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Yellow Cab, Inc. v. Bankers Indemnity Insurance Co.

Decided: April 28, 1933.

YELLOW CAB, INCORPORATED, PLAINTIFF-RESPONDENT,
v.
BANKERS INDEMNITY INSURANCE COMPANY, DEFENDANT-APPELLANT



On appeal from the Supreme Court.

For the defendant-appellant, John Milton and Hartwell Cabell (of the New York bar).

For the plaintiff-respondent, Henry H. Fryling and William H. Speer.

Donges

The opinion of the court was delivered by

DONGES, J. Bankers Indemnity Insurance Company appeals from a judgment of the Supreme Court in favor of Yellow Cab, Incorporated, entered by rule signed by the late Chief Justice Gummere, striking the answer of said appellant as sham and the separate defenses as frivolous, and directing the entry of judgment in favor of plaintiff and against appellant in the sum of $44,785.01.

The action is for the alleged breach of the condition of a bond in the sum of $360,000, dated April 23d, 1930, made by nine individual defendants as principals and by the Bankers Indemnity Insurance Company as surety, and is based upon twenty-two counts, each count alleging a breach of the bond and damage in various amounts.

The plaintiff alleges, and it is not denied, that on May 27th, 1926, the Reliance Casualty Insurance Company, of

New Jersey, was incorporated under the insurance laws of the State of New Jersey as a stock company. Before transacting any business, it deposited with the commissioner of banking and insurance $50,000, which deposit was subsequently increased to $100,000. The Yellow Cab, Incorporated, operated a large number of taxicabs in the State of New Jersey. of the payment of certain premiums by Yellow Cab, Incorporated, issued its policy of insurance for public liability covering specified taxicabs for certain periods of time and in certain amounts. The taxicabs so insured were involved in accidents, resulting in injuries to persons, on account of which suits were instituted against Yellow Cab, Incorporated, for some claims, and others were settled without suit. Upon due notice thereof the Reliance Casualty Insurance Company undertook the defense of some of said suits and refused to defend others. Such proceedings were had in each case that a judgment was entered, or settlements effected, some of the settlements with the approval of appellant, so that Yellow Cab, Incorporated, was obliged to pay in all the sum of the judgment entered herein. At all of the time of the accidents the taxicabs involved were covered against such liability by a valid policy of Reliance Casualty Insurance Company.

On November 18th, 1929, the board of directors of the insurance company adopted a resolution that in the opinion of said board it was to the best interests of said company that it should be dissolved. After due notice, on December 19th, 1929, at least two-thirds of the stockholders in meeting voted for and consented in writing to such dissolution. Upon filing this consent a certificate of dissolution was issued by the department of banking and insurance. So far as appears the steps necessary to be taken by the board of directors and the stockholders were properly taken and the necessary publications were made.

On December 19th, 1929, Reliance company reinsured all outstanding policy obligations, as of that date, with Equitable Casualty Insurance Company and General Reinsurance Corporation of New York. The record discloses that Equitable

Casualty Insurance Company was declared insolvent and its charter annulled ...


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