In this action for personal injuries, judgments were entered in favor of plaintiffs and against the defendant James A. Busby on verdicts aggregating $26,000. Plaintiffs thereupon instituted supplemental citation proceedings under section 73 of the Civil Practice Act (Ill Rev Stats, c 110, § 73 (1963)) for the purpose of subjecting the coverage provided by an insurance policy issued by Safeco Insurance Company of America (citation defendant) to the payment of the judgments. The trial court on motion of plaintiffs entered summary judgment against the citation defendant, and the latter has appealed.
The principal contention of citation defendant is that a decree was rendered against James Busby in the Circuit Court of Walker County, Alabama, finding that the insurance policy was void on the ground that it was procured by fraudulent misrepresentations and that this decree is entitled here to full faith and credit, notwithstanding the fact that the personal injury plaintiffs were not made parties to the Alabama proceeding. The background of these proceedings follows:
On July 9, 1955, plaintiffs, residents of New York, were injured in a collision at Markham, Cook County, Illinois, between an automobile driven by James A. Busby of Jasper, Alabama, and one in which plaintiffs were riding. Plaintiffs instituted suit in the Superior Court of Cook County on December 28, 1955, to recover for personal injuries sustained. The insurance policy in question had been issued by the citation defendant in Jasper, Alabama, on July 23, 1954, on the application of Lane Busby, the father of James. It covered the operation of the automobile by James at the time of the accident. Attorneys designated by the citation defendant entered their appearance in the personal injury suit and filed an answer for the Busbys.
Following the decree, the attorneys for the citation defendant who had filed an appearance on behalf of Busby in the personal injury suit, made a motion to withdraw, setting forth the decree of the Alabama court and averring that no contractual or other obligation of any kind existed requiring the citation defendant to provide for the defense. It is significant that this motion was not made within thirty days, the period within which courts generally, including Alabama, (Code of Alabama, Title 13, § 119 (1958)) have broad discretion to set aside their orders. Submitted with that motion was a letter to James A. Busby and his father Lane Busby, advising them that the insurance policy had been declared void and that they should provide their own defense to the personal injury suit. On November 10, 1960, an order was entered granting the requested leave to withdraw. On February 19, 1962, an order of the Superior Court of Cook County found James A. Busby in default and ordered that the cause be heard on complaint and
There can be no doubt that the Alabama suit to void the policy was for the main, if not the only, purpose of avoiding any obligation which might arise in the Illinois suit, and that the personal injury plaintiffs were not made parties defendant to that suit or given notice thereof, so that they could not participate in the defense.
Lane Busby, in his deposition taken in support of the plaintiffs' motion for summary judgment in the citation proceeding, testified that the 1948 Chevrolet which James bought for a few hundred dollars in 1954 in his (Lane Busby's) name, had been purchased so that James could go to Chicago to look for a job. Lane Busby was a miner in Alabama. The policy initially was issued for a six-month period and was renewed by Lane Busby on instructions from James, who was then in Chicago.
It thus appears that James Busby's financial responsibility was such as to make his ability to pay any judgment which might be obtained against him in the Illinois suit doubtful, and that the people who were substantially and definitely interested in the insurance policy and in the Alabama suit were the plaintiffs in the Illinois suit.
With this in mind we proceed to a consideration of the full faith and credit clause of the Federal Constitution as it applies to the decree of the Alabama court voiding the policy of insurance on the ground of misrepresentation. The case relied upon by defendant, so far as Illinois is concerned is Western States Mut. Automobile Ins. Co. v. May, 18 Ill.App.2d 442, 152 N.E.2d 608. There the insurance company brought a declaratory judgment action in Illinois seeking to have its automobile insurance liability policy declared void on the ground of a misrepresentation, in the application for the policy, that the automobile owner was an adult. The actual owner was a minor, the son of the named insured. The minor and two passengers were killed and three others were injured in an accident in Tennessee. Suits were filed in Tennessee and thereafter the declaratory action in Illinois was filed. The plaintiffs in the Tennessee action were not made parties to the Illinois suit. The trial court declared the policy void. On appeal this court affirmed and held that the Tennessee plaintiffs were not necessary parties; that the fact that "a claim or series of claims has been filed against the purported insured is of no significance in determining whether or not the insurance relationship ever existed." We will consider Western States v. May further after examining the cases to the contrary.
