Opinion
June 28, 1911.
B.R. Wellington, for the appellants.
Hirsh Rasquin [ Leon N. Futter of counsel], for the respondent.
The facts are very similar to Saratoga Trap Rock Co. v. Standard Accident Ins. Co. ( 143 App. Div. 852). In that case we held, by a divided court, that where the judgment against the assured was for just $5,000, and under the terms of a policy the insurance company appealed, the insurer was not liable for interest upon the judgment during the pendency of the appeal. That case settles the question of interest adversely to the appellants.
The plaintiffs in this action have been compelled to pay the taxable costs of the action and of the defendant's unsuccessful appeal and also the interest on the judgment during the appeal. The case cited rather assumes, without deciding, that the insurance company, upon a similar policy, would be liable for the costs of the suit. The policy forbade the assured to settle, and provided that in case suit is brought every summons and other paper, as soon as served, shall be forwarded to the surety company, "and the company will, at its own cost, defend such suit in the name and on behalf of the assured, unless the company shall elect to settle the same or to pay the assured the indemnity provided for in Condition A hereof." The policy gave the company the absolute right to appeal and manage the case. It is said by defendant that the words "at its own cost" in the above quotation mean that the company is to pay its own attorneys and disbursements but is not to pay the costs of the action which enter into the judgment. This puts too narrow a construction upon these words. We think the policy contemplates that the lawsuit and its results shall rest upon the insurer, with the limitation, however, that the damages for the accident which it must eventually pay shall not exceed $5,000. The taxable costs in the judgment and the costs of the appeal are not damages on account of the accident. Within the spirit of the policy the defendant has not defended the lawsuit at its own cost, while the plaintiffs are compelled to pay the taxable costs of the suit and of the unsuccessful appeal which the defendant prosecuted. It follows, therefore, that the order and judgment appealed from should be reversed and a new trial granted, with costs to the appellants to abide the event.
All concurred.
Judgment and order reversed and a new trial granted, with costs to appellants to abide event.