Apex Mut. Ins. Co. v. Christner
| Decision Date | 18 September 1968 |
| Docket Number | Gen. No. 50851 |
| Citation | 99 Ill.App.2d 153,240 N.E.2d 742 |
| Parties | APEX MUTUAL INSURANCE COMPANY, a Corporation, Plaintiff-Appellee, v. John CHRISTNER, Helen Christner, Leo J. Marks and Louis H. Clepp, Defendants-Appellants. |
| Court | United States Appellate Court of Illinois |
Rosenblum, Lipnick & Joseph, Chicago, for defendants-appellants Leo J. Marks and Louis H. Clepp.
Bennett H. Shulman, Chicago, for defendants-appellants John Christner and Helen Christner; Arthur Rosenblum, Erwin Rubin, Chicago, of counsel.
Brooks & Simon and Gilbert Gordon, Chicago, for plaintiff-appellee; Gilbert Gordon, Chicago, of counsel.
This is a declaratory judgment proceeding brought by plaintiff against John Christner, the owner of an automobile insured against public liability by plaintiff. The car was in an accident while being driven by Helen Christner, John's wife and a co-defendant. Leo Marks and Louis Clepp, the persons allegedly injured in the accident, were also named as defendants. Plaintiff sought a declaration relieving it of the duty to defend or to pay any judgment against Helen Christner, on the ground that she had breached the cooperation clause of the insurance policy and that plaintiff had not waived this breach. The court found all material issues in favor of plaintiff and entered a decree granting the relief requested. Defendants moved for a 'judgment notwithstanding the verdict' (sic) or, alternatively, for a new trial. These motions were denied. Defendants have appealed, raising the sole issue of whether plaintiff waived its right to assert Helen Christner's non-cooperation as a defense to its obligations to her under the policy.
There is no material dispute over the facts. At about 12:40 A.M., on August 2, 1962, Helen Christner, while driving alone in her husband's automobile, collided with a squad car occupied by Police Officers Leo Marks and Louis Clepp. She was included as an insured by the terms of the liability policy carried by her husband with plaintiff. She informed plaintiff by telephone of the accident before 9:30 A.M. on that morning, at which time she appeared at plaintiff's local office and was interviewed by its claims supervisor. On August 8, its field investigator obtained from her at her home a signed statement concerning the accident.
On November 21, 1962, the law firm of Rosenblum, Lipnick and Joseph filed a personal injury action on behalf of Clepp and Marks against Helen and John Christner. Plaintiff assigned the defense of that case to the law firm of Gillin and Owens. 1 As attorneys for the Christners, Gillin and Owens filed an answer, and served and answered interrogatories.
On April 18, 1963, discovery depositions of Clepp and Helen Christner were taken at the office of Rosenblum, Lipnick and Joseph with a representative of Gillin and Owens present. Mrs. Christner's testimony was in substantial agreement with the account of the accident contained in the statement which she had given to plaintiff's investigator: she stopped her car on the street to permit the police car to back out of a driveway; after the police car had completed this maneuver and started to move forward along the street, she proceeded, following behind; after traveling forward for two or three car lengths, the police car stopped suddenly and without warning; as a result, she struck the police car in the rear.
On September 17, Mrs. Christner had a conversation with Officer Marks in the restaurant where she worked as a waitress. Thereafter, she telephoned Marks' attorney, Rosenblum, and the next day went to his office where she executed a handwritten statement concerning the accident. Rosenblum's office notified Gillin and Owens by telephone on the same day that Mrs. Christner had given them a statement. This statement asserted relevant facts not previously disclosed to plaintiff, declared that she had told untruths in her deposition, and admitted that she was fully and solely responsible for the accident.
Rosenblum did not furnish a copy of the statement to Gillin and Ownens, but on October 3 they obtained a copy by court order. (We would assume from this that request for a copy had been denied by counsel.) Two weeks later they took a discovery deposition of Officer Marks. Part of this deposition dealt with Mrs. Christner's connection with the police as a crossing guard, the circumstances of her meeting with Marks in the restaurant, and the events surrounding her giving the statement to Rosenblum.
On November 4, 1963, the policemen plaintiffs in the personal injury action filed a motion for summary judgment on the issue of liability. The court granted time for the filing of papers in opposition and set the motion for hearing on December 17.
On December 11, plaintiff, through other counsel, filed this declaratory action. Defendants were served with process on December 15. Until this time, plaintiff had not served a reservation of rights or notified its insureds in any manner that under the terms of the policy it no longer considered itself bound to defend Mrs. Christner. However, the gist of its complaint for declaratory relief was that when Mrs Christner gave Rosenblum the statement admitting responsibility, she breached the condition of the policy requiring her to cooperate with plaintiff in the conduct of the defense and that because of this breach, plaintiff was neither obligated to defend that lawsuit on her behalf nor to pay any judgment which might be rendered against her. For the purpose of narrowing the issues on appeal, defendants have conceded in their brief that the conduct of Mrs. Christner did constitute a breach of the cooperation clause of the policy.
On December 17, 1963, Gillin and Owens filed a counter-affidavit in opposition to the motion for summary judgment in the personal injury action. This affidavit contained a description of the accident according to the testimony of Helen Christner in her discovery deposition, and denied knowledge of 'the validity or circumstances under which the alleged statement (to Rosenblum) was given or taken.' It also informed the court of the pending declaratory action and requested that all proceedings in the personal injury action be stayed. The court, however, did not wait for determination of the declaratory judgment action, and entered summary judgment on the issue of liability in favor of Clepp and Marks and against both John and Helen Christner. 2
On January 17, 1964, Gillin and Owens filed a motion to vacate the summary judgment. This motion was denied on February 17.
The declaratory action was tried on March 18 and 198 1965, and on May 17 the court entered the decree in plaintiff's favor. On plaintiff's motion, the court vacated its decree on May 28 and entered an amended decree Nunc pro tunc as of May 17, declaring plaintiff free of any obligation to defend Helen Christner or pay any judgment which might be rendered against her in the personal injury case. The decree as first entered had not limited plaintiff's relief to Mrs. Christner, but had referred generally to plaintiff's release from the obligation to defend the lawsuit and to pay any judgment rendered therein. The court found '* * * the actions of the defendant Helen Christner were in violation of the conditions of the insurance policy and such violation was not waived or excused by any actions or omissions of the plaintiff * * *.'
Meanwhile, on May 24, 1965, the plaintiffs in the personal injury suit made a motion to advance that cause for hearing on the remaining issue of damages. The motion was denied, the order including the recital: '* * * the defendants through their attorney Gillin and Owens objecting to any advancement, the court having heard arguments of counsel * * *.' However, with regard to this motion to advance, it is stipulated in the case now before us that the attorney from Gillin and Owens testified (on defendants' motion herein for 'judgment notwithstanding the verdict') that he had told Rosenblum (attorney for the injury action plaintiffs), before the motion was presented, that he did not know the status of the declaratory judgment suit at that time; that Rosenblum had prepared in advance the written order denying his own motion; that when the judge told Rosenblum that no written order was necessary, Rosenblum insisted he wanted the draft order anyway; and, further, that the attorney from Gillin and Owens made no statement of any kind before the court at the hearing on the motion to advance.
Difficulties arise when an injured party brings an action against an insured, and investigation by the insurer reveals a breach of condition or an essential fact tending to place the claim outside the coverage of the policy. The insurer's interest in defending against the claim while restricting its obligation to the terms of the policy, presents the insurer with an urgent strategical problem: whether or not to defend the insurer of all questions of policy DiGuilio, 95 Ill.App.2d 184, 237 N.E.2d 771.
It is well settled that assumption of the insured's defense constitutes a waiver by the insurer of all questions of policy coverage. Bourne v. Seal, 53 Ill.App.2d 155, 203 N.E.2d 12; American Casualty Co. of Reading, Pa. v. Shely, 314 Ky. 80, 234 S.W.2d 303 (1950); see De Hart v. Illinois Casualty Co., 7 Cir., 116 F.2d 685, 688. If, therefore, in spite of its doubts as to coverage, the insurer elects to take over the insured's defense, it will afterwards be estopped from denying its own liability under the policy. The estoppel referred to here is 'estoppel In paid'; it is ordinarily justified on the ground that the insurer has prejudiced the insured's right to control his own defense. See the dissent in De Hart v. Illinois Casualty Co., 7 Cir., 116 F.2d 685, 688--689; and Rom v. Gephart, 30 Ill.App.2d 199, 173 N.E.2d 828.
With this in view, the insurer may wholly decline to assume the insured's defense when coverage is in...
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