
    Mount Vernon Fire Insurance Company, Appellant, v Travelers Indemnity Company et al., Respondents.
    Argued May 29, 1979;
    decided July 3, 1979
    
      POINTS OF COUNSEL
    
      Martin S. Rothman, Richard Godosky and Robert B. Marcus for appellant.
    I. Contrary to the decision of the court below, subdivision 4 of section 388 of the Vehicle and Traffic Law has no application to Mount Vernon’s excess liability insurance policy which was a wholly private and voluntary contractual agreement beyond the reach of any statutory or public policy imposition. (Continental Auto Lease Corp. v Campbell, 19 NY2d 350; Motor Vehicle Acc. Ind. Corp. v Continental Nat. Amer. Group Co., 35 NY2d 260; Richard’s Serv. Sta. v Town of Huntington, 79 Misc 2d 834, 47 AD2d 963; Matter of Hogan v Culkin, 18 NY2d 330; Rankin v Shanker, 23 NY2d 111; Gaden 
      
      v Gaden, 29 NY2d 80; Ansonia Brass & Copper Co. v New Lamp Chimney Co., 53 NY 123, 91 US 656; Harlem Gas-Light Co. v City of New York, 33 NY 309; People ex rel. Urban Water Supply Co. v Connolly, 164 App Div 163; People ex rel. Westchester Fire Ins. Co. v Davenport, 91 NY 574.) II. By nullifying the exclusionary provision in Mount Vernon’s excess policy, the court below voided a key provision therein and in a very basic sense impermissibly rewrote the policy and imposed upon Mount Vernon a contractual obligation which it did not undertake. (Laba v Carey, 29 NY2d 302; Sommer v Guardian Life Ins. Co. of Amer., 281 NY 508; Whiteside v North Amer. Acc. Ins. Co. of Chicago, 200 NY 320; State Farm Mut. Ins. Co. v Westlake, 35 NY2d 587; Mandels v Liberty Mut. Ins. Co., 60 AD2d 864; Miller v American Eagle Fire Ins. Co., 253 NY 64; Liverpool & London Ins. Co. v Gunther, 116 US 113; Gunther v Liverpool Ins. Co., 134 US 110; Mead v North-western Ins. Co., 7 NY 530; Brustein v New Amsterdam Cas. Co., 255 NY 137.) III. Mount Vernon’s exclusionary provision tracked Insurance Department regulation 11 NYCRR 60.2 (c) and was proper and reasonable. It should not have been voided. (Ostrer v Schenck, 41 NY2d 782; Breen v Cunard Lines S. S. Co., 33 NY2d 508; Matter of Lezette v Board of Educ., 35 NY2d 272; Matter of Howard v Wyman, 28 NY2d 434.) IV. The voiding of Mount Vernon’s exclusionary provision was an unconstitutional impairment of contract and violated section 10 of article I of the United States Constitution, and the due process guarantees of the Fifth and Fourteenth Amendments of the United States Constitution and section 6 of article I of the New York State Constitution. (State Farm Mut. Auto. Ins. Co. v Westlake, 35 NY2d 587; Mandels v Liberty Mut. Ins. Co., 60 AD2d 864.) V. The cases cited in the majority opinion below are distinguishable from the facts at bar. (Wheeler v Piscina, 277 App Div 1014; Rosado v Eveready Ins. Co., 34 NY2d 43.)
    
      William A. Prinsell for Travelers Indemnity Company, respondent.
    I. The language of subdivision 4 of section 388 of the Vehicle and Traffic Law is unambiguous and internally consistent and must be given the effect literally set forth in its terms. The exclusion relied on by Mount Vernon is in conflict with the statute and void. (New Amsterdam Cas. Co. v Stecker, 3 NY2d 1; Patrolmen’s Benevolent Assn. of City of N. Y. v City of New York, 41 NY2d 205; Rosado v Eveready Ins. Co., 34 NY2d 43; General Mut. Ins. Co. v Sun Ins. Co. of 
      
      N. Y., 24 AD2d 135; Wheeler v Piscina, 277 App Div 1014.) II. Mount Vernon’s contention that its so-called "excess” policy incorporates by reference the Travelers policy operates to make the Mount Vernon policy subject to the same coverage and limitations as is provided by the Travelers policy. III. There is no proper constitutional issue raised since all policies issued by insurance carriers within the State of New York must comply with the requirement of the law, i.e., section 388 of the Vehicle and Traffic Law, section 167 of the Insurance Law and the general public policy of the State as expressed by the Legislature in those statutes. (Veix v Sixth Ward Assn., 310 US 32; California Auto. Assn. v Maloney, 341 US 105.)
    
      James A. Magee for Smolowitz Brothers Van Lines, Inc., respondent.
    I. The exclusion clause contained in the Travelers liability policy is contrary to law and therefore a nullity. (Matter of Rothko, 43 NY2d 305.) II. Since the exclusion clause in Travelers liability policy fails by operation of law, it cannot be resurrected in Mount Vernon’s policy. (Miller v Continental Ins. Co., 40 NY2d 675; Sperling v Great American Ind. Co., 7 NY2d 442; Graves v Public Serv. Mut. Ins. Co., 5 NY2d 120.)
    
