Dyer v. Great Eastern Insurance

Appeal [582] from an order of the Supreme Court at Special Term, entered August 24, 1972 in Broome County, which denied the motion of defendant Great Eastern Insurance Company for summary judgment,- and granted summary judgment in favor of the plaintiff. Plaintiff purchased a 1969 Ford Mustang on May 27, 1970 financing- the purcháse by an installment loan, contract, with the Endieott Trust Company. At the same time'plaintiff obtained from defendant Howard Palmer, an insurance agent, a comprehensive collision insurance policy issued by appellant Great Eastern Insurance Company, and a property damage insurance policy issued by defendant Hanover Insurance Company which, policies-.-were to- be effective from May. 27, 1970 to May 27, 1971. Each, policy .contained á loss, payable clause running to the Endieott Trust Company. The. loss payable clause contained in the policy issued by .appellant Great Eastern Insurance Company provides that.“any loss hereunder is payable as interest may appear to the-insured and Endieott Trust Co., Endieott, N. Y.". The premium’s on.said policies were financed by plaintiff through the Policy Advancing Corporation. On October 9, 1970 Policy Advancing Corporation, pursuant to a- power of' attorney granted it by plaintiff, mailed notices of cancellation of the policies to. plaintiff and to both insurance companies by reason of plaintiff’s failure to. make: payments pursuant to the premium, financing agreement. Thereafter, on or about. November 14, 1970, plaintiff’s automobile was involved in an accident and the- vehicle was- declared, a total loss'. Both-insurance companies disclaimed.. Plaintiff then brought this action for a, judgment declaring' that the disclaimers were 'improper, and that he -was entitled to full protection under the policies. Plaintiff contends that the disclaimers by the insurance companies were improper on the grotind, among others, that'.'the'.Ioss payee, Endieott Trust Company,' • had: not' been given notice, of cancellation. Both insurance companies moved •for summáry- judgment ■ dismissing the ¡complaint as .against them. Special .Term granted the motion- -by the Hanover Insurance Company; denied the motion by. appellant Greát Eastern Insurance Company;.arid granted summary - judgment • 'in favor. of the plaintiff against. Great' Eastern' Insurance Company. The. ' judgment in favor'of the Hanover Insurance Company is not before.us on this appeal. . The sole issue raised on this.appeal is whether, a policy of automobile' .collision.insurance is effectively'canceled as to' all parties, including.a -secured' party under a loss payable clause, by a premium finance agency under a power of attorney from the insured, pursuant to section 576 of the New York.Banking ■Law, when the premium finance agency gave the requisite statutory notices, and there is no requirement in the - insurance policy for notice of cancellation to. be-given to the-loss payee. Notice of cancellation óf policies of insurance is not required-by statute-to be delivered to a. loss payee. (Banking Law, § 576; Vehicle-and -Traffic Law, §'313; Insurance Law, § 167-a.) Section '576 of the •Banking Law is the statutory authority for cancellation' óf a policy of. insurance .by a premium finance -agency. This section- contains no requirement for notice, "to-a secured party,, but the provisions thereof' govern the.relationship, only between the insured, the financing agency, and the insurance company. A secured, party, not' being a party to the. premium finance agreement, is not affected by the' provisions thereof.'. Plaintiff having granted Policy Advancing Corporation, the. authority to cancel the policy for nonpayment in the. premium finance agreement, that corporation' could properly cancel the policy pursuant to-section .576- of the. Banking- Law-, without notice to' the secured party and '"effectively terminate the obligations and rights between the insurer and the insured. Accordingly, the notice of cancellation was -not required'to be given-..to-the Endieott Trust Company, as loss payee. (East Side- Oarage v. New Bnmáwiéh'Fire Ins. Go., 198 A.pp. Div. 408; Schleim'errv. Empire Mut.'Ins. Go., ■71 Mise. 2d. 1014; 17 Couch, Insurance, § 67:120.).' The policy having been [583] properly canceled pursuant to statute prior to the accident; plaintiff’s coverage was terminated. ■ Order reversed; on the law, without costs, and summary judgment granted' in favor of 'Great Eastern Insurance Company.' Herlihy,' P. J., Staley, Jr., Cooke, Kane and Reynolds, JJ., concur. [71 Misc 2d 89.]