Roomy v. Allstate Insurance Company , 256 N.C. 318 ( 1962 )

123 S.E.2d 817 (1962) 256 N.C. 318

Katherine ROOMY
v.
ALLSTATE INSURANCE COMPANY.

No. 593.

Supreme Court of North Carolina.

February 2, 1962.

Stern & Rendleman, Greensboro, for plaintiff-appellant.

Smith, Moore, Smith, Schell & Hunter, Greensboro, for defendant-appellee.

WINBORNE, Chief Justice.

The pivotal question on this appeal is this: Should the automobile liability insurance contract in question be interpreted in accordance with the laws of the State of New York wherein the contract was made and delivered, in spite of the fact that the liability of the insured arose out of a collision occurring in North Carolina? The answer is Yes.

The applicable rule, as stated by Connor, J., in Cannaday v. Atlantic Coast Line R. Co., 143 N.C. 439, 55 S.E. 836, 8 L.R.A.,N.S., 939, is as follows: "It is settled that `matters bearing upon the execution, interpretation, and validity of a contract are determined by the law of the place where it is made.' Scudder v. Nat. Union Bank [of Chicago], 91 U.S. 406, 23 L. Ed. 245. `The interpretation of a contract, and rights and obligations under it of the parties thereto, are to be determined in accordance with the proper law of the contract. Prima facie the proper law of the contract is to be presumed to be the law of the country where it is made.' Dicey Conf. Law, 563. Bowen, L. J., in Jacobs v. Credit Lyonnais, 12 Q.B. 589, says: `It is generally agreed that the law of the place where the contract is made is prima facie that which the parties intended, or ought to be presumed to have adopted, as the footing upon which they dealt, and that such law ought, therefore, to prevail in the absence of circumstances indicating a different intention.' 9 Cyc. 667." See, to the same effect, Satterthwaite v. Doughty, 44 N.C. 314; Hall v. Western Union Tel. Co., 139 N.C. 369, 52 S.E. 50; Keesler v. Mutual Ben. Life Ins. Co., 177 N.C. 394, 99 S.E. 97; Tieffenbrun v. Flannery, 198 N.C. 397, 151 S.E. 857, 68 A.L.R. 210; Connecticut General Life Ins. Co. v. Skurkay, 204 N.C. 227, 167 S.E. 802.

In Myers v. Ocean Accident & Guaranty Corp., 99 F.2d 485 (4th Cir., 1938), the insured, a citizen and resident of North Carolina, had an automobile liability insurance policy which was countersigned and delivered in Ohio. An automobile accident involving the insured occurred in Georgia. The insurance carrier brought a declaratory judgment action in the U. S. District Court for the Middle District of North Carolina against the insured seeking to avoid liability under the policy because the automobile covered was being used to carry persons for hire in violation of an exclusionary clause in the policy. Holding that there was no coverage, the court said: "Under the general doctrine the interpretation of an insurance contract depends on the law of the place where the policy is delivered. Mutual Life Ins. Co. [of New York] v. Johnson, 293 U.S. 335, at page 339, 55 S. Ct. 154, 156, 79 L. Ed. 398. * * * Both by the federal and North Carolina decisions it is clear that the policy should be interpreted in accordance with the law of the State of Ohio. Mutual Life Ins. Co. [of New York] v. Johnson, 293 U.S. 335, 339, 55 S. Ct. 154, 156, 79 L. Ed. 398 [supra]; Northwestern Mutual Life Ins. Co. v. McCue, 223 U.S. 234, 32 S. Ct. 220, 56 L. Ed. 419, 38 L.R.A., N.S., 57; Beale, Conflict of Laws, Vol. 2, s. 332.40; Keesler v. Mutual Life Ins. Co., 177 N.C. 394, 99 S.E. 97 (supra); Dixie Fire Ins. Co. v. American Bonding Co., 162 N.C. 384, 78 S.E. 430; Connecticut Gen. Life Ins. Co. v. Skurkay, 204 N.C. 227, 167 S.E. 802 (supra); Cannaday v. Atlantic Coast Line RR Co., 143 N.C. 439, 55 S.E. 836, L.R.A.,N.S., 939, (supra); Wilson v. Supreme Conclave, 174 N.C. 628, 94 S.E. 443."

We see no reason, in the instant case, to depart from this well established principle. The parties agreed upon the terms of a contract of insurance in the State of New York. The insured paid a specific premium and received in return the promise of defendant to provide specific liability insurance coverage. To interpret the contract according to the laws of New York would be neither more nor less than to enforce the contract according to the original intention of the parties.

As stipulated, Subdivision 3 of section 167 of the New York Insurance Law, McKinney's Consol.Laws, c. 28, provides in pertinent part that, "No policy or contract shall be deemed to insure against any liability of an insured because of death of or injuries to his or her spouse * * * unless express provision relating specifically thereto is included in the policy."

The leading New York case construing this statute is New Amsterdam Casualty Co. v. Stecker, 3 N.Y.2d 1, 163 N.Y.S.2d 626, 143 N.E.2d 357. This case involved an automobile accident occurring in Connecticut, wherein a husband received injuries while a passenger in an automobile owned and operated by his wife. The husband instituted suit for personal injuries against his wife in Connecticut. Both husband and wife were residents of New York at the time of the accident, and the wife had an automobile liability insurance policy which was made and delivered in New York. The insurance carrier brought a declaratory judgment action against the wife in New York seeking to avoid liability under the policy because of the provisions of the above quoted statute. Holding that the policy did not provide coverage for the husband's injuries, the New York Court of Appeals had this to say: "Subdivision 3 of Section 167 governs all automobile liability insurance policies issued in this State without regard to where the accident occurs. It is mandated into and made a part of every policy of automobile liability insurance issued in this State.

"* * * The manifest purpose of subdivision 3 of Section 167 was to protect insurance carriers from collusive actions between spouses arising out of automobile accidents. Surely the Legislature recognized that the possibility of fraud and collusion is the same no matter where the accident occurs. * * * It is that possibility which the statute was intended to guard against, and the language of subdivision 3 of section 167, if literally applied will accomplish that result. There is not the slightest difference in the fraud potential between accidents occurring in New York and those occurring elsewhere."

For these reasons, the judgment of the court below is

Affirmed.

HIGGINS, J., dissents.