Brosam v. Employer's Mut. Cas. Co.

• Decision Date: 20 July 1965
• Docket Number: Gen. No. 10615
• Citation: 61 Ill.App.2d 183,209 N.E.2d 350
• Parties: Floyd BROSAM and Orean Brosam, d/b/a Brosam Brothers, a partnership, Plaintiffs-Appellees Cross-Appellants, v. EMPLOYER'S MUTUAL CASUALTY COMPANY, Defendant-Appellant Cross-Appellee.
• Court: United States Appellate Court of Illinois

Page 350

209 N.E.2d 350

61 Ill.App.2d 183

Floyd BROSAM and Orean Brosam, d/b/a Brosam Brothers, a partnership, Plaintiffs-Appellees Cross-Appellants, v. EMPLOYER'S MUTUAL CASUALTY COMPANY, Defendant-Appellant Cross-Appellee.

Gen. No. 10615.

Appellate Court of Illinois, Fourth District.

July 20, 1965.

Rehearing Denied Aug. 16, 1965.

Craig & Craig, Mattoon, for appellant.

Thomas J. Logue, Mattoon, for appellees.

TRAPP, Justice.

The Circuit Court of Coles County, Illinois, in a suit for reformation of a public liability insurance policy, brought by Floyd Brosam and Orean Brosam, partners, against Employer's Mutual Casualty Company, entered a decree the effect of which was to reform the insurance policy to extend the liability coverage for property damage to horses in the care, custody and control of the insured partners for breeding purposes. The Circuit Court also entered judgment in favor of the plaintiff partners and against the defendant insurance company in the amount of $2,525.60, being the amount of a judgment that had been rendered against the partners for damages for the death of a stallion resulting from alleged negligence of the partners while the stallion was in their care, custody, and control for breeding purposes. The Circuit Court denied a claim of the plaintiff for $1,000.00 legal expenses in defending the negligence suit and a claim of $500.00 for alleged vexatious delay provided by Ill.Rev.Stat.1963, Chap. 73, sec. 767.

Both parties appeal from the decree and judgments of the Circuit Court.

The written insurance policy was delivered to the plaintiff after the incident which gives rise to this action. Such policy, which defendant claims is controlling of the issues in this case, contained exclusion of liability for damage to property rented to the insured, or in the care, custody or control of the insured.

Defendant, in seeking to reverse the decree of reformation of the policy and the money judgment contends (1) that the judgment creditor in the negligence suit against the partners is the sole real party in interest and is a necessary party to the suit, (2) that the statute of frauds presents a defense to the action, (3) that parol evidence is inadmissible to vary the terms of the written insurance policy as delivered, (4) that the plaintiffs accepted the terms of the written insurance policy as delivered, (5) that the evidence upon which reform of the insurance policy was based consisted of declarations of an insurance solicitor whose authority was not established by the evidence and certain letters and correspondence which were not properly authenticated.

The defendant's motion to dismiss the Fourth Amended Complaint is based upon Section 48 of Chapter 110, Ill.Rev.Stat.1963, and alleges that the complaint shows on its face that plaintiffs have no interest in the cause of action and that only the judgment creditor has any interest in the cause of action. The trial court properly denied the motion. The cases cited, Holowaty, for Use of Cherka v. Prudential Insurance Co., 282 Ill.App. 584 at 588; Hays v. Country Mutual Insurance Co., 28 Ill.2d 601, 192 N.E.2d 855, illustrate the fact that a garnishment proceeding is sometimes a proper remedy for a person who may be entitled to the proceeds of another's insurance. The question here presented is not discussed in either of those case. At common law in Illinois, it was well established that if a proper party brought suit he need name no use party or real party in interest and that naming such party was surplusage. Lee v. Pennington, 7 Ill.App. 247 on 252; Schiff v. Supreme Lodge, Order of Mutual Protection, 64 Ill.App. 341 on 343; Brownell Improvement Co. v. Critchfield, 96 Ill.App. 84 on 90; Continental Casualty Co. v. Maxwell, 127 Ill.App. 19 on 23; Cunat v. Supreme Tribe of Ben Hur, 157 Ill.App. 138 on 144; Smith, for Use of Karle v. Vandalia R. R. Co., 188 Ill.App. 426 on 429; People, for Use of Dickes v. Egan, 239 Ill.App. 61 on 67; Grove, for Use of Hamm Post No. 101, Am. Legion v. Board of Supervisors, 246 Ill.App. 241 on 246; Stefanich v. Richard, 314 Ill.App. 183 on 186, 41 N.E.2d 104; Chadsey Adm'r v. Lewis, 1 Gilman 153, 159; Atkins v. Moore, 82 Ill. 240, 241; Schott v. Youree, 142 Ill. 233, 241, 31 N.E. 591; Tedrick v. Wells, 152 Ill. 214 on 217, 38 N.E. 625; Knight v. Griffey, 161 Ill. 85, 87, 43 N.E. 727.

