Employers' Liability Assur. Corp. v. Coronet Ins. Co.

Decision Date10 February 1969
Docket NumberGen. No. 52868
Citation106 Ill.App.2d 24,245 N.E.2d 629
PartiesEMPLOYERS' LIABILITY ASSURANCE CORPORATION, Ltd., a corporation, Plaintiff-Appellee, v. CORONET INSURANCE COMPANY, a corporation, Defendant-Appellant.
CourtUnited States Appellate Court of Illinois

Haft, Shapiro & Haft, Chicago, for defendant-appellant, Morris A. haft, Chicago, of counsel.

Teller, Levit & Silvertrust, Chicago, for plaintiff-appellee.

Howard M. Turner, Chicago, of counsel.

ALLOY, Presiding Justice.

The present action was instituted on a judgment entered in the State of Louisiana in favor of plaintiff, Employers' Liability Assurance Corporation, Ltd., against defendant, Coronet Insurance Company, a corporation. The action was nominally to register the Louisiana judgment and to recover a new Illinois judgment thereon.

The background of the Louisiana judgment arose from the circumstance that Milton Cryer was insured with Coronet Insurance Company. On December 27, 1964, he was involved in an automobile accident with an automobile driven by David Alford and owned by James Alford, who were both residents of Louisiana. Two passengers were injured in the Alford car. Cryer died as a result of his injuries. James Alford was insured with plaintiff, Employers' Liability Assurance Corporation, Ltd. and this policy provided uninsured motorists coverage.

The record disclosed that Employers', by determined that Cryer was not insured, so they paid James Alford $2,625 for the loss to his automobile and paid $1,150 for settlement of the two injury claims to passengers in the Alford automobile. This made a total paid out of $3,775. When Employers' insurance company found out that Cryer actually was insured with Coronet Insurance Company, Employers' brought suit against Coronet Insurance Company and the administrator of the Cryer Estate. The action was instituted in Louisiana by Employers' as subrogee of the car owner and the injured passengers. A Louisiana statute allowed a direct action to be filed as against Coronet Insurance Company. While Coronet first appeared specially in Louisiana, the Louisiana court obtained jurisdiction over Coronet when Coronet eventually defended the action. The Louisiana court entered judgment against Coronet for $3,775 on October 12, 1966, but there was no judgment entered against the Milton Cryer Estate or as against the widow of Milton Cryer individually.

The Coronet Insurance Company policy which insured Cryer, contained the following clauses which are relevant in the instant case:

'1. No person or organization shall have any right under this policy to join the company as a party to any action against the insured to determine the insured's liability, nor shall the company be impleaded by the insured or his legal representative.

2. No judgment against any person or organization alleged to be legally responsible for the bodily injury shall be conclusive, as between the insured and the company, of the issues of liability of such person or organization or of the amount of damages to which the insured is legally entitled unless such judgment is entered pursuant to an action prosecuted by the insured with the written consent of the company.'

The Louisiana statute which permitted direct actions against insurance companies, provided in part as follows:

'No policy or contract of liability shall be issued or delivered in this state, unless it contains provisions to the effect that * * * The injured person or his or her survivors or heirs hereinabove referred to, at their option, shall have a right of direct action against the insurer within the terms and limits of the policy; and such action may be brought against the insurer alone, or against both the insured and insurer jointly and in solido, in the parish in which the accident or injury occurred or in the parish in which an action could be brought against either the insured or the insurer under the general rules of venue prescribed by Art. 42, Code of Civil Procedure. This right of direct action shall exist whether the policy of insurance sued upon was written or delivered in the State of Louisiana or not and whether or not such policy contains a provision forbidding such direct action, provided the accident or injury occurred within the State of Louisiana.'

Illinois statutory law prohibits actions directly against an insurance company and the pertinent provisions of the Illinois statute are as follows: (1967 Illinois Revised Statutes, Ch. 73, § 1000 - Insurance Code)

'No policy of insurance against liability or indemnity for loss or damage to any person other than the insured, or to the property of any person other than the insured, for which any insured is liable, shall be issued or delivered in this State * * * unless it contains in substance a provision * * * that in case execution against the insured is returned unsatisfied in any action brought by the injured person * * * an action may be maintained by the injured person * * * against such company * * * for the amount of the judgment in such action not exceeding the amount of the policy.'

