promote settlements in multiple-party tort cases by clearly defining the effect the settlement will have on collateral rights and liabilities in future litigation. There is nothing at all to suggest that this statute was ever intended to nullify a pre-existing judgment.” However, Westbury is not obligated to pay the full $50,000. Because the jury allocated Westbury’s responsibility at 12.5% of the loss, Reed-Prentice is only entitled to 12.5% of the $250,000 settlement, or $31,250.

  • Barry v. Niagara Frontier Transit System, Inc., 35 N.Y.2d 632 (1974): Prior Notice Requirement for Claims Against Municipalities

    Barry v. Niagara Frontier Transit System, Inc., 35 N.Y.2d 632 (1974)

    A municipality cannot be held liable in a third-party action for contribution or indemnification relating to a defective street or sidewalk condition if the municipality did not receive prior written notice of the condition, as required by statute.

    Summary

    Dorothy Barry sued Niagara Frontier Transit System for injuries sustained while exiting a bus at a bus stop in the Village of Kenmore, alleging negligence in failing to provide a safe place to alight. Niagara Frontier then brought a third-party action against the Village, seeking contribution or indemnification should it be found liable to Barry. The Village moved to dismiss the third-party complaint, arguing that it had not received prior written notice of the defective condition as required by Village Law § 341-a. The New York Court of Appeals affirmed the dismissal, holding that allowing a third-party action without prior written notice would undermine the statute’s intent to limit municipal liability for nonfeasance.

    Facts

    Dorothy Barry allegedly sustained personal injuries on September 10, 1968, while alighting from a bus operated by Niagara Frontier Transit System at a bus stop within the Village of Kenmore. Barry sued Niagara Frontier, claiming negligence in operating the bus and failing to provide a safe place to alight. Niagara Frontier then filed a third-party complaint against the Village of Kenmore, seeking contribution or indemnification, arguing that if Barry’s injuries occurred as claimed and Niagara Frontier was found liable, the Village should be responsible for all or part of the judgment. It was conceded that the Village had not received prior written notice of the alleged defect.

    Procedural History

    The Special Term dismissed Niagara Frontier’s third-party complaint, relying on Village Law § 341-a, which requires prior written notice to the Village of any dangerous condition before an action can be maintained. The Appellate Division affirmed the Special Term’s decision. The Court of Appeals granted leave to appeal to consider the applicability of the notice requirement in the context of a third-party complaint for apportionment, following the principles established in Dole v. Dow Chem. Co., 30 N.Y.2d 143.

    Issue(s)

    Whether a third-party action for contribution or indemnification can be maintained against a village for personal injuries allegedly caused by a dangerous condition in a street or sidewalk when the village did not receive prior written notice of the condition, as required by Village Law § 341-a (now CPLR 9804).

    Holding

    No, because allowing a third-party action without prior written notice would undermine the legislative intent of Village Law § 341-a to restrict a village’s liability for nonfeasance regarding defective street and sidewalk conditions.

    Court’s Reasoning

    The Court of Appeals reasoned that the rule of apportionment applies when tortfeasors share responsibility for an accident due to violations of duties they respectively owed to the injured person. In this case, the village’s duty of care to the plaintiff was to repair or remove any defect within a reasonable time after receiving written notice of the dangerous condition. Because no prior notice was given, no cause of action accrued against the village directly. The court emphasized that allowing a third-party action would permit indirectly what could not be done directly due to the failure to comply with the notice requirement. The court stated, “applies when two or more tort-feasors have shared, albeit in various degrees, in the responsibility by their conduct or omissions in causing an accident, in violation of the duties they respectively owed to the injured person.” The Court further explained that Village Law § 341-a was enacted to address municipal street and sidewalk liability and modified the general substantive law of torts by varying a village’s duty of care. The practical consequence of this requirement is to prevent any possibility of liability for nonfeasance, except where the village fails or refuses to remedy the condition within a reasonable time after receipt of notice. The Court noted that permitting a Dole claim to proceed without notice would undermine the legislative intent to restrict the village’s liability and potentially subject the village to significant financial burdens arising from unnoticed defects. As the Court argued, “To permit a Dole claim to go forward in the absence of notice would undermine the legislative design to restrict the village’s liability for nonfeasance and might subject the village to ultimate responsibility to pay a ‘catastrophe judgment’ arising from unnoticed defects.”

