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HOWARD v. MASSACHUSETTS BONDING & INS. CO.

January 7, 1947

HOWARD
v.
MASSACHUSETTS BONDING & INS. CO.



The opinion of the court was delivered by: BYERS

This is a defendant's motion for a directed verdict, made at the close of the case, and as to which decision was reserved. On December 19, 1946, the jury returned a verdict for plaintiff in the sum of $ 4,281.17, under instructions that the only question submitted to them was the amount of damage deemed to have been established, on the assumption that as a matter of law the plaintiff should prevail, but that as to such assumption the responsibility lay with the court.

The action was for breach of contract, namely, the failure of the defendant to defend in the name of the plaintiff any suit against him alleging injury and seeking damages on account thereof, 'even if such suit is groundless, false or fraudulent' -- according to the obligation to that effect under a certain Liability Policy issued by it to the plaintiff, bearing Number GS 1994, and covering the period of one year ended May 2, 1942.

 This plaintiff for present purposes is to be deemed the Assured named in the policy. He was the proprietor of a summer camp for boys near Pawling, New York, during the policy year. In the month of August, 1941, one or two of the campers became ill, and by about the 23rd day of that month it became known to this plaintiff that the illness was poliomyelitis; he at once gave notice that the camp would be closed, which was effected on the following day by the evacuation of all campers, a few days prior to the end of the camping season.

 On September 26, 1941, a summons was served upon him in an action in the Supreme Court of the State of New York by one Fisher as guardian and litem for his two infant sons, who were campers that year, but no complaint accompanied the summons.

 I am satisfied that the plaintiff was aware of the alleged basis of the suit at that time, but that fact has no present bearing. The summons was delivered in a day or so, to the plaintiff's broker who procured the insurance policy in question, and was forwarded by the latter to this defendant with a letter of explanation, dated September 30, 1941. The latter, through its resident attorney, procured an extension of time for appearance, and so advised this plaintiff, explaining in effect that this was done as a matter of courtesy only.

 The complaint was served during the month of November, and the correspondence between these parties establishes that this defendant took the position that it was not obligated to defend that action since it did not fall within the coverage of the policy.

 Whether it did, is the question of law which is involved in this case, because the Fisher action was defended by this plaintiff's own attorney, to such effect that it was dismissed for failure to prosecute, and judgment accordingly was entered on February 9, 1945, and affirmed by the Appellate Division, First Department, in October of that year. 269 App.Div. 932, 58 N.Y.S.2d 213.

 The reasonable value of the plaintiff's outlay for counsel fees and expenses is reflected in the jury's verdict, which should be permitted to stand, if the defendant company indeed breached the contract embodied in the policy. A determination of that issue presents two questions:

 First: The coverage of the policy.

 Second: The nature of the Fisher action.

 As to the policy, the pertinent provisions are:

 Item 3 lists five divisions of hazards, and only the first is included. As to that, limits of liability are tabulated thus:

 'Coverage A

 'Bodily Injury

 'Liabilit ...


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