I dissent and vote to affirm.
The majority takes the position that where an insurance carrier, a few days before trial, “ throw[s] in the whole pol-. icy ’ ’ it has fulfilled its contractual obligation to its assured and cannot be held liable for any excess judgment based on bad faith. To concur in that reasoning is to say that by offering its policy limits at the last minute , the carrier is granted absolution for all its prior acts, no matter how grievous and even though they may have affected its assured in a detrimentally irreversible manner. I cannot agree.
On June 2, 1962 Fred Knobloch, then a college student 22 years of age, was operating an automobile, owned by his mother, along Taconic State Parkway. He and a passenger, John Wickman, were returning to school. At a point where the roadway was impaired, Knobloch lost control of the car, it left the road and overturned and Wickman was seriously injured. He suffered a compression fracture of the fourth dorsal vertebra, injury to the fifth, sixth and seventh cervical vertebrae and muscle atrophy of the right arm, as well as lacerations of the face resulting in disfiguring scars. His medical bills were about $1,292 and his lost earnings $7,590.
The automobile was insured with Royal Globe Insurance Company, with a liability limit of only $10,000 for one person.
*294Settlement negotiations started in 1962 between Wickman’s attorney, John Browne, and continued for seven years, until shortly before the trial started on April 14, 1969, but the Knoblochs were not advised of these discussions until just before the trial.
As early as May 19, 1964 Browne offered to accept $9,500 in full settlement of Wickman’s claim against the Knoblochs because he had been made aware of the low insurance coverage. Royal Globe rejected the offer, although its own doctor had made a physical examination of Wickman more than one year before and had verified the seriousness of his injuries.1
Although by now it was abundantly clear to Royal Globe that the damages far exceeded both the policy limit and Wickman’s demand for settlement and that the chances of escaping liability were virtually nil, it continued to stall and procrastinate, making frivolous demands for verification of various items of damage having no real relevance in deciding whether to settle at the very low figure offered.
Finally on March 10,1967, five years after the accident, Royal Globe made its first offer of settlement — $6,500, which was rejected.
On February 11, 1968 Royal Globe experimentally inquired if Browne would accept $8,500 or $9,000, without actually offering either figure. It was told $9,500 was still open and that was the minimum Browne would accept. On March 21, 1969 the case appeared on the day calendar and Royal Globe’s attorney requested an adjournment, explaining that Fred Knobloch was outside the United States on a business trip. Browne testified that this inadvertent allusion and a statement by Royal Globe’s counsel that Knobloch had retained private personal counsel indicated to him that " there was a new ballgame ’ ’ and that “there was more money than $10,000 in this case,” so when the insurance company finally offered to pay the $9,500 a few days later (on April 3, 1969) he told its representative that he was now going to “ let the case ride ”,
Sensing now that by revealing its assured to be a business man. and no longer a college student and by “foolishly * * * trying to save * * * a few dollars ” it might be in trouble with its assured, the company offered the entire $10,000 policy six days later (on April 9, 1969). Browne rejected it *295and said the case was worth $10.0,000. The case went to trial on April 14, 1969 and resulted in a jury’s verdict for $75,000 against the Knoblochs and the East Hudson Parkway Authority.
As to the Knoblochs’ financial status, Browne’s assessment of the situation turned out to be correct, since the Knoblochs, mother and son, were persons of financial means who were good for the judgment. They had to pay their pro rata share over the $10,000 insurance coverage — $30,236.
This action sought to recover from Royal Globe that $30,236, plus $25,000 expenses incurred by the plaintiffs in defending against Wickman’s action. The jury’s verdict herein was for the $30,236 plus $20,000 for the expenses.
The main question we have for decision is what is the measure of the good faith which an insurance company owes its assured in conducting settlement negotiations? There is an ancillary question and that is whether the belated and futile offer of the policy limit after the damage had been done relieved Royal Globe from all liability as a matter of law and insulated it from responsibility for the subsequent damages.
It seems clear to me that the answer to. the second question must be in the negative. To be sure, it is a relevant fact for the jury to consider in arriving at a decision on the over-all question of good faith and the jury had this information before it in this case. But there is nothing in logic or precedent which holds that this is a substitute for good faith, i.e., that it precludes recovery even where there has been bad faith.
As Professor Keeton observed in his article entitled " Liability Insurance and Responsibility for Settlement ” (67 Harv. L. Rev. 1136, 1148-1149 [1954]): “The company may protect itself against excess liability, where the settlement value of the claim is recognized as being in excess of the policy limits, by making an offer to settle for the maximum sum within the policy limits or by advising the insured of continued willingness to pay such sum at any time that the claim can he settled for that sum or for that sum plus whatever the insured is willing to add ” (emphasis supplied). The all important point to note here, which takes it out of the rule, is the utter futility of the company’s offer at the time it finally made it, for no longer could the case be settled for the policy limit.
It is not seriously disputed that the law implies a requirement of good faith on the part of the company in discharging its obligations to the assured under the insurance contract. The uncertainty centers on how to define good faith by an objective standard.