Illinois does not have a 'real party in interest statute'. Smith-Hurd, Ill.Ann.Stat., chap. 110, sec. 22, 'Historical and Practice Notes', second paragraph; also 'Law Review Commentaries' quoting William L. Eagleton, June 1936, 3 Univ. of Chicago Law Review 597, 603 as follows: 'The Illinois Civil Practice Act is almost unique in omitting the 'real party in interest' provision.' Section 1000 of the insurance Code, Ill.Rev.Stat., 1959, chap. 73, par. 1000, attempts by regulation of the policies of casualty companies to provide for direct suit in case of insolvency of the insured.

Even where a right of subrogation may exist, the person having an interest in the suit (here the contract of insurance) may bring the suit in his own name. Osgood v. Chicago and Northwestern Railway Co., 253 Ill.App. 465 on 466; Ebel v. Collins, 47 Ill.App.2d 327, 198 N.E.2d 552 on 555.

Additionally, the facts stated in the motion to dismiss are not correct. It does not appear on the face of the complaint that the judgment creditor is the only one having any interest in the insurance. The complaint very clearly alleges that the defense of the suit by the now judgment creditor was tendered to the insurance company, that the defense was refused and the plaintiff was damaged thereby to the extent of $1,000.00 costs of defending the suit. The complaint also prays damages of $500.00 for vexatious delay in payment under section 767 of chapter 73, Ill.Rev.Stat.1963.

If there is a provision in the liability policy of the defendant allowing direct suit by the judgment creditor, the fact does not appear in the motion to dismiss or anywhere in the record, so far as we are advised. In its brief defendant says that its obligation under Coverage C of the policy is 'to pay on behalf of the named insured all sums which the insured shall become legally obligated to pay'.

This point could well have been raised by a motion to make the judgment creditor a party. This was not done. A motion to dismiss the suit was filed and was properly denied.

The proceeding to reform the insurance policy was properly the burden of the insured and not the burden of the judgment creditor. This is an equity proceeding. In our opinion the judgment creditor would have been a proper party. The defendant should have a right to require that payment of the judgment in favor of Neal Strole against the plaintiffs would be a satisfaction of so much of the judgment in this case as is based upon the earlier judgment. Balch v. English, 247 Ill.App. 429 on 435. See also London and Lancashire Indemnity Co. v. Tindall, 377 Ill. 308 on 315, 36 N.E.2d 334.

Not having sought to bring the judgment creditor in by motion to add him as a party, the defendant may still, if a difficulty arises, require the satisfaction of all claims arising out of the transaction with one payment.

The defendant contends that the suit is a suit to charge the defendant with the debt, default or miscarriage of another and that the Statute of Frauds, chap. 59, sec. 1, Ill.Rev.Stat., 1959, requires the promise in reference thereto to be in writing. If the circuit court was correct in the decree reforming the policy then there would be a writing to charge the defendant with the insured's debt, default or miscarriage.

The defendant urges that parol evidence is inadmissible to vary the terms of the written contract which it contends is the policy of insurance delivered September 1, 1960. There is no doubt that parol evidence is admissible to show the real agreement between parties when a mistake has been made in the written contract and the evidence is for the purpose of making the contract conform to the original intent of the parties. Mahon v. State Farm Mutual Ins. Co., 36 Ill.App.2d 368 on 376 et seq., 184 N.E.2d 718, and cases therein cited.

While admitting that in case of mutual mistake a policy may be reformed on the basis of parol evidence, the defendant argues that the evidence must be clear and convincing and cites Hyman-Michaels Co. v. Massachusetts Bonding and insurance Co., 9 Ill.App.2d 13 at 26-27, 132 N.E.2d 347; Pearce v. Osterman, 343 Ill. 175 at 176, 175 N.E. 416; Richer v. Catholic Order of Foresters, 344 Ill.App. 200 at 203, 100 N.E.2d 807; Harley v. Magnolia Petroleum Co., 378 Ill. 19, 37 N.E.2d 760, 137 A.L.R. 900, and other authority. The principles cited are correct but they are, in the authorities cited, applied to various fact situations which are not closely analogous to the situation here presented.

Defendant also contends that plaintiffs accepted the policy and that their failure to read the same presents no excuse for failure to know the terms and cites Richer v. Catholic Order of Foresters, 344 Ill.App. 200 at 203, 100 N.E.2d 807; Spence v. Washington National Ins. Co., 320 Ill.App. 149 at 155, 50 N.E.2d 128; Rozgis v. Missouri State Life Ins. Co., 271 Ill.App. 155 at 157. Plaintiffs answer that failure to read a policy is not a bar to reformation citing Mahon v. State Farm Mutual Automobile Ins. Co., 36 Ill.App.2d 368 at 379, 184 N.E.2d 718, and other authority. All cases depend on the particular facts and here the unique fact situation is that there was no written binder and the accident occurred almost three weeks prior to the delivery of the written policy. Additionally, as will be noted, the insured, the agent and the agent's superior all though that coverage existed after the loss and after the issuance of the written policy. Under the evidence in this case it could equally well be said that the agent didn't read the policy as that the insured did not.

Proceeding to the...