There is ample authority holding that the plaintiffs in the underlying tort action are not in privity with
In New Amsterdam Cas. Co. v. Murray, supra, the defendant's insurance company brought suit in Virginia to cancel the insurance on the ground that it was procured by false representations. A default judgment was entered, cancelling the policy as of a date before the accident. The party injured in the accident, who was not made a party to the Virginia action and had no knowledge of it, brought suit in Kentucky and obtained a judgment. He then sued the defendant's insurance company, which defended on the ground that the Virginia judgment cancelling the policy was binding on the plaintiff, regardless of the fact that the latter was not a party to the suit. The court held that as to the insurance company, the injured party's rights arose upon the happening of the accident and could not thereafter be abridged by the judgment to which she was not a party, citing Spann v. Commercial Standard Ins. Co., supra. The insurance policy was for indemnity against liability, and the obligation of the insurer became fixed when liability attached to the insured.
Illinois has a similar statute in section 388 of the Insurance Code, Ill Rev Stats, c 73, § 1000 (1963), and has expressed the same views with respect to public policy which led other states to hold that the injured plaintiff in the underlying tort action has an interest which cannot be cut off by an action to which he is not a party. Thus, in Scott v. Freeport Motor Cas. Co., 392 Ill. 332, 64 N.E.2d 542, the court said (p 346):
The court, after noting that similar conclusions had been reached in Pennsylvania, Oregon, Washington and New York, quoted with approval the following language from Spann v. Commercial Standard Ins. Co., supra, relied on by the Circuit Court of Appeals in New Amsterdam Cas. Co. v. Murray, supra, (p 347):
Alabama courts have held that in a declaratory judgment action brought by the insurance company to discharge it from liability, the personal injury plaintiffs are necessary parties. State Farm Mut. Auto Ins. Co. v. Sharpton, 66 So.2d 915 (Ala 1953); American Auto Ins. Co. v. English, 94 So.2d 397 (Ala 1957). The question was one of venue rather than of jurisdiction, but involved the determination of whether the personal injury plaintiffs were parties in interest. The Alabama court said in Sharpton, supra (p 917):
The same question of venue was raised in American Auto Ins. Co. v. English, 266 Ala 80, 94 So.2d 397, where a suit for a declaratory judgment was brought against one insurer by another to determine the extent of its liability. The plaintiff in the personal injury action, an administrator, was made a party to the suit.
Reverting to Western States v. May, supra, in essence the reasoning there was that fraud vitiates a contract ab initio, as the hornbooks all taught, and hence the personal injury plaintiffs could not acquire anything under it. In that case we distinguished between suits seeking to void a policy of insurance and suits to determine the extent of coverage. It is a distinction without merit insofar as the rights of plaintiffs in the underlying personal injury action are concerned. The syllogism was correct, but contemporary life does not admit of such simple solutions. We must now enlist that famous aphorism of Justice Holmes, "The life of the law is not logic but experience." In Western States, we could not see the totality of the problem nor how the principle there announced could be used to destroy rather than promote justice, nor did we see the lack of realism in a holding that injured plaintiffs had no such interest as would make them necessary parties to a legal proceeding which could deprive them of the benefit of insurance procured for their protection pursuant to the laws of this and other states. Law when divorced from reality courts injustice.
The citation defendant argues that its equity suit was not for a declaratory judgment, but was brought to rescind the insurance contract under Rule 29 of the Alabama Equity Rules (Code of Ala, Vol 3, Appendix (1958)) which provides that necessary or proper parties who are nonresidents of the jurisdiction need not be made defendants. The Alabama Declaratory Judgment Act requires that "All persons shall be made parties who have or claim any interest which would be affected by the declaration and no declaration shall prejudice the rights of persons not parties to the proceedings...." (Code of Ala, Title 7, § 166 (1958).) Whether the Alabama action is called a suit for rescission or for declaratory relief makes no difference. In both instances the rights of the nonresident defendant cannot be affected by the decree of the Alabama court unless they have been served with process. As hereinbefore set forth, our decision does not turn on whether or not the plaintiffs in the personal injury suit were necessary parties to the Alabama decree, but rather on our holding that the rights of the plaintiffs to resort to the automobile liability insurance could not be cut off in the Alabama suit between the citation defendant and James Busby unless they were made parties defendant to that proceeding.
The social problem inherent in the ever increasing use of the automobile has induced legislative action. The extent of the problem is revealed in statistics appearing in the National Safety Council's report for the year 1963, showing 43,400 deaths and 1,600,000 injuries in automobile accidents, the licensing of 93,700,000 drivers, and the registration of 83,000,000 vehicles, contributing mileage totaling the fantastic figure of eight hundred billion miles. Illinois, the third or fourth state of the union, has its share of this traffic. All the states have enacted laws seeking to assure some remedy for those injured as the result of automobile accidents. Simmon v. Iowa Mut. Cas. Co., 3 Ill.2d 318, 121 N.E.2d 509.