  • Amsterdam Savings Bank v. Marine Midland Bank, 39 N.Y.2d 983 (1976): Co-Guarantors Must Secure the Same Debt for Contribution

    Amsterdam Savings Bank v. Marine Midland Bank, 39 N.Y.2d 983 (1976)

    Sureties bound by separate instruments are not considered co-sureties with a right to contribution unless they are bound for the same debt.

    Summary

    This case addresses the right to contribution among co-guarantors. The New York Court of Appeals held that separate instruments of guarantee do not automatically establish co-suretyship. For a guarantor to prevail on a claim for contribution, they must demonstrate that their obligation secured the same debt as the other guarantors. The fact that separate guarantees contain open-ended collateral provisions is insufficient to establish co-suretyship if the underlying debts and principals differ.

    Facts

    In 1957, Yavers executed a guarantee. Also in 1957, Druce and Mandell executed a separate guarantee. In 1964, Druce and Mandell, as principals, obtained a $15,000 loan from Amsterdam Savings Bank and pledged a bond as security. Amsterdam Savings Bank sought to establish that Yavers was a co-guarantor with Mandell and Druce on the same debt, so that they could seek contribution from Yavers’s assignor, Marine Midland Bank.

    Procedural History

    The case originated in a lower court. The Appellate Division’s order was appealed to the New York Court of Appeals.

    Issue(s)

    Whether Yavers was a co-guarantor with Mandell and Druce on the same debt such that contribution was required.

    Holding

    No, because the separate instruments of guarantee did not establish that they secured the same debt. “[T]here would be no right to contribution among sureties unless it be found that they are bound as sureties for the same debt.”

    Court’s Reasoning

    The court reasoned that a presumption of co-suretyship exists when sureties are bound by the same instrument. However, this presumption does not apply when sureties are bound by different instruments. In such cases, a right to contribution arises only if the sureties guaranteed the same debt. The bond pledged in 1964 secured a distinct $15,000 loan to Mandell and Druce as principals. This obligation differed from Yavers’s obligation, which was created seven years earlier. The court found that the open-ended collateral provisions in both instruments were insufficient to establish that the instruments related to the same debts owed by Amco Financial. The court stated: “[T]he open-ended ‘collateral’ provisions in the 1957 and 1964 instruments are insufficient to overcome the distinction between different debts with different principals.”

  • Kelly v. Long Island Lighting Co., 31 N.Y.2d 25 (1972): Apportioning Damages Among Joint Tortfeasors

    Kelly v. Long Island Lighting Co., 31 N.Y.2d 25 (1972)

    Under Dole v. Dow Chemical Co., damages among joint or concurrent tortfeasors should be apportioned based on their relative degrees of fault, regardless of whether their negligence is characterized as “active” or “passive.”

    Summary

    Willis Kelly, a laborer, was injured when a crane on a construction site contacted high-tension wires owned by Long Island Lighting Co. (LILCO). Kelly sued LILCO and Herrick Manor, Inc. (Herrick), the general contractor. Both defendants cross-claimed against each other. The jury found both defendants negligent, and the trial court dismissed the cross-claims, finding both actively negligent. The Court of Appeals modified the order, holding that damages should be apportioned based on relative fault, and remanding the case for the trial court to determine the percentage of fault attributable to each defendant. The court emphasized this new rule does not affect a plaintiff’s right to recover the full amount of damages from any joint tortfeasor.

    Facts

    LILCO owned and maintained high-tension wires along Clinton Avenue. Herrick was the general contractor for an apartment building being constructed near these wires. Kelly, a laborer, was injured when a crane contacted the wires, causing him to be electrocuted. LILCO knew about the construction but took no protective measures regarding the wires. Herrick’s president knew of the danger posed by the wires and requested LILCO to insulate them but did not warn the workers, including Kelly, of the danger, even when he saw the crane moving towards the wires.

    Procedural History

    Kelly and his wife sued LILCO and Herrick. Both defendants filed cross-claims against each other. The jury found both LILCO and Herrick negligent and awarded damages to the plaintiffs. The trial court dismissed both cross-claims, finding each party actively negligent. Herrick appealed the dismissal of its cross-claim. The Appellate Division affirmed. Herrick appealed to the Court of Appeals.

