Country Mut. Ins. Co. v. Transit Cas. Co.

• Decision Date: 28 April 1978
• Docket Number: No. 77-320,77-320
• Citation: 59 Ill.App.3d 283,375 N.E.2d 575,16 Ill.Dec. 702
• Parties: , 16 Ill.Dec. 702 COUNTRY MUTUAL INSURANCE COMPANY, Subrogee of Arlyn P. Jones and Geneva J. Jones, Plaintiff-Appellant, v. TRANSIT CASUALTY COMPANY, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 575

375 N.E.2d 575

59 Ill.App.3d 283, 16 Ill.Dec. 702

COUNTRY MUTUAL INSURANCE COMPANY, Subrogee of Arlyn P. Jones and Geneva J. Jones, Plaintiff-Appellant, v. TRANSIT CASUALTY COMPANY, Defendant-Appellee.

No. 77-320.

Appellate Court of Illinois,Third District.

April 28, 1978.

David L. Cover, James S. Dixon, Peoria, for plaintiff-appellant.

David M. Lynch, Westervelt, Johnson, Nicoll & Keller, Peoria, for defendant-appellee.

STOUDER, Justice:

This action was commenced by plaintiff, Country Mutual Insurance Company as subrogee of Arlyn Jones and Geneva Jones, against defendant, Transit Casualty Company, to recover amounts which plaintiff had paid to the Jones' under an insurance policy. Upon appropriate motion by defendant, the circuit court of Peoria County dismissed two counts of the complaint and granted summary judgment for defendant on the third count and plaintiff appealed.

Three issues are presented for review: first, whether plaintiff's right of subrogation is affected by a settlement and release given by plaintiff's insured to defendant's insured; second, whether defendant improperly interfered with the subrogation contract between Country Mutual Insurance Company and its insured, Arlyn and Geneva Jones; and third, whether a contract existed between plaintiff and defendant which has been breached by defendant. We reverse and remand.

The facts leading to the present action are relatively certain. In July of 1971, Arlyn and Geneva Jones (husband and wife) were involved in a vehicular accident with a tractor-trailer unit driven by James Baughman, an employee of Lincoln Transfer Company. The tractor-trailer unit was owned by Lincoln Transfer Company. At the time of the collision an insurance policy between the plaintiff and the Jones' provided insurance coverage for damage to their automobile as well as medical coverage for them in the maximum amount of $5,000. Pursuant to the provisions of the insurance policy, plaintiff paid to Arlyn Jones $647.28 ($747.28 actual damage less $100 deductible) for damage to his automobile and $5,000 to Geneva Jones for medical expenses. Mr. and Mrs. Jones agreed to assign and reimburse plaintiff for the full amount received under their policy if they should recover from anyone for the damages arising from the accident.

Shortly after the collision, plaintiff sent a "notice of lien and subrogation interest" by letter to James Baughman, claiming a lien on any proceeds to be paid for the loss and damage sustained by Mrs. and Mrs. Jones. The letter also advised Baughman of plaintiff's subrogation interest. Copies of the letter were sent to Lincoln Transfer and to Garrison Insurance Agency, agent for Lincoln's insurance carrier, Transit Casualty Company.

In early 1972, defendant received a series of further correspondence from plaintiff as to certain specifics of plaintiff's subrogation claim. Defendant attempted to pay plaintiff for the property damage portion of plaintiff's subrogation claim, unaware of the possible existence of a bodily injury subrogation claim. When payment was rejected by plaintiff, the defendant responded on May 23, 1973 by stating that the property damage subrogation claim was paid prior to defendant's knowledge that personal injury was involved and assured plaintiff that as soon as the bodily injury portion of the claim was concluded, it would give plaintiff's subrogation interest immediate attention. After receiving notification of plaintiff's $5,000 payment to Geneva Jones for medical expenses, defendant advised plaintiff by letter that "suit is now pending on this matter and when a settlement is reached your interest will be protected." Subsequent to this letter, a settlement was reached between plaintiff's insured and defendant, representing its insured, for the damages the Jones' sustained as a result of the collision. Based upon the settlement, defendant issued three drafts totaling $150,000. One of these drafts was issued to Arlyn P. Jones, Geneva Jones and the Country Companies in the amount of $3,666.67, apparently as payment for plaintiff's subrogation claim. The amount of the draft was provided by Elmo Koos, attorney for plaintiff's insured. According to defendant, Mr. Koos stated that he was representing the interest of plaintiff. Mr. and Mrs. Jones, plaintiff's insured, each executed a general release to Lincoln Transfer Company and James Baughman for claims arising out of the accident. Plaintiff was unaware of the...