The effect of such provision in the State of Illinois is that there can be no direct action unless a judgment is first obtained against the insured.

It is also noted that under the Illinois Civil Practice Act, Ch. 110, § 25(2) (1967 Illinois Revised Statutes), which deals with the problem of bringing in additional parties to a lawsuit, there is a provision:

'Nothing herein applies to liability insurers or creates any substantive right to contribution among tortfeasors or against any insurer or other person which has not heretofore existed.'

After the judgment for $3,775 had been obtained in Louisiana, Employers' filed a petition in Cook County, Illinois, to register the foreign Louisiana judgment. This proceeding is authorized under 1967 Illinois Revised Statutes, Ch. 77, §§ 88--105. Defendant, Coronet, answered the petition to register the Louisiana judgment in Illinois and contended that such judgment should not be so registered or judgment entered on it. In Paragraph 6 of the answer of Coronet, it is specifically alleged that the judgment entered in the State of Louisiana is based upon the claim, the grounds of which are repugnant to the basic policy to the State of Illinois, and also that such action was brought contrary to the terms of the casualty policy issued by defendant and pursuant to a statute and the laws of the State of Louisiana, so that in truth and in fact, this action was brought upon such statute and not for the registration of judgment as the pleadings would have it appear. Employers' in the Illinois action for registration of the Louisiana judgment, filed a motion to strike defendants amended answer to the petition to register the judgment. Upon the hearing held in Cook County, all of the Louisiana pleadings were presented to the trial court. At the conclusion of the hearing, the trial court in Illinois stated that from the pleadings it appeared that defendant had submitted to the jurisdiction of the court in Louisiana, and the court then sustained the motion to strike defendant's answer and entered an order directing judgment in the sum of $4,032.25 plus costs of suit.

On appeal in this Court, defendant Coronet asserts that the action brought in the cause is a direct action as against the defendant and in violation of the policy provisions and the statutory law of Illinois; that it violates the public policy of the forum and; likewise, that the Louisiana direct action statute is procedural rather than substantive in character. It is also contended that the judgment rendered in Louisiana is not entitled to be registered in Illinois under the full faith and credit clause of the United States Constitution. Coronet further contends that the filing of a petition for registration of the foreign decree by the subrogee constitutes a direct action as against the defendant contrary to the policy terms and violates the public policy of the State of Illinois.

Cases cited by Coronet in support of its contention involve situations where the original action was begun either in the State of Illinois or in another State which prohibited direct actions as against insurance companies. In such cases there was an attempt to apply the law of some other state which allowed such direct action and the courts in this State refused to apply the foreign law on the ground that it was opposed to Illinois public policy. Marchlik v. Coronet Insurance Company, 40 Ill.2d 327, 239 N.E.2d 799, to which defendant referred in its brief, was a case of this type. In the Marchlik case the Illinois court concluded that the direct action statute of Wisconsin was substantive law but that it was not applied in Illinois in an action directly against insurance companies because, as the court said, at page 332, 239 N.E.2d at page 802, 'An examination of Illinois law and customs will, we believe, demonstrate that entertaining direct action suits is contrary to a firmly-fixed public policy.'

Defendant also cites a number of cases concluding that the Louisiana direct action statute is procedural, thus requiring that the law of the forum be applied to prohibit direct actions against insurance companies. It is noted, however, that these cases are applicable to the instant case Only if the proceedings in Illinois to register the judgment can be held to be an original direct action against an insurance company. The other Illinois cases cited by defendant, Pholman v. Universal Mutual Casualty Co., 12 Ill.App.2d 153, 138 N.E.2d 848, Piper v. State Farm Mutual Auto Ins. Co., 1 Ill.App.2d 1, 116 N.E.2d 86 and Millsap v. Central Wisconsin Motor Transport Co., 41 Ill.App.2d 1, 189 N.E.2d 793, all involved situation where part of the transaction took place in a foreign state and the initial action was begun in Illinois. There was an attempt to apply, in Illinois, the direct action statute of the other state. The cases are, therefore,...

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