    Issue(s)

    Whether damages among joint or concurrent tortfeasors should be apportioned based on their relative degrees of fault, regardless of whether their negligence is characterized as “active” or “passive”.

    Holding

    Yes, damages should be apportioned based on the relative fault of each tortfeasor because to require a tortfeasor who is only slightly negligent to pay the same amount as a more negligent co-tortfeasor is inequitable and unjust.

    Court’s Reasoning

    The court applied the rule established in Dole v. Dow Chemical Co., which permits the apportionment of damages among joint tortfeasors based on their relative degrees of fault, regardless of the nature of their concurring fault. The court found that the previous rule, which prevented a defendant found guilty of “active” negligence from recovering from another negligent party, was inequitable. The court stated, “To require a joint tort-feasor who is, for instance, 10% causally negligent to pay the same amount as a co-tort-feasor who is 90% causally negligent seems inequitable and unjust. The fairer rule, we believe, is to distribute the loss in proportion to the allocable concurring fault.” This refinement of the contribution rule does not affect the plaintiff’s right to recover the total amount of damages from any joint tortfeasor. The court remanded the case to the trial court to determine the relative degrees of negligence or fault and the percentage of fault attributable to each defendant. The court clarified that this case addresses contribution between joint tortfeasors and does not concern issues like vicarious liability where the active-passive dichotomy would still apply.

  • Federal Insurance Co. v. Employers Mutual Liability Insurance Co., 28 N.Y.2d 460 (1971): Apportioning Liability Between Insurers of Tractor-Trailer Combinations

    Federal Insurance Co. v. Employers Mutual Liability Insurance Co., 28 N.Y.2d 460 (1971)

    When separate insurance policies cover a tractor and trailer involved in an accident, and each policy excludes coverage for the other unless insured by the same insurer, contribution between the insurers should be proportionate to the respective accident limits of the policies.

    Summary

    This case addresses the apportionment of liability between the insurers of a tractor and trailer involved in an accident. The tractor’s insurer settled claims from injured bus passengers and sought contribution from the trailer’s insurer. The policies had clauses excluding coverage for each other under certain conditions, precluding concurrent insurance. The court held that contribution should be proportionate to the accident limits of each policy (tractor: $750,000, trailer: $300,000), resulting in the trailer’s insurer paying two-sevenths of the settlement, reflecting the ratio of its accident limit to the total accident coverage. The court reasoned that this approach aligns with precedents regarding contribution in the absence of specific policy provisions or statutes and provides certainty for insurers.

    Facts

    Jersey Truck Renters, Inc. owned a tractor, and B & B Truck Renters owned a semitrailer. Both were rented to Grand City, whose employee operated them as a unit. The tractor-trailer collided with a bus, injuring passengers. The tractor’s insurer, Federal Insurance, settled nine claims totaling $44,976.16. The tractor policy had limits of $500,000 per claim and $750,000 per accident. The trailer’s insurer, Employers Mutual, had policy limits of $100,000 per claim and $300,000 per accident. Employers Mutual conceded its obligation to contribute, but disputed the apportionment method.

    Procedural History

    The parties submitted the case on agreed facts to the trial court. The trial court initially ordered Employers Mutual to pay half of the settlement. The Appellate Division affirmed this decision. Employers Mutual appealed to the New York Court of Appeals, contesting the apportionment.

    Issue(s)

    Whether, in the absence of concurrent insurance and specific policy provisions, the contribution between the insurers of a tractor and trailer involved in an accident should be divided equally, proportionately to the single claim limits, or proportionately to the accident limits of their respective policies.

    Holding

    No, contribution should be proportionate to the respective accident limits of the policies because this approach aligns with precedents and provides certainty for insurers in similar situations.

    Court’s Reasoning

    The court found that the Vehicle and Traffic Law imposes joint and several liability on the tractor and trailer owners. However, the insurance policies contained exclusions that prevented concurrent coverage. The court relied on the principle that in the absence of statute or contrary policy provisions, insurers sharing a risk are entitled to contribution in proportion to the policy limits. The court reasoned that the stipulation by the insurers that they were “concurrently” liable suggested a preference for proportionate sharing. The court found that, “[n]otably, the insurers under the policies in suit show a preference for proportionate sharing in the ‘ ‘ other insurance ’ ’ clause applicable to concurrent insurance.” The court rejected equal sharing, stating: “Since there is no predominance of authority or analysis one way or the other it would seem better to follow precedents and principles most analogous.” The court emphasized the importance of certainty for insurers, noting that the apportionment method’s ultimate impact is reflected in premiums. They also noted that insurers are free to modify their policies to specify different apportionment methods. Because the settlements arose from a single accident, the court found that the relevant limits were the accident limits, not the per-claim limits. The court modified the Appellate Division’s order, directing contribution based on the ratio of the accident limits, resulting in Employers Mutual paying two-sevenths of the total settlement ($300,000/$1,050,000).