In Illinois, the legislature has provided for minimum liability insurance coverage as proof of financial responsibility for accidents (Ill Rev Stats, c 95 1/2, § 7-203 (1963)); has provided that those supplying transportation for hire must have liability insurance policies or make proof of financial responsibilty before commencing operations (Ill Rev Stats, c 95 1/2, § 8-101 et seq. (1963)); has further provided that no liability insurance policy shall be issued unless "uninsured
In Simmon v. Iowa Mut. Cas. Co., supra, the court noted the important position which automobile insurance has taken in the modern world and said that it was no longer merely a private contract between two parties; that the greater part of our litigation was concerned with personal injuries caused by the operation of motor vehicles; and that the legislatures of all our states have recognized the hazards and perils daily encountered and as a result have enacted legislation aimed at the protection of the injured party. The court then referred to the various Acts which had been passed, hereinbefore mentioned, and said (p 322):
In People ex rel. Terry v. Fisher, 12 Ill.2d 231, 145 N.E.2d 588, the court sustained an order for a pretrial discovery of liability insurance in a personal injury suit. The question had not been theretofore determined by a court in Illinois, and the court in passing upon it reviewed the various laws and decisions relating to liability insurance, saying (pp 237-38):
The reason for the courts thus distinguishing liability insurance from other assets is clear. Liability insurance as such cannot be converted into cash. Its value arises only when an accident has occurred, when defense becomes necessary, and when liability is acknowledged or contested. It is not an "asset" such as a bank account, real estate or salary due, with respect to which the courts created the test that the creditor cannot collect from the citation defendant if the debtor could not. The position of the personal injury plaintiffs in the case before us is more in the nature of a creditor relationship carved out of the Busby interest. The test used in the ordinary garnishment proceeding is not applicable in a case such as this where, as we have seen, the interest of the plaintiffs was not extinguished by a decree entered in a proceeding to which they were not parties.
The citation defendant further argues that section 73(5) (Ill Rev Stats, c 110, § 73(5) (1963)) requires that the rights of the person shall be "determined pursuant to the law relating to garnishment proceedings." The statute provides that such rights shall be "asserted and determined." (Emphasis added.) There is
The citation defendant further argues that irrespective of the correctness of the trial court's decision with
Approximately nine months after the citation defendant's answer had been filed, plaintiffs on September 10, 1963, filed a motion for judgment on the pleadings or in the alternative for summary judgment, attaching a copy of the insurance policy and alleging, among other things, that the insurer had waived any breaches or misrepresentations in the policy and that it was estopped from denying its liability thereunder. When that motion came on for hearing on September 17, 1963, leave was granted to the citation defendant to reply to the motion, and the hearing was continued to October 8, 1963. The citation defendant filed its reply on September 18, 1963, and in addition to stating its position with respect to the Alabama decree, set forth that the policy was void because of material misrepresentations and false statements on the part of Lane Busby to the effect that he was sole owner of the automobile and that James would drive the vehicle ten percent of its annual mileage. It alleged that the deposition of James Busby was pending and that plaintiffs had requested, and there were pending, depositions to be taken of the citation defendant's agent and office manager at Jasper, Alabama. Lane Busby's deposition had been taken on February 3, 1963, some
On the following day, October 8th, plaintiffs' motion for judgment was granted and judgments for plaintiffs in varying amounts were entered against the citation defendant.
The citation defendant's principal argument is that the absence of depositions in opposition to plaintiffs' motion for summary judgment was attributable to the conduct of plaintiffs' attorney. According to the citation defendant, a stipulation was entered into which provided that the depositions of Lane and James Busby and the Blackwoods be taken. In fact, however, only the deposition of Lane Busby was taken. James apparently was sick and out of the county at the time the elder Busby's deposition was taken. No reason was given for not taking the depositions of the Blackwoods, except that the Alabama attorneys for plaintiffs had informed the Alabama attorneys for the citation defendant that they had received instructions from the plaintiffs' Chicago attorney not to proceed with the depositions which had been set for October 4, 1963. This last information is contained in the affidavit of citation defendant's attorney in support of the October 7th motion for a court order setting the depositions of James Busby and the Blackwoods for October 26, 1963.
The citation defendant, if the trial court ruled against it on the conclusiveness of the Alabama decree, desired to make a factual defense based on the alleged misrepresentation. To that end, a stipulation with the plaintiffs' attorney which provided for the taking of depositions was evidently agreed upon. While these depositions were pending, it appears that the plaintiffs, after obtaining Lane Busby's deposition, refused to continue with the taking of depositions and abruptly moved for summary judgment. A motion of citation defendant for an order setting the depositions of James Busby and the Blackwoods for October 26, 1963, and ordering that plaintiffs be bound by those depositions whether or not they participated was never ruled on. The following day the summary judgment was granted.
