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Taylor v. Kinsella

August 16, 1984

SAMUEL TAYLOR, PLAINTIFF,
v.
JOSEPH A. KINSELLA AND THE NEW YORK POST, DEFENDANTS, AND THE HERTZ CORPORATION, DEFENDANT-APPELLEE; THE HERTZ CORPORATION, THIRD PARTY PLAINTIFF-APPELLANT, V. CENTENNIAL INSURANCE COMPANY, THIRD PARTY DEFENDANT-APPELLANT, AND NEWS GROUP PUBLICATIONS, INC., THIRD PARTY DEFENDANT



Centennial Insurance Company appeals from a judgment of the United States District Court for the Southern District of New York (Pollack, J.) which ordered Centennial to pay the Hertz Corp. the sum of $109,000. Reversed with instructions to direct repayment.

Author: Van Graafeiland

Before: VAN GRAAFEILAND and CARDAMONE, Circuit Judges, and BRIEANT, District Judge*fn*

VAN GRAAFEILAND, Circuit Judge:

On May 19, 1982, Samuel Taylor, an employee of the New York Post was injured by a truck driven by a fellow worker. The truck had been leased to the Post by the Hertz Corp. Taylor sued the driver, the Post, and Hertz in the Southern District of New York, alleging negligent operation by the driver, negligent maintenance by the Post, and negligent failure to inspect and test by Hertz.

Taylor's co-employee and the Post were immune from suit under New York's Worker's Compensation Law, see N.Y. Work. Comp. Law ยงยง 29(6) & 53, and Taylor's complaint against them was dismissed. This mean that Hertz could not be held derivatively liable for the dismissed defendants' negligence. Rauch v. Jones, 4 N.Y.2d 592, 596, 176 N.Y.S.2d 628, 152 N.E.2d 63 (1958). Hertz could, however, be held liable for his own negligent acts.

On June 2, 1983, Hertz brought a third-party action against the Post's parent company, News Group Publications, Inc., (hereinafter "the Post") and Centennial Insurance Company, the Post's automobile insurance carrier. Although, for some undisclosed reason, the parties have not seen fit to make the third-party pleadings part of the record on appeal, the parties inform us that Hertz sought recovery against Centennial as an additional insured under the Centennial-Post policy. The lease agreement between Hertz and the Post provided that the Post would procure a standard automobile liability policy for the leased vehicles covering both Hertz and the Post. The Centennial policy did cover "lessors" such as Hertz, but provided in a "Hired Autos" endorsement that a lessor "is not an insured for liability resulting from defects or faulty workmanship," the gravamen of plaintiff's claim against Hertz.

Hertz asserts a right of recovery against Centennial, however, because of a "Certificate of Insurance", issued by Centennial, which, under the heading "Description of Operations/Locations/Vehicles", stated:

It is agreed that the Hertz Corporation Truck Division 7 Entin Road, Parsippany, New Jersey, is included as additional insured for all vehicles leased by them to [the Post] including replacement and substitute vehicles per leasing contract and also included as Loss Payee on Physical Damage A.I.M.A.

Alternatively, Hertz argues that, if the Centennial Policy does not provide coverage for Hertz, the Post is liable for breach of the leasing agreement, a contention with which we are not now concerned.

Plaintiff's claim against Hertz has been settled with the consent of all parties for $100,000. Following a bench trial before Judge Pollack, Centennial has been held liable for the full amount of the settlement plus $9,000 in court costs and attorneys' fess. For reasons hereafter assigned, we reverse.

As a predicate for its finding of liability, the district court stated:

The rental agreement between Hertz and [the Post] clearly contemplated coverage broad enough to protect Hertz herein. Centennial must be held to have incorporated such broader coverage in its insurance policy by means of the insurance Certificate and the conflict between such incorporation and the "Hired autos endorsement" is resolved in favor of Hertz and against Centennial.

We believe that this determination was error.

The genesis of the Certificate of Insurance is obscure. We question Hertz's assertion that the Certificate was written to comply with the provisions of New York's financial responsibility laws. Section 312 of New York's Vehicle and Traffic Law provides that no motor vehicle shall be registered in New York unless the application for registration is accompanied by proof of financial security which may be evidenced by, among other things, a certificate of insurance which is filed with the Department of Motor Vehicles. Section 311 of the Vehicle and Traffic Law defines a certificate of insurance as "any evidence issued by or on behalf of an insurance company duly authorized to transact business in this state, stating ...


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