  • Grayhound Corp. v. General Acc. Fire & Life Assur. Corp., 14 N.Y.2d 350 (1964): Assignee’s Right to Enforce Judgment Despite Being a Joint Tortfeasor

    Greyhound Corp. v. General Acc. Fire & Life Assur. Corp., 14 N.Y.2d 350 (1964)

    An assignee of a judgment for personal injuries can maintain an action against the judgment debtor’s insurer, even if the assignee is a joint tortfeasor, unless the statute explicitly excludes such assignees.

    Summary

    Greyhound, as assignee of Central Greyhound, sought to recover from Dorp’s insurer (General Accident) based on a judgment against Dorp. Central Greyhound had settled a case with Thomas, Demarest, and Bimess and received an assignment of their judgment against Dorp, who did not appeal the initial judgment against him while the others did. The court addressed whether Greyhound, as Central Greyhound’s assignee and a joint tortfeasor, could enforce the judgment against Dorp’s insurer. The Court of Appeals held that Greyhound could not enforce the assigned judgment because Central Greyhound’s settlement extinguished the underlying debt. However, a strong dissent argued that the relevant insurance law allowed *any* assignee to enforce such a judgment.

    Facts

    Thomas, Demarest, and Bimess obtained a judgment against Dorp and other defendants, including Central Greyhound. The judgment was reversed on appeal for all defendants except Dorp, who did not appeal. Central Greyhound settled with Thomas, Demarest, and Bimess, receiving an assignment of their judgment against Dorp. Greyhound, as assignee of Central Greyhound, then sued Dorp’s insurer, General Accident, to collect on the Dorp judgment.

    Procedural History

    The lower court denied General Accident’s motion for summary judgment, allowing Greyhound’s claim to proceed. General Accident appealed. The Appellate Division certified questions to the New York Court of Appeals. The Court of Appeals reversed in part, dismissing the complaint regarding the assigned claims of Thomas, Demarest, and Bimess but affirmed the denial of summary judgment regarding Central Greyhound’s claim for contribution related to a separate judgment in favor of Amanda Young.

    Issue(s)

    1. Whether Greyhound, as assignee of a judgment against Dorp and as a joint tortfeasor through its assignor Central Greyhound, can maintain an action against Dorp’s insurer to recover on that judgment.

    2. Whether Central Greyhound’s payment of a portion of the judgment in favor of Amanda Young against all defendants jointly allows Greyhound to seek contribution from Dorp’s insurer.

    Holding

    1. No, because Central Greyhound’s settlement with Thomas, Demarest, and Bimess extinguished the underlying debt, precluding recovery on the assigned judgment.

    2. Yes, because Central Greyhound paid a portion of the joint judgment in favor of Amanda Young, entitling it (and therefore its assignee, Greyhound) to seek contribution.

    Court’s Reasoning

    The court reasoned that Central Greyhound’s settlement and acquisition of the assignment from Thomas, Demarest, and Bimess operated to extinguish the underlying debt. Because Central Greyhound was a joint tortfeasor, its settlement discharged Dorp’s obligation to the original plaintiffs. Therefore, Greyhound, as Central Greyhound’s assignee, could not enforce a debt that no longer existed. The court distinguished this situation from a typical assignment where the debt remains valid. Regarding the Amanda Young judgment, the court found that Central Greyhound’s payment of a portion of that joint judgment entitled it to seek contribution from the other joint tortfeasors, including Dorp. The dissent argued that Section 167 of the Insurance Law specifically allows “any assignee” of a judgment for personal injury to maintain an action against the insurer. The dissent emphasized that the legislature could have excluded joint tortfeasor assignees but did not, and the statute should be interpreted broadly to protect injured parties. The dissent quoted from the statute, “Any assignee of a judgment obtained by any person for personal injury may maintain an action” to support this reading.