      Bernard Meyerson and Samuel Spevack for Gino Trotta, respondent.
    I. The argument of appellant that the premium paid by Smolowitz Brothers procured no insurance and was nothing more than a donation to the welfare of Mount Vernon Insurance Company is not supported by the authorities. (Rosado v Eveready Ins. Co., 34 NY2d 43; General Mut. Ins. Co. v Sun Ins. Co. of N. Y., 24 AD2d 135; Wheeler v Piscina, 227 App Div 1014, 302 NY 689; Matter of Adams [Government Employees Ins. Co.], 52 AD2d 118; Lacks v Fidelity & Cas. Co. of N. Y., 306 NY 357.) II. On the theory advanced by appellant its coverage is primary insurance. (Travelers Ins. Co. v General Acc., Fire & Life Assur. Corp., 28 NY2d 458.) III. There is no clause in the Constitution of the United States or the State of New York that gives an insurance company the right to write insurance policies for which premiums are paid but afford no coverage or to write policies that are contrary to the insurance laws of this State. (California Auto. Assn. v Maloney, 341 US 105; Insurance Co. v Glidden Co., 284 US 151; Home Bldg. & Loan Assn. v Blaisdell, 290 US 398; Brown Co. v Feldman, 256 US 170.)
   OPINION OF THE COURT

Fuchsberg, J.

In this action for a declaratory judgment, we are asked to construe the effect of an excess automobile liability insurance policy clause which incorporates by reference the exclusions contained in the contract for primary coverage issued to the insured by another carrier.

The disputed clause, contained in an agreement for excess coverage entered into between plaintiff Mount Vernon Fire Insurance Company, as insurer, and Smolowitz Brothers Van Lines, Inc., as insured, provided that the risks assumed were subject to "all the conditions, agreements, exclusions and limitations of and shall follow the Primary Insurance in all respects”. The primary policy, issued to the insured by defendant Travelers Indemnity Company, afforded Smolowitz the statutory minimum coverage on each of the seven units of its fleet of trucks and vans; it was expressly inapplicable "while any trailer covered by this policy is used with any [tractor] owned or hired by the insured and not covered by like insurance in the company”.

This suit was precipitated by the pressing of a claim for personal injuries by a third party (Gino Trotta, formally joined here as a party defendant), allegedly incurred when a vehicle he was operating collided with a tractor-trailer tandem rig both sections of which were owned and operated by Smolowitz. At the time of the accident, the tractor and trailer were each expressly covered by the Travelers policy, but only the trailer was included in the Mount Vernon contract.

It was on these conceded facts that Mount Vernon sought a declaration that, though Travelers’ primary coverage of both the tractor and trailer precluded it from invoking the exclusion clause, nevertheless, since the trailer protected by the Mount Vernon excess policy was not being towed by a tractor insured by the same "company”, i.e., Mount Vernon, the exclusionary clause continued to serve to gain it exemption from liability. The Supreme Court, however, was of the view that the exclusionary clause was contrary to the public policy of New York State and entered a judgment to that effect. The Appellate Division, while modifying in respects not relevant to our disposition, declared that Mount Vernon was obligated to indemnify Smolowitz for any judgment within its coverage that exceeded the limits of the Travelers policy (63 AD2d 254). In turn, we now affirm the order of the Appellate Division, but do so solely on the narrower grounds we hereinafter articulate.

Given the exceptionally strong principle of construing exclusions strictly against an insurer, whose form policy language is not only its own but "non-negotiable” as well (Thomas J. Lipton, Inc. v Liberty Mut. Ins. Co., 34 NY2d 356, 361; Sincoff v Liberty Mut. Fire Ins. Co., 11 NY2d 386; 7 Appleman, Insurance Law and Practice, § 4438, p 458), Mount Vernon may not use the clause at issue to gain an exemption for itself where its author — Travelers—would not be entitled to call the clause into play. Manifestly, Travelers, at whose instance and in whose policy the clause was inscribed, can claim no such benefit here, for it insured both tractor and trailer. And, as indicated, the excess policy clause which here is sub judice tells us that the exclusions it incorporates are to "follow” the primary insurance "in all respects”.

If, despite that, Mount Vernon was intended to have the right to resurrect the clause for itself, it would have been a simple matter for it to have said so in so many words, or, indeed, to have reiterated the exclusionary language in its own policy (see Miller v Continental Ins. Co., 40 NY2d 675, 678-679). Absent resort to either of these devices of draftsmanship, it would not have been unreasonable for Smolowitz, the insured to whom Mount Vernon in effect unilaterally addressed its words of incorporation, to assume that, in the circumstances of the primary policy provisions to which it referred, the Mount Vernon language would not create an additional exclusion (cf. Messina v Lufthansa German Airlines, 47 NY2d 111, 114-115; Curtis, A Better Theory of Legal Interpretation, Jurisprudence in Action, pp 155, 156; Holmes, Collected Legal Papers, 203). We therefore conclude that the exclusion clause, in the context in which it here is found, remains dormant or comes to life in accordance with the terms of the primary insurance policy.

This conclusion is also consonant with the result that obtains when the same principle of strict construction is applied to read the phrase “in the company” to mean “in Travelers” so that Mount Vernon would only be able to assert the exemption when the tractor is not covered by like insurance in Travelers. This condition being satisfied, on this score too, Mount Vernon has no ground on which to avoid being held, within the limits of its excess undertaking, to indemnify Smolowitz for the amount of any judgment beyond that embraced by the Travelers policy.

For these reasons, the order appealed from should be affirmed.

Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler and Meyer concur.

Order affirmed, with costs. 
      
      . At one time the Mount Vernon excess policy apparently applied to all of the Smolowitz vehicles. However, for reasons not indicated in the record, several months before the accident the policyholder’s only tractor and both of its trailers first were deleted from the policy, and then the particular trailer involved here was reincluded.
     
      
      . Mount Vernon’s and Travelers’ coverage were each set out in a "form” policy.
     
      
      , In view of the rationale on which we rely for our affirmance on this appeal, we do not reach the question whether such an exclusionary clause, in either a primary or an excess coverage policy, would be invalid as against public policy in New York State.
     