Merchants Mut. Liab. Ins. Co. v. Smart, 267 U.S. 126 (1925)

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Merchants Mutual Liability Insurance Company v. Smart

No. 223

Argued January 22, 1925
Decided March 2, 1925
267 U.S. 126 (1925)

ERROR TO THE SUPREME COURT

OF THE STATE OF NEW YORK

Syllabus

A state law (N.Y.Laws 1918, c. 182) required that any policy issued by an insurance corporation in the future to indemnify the owner of a motor vehicle against liability to persons injured through negligence in its operation shall provide that the insolvency or bankruptcy of the insured shall not release the company from payment of damages for an injury sustained during the life of the policy, and that, in case execution against the insured in an action brought by a person so injured shall be returned unsatisfied because of such insolvency or bankruptcy, the injured person may maintain an action against the company on the policy for the amount of the judgment not exceeding the amount of the policy.

Held:

(1) That the regulation is reasonable, and within the police power; it cannot be said to deprive the insurance company of property without due process of law. P. 129.

(2) That it does not conflict with the Bankruptcy Act by providing for an unlawful preference. P. 130.

198 N.Y.S. 949 affirmed.

Error to a judgment of the Supreme Court of New York, Appellate Division, affirming a judgment recovered by Smart against the Insurance Company. The New York court of appeals declined to review. The facts are given in the opinion.