ENGEL v. CHICAGO & NW. TRANSPORTATION CO.
186 Ill. App.3d 522 (1989)
Appellate Court of Illinois — First District (4th Division).
Opinion filed February 16, 1989.
Under the provisions of the Local Governmental and Governmental Employees Tort Immunity Act (Act) in effect at the time of Engel's injury, "a local public entity [was] not liable to pay punitive or exemplary damages in any action brought directly against it by the injured party." (Ill. Rev. Stat. 1981, ch. 85, par. 2-102.) The Act further provided, however, that when a public entity purchased liability
insurance covering a liability for which the Act had created a defense, the insurance company could not assert the public entity's immunity or other defenses as a means of avoiding payment under its policy. (Ill. Rev. Stat. 1981, ch. 85, par. 9-103(c).) The Act has since been amended in several key respects. See Ill. Rev. Stat. 1987, ch. 85, pars. 2-102, 9-103(c).
According to Engel, punitive damages liability will lie against a municipal corporation "if the defendant is insured for that risk," citing Holda v. County of Kane (1980), 88 Ill.App.3d 522, 410 N.E.2d 552, and Collins v. School District No. 189 (1983), 115 Ill.App.3d 100, 450 N.E.2d 387. Thus, any immunities under the Act are waived if the municipality is insured for the specific risk under consideration. The reason Engel gives is that while a municipality should benefit from the immunities given in the Act, an insurance company should not.
We note that the Act has been amended so as to allow insurance companies to use the same immunities as the municipalities they insure. (Ill. Rev. Stat. 1987, ch. 85, par. 9-103(c).) Under current law, Engel's theory would fail. Even under the law as it existed at the time of Engel's action, however, we cannot agree with his argument. The Park District itself had immunity from the claim under the Act. Its general liability insurance policy admittedly does not include or explicitly exclude punitive damages. Unless we construe the absence of an exclusion for punitive damages in the policy as a positive statement of coverage for punitive damages, the immunity has not been waived.
We find no waiver of the immunity has occurred. In the cases Engel cites, such as Holda and Collins, the courts did not state that the mere purchases of insurance waived the immunity. At best, they state that the immunity is not waived unless the insurance policy covers the specific risk under consideration. In this case that is the specific risk of a punitive damages award. General liability coverage as defined in the policy is not enough.
• 11 The trial court apparently believed that the policy could be construed as insuring against punitive damages. However, it dismissed the punitive damages count on the public policy ground that one cannot insure himself against punitive damages because he may not be allowed to escape economic punishment for his wrongful acts. (Beaver v. Country Mutual Insurance Co. (1981), 95 Ill.App.3d 1122, 420 N.E.2d 1058.) Engel argues that a corporation may insure itself against damages, however, if its liability is truly vicarious and not the result of its own corporate acts. See Scott v. Instant Parking, Inc.
(1969), 105 Ill.App.2d 133, 245 N.E.2d 124 (employer may insure himself against vicarious liability for punitive damages incurred as a result of employee's wrongful acts); cf. Mattyasovszky v. West Town Bus Co. (1975), 61 Ill.2d 31, 330 N.E.2d 509.
• 12 We need not address this issue further because a private corporation, unlike a municipal corporation, does not have a statutory immunity. The immunity was intended, presumably, to protect the tax-payers' money. If a private corporation is assessed punitive damages for its own acts it must pay out of corporate funds. Insurance is not available for the punitive damages award in that situation for the public policy reasons cited above. Whether or not insurance would be available if the corporation established that it was liable only vicariously, through the acts of an employee or agent who was not a corporate officer, is not at issue in this appeal. Because we have determined that the Park District's purchase of liability insurance has not waived its immunity from punitive damages, we affirm the trial court's dismissal of the punitive damages count and its vacation of the jury's verdict on that count.
Accordingly, we affirm the trial court on both the main and cross appeals.