Halloran v. Dickerson

• Citation: 223 Ill.Dec. 323,287 Ill.App.3d 857,679 N.E.2d 774
• Decision Date: 09 April 1997
• Docket Number: No. 5-96-0410,5-96-0410
• Parties: , 223 Ill.Dec. 323 June E. HALLORAN, Executrix of the Estate of John W. Halloran, Deceased, Plaintiff-Appellee, v. James A. DICKERSON and Debra A. Roberson, Defendants, (Union Automobile Insurance Company, Intervenor-Appellant.)
• Court: United States Appellate Court of Illinois

Page 774

679 N.E.2d 774

287 Ill.App.3d 857, 223 Ill.Dec. 323

June E. HALLORAN, Executrix of the Estate of John W.

Halloran, Deceased, Plaintiff-Appellee, v. James A. DICKERSON and Debra A. Roberson, Defendants,

(Union Automobile Insurance Company, Intervenor-Appellant.)

No. 5-96-0410.

Appellate Court of Illinois,

Fifth District.

April 9, 1997.

Karen L. Kendall, Gary D. Nelson, Heyl, Royster, Voelker & Allen, Peoria, Robert H. Shultz, Jr., Edwardsville, for appellant.

Anne C. Juhasz, Keith A. Jensen, Callis, Papa, Jensen, Jackstadt & Halloran, P.C., Granite City, for appellee.

Justice MAAG delivered the opinion of the court:

On July 27, 1993, John Halloran was involved in an automobile accident with another vehicle operated by James Dickerson. The owner of the vehicle being operated by Dickerson was Debra Roberson. John Halloran died the following day of injuries suffered in the accident. June Halloran was appointed executrix of the estate of John Halloran, and she commenced an action against Dickerson premised on alleged negligence and wilful and wanton conduct. In a separate count, Roberson was sued on a negligent entrustment theory.

The