Ætna Casualty & Surety Co. v. O'Connor

Beldock, J. The question involved is whether an insurer, which, before compulsory insurance went into effect, issued an automobile liability policy under the New York Automobile Assigned Risk Plan (hereinafter referred to as the “ Plan ”) has the right to rescind the policy as of the date of its original issuance because of false representations contained in the application therefor, even though the Plan does not give the insurer the right to rescind, but only the right to cancel the policy as of a date 10 days after the notice of cancellation. [531] Pursuant to the authority contained in section 63 of the Insurance Law (L. 1946, eh. 467), insurers licensed to write motor vehicle liability insurance in this State prepared the Plan, which was thereafter approved by the Superintendent of Insurance, and became effective January 1, 1955. Section 9 of the Plan provides that an applicant who certifies that he has, within the past 60 days, attempted to obtain automobile liability insurance and has been unable to do so, shall be considered for assignment upon making application in good faith to the Plan. Said section 9 further provides: ‘ ‘ An applicant shall be considered in good faith if he reports all information of a material nature, and does not wilfully make incorrect or misleading statements, in the prescribed application form, or does not come within any of the prohibitions or exclusions listed below. ‘1 A risk shall not be entitled to insurance nor shall any subscriber be required to afford or continue insurance under the following circumstances: “ (A) If the applicant * * * habitually disregards local or state laws as evidenced by two or more non-motor vehicle convictions during the immediately preceding thirty-six months.” Section 18 of the Plan provides that a carrier which has issued a policy under the Plan shall have the right to cancel the insurance as of a date 10 days after notice of cancellation if the insured “ (1) is not or ceases to be eligible or in good faith entitled to insurance, or # # * “ (4) has obtained the insurance through fraud or misrepresentation ’ ’. After attempting to obtain automobile liability insurance and failing in his attempt, respondent O’Connor on May 28, 1955 swore to an application for insurance under the Plan. To question 15 (m) inquiring whether at any time during the immediately preceding 36 months the applicant had been convicted for any offenses not arising out of the operation of a motor vehicle, O’Connor answered “no”. That answer was false. Within three years prior to the application, 0 ’Connor on two occasions had been convicted of disorderly conduct and, on two other occasions, of public intoxication. The application was received by the Plan, which assigned the risk to the appellant. The appellant issued the policy on June 8, 1955 for one year. It is undisputed that said policy was issued by the appellant pursuant to and in accordance with [532] the Plan as authorized by section 63 of the Insurance Law afore-mentioned. On March 4, 1956 O’Connor was involved in an accident with the respondents Hamilton. In the course of appellant’s investigation of the accident, it discovered the four convictions above mentioned. On April 5,1956 appellant notified O’Connor that it elected to rescind the policy from its inception and tendered the premium previously paid, with interest. On May 5, 1956 this action for a declaratory judgment was commenced. After trial at Special Term, it was held that appellant had the right to cancel the policy as of a date 10 days after the notice of cancellation because of O’Connor’s false representations, but that it did not have the right to rescind the policy as of the date of its original issuance on June 8, 1955. In our opinion, that determination was correct. The enumeration of certain powers with respect to a particular subject matter is a negation of all other powers with respect to the same subject matter. (Tucker v. Alexandroff, 183 U. S. 424, 436.) Where one mode of settling disputes is made the subject of express provision by law, such mode is exclusive and is intended to withhold from the disputants the right to adopt proceedings under general provisions applicable to the rights of the public at large. (Matter of New York, Lake Erie & Western R. R. Co., 110 N. Y. 374, 378-379.) "Where an insured obtains insurance through fraud or misrepresentation, the only remedy given by the Plan is cancellation. All other remedies with respect to insurance so obtained are, therefore, negated. The remedy of cancellation must be considered exclusive. Giving the insurers the right of cancellation for fraud signified an intention to withhold the right to pursue the remedy of rescission for fraud, even though other litigants might have that right under similar circumstances. The Plan gives every indication of having been very carefully drafted. The inference is that omitted remedies were intended to be excluded. (Cf. Behan v. People, 17 N. Y. 516.) Courts may not read into the Plan a right which is not there. Section 19 of the Plan provides that an insured given notice of cancellation of insurance may appeal such action to the governing committee, whose action may be appealed to the Superintendent of Insurance. The Superintendent’s determination is reviewable under article 78 of the Civil Practice Act. (Insurance Law, §§ 34,63.) It was not the intent of the Plan to provide that the rights of parties should be adjudicated by two independent and, perhaps, conflicting tribunals, namely, the administrative tribunals provided by the Plan and the courts in the first instance [533] in an independent action like the present. Affirmance of this judgment will render the scheme provided by the Plan consistent, reasonable, and harmonious, and capable of uniform, precise and impartial administration by the tribunals therein contemplated. Furthermore, if rescission by action in equity were permitted, it would materially interfere with the power conferred on the Superintendent to supervise the Plan and with the exercise of his judgment in investigating and determining its operation. This would conflict not only with the terms of the Plan, but would plainly violate its spirit and intent. (Cf. People ex rel. Killeen v. Angle, 109 N. Y. 564, 570.) The judgment should be affirmed, with costs.