Wecht v. Kornblum

Russell, J. Plaintiff seeks an order to enter judgment against defendant for the unpaid balance of a compromise heretofore effected between a now bankrupt liability insurance carrier on the part of defendant and the plaintiff. Neither counsel can suggest an adjudicated case in point. No copy of the policy is annexed but the court will assume it contained the usual terms precluding individual compromise by the assured and allowing and authorizing the liability company to conduct the course of the action throughout including its defense or terms of settlement. Such provision is essential to the business of the insurer. It is indispensable to the contract of indemnity or liability that the matter of settlement should be left with the party who is to pay all or the major part of the liability. An insurance company could not be expected to transact its affairs upon any other basis because such reservation to the company furnishes to it the only safeguard available against fraud between the insured and the claimant as well as against the payment of excessive damage. The foregoing seems to present a basis of solution of this motion. It would appear that in equity to all concerned two courses are open to the claimant. He has his lawful right to file a claim as a creditor with the liquidator of the indemnity company and thus affirm the provisions of the compromise, or else he may disaffirm same by refunding to the legal representative of the insurance company the money he has received on account of said compromise and be granted the right to proceed with his action against the defendant individually. The motion in its present form is denied.