*296In this case the trial court charged as follows on this subject: “We do not have any specific definition in our law as to what indicates or evidences bad faith. There is no language in our statutory law that sets forth what the Court can indicate to you to specifically encompass or limit such language of bad faith. It would be for you as a jury panel to determine whether or not the conduct of the parties in this action indicates the presence of bad faith as alleged by the plaintiffs in failing to bring about a settlement within the policy limits and thereby avoid the situation which, in effect, ultimately developed as far as the plaintiffs are concerned, namely, that they were subjected to the judgment in excess of that $10,000 policy and were put to the expenses for which they are now suing in this lawsuit.”
At the close of the charge Royal Globe’s counsel requested a further legal definition of bad faith. To the Justice’s suggestion that he refer the court to a specific authority for the definition he had in mind, he made the extraordinary rejoinder that he was not prepared to say.
Nevertheless the Justice gave the following additional instructions:
" Members of the jury: The Court would further charge you that the defendant insurance company was under an obligation to act in this case as though it were fully liable for whatever judgment might be rendered the plaintiff in this particular lawsuit. In other words, they have to act as though only their own money was on the line here, that they were the only ones at risk of financial loss, and it is that kind of judgment that they must make, an honest judgment as though all the loss were going to come out of their own pocket. This, of course, relates to the obligation of the defendant insurance company with respect to any negotiations that it had before it from the time following the accident.
“ The Court further charges you that since the insurance company has power, through the control of settlement, to adversely affect the insured’s interests, it must necessarily bear a legal responsibility for the proper exercise of that power. Thus, the law imposes upon the insurer—in this instance, the Royal Globe Insurance Company—the obligation of good faith —basically, the duty to consider, in good faith, the insured’s interests as well as its own when making decisions as to settlement.”
To the defendant’s request that the court charge: “The defendant is not responsible in damages for negligence in failing to settle [a] claim within the limits of recovery of judg*297ment for [an] amount over policy limits in absence of fraud or bad faith,” the court refused, saying, “The Court has, in effect, so charged that the duty and obligation of the plaintiffs here is to establish and prove bad faith ” [emphasis supplied].
In a case where an issue as to negligence has been developed for the jury, I agree that such a request would be appropriate and proper, but in the posture of this case, where there had been no claim of negligent conduct on the part of the defendant, Such as failure to properly investigate the case, or try it,, or the like, but rather a deliberate decision to ignore the interests of the assured and to consider only its own, the request to charge the effect of negligence was irrelevant and was properly refused.
As to the main issue, the trial court adopted the view of New York law taken by the Federal courts for the Second Circuit in a line of cases including Young v. American Cas. Co. of Reading, Pa. (416 F. 2d 906); Peterson v. Allcity Ins. Co. (472 F. 2d 71); Brockstein v. Nationwide Mut. Ins. Co. (417 F. 2d 703); Brown v. United States Fid. & Guar. Co. (314 F. 2d 675). The essence of the test of good faith as developed in these cases, particularly Brown, is that the insurance company must act as though its own money were at risk for the amount demanded over the policy and that it must consider the assured’s interests, as well as its own, in arriving at a decision whether to settle within the policy limits.
The early New York cases seem to have given the insurance,, company rather a free hand in deciding whether to settle or not (see Auerbach v. Maryland Cas. Co., 236 N. Y. 247 [1923] ; Streat Coal Co. v. Frankfort Gen. Ins. Co., 237 N. Y. 60 [1923]; Best Bldg. Co. v. Employers’ Liab. Assur. Corp., 247 N. Y. 451 [1928]). Even though the insurance companies were exonerated in all these cases, the last and leading one, Best Bldg., reaffirmed the requirement of good faith and fairness.
In evaluating New York law, Judge Kaufman in Brown, arrived at the conclusion that New York today would apply the standard annunciated by Professor Keeton in Harvard Law Review (vol. 67, pp. 1146-1148). That standard is essentially the one adopted by the Trial Justice in the present case and it is one with which I agree.
A leading case very much in point in a neighboring jurisdiction is Rova Farms Resort v. Investors Ins. Co. of Amer. (65 N. J. 474), which in many respects is not as strong for the assured as the instant case, although the attitude of the insurance company was on a par with that of the defendant herein.
*298That case, however, presented a genuine issue of contributory negligence, in that the claimant had dived into murky water without ascertaining that it was only three to four feet deep and had emerged from the accident completely and permanently paralyzed. The company offered $12,500 on a $50,000 policy and never budged from that figure, even after a $225,000 judgment against the assured was on appeal and although warned that on a retrial it might go to $500,000. The Supreme Court of New Jersey brushed aside the defense that there had never been a formal request by the plaintiff’s counsel to settle for the policy limits, stating (p. 485): “ We note that substantial evidence before the court revealed a multitude of circumstances which should have impelled Investors to energize a clearly attainable settlement of the McLaughlin claim. Settlement at trial could have been arranged for $75,000, an amount which plaintiffs’ attorney was authorized by his clients to accept, as was made known to the McLaughlin trial judge, to Liebowitz, to Both and, through Liebowitz, to Investors. During those somewhat hectic trial days there were raised many storm signals of potential financial disaster in the face of which Investors maintained a singular imperturbability, never increasing its first-day offer of $12,500.”
