Dunbar v. National Union Fire Ins. Co.
| Decision Date | 04 October 1990 |
| Docket Number | No. 4-90-0042,4-90-0042 |
| Citation | 561 N.E.2d 450,149 Ill.Dec. 172,203 Ill.App.3d 661 |
| Parties | , 149 Ill.Dec. 172 Gary DUNBAR, d/b/a Dunbar Towing, Plaintiff-Appellee, v. NATIONAL UNION FIRE INSURANCE COMPANY, Defendant-Appellant and Crossplaintiff-Third Party Plaintiff (Protow America, Inc. et al., Defendants; AFCO Credit Corporation, Crossdefendant, and W.T. Fish, d/b/a W.T. Fish Insurance Agency, Third Party Defendant). |
| Court | United States Appellate Court of Illinois |
George B. Gillespie, Lee, Humphrey, Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Springfield, for National Union Fire Ins. Co.
Thomas P. Young, Muscarello, Crisanti & Young, P.C., Elgin, for Gary Dunbar.
The plaintiff, Gary Dunbar, d/b/a Dunbar Towing, filed a declaratory judgment action against the defendants, National Union Fire Insurance Company, Protow America, Inc., and AFCO Credit Corporation, seeking a declaration that National Union was obligated to defend the plaintiff in a personal injury suit. The trial court found for the plaintiff. National Union appeals. We reverse.
The facts in this case are not in dispute. On June 27, 1984, the plaintiff applied for a garage owner's liability insurance policy from National Union. On that day a policy was issued to the plaintiff effective June 27, 1984, through June 27, 1985. The policy showed the plaintiff's mailing address to be 4140 N. 8th Street, Springfield, Illinois.
Thereafter, the plaintiff and AFCO entered into an agreement whereby AFCO would finance the premium for the plaintiff's insurance policy with National Union. This agreement contained a power of attorney authorizing AFCO to act on behalf of the plaintiff. The total premium due under this agreement was $10,122. The plaintiff paid AFCO $3,072 as a down payment. The remaining amount was to be paid to AFCO in seven additional monthly payments in the amount of $1,057.27, with the first payment due July 22, 1984.
Thereafter on October 22, 1984, the plaintiff failed to make his October 22, 1984, payment to AFCO as required by the premium finance agreement. On November 1, 1984, AFCO mailed the plaintiff by regular mail, postage prepaid, a notice of intent to cancel if the overdue premium payment was not received in 10 days. The notice was addressed to 4140 N. 8th Street, Springfield, Illinois. The plaintiff admits receiving this notice of intent to cancel from AFCO and also admits failing to pay this payment within ten days. On November 8, 1984, AFCO mailed by regular mail, postage prepaid, a second notice of intent to cancel indicating that cancellation would be effective November 15, 1984, if payment was not received by that date. The plaintiff denies receiving this notice.
On November 20, 1984, AFCO mailed a notice of cancellation by regular mail, postage prepaid, to the plaintiff and National Union indicating cancellation would be effective November 27, 1984. The plaintiff denies receiving this notice. However, AFCO employee Joyce Oetjens testified that it was properly mailed to the plaintiff's last known address.
The plaintiff also failed to make his November 22, 1984, premium payment. On November 26, 1984, National Union received the notice of cancellation from AFCO. AFCO stated that it was cancelling the policy on behalf of the insured by the power of attorney given to it by the plaintiff. National Union did nothing at that time.
On December 15, 1984, the plaintiff's truck was involved in a personal injury accident, giving rise to the instant declaratory judgment action. On December 19, 1984, AFCO received the plaintiff's October 22, 1984, payment. In response, AFCO sent a notice to the plaintiff acknowledging receipt of his late payment but stating that the policy was still cancelled.
On January 16, 1985, the plaintiff wrote to National Union inquiring about the status of his insurance. On January 23, 1985, National Union informed the plaintiff that his insurance had been cancelled effective November 27, 1984. On June 21, 1985, National Union issued a $6,021 check to AFCO for the unearned premium. This check was forwarded to the plaintiff. National Union admits that it never informed any third-party lienholders about the cancelled insurance policy.
The trial court found for the plaintiff, stating that the defendants had failed to properly terminate the insurance policy since they failed to notify the lienholders. The court therefore held that National Union was required to defend and indemnify the plaintiff in the personal injury suit.
On appeal, National Union argues that the trial court erred in finding that the insurance policy was not properly terminated. Specifically, it contends that AFCO complied with the requirements set forth in section 521 of the Insurance Code (the Code) (Ill.Rev.Stat.1989, ch. 73, par. 1065.68).
Section 521 provides in pertinent part:
"When a premium finance agreement contains a power of attorney enabling the premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled by the premium finance company unless such cancellation is effectuated in accordance with this Section.
(1) Not less than 10 days written notice shall be mailed to the insured of the intent of the premium finance company to cancel the insurance contract unless the default is cured within such 10 day period.
(2) After expiration of such 10 day period, the premium finance company may thereafter request in the name of the insured, cancellation of such insurance contract or contracts by mailing to the insurer a...
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