The opinion of the court was delivered by: LOWE
This is an action between two insurance companies which dispute liability for a building fire loss. The parties agree that there are no disputed material issues of fact and cross move for summary judgment. For the reasons stated below we deny summary judgment to plaintiff, we grant summary judgment to defendant and dismiss the action.
The dispute centers around commercial real estate on the west side of Manhattan. The premises in question were held by Paul Saurel and The United States Trust Company as trustees under a will ("Trust"). Part of the premises were leased to the Pellon Corporation ("Pellon") pursuant to a written lease with Trust which inter alia provided that if the premises were damaged by fire the landlord (Trust) would bear the cost of repair. (Lease [P] 9, annexed to affidavit of Edward Masterson as Exhibit "E").
Trust entered into a contract of insurance with plaintiff St. Paul Fire and Marine Insurance Company ("St. Paul") to protect against, inter alia, fire damage to the building.
Pellon also entered into an insurance contract. Pellon's contract was with defendant Protection Mutual Insurance Company ("Protection"). The Protection policy was a general business insurance policy which covered stock, inventory and other personality as well as fire damage to the betterments and improvements. When the building was swept by fire, Pellon suffered $446,000 in stock and equipment losses and the premises received approximately $188,000 in damages.
Protection paid Pellon $446,000 in personal property loss. Pellon requested that Trust make repairs pursuant to the lease. Trust in turn made a damage claim against St. Paul for the loss. When St. Paul disputed liability, Trust refused to make repairs. Pellon then instituted an action on the lease to enforce Trust's obligation to repair. Trust brought a third-party action against St. Paul for indemnification.
Settlement of that litigation was reached under which St. Paul paid for the fire damage by a check made out to Pellon and Trust jointly. Trust endorsed the check and Pellon made repairs. The Settlement agreement also provided that St. Paul would be "subrogated to, and the assignee of any and all rights which Pellon has against Protection for said loss. . ." (Agreement annexed as Exhibit "J" to the affidavit of Edward Masterson).
St. Paul now brings the instant action in an attempt to recover some or all of its payment from Protection. St. Paul alleges two grounds for recovery. First it claims that both insurance policies are socalled "excess" insurance thus under the law the insurers must share the loss pro rata based on the total coverage available. St. Paul's second claim is that Protection is liable to it for the Full loss as Pellon's subrogee.
Both policies covered the fire damages to the improvement and betterments of the property and both policies contained so-called "excess" insurance clauses. AN excess insurance clause requires that any primary insurance coverage on the same interest be exhausted before a claim may be made on the policy. However in this case both policies proported to be excess to the other. In such a situation, it is well settled law that the insurers must share the loss pro rata. See e.g. Federal Ins. Co. v. Atlantic National Ins. Co., 25 N.Y.2d 71, 302 N.Y.S.2d 769, 250 N.E.2d 193 (1969), IBM World Trade Corp. v. Granite State Ins. Co., 116 Misc. 2d 681, 455 N.Y.S.2d 914 (Sup. Ct. N.Y. Co. 1982).
Protection argues, however, that the policies were not excess since they covered different insurable interests and different insureds. In support of its argument, Protection cites Oakley v. Firemen's Ins. Co. of Newark, 70 N.Y.S.2d 458 (Supp. Ct. N.Y. Co. 1947) which states in pertinent part:
Double insurance * * * is where two or more insurances are made in favor of the same assured, on the same interest in the same subject against the same risks ... 'Other Insurance' must be on the same interest, and insurance obtained by a third person upon another distinct insurable interest does not ...