The court went on to state the rule governing such cases as follows (pp. 492-493): “ By virtue of the terms of such a policy, proscribing the insured from settling in his own behalf, the carrier has made itself the agent of the insured in this respect. Fidelity & Cas. Co. v. Robb, 267 F. 2d 473, 476 (5th Cir. 1959). Thus the relationship of the company to its insured regarding settlement is one of inherent fiduciary obligation. Bowers, supra; Radio Taxi, supra, 31 N. J. at 313 (Jacobs, J. dissenting); Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566, 108 Cal. Rptr. 480, 491, 510 P. 2d 1032, 1043 (1973) (Roth, Justice pro. tem, dissenting) . When an opportunity for settlement approximates the limit of coverage, it may be tempting for the insurance company to gamble on the outcome of a trial, its exposure not being considerably affected by a verdict in excess of coverage. See Kaudern, supra, 277 F. Supp. at 88; cf. Dumas v. State Farm Mut. Auto Ins. Co., 111 N. H. 43, 274 A. 2d 781, 784 (1971). Recognizing that such temptations on the part of the carrier are directly in conflict with the interest of the insured in settling within the limits of coverage and thereby avoiding the prospect of excess judgment, this Court declared that where, as in the present case, any adverse verdict at trial is likely to exceed the policy limit, the boundaries of good faith become more com*299pressed in favor of the insured, and the carrier can justly serve its interests and those of its insured only by treating the claim as if it alone might be liable for any verdict which may be recovered. Bowers, supra; Board of Education, supra” (emphasis supplied).
Rova does not, and I do not, subscribe to the proposition that to require the insurance company to treat with a settlement offer as though the company had unlimited exposure is to compel the company to disregard its own interests and to give the insured complete consideration, to the exclusion- of itself. Actually it is a generally accepted rubric that sensible people usually act in good faith where their own interests are at stake, so it is a valid conclusion that they may be in bad faith when they fail to act the same way when someone else’s interests are substituted for their own.
This does not mean that a company must always settle a case when it can do so. Many insurance companies with large policy limits often go to trial on the issue of liability where it is fairly arguable whether they will be successful. They do not do so however on a forlorn hope that some miracle will exculpate their assured and thus themselves where all the facts indicate the opposite and they have high exposure. Therefore, when they do so in a case of limited liability, it becomes fairly obvious that they are consulting nobody’s interests but their own and that amounts to had faith, or at least a jury could so find, as it has done in this case.
We must keep in mind that in a negligence suit the assured is not in a position to exercise effective control over the lawsuit or to further his own interests by independent action, even when those interests appear in serious jeopardy. Control of the litigation, even though the assured has private counsel, remains in the hands of the carrier. An assured’s private attorney is an inadequate answer to a conflict of interests, since his counsel cannot compel a settlement or take an active part in the trial.
Not to he overlooked as a motivation for Royal Globe’s refusal to settle on the very favorable basis offered is the fact that the use for seven years of the money which would have gone into settlement had an intrinsic value all its own, irrespective of whether the defendant entertained any genuine belief that it should refuse to settle because it might win the ease. Needless to say, any such motivation would fail to qualify as a good faith reason for exposing the assured to a full recovery for the serious injuries which the defendant knew to exist.
*300Given what had transpired in this case, it seems fairly obvious that by the time the plaintiffs’ private attorney, Selkowe, entered the case, settlement negotiations had deteriorated to a point where the chances of reviving the favorable settlement offer, or anything approximating it, had vanished irretrievably. Thus, there was indeed no point in adding to the proposed contribution by the plaintiffs in the face of the new demand and the defendant’s refusal to consider paying any additional sum.
However, be that as it may, we must, keep in mind that we are., not resolving an issue of Selkowe’s bad faith in this lawsuit, assuming there was any, and frankly I do not believe there was. But even if we assume there was, Royal Globe was found to have acted in bad faith (by the jury) not for anything Selkowe did or failed to do, but for what it did and failed to do, and at no time was the jury instructed to hold it responsible for anything else.
I would therefore affirm the judgment.
Christ and Munder, JJ., concur with Shapiro, J.; Gulotta, P. J., dissents in opinion; Hopkins, J., dissents in part and concurs in part in opinion.
Judgment of the Supreme Court, Queens County, entered March 13, 1974, and order of the same court dated March 11, 1974, reversed, on the law and the facts, without costs; and complaint dismissed and plaintiffs’ motion to add interest to a portion of the jury award dismissed.
. It may be noted that at the. trial Royal Globe offered no medical witness to rebut Wickman’s claimed injuries, thus in effect conceding their seriousness. Additionally, on appeal in the Wickman case (Wickman v. Knobloch, 34 A D 2d 617) Royal Globe did not question the $75,000 awarded in damages by a jury.