Summary
In De Luca v. Motor Vehicle Accident Indemnification Corp., 17 N.Y.2d 76, 268 N.Y.S.2d 289, 215 N.E.2d 482 (1966) and Sahloff v. Western Casualty and Surety Co., 45 Wis.2d 60, 171 N.W.2d 914 (1969), it was held that although the uninsured motorist, in an action against him, could have availed himself of a defense, based upon the statute of limitations, that defense was not available to his insurer.
Summary of this case from Medders v. U.S. Fidelity and Guar. Co.Opinion
Argued January 12, 1966
Decided February 24, 1966
Appeal from the Appellate Division of the Supreme Court in the First Judicial Department, IRWIN D. DAVIDSON, J., JOSEPH A. BRUST, J.
William C. Mattison and Thomas Grimes for appellant in the first above-entitled proceeding.
William C. Mattison and Thomas Grimes for appellant in the second above-entitled proceeding.
Arthur Moskoff for respondents in the second above-entitled proceeding.
These two cases arise out of automobile accidents which occurred in 1960. In each, the claimant, who carried automobile liability insurance, was struck and injured by a motorist driving an uninsured automobile. As required by the MVAIC endorsement to his policy, he promptly filed a claim with MVAIC for his injuries. He did not, however, serve a demand for arbitration until 1964. MVAIC moved to prevent arbitration (CPLR 7502, subd. [b]; CPLR 7503, subd. [b]) on the ground that the claim sounded in tort and, accordingly, was barred by the three-year Statute of Limitations. The motions were denied at Special Term and unanimously affirmed by the Appellate Division. We granted leave to appeal in order to resolve the question — of first impression in this court — whether the three-year (tort) or the six-year (contract) Statute of Limitations applies.
The claim asserted in arbitration against MVAIC exists solely by reason of the coverage provided by the insurance policy, for which the insured paid an additional premium. Absent the provision in the contract of insurance, there could and would be no conceivable basis for recovery against MVAIC and, accordingly, the claim asserted is governed by the contract Statute of Limitations. Since the six-year statute applies, the claimant is not required to demand arbitration within the three-year period prescribed for the commencement of tort actions.
Indeed, the lower courts have over the years consistently held that the contract Statute of Limitations is applicable and that the insured has six years from the date of the accident to demand arbitration. (See, e.g., Matter of McNamara [ MVAIC], 22 A.D.2d 1017 [1st Dept.], affg. 42 Misc.2d 923 [per GOLD, J.]; Matter of MVAIC [ McDonnell], 23 A.D.2d 773 [2d Dept.], affg. 40 Misc.2d 657 [per ALBERT, J.]; Matter of La Marsh [ Maryland Cas. Co.], 35 Misc.2d 641 [per STIER, J.]; Matter of McGuinness [ MVAIC], 40 Misc.2d 775 [per BRUST, J.]; Matter of Fitzpatrick [ MVAIC], 40 Misc.2d 970 [per LIVOTI, J.]; Matter of Ceccarelli [ Travelers Ind. Co.], 204 N.Y.S.2d 550 [per McDONALD, J.]; Matter of Travelers Ind. Co. [ De Bose], 226 N.Y.S.2d 16 [per VENTIERA, J.]; Allstate Ins. Co. v. Guarriello, N.Y.L.J., Mar. 14, 1963, p. 15, col. 2 [per CHIMERA, J.]; Napoli v. MVAIC, N.Y.L.J., June 29, 1964, p. 9, col. 6 [per HELMAN, J.]; Massa v. MVAIC, N.Y.L.J., Nov. 4, 1964, p. 17, col. 3 [per SILVERMAN, J.]; cf. Matter of Nationwide Mut. Ins. Co. [ Holbert], 19 A.D.2d 683 [3d Dept.], affg. 39 Misc.2d 782.)
Nor will the arbitrator who is to hear the controversy be permitted to import a three-year time limitation into the contract by virtue of the provision which obligates MVAIC to pay all sums (up to $10,000) that the insured would be "legally entitled to recover" as damages from the uninsured motorist (Endorsement, par. I; see Insurance Law, § 167, subd. 2-a [L. 1958, ch. 759, § 4]). Although, under a broad arbitration clause, interpretation of contractual language is left to the arbitrator (see, e.g., Matter of Exercycle Corp. [ Maratta], 9 N.Y.2d 329, 333-334; Matter of Terminal Auxiliar Maritima [ Winkler], 6 N.Y.2d 294, 298; Matter of Marchant v. Mead-Morrison Mfg. Co., 252 N.Y. 284, 298), we deal here not only with a narrow arbitration provision (see Matter of Rosenbaum [ American Sur. Co. of N.Y.], 11 N.Y.2d 310; Matter of MVAIC [ Downey], 11 N.Y.2d 995) but with language of statutory origin, language which the Legislature mandated be written into the policy (Insurance Law, § 167, subd. 2-a). Under such circumstances, the court should definitively construe the phrase, legally entitled to recover, rather than leave the matter for decision by individual arbitrators on a case to case basis.
Subdivision 2-a of section 167 of the Insurance Law was amended in 1965 to substitute the particular insurer on the policy for MVAIC. The statute, as it now reads, requires each policy to contain "a provision whereby the insurer agrees that it will pay [such sums] to the insured" (L. 1965, ch. 322, § 3, eff. July 1, 1965; italics supplied).
Pursuant to the terms of the policy endorsement, the insured person must give written notice of his claim to MVAIC within 90 days after the accident and, if the claimant and MVAIC do not agree that he is "legally entitled to recover" from the uninsured motorist, then, "upon written demand of either," the matter is to be settled by arbitration. The only claim that may be referred to the arbitrators is the one which was made within 90 days after the accident. In other words, the issue whether the insured would be "entitled" to recover from the tort-feasor must necessarily be decided as of the time the claim was initially filed with MVAIC. The language in question — legally entitled to recover — simply means, therefore, that, if the insured is to obtain an arbitral award against MVAIC, he must support his claim by proving those facts which he would have had to establish had he proceeded against the uninsured motorist, namely, (1) fault — i.e., the uninsured motorist's negligence as well as the claimant's freedom from contributory negligence — and (2) damages. Indeed, this court has already indicated that the phrase "legally entitled" means and denotes "fault". ( Matter of Rosenbaum [ American Sur. Co. of N.Y.], 11 N.Y.2d 310, 314, supra; see, also, Matter of MVAIC [ Downey], 11 N.Y.2d 995, supra.) The provision was not designed to bar arbitration or to prevent recovery from MVAIC merely because the tort-feasor, had he been sued at law, could have asserted the Statute of Limitations in defense.
This conclusion is confirmed by comparing subdivision 2-a of section 167 of the Insurance Law, which concerns "insured persons" such as the claimant before us, with subdivision (d) of section 618, which covers uninsured "qualified persons" who are victims of hit-and-run accidents. In sharp contrast with the former provision, subdivision (d) of section 618 declares that MVAIC may assert "any defense" which "would have been available" to the tort-feasor had he been sued by the injured party. The absence of a similar provision in section 167, or in the policy endorsement required by the statute, precludes MVAIC from seeking to benefit from a shorter time limitation than is available for contracts generally. If the tort Statute of Limitations had been desired as a restriction on an insured's claim against MVAIC, it would have been a simple matter to expressly provide therefor — either by the insurer in the policy or by the Legislature in the statute (cf. Cal. Ins. Code, § 11580.2, subd. [h]; see, also, Cal. Ins. Code, § 11580.2, subd. [f], dealing with the insurer's right of subrogation against the tort-feasor).
In sum, then, the contract Statute of Limitations applies and, in a case such as the present, the insured person has six years from the date of the accident within which to demand arbitration of his claim against MVAIC.
In De Luca, the order appealed from should be affirmed, without costs. In Bradanese, the order appealed from should be affirmed, with costs in this court.
The holding that the six-year limitation is available to respondent because this is an "action on a contract" (CPLR 213) is correct if, forgetting all else, we consider only the circumstance that respondent's right to recover from MVAIC is expressed in a rider to an insurance policy. But the result (six years instead of three for beginning a litigation for personal injuries) is so obviously unreasonable and unintended that we should look at the larger picture. The whole concept of MVAIC was a legislative creation intended to secure to injured persons like these the same protections (subject to dollar limits) they would have had as to their tort-feasors had their injuries been caused by insured cars or drivers who did not hit and run (see Legislative Declaration of Purpose, Insurance Law, § 600; 2 Encyclopedia of New York Law, Automobiles, ch. 16, Insurance [1965 Supp.], § 1350). The policy rider here sued upon was a mere instrumentality for carrying out the legislative mandate and so it is legislative intent we should be looking for. To say in these days of struggle against litigation delays that the Legislature for no discoverable reason gave this class of claimants three years longer to commence suit than they would have had to sue in the more usual situation is to ascribe to the Legislature an incredible purpose.
The order should be reversed and the stay of arbitration granted in each case.
In each of the above-entitled proceedings: Judges BURKE, BERGAN and KEATING concur with Judge FULD; Chief Judge DESMOND dissents and votes to reverse the order and to grant the stay of arbitration in an opinion in which Judges VAN VOORHIS and SCILEPPI concur.
Orders affirmed.