The citation defendant seeks to distinguish them on the ground that in these cases the insurance application was introduced by one party and the parole evidence by another. The distinction has no merit. In moving for summary judgment, the plaintiffs naturally introduced the insurance policy along with their complaint, and after the citation defendant alleged material misrepresentations in the application for the policy, the plaintiffs introduced the deposition of Lane Busby controverting those allegations.
The finding of the trial court that the plaintiffs were not bound by the Alabama decree was proper. The court should, however, give the citation defendant a reasonable opportunity within which to present its defense on the factual issues involved.
The judgment is reversed and the cause is remanded with directions to set aside and vacate the summary judgment and for such other and further proceedings as are not inconsistent with the views herein expressed.
Judgment reversed and cause remanded with directions.
DEMPSEY, P.J. and SULLIVAN, J., concur.
ON PETITION FOR REHEARING
We held in this case that the decision of the Alabama court voiding the insurance policy here involved was not binding on the Illinois courts because the personal injury plaintiffs were not made parties defendant. In so doing we departed from the rule laid down in Western States Mut. Automobile Ins. Co. v. May, 18 Ill.App.2d 442, 152 N.E.2d 608, which had for some years been the law as stated by the Appellate Court and on which the citation defendant (the insurance company) relied. We specifically preserved the right of citation defendant however to defend on the ground that the policy was obtained by misrepresentation. We further sustained Point 4 of citation defendant's brief, that the trial court erred in proceeding to summary judgment before depositions were taken on that issue.
Plaintiffs subsequently filed a motion in diminution of the record and to amend by filing a supplemental record. Plaintiffs also filed a document called a "Motion to Expunge the Order of Remandment as Beyond the Constitutional Power of the Appellate Court and a Petition for Rehearing." This document relied in part on portions of the trial proceedings contained only in the supplemental record.
We turn to a consideration of plaintiffs' motion to expunge the order of remandment and petition for rehearing without reference to the supplemental record. Plaintiffs' argument is twofold: (1) no order was ever entered denying defendant's motion for a continuance for the purpose of taking the depositions of James Busby and the Blackwoods and that it must be presumed at law that the motion was never urged and therefore this court was exercising original rather than appellate jurisdiction; and (2) that the trial court did not abuse its discretion in not granting the continuance for the purpose of taking depositions.
The plaintiffs and the citation defendant both desired to take depositions. James Busby was the driver of the car at the time the accident occurred and he is the one sought to be covered by the insurance company. On January 17, 1963, plaintiffs' attorney in Chicago wrote to the defendant's attorney in Chicago as follows:
It thus appears clear that both parties desired these depositions and we must assume that both parties considered that the testimony thus to be given was important and relevant to the issue of misrepresentation.
Plaintiffs on September 10, 1963 had filed a motion for judgment on the pleadings or in the alternative for summary judgment. When it came on for hearing on September 17, 1963, leave was granted to the citation defendant to reply to the motion and the hearing was continued to October 8, 1963. The citation defendant filed its reply on September 18, 1963, alleging
The jurisdiction of the Appellate Court on the question was of course therein assumed, and if there was any question about it, plaintiffs should have raised the point at that time. Appellate Court Rule 9 provides that the petition for rehearing shall state concisely the points supposed to have been overlooked or misapprehended by the court, with proper reference to the particular portion of the abstract and brief relied upon. Reargument of the case shall not be made in the petition. Parties cannot for the first time on petition
In their original brief plaintiffs contended that defendant obtained no ruling on the motion to set the day for the taking of depositions and that it is thereby deemed to have waived and abandoned the motion, citing Brandes v. Illinois Protestant Children's Home, Inc., 33 Ill.App.2d 319, 179 N.E.2d 425, for the proposition that a "Motion upon which no order is entered or which is never called to the attention of the court presumably is waived or abandoned." The fact is that the court, without ruling on the motion for an order for the setting of the depositions, proceeded to hear the motion for summary judgment. The citation defendant had persistently maintained in both the trial and appellate courts its right to try the issue of misrepresentation if the decree of the Alabama court was not accepted as conclusive. The pending nature of James Busby's deposition was known to the court by citation defendant's answer of September 18, 1963. It was again before the court in citation defendant's motion of October 7, 1963. To argue that it must be presumed the motion was never urged or that it was waived or abandoned is to ignore the realities of the case.
Plaintiffs' attorney in the petition for rehearing expresses apprehension that there is language in our opinion which reflects on him and on the trial judge. It was not so intended.
Motions and petition for rehearing denied.
DEMPSEY, P.J. and SULLIVAN, J., concur.
Comment
User Comments