Bohnen Intern., Inc. v. Liberty Mut. Ins. Co., Inc.

• Decision Date: 30 December 1983
• Docket Number: No. 83-138,83-138
• Citation: 458 N.E.2d 644,120 Ill.App.3d 657,76 Ill.Dec. 244
• Parties: , 76 Ill.Dec. 244 BOHNEN INTERNATIONAL, INC., a Delaware corporation and John J. Bohnen, Jr., Individually and as agent for Bohnen International, Inc., Plaintiff-Appellee, v. LIBERTY MUTUAL INSURANCE COMPANY, INC., a Foreign Corporation, Defendant- Appellant.
• Court: United States Appellate Court of Illinois

Page 644

458 N.E.2d 644

120 Ill.App.3d 657, 76 Ill.Dec. 244

BOHNEN INTERNATIONAL, INC., a Delaware corporation and John

J. Bohnen, Jr., Individually and as agent for

Bohnen International, Inc., Plaintiff-Appellee, v. LIBERTY MUTUAL INSURANCE COMPANY, INC., a Foreign

Corporation, Defendant- Appellant.

No. 83-138.

Appellate Court of Illinois,

Second District.

Dec. 30, 1983.

Sweeney & Riman, Ltd., Harry E. Sachrison, John S. Huntley, Chicago, for defendant-appellant.

Dallas C. Ingemunson, Yorkville, Puckett, Barnett, Larson, Mickey, Wilson & Ochsenschlager, Peter K. Wilson, Jr., Aurora, for plaintiff-appellee.

UNVERZAGT, Justice:

The plaintiffs, Bohnen International, Inc. and John J. Bohnen, Jr., sought recovery for the loss of certain tractors from the defendant, Liberty Mutual Insurance Company, Inc., under an insurance policy issued by the defendant (Liberty). Summary judgment was entered for Bohnen International, and against the defendant, on the issue of liability. A jury trial was conducted on the issue of damages suffered by Bohnen International as the result of the loss. A verdict in favor of Bohnen International in the amount of $36,500 was awarded. Liberty appeals.

Bohnen International was engaged in the business of selling and servicing new and used trucks in Oswego, Illinois. Pursuant to an agreement with Charles Odom and Joan Odom, the plaintiffs sold the Odoms three new tractors for a price of $106,900. As partial payment for the new trucks, the Odoms gave the plaintiffs three used tractors.

Two of the trade-in tractors, a 1973 International Harvester and a 1974 Ford, were subsequently seized by the FBI and the police on behalf of the true owners. The plaintiffs state that the two used tractors were stolen vehicles. The defendant Liberty claims that it was never proven the tractors were stolen. In its summary judgment order, the court stated the vehicles had been stolen.

The plaintiffs filed a complaint against the Odoms for breach of warranty of title to the two used tractors. A default judgment was entered against the Odoms for $33,988.59.

The plaintiffs sought recovery for the loss of the two vehicles from Liberty. The plaintiffs claimed the money was due them under the terms of an insurance policy issued by Liberty in consideration for premiums paid by the plaintiffs. The damage amount was based upon the trade allowance and the plaintiffs' investment in reconditioning the tractors.

The court granted the plaintiffs' motion for summary judgment and against Liberty on the issue of liability only. The judgment provided:

"f) In July 1976 plaintiff had, among others, three new motor vehicles covered by defendant's policy, which were sold to defendant Odom for $106,900.

g) The purchase price included three used motor vehicles received in trade and credited against the purchase price in the amount of $30,000.00 and which became motor vehicles covered by defendant's policy.

h) Plaintiff had not entrusted custody or possession of the new motor vehicles to any one prior to sale or consigned or franchized same, but rather made the sale direct to defendant Odom.

i) In fact the used motor vehicles had been stolen and by virtue thereof plaintiff lost permanent use and possession of both the new motor vehicles taken by defendant Odom and also the old motor vehicles returned to the rightful owners.

j) That such conduct constituted a theft.

k) That loss under the policy is limited to direct but may be subject to a further limitation in the case of loss and plaintiff claims additional expenses of $3,238.59 for restoration of the vehicles."

The judgment went on to find that questions of fact remained as to John J. Bohnen's agency and the amount of damages. Summary judgment for John J. Bohnen was denied.

The court denied Liberty's motion to vacate this judgment and enter summary judgment in its favor. The same judgment allowed the plaintiff to non-suit John J. Bohnen, to amend the amount of damages to $31,238.59 and to amend the month of loss from August to October 1976, and to withdraw a jury demand. A fifth amended complaint reflecting the amendments was filed.

A trial on the issue of damages resulted in a verdict in the amount of $36,500.

Liberty's motion for judgment NOV and for entry of judgment not to exceed $31,724 was denied.

Liberty filed a post-trial motion which sought to vacate the prior judgment and for judgment in its favor because the loss was not covered by the Automobile Physical Damage Insurance Endorsement. The motion was denied.

On appeal, Liberty does not contest the fact that the plaintiff (Bohnen) was the named insured on a policy of insurance issued by Liberty. The policy period ran from November 1, 1975, to November 1, 1976, covering the time of loss. Nor does Liberty dispute the fact that the three new tractors sold to the Odoms and the three used tractors received by the plaintiff were "covered automobiles" under the endorsement to the insurance policy. Liberty claims that the endorsement, entitled Automobile Physical Damage Insurance Endorsement, either did not cover or specifically excluded the loss suffered by the plaintiff.

Pertinent portions of the endorsement are:

"1. Coverage Agreements

1. The company will pay for loss to covered automobiles under

Theft Coverage--caused by theft or larceny,

* * *

* * *

Exclusions

This insurance does not apply:

* * *

* * *

(e) to loss occurring

(iii) after, or resulting from, the named insured's voluntarily parting with title to or possession of any covered automobile, if induced to do so by any fraudulent scheme, trick, device or false pretense, or from embezzlement, conversion, secretion, theft or larceny committed by any person entrusted by the named insured with custody or possession of the covered automobile;

* * *

* * *

IV. Additional Definitions

'loss' means direct and accidental loss or damage; * * * "

The first issue presented for review is whether the trial court erred in granting summary judgment for the plaintiff on the issue of the defendant's liability under the endorsement. The defendant views that issue in two parts. First, it claims that any loss to the plaintiff resulted from the plaintiff's voluntary parting with the three new tractors to the Odoms upon their misrepresentation they had good title to the used tractors. Although the three new vehicles were "covered automobiles," paragraph (e)(iii) of the endorsement excluded any loss from the sale to the Odoms. Second, theft coverage under the endorsement did not cover the loss of the two used vehicles because seizure by the FBI was not a theft.

The plaintiff points out that the loss it claims is not the three new tractors delivered to the Odoms but the two used tractors seized by the FBI. It further claims that the theft giving rise to the defendant's liability is not the seizure of the used tractors by the FBI. The theft which caused the plaintiff's loss was the original theft by the Odoms of the 1973 International Harvester and the 1974 Ford. The original theft caused the seizure which resulted in the plaintiff's loss. The plaintiff claims that the policy does not require the loss to be "directly" caused by the theft. Direct modifies loss.

Since the trial court's summary judgment order does not single out what actions constituted the theft, all three arguments of the parties are reviewed.

Summary judgment is properly granted only where no triable, genuine issues of material fact remain and the movant is entitled to judgment as a matter of law. (Blaylock v. Country Mutual Insurance Co. (1980), 85 Ill.App.3d 1042, 41 Ill.Dec. 351, 407 N.E.2d 849.) The facts of this case are not in dispute. The construction of language in an insurance policy and its effect are questions of law. (Illinois Casualty Co. v. Peters (1979), 73 Ill.App.3d 33, 29 Ill.Dec. 284, 391 N.E.2d 547.) The extent of coverage based on the construction of the endorsement's language herein was a question of law properly decided on a motion for summary judgment. (John Bader Lumber Co. v. Employers Insurance of Wausau (1982), 110 Ill.App.3d 247, 65 Ill.Dec. 792, 441 N.E.2d 1306.) However, as a question of law, the question of insurance coverage can be determined upon review, independent of the trial court's judgment. Illinois Casualty Co. v. Peters (1979), 73 Ill.App.3d 33, 29 Ill.Dec. 284, 391 N.E.2d 547.

In its first argument, Liberty contends that the loss suffered by the plaintiff is the loss of the three new vehicles taken by the Odoms. The loss was specifically excluded by the exclusionary provision of (e)(iii) of the insurance endorsement. Liberty claims that the plaintiff voluntarily parted with the three new vehicles and cannot recover for the loss resulting from the transaction.

The plaintiff points out that it sought recovery for the loss of two used vehicles seized by the FBI. It argues that that loss is not excluded by the provision (e)(iii) and therefore Liberty's argument is irrelevant on that point.

The plaintiff did not seek recovery on the loss of the three new vehicles. As both sides would acknowledge, the three new tractors were "covered automobiles" under the policy. However, their loss in this factual situation was specifically excluded by the terms of the endorsement.

Provision (e)(iii) is very similar to an exclusionary clause before the court in Baxter Motors, Inc. v. Iowa Hardware Mutual Insurance Co. (1958), 15 Ill.App.2d 524, 146 N.E.2d 797. In Baxter, the plaintiff allowed a man to take a car for the weekend pursuant to an agreement that the man would return on Monday to pay for it. The plaintiff and the man had earlier entered into an agreement whereby the plaintiff would sell the car to the man for a certain sum of money. The car and the man were never found. The plaintiff sought recovery for the loss of the car under an insurance policy from the defendant.

Although the trial court found for the plaintiff, the appellate court reversed on...