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Saratoga Trap Rock Co. v. Standard Accident Ins. Co.

Supreme Court of New York, Appellate Division

March 8, 1911

THE SARATOGA TRAP ROCK COMPANY, Plaintiff,
v.
THE STANDARD ACCIDENT INSURANCE COMPANY, Defendant.

SUBMISSION of a controversy upon an agreed statement of facts, pursuant to section 1279 of the Code of Civil Procedure.

COUNSEL

Hiram C. Todd and Edgar T. Brackett, for the plaintiff.

Neile F. Towner, for the defendant.

Page 853

HOUGHTON, J.:

The plaintiff is a manufacturing corporation and the defendant is an indemnity insurance company. The defendant issued to the plaintiff a policy whereby it agreed to indemnify the plaintiff 'against loss by reason of the liability imposed by law upon the assured for damages on account of bodily injuries' sustained by any employee through accident while prosecuting his work in the plaintiff's mill. The defendant's liability was limited to $5,000 for injuries to or death of one person, and in addition all cost of litigation together with certain first surgical aid bills. It was further stipulated by the policy that immediately upon the happening of an accident written notice should be given to the company or its duly authorized agent, and upon action being brought that the defendant should take over the defense of the suit, and that the plaintiff should not assume any liability or settle any claim or interfere with the litigation without the consent of the defendant. If action was brought the policy provided that 'the [defendant] company shall have the absolute right of determining whether an appeal shall be taken from any order or judgment in such suit.' The policy further provided that 'no action shall lie against the company to recover for any loss under this policy unless it shall be brought by the assured for loss actually sustained and paid in money by him after actual trial of the issue.'

One of the plaintiff's employees was injured in its mill and brought suit against it, and the defendant took over the defense and a verdict of $5,000 was rendered upon which judgment was entered, with costs. The defendant appealed and the judgment was affirmed and the defendant paid $5,000 towards satisfying the judgment, besides all costs, but refused to pay $275 interest which had accumulated upon the judgment pending the appeal, on the ground that its liability under the policy was limited to $5,000 and the cost of the litigation.

The facts are stipulated, and the question for determination is whether the plaintiff is entitled, as matter of law, to recover from the defendant the interest on the judgment which it was compelled to pay.

The plaintiff urges that the verdict and judgment being no greater than the limit of the defendant's liability the appeal which it insisted

Page 854

upon taking was for its own benefit, and, therefore, it should pay the interest which accumulated pending its unsuccessful efforts to relieve itself from ultimate liability, and that any contrary construction of the provisions of the policy would render it nugatory because the accumulating interest would be constantly eating away the agreed indemnity, and the interest might eventually amount to as much as the indemnity itself.

The defendant insists that the contract limited its liability to the specific sum of $5,000, and gave to it the express right of appeal, and that whether the accumulating interest amounted to much or little during its exercise of that right it can be made to pay only the sum which was agreed, and that no cause of action existed in favor of the assured until it had paid the judgment which was entered against it, which was not done until after the interest complained of had accumulated.

There are but two decisions in this State having any bearing upon the question, to which counsel have called our attention or which we have been able to find. One is that of Munro v. Maryland Casualty Company (48 Misc. 183) where the non-liability of the insuring company for accumulated interest was placed upon the ground that the delay in appealing had not been unreasonable. The other is Creem v. Fidelity & Casualty Company (141 A.D. 493) where a judgment charging the insuring company with interest upon the judgment rendered was affirmed, the question of its non-liability not being raised.

The significance of the latter decision lies only in the fact that counsel for the insuring company conceded liability for interest accumulating pending an appeal by not challenging the correctness of its allowance. It is very doubtful whether the reasonableness or the unreasonableness of delay in prosecuting the appeal is of any importance in determining the liability of the insuring company for interest, at least in a pure action at law, ...


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