Opinion
June 5, 1967
Judgment of the Supreme Court, Richmond County, dated February 17, 1966 and made after a nonjury trial, reversed, on the law and facts, with one bill of costs payable jointly to the appellants who filed separate briefs, and action remitted to Special Term with direction that judgment be entered declaring that plaintiff is deemed to have waived its contractual right to disclaim and, furthermore, that it is estopped from asserting that right. Plaintiff insurance company brought this action for a judgment declaring it not liable to defend defendant Bianco or pay any judgment obtained against him in an action brought against him by defendants Caggiano, by reason of his breach of the assistance and co-operation clause of an automobile liability insurance policy issued to him by plaintiff. His breach consisted in admittedly making a statement in reporting the accident, knowing it to be false, to the effect he had swerved his automobile to avoid an automobile approaching from the opposite direction. In fact, he had fallen asleep at the wheel. Notice that the original statements by Bianco and the Caggianos regarding the accident might be false was brought to the attention of plaintiff's representatives in September, 1961, about three months after the accident. No investigation was made. Nor was anything done after Bianco and the Caggianos admitted under oath at a hearing conducted by the Department of Motor Vehicles in November, 1961 that the "truth" was that Bianco had fallen asleep. Complete disregard by plaintiff of notice of the contradictory versions of the accident, notice which was sufficient to excite attention and call for inquiry, justified the inference that it intended to waive its contractual right to disclaim (see S. E. Motor Hire Corp. v. New York Ind. Corp., 255 N.Y. 69, 75). Not until June, 1962, three months after service of the summons and complaint against Bianco in the personal injury action, did plaintiff notify Bianco of its disclaimer. Prior thereto, plaintiff, through its attorneys and on Bianco's behalf, had served an answer and demand for a bill of particulars and conducted an examination before trial in that action. This three-month delay after institution of the personal injury action in disclaiming (seven months, at the least, after plaintiff learned that Bianco's original version and the true version were not the same) was unreasonable (Insurance Law, § 167, subd. 8) and prejudicial to the plaintiffs in the personal injury action, the Caggianos, because in reliance on plaintiff's failure to disclaim they proceeded with the labor and expense of prosecuting their action against Bianco ( Appell v. Liberty Mut. Ins. Co., 22 A.D.2d 906, affd. 17 N.Y.2d 519; see Merchants Mut. Cas. Co. v. Wildman, 21 Misc.2d 1073, affd. 12 A.D.2d 664, affd. 9 N.Y.2d 985). Accordingly, even if we were to agree with Special Term (which we do not) that plaintiff did not waive its right to disclaim liability, we conclude that it must be estopped from asserting that right. Brennan, Acting P.J., Hopkins, Benjamin, Munder and Nolan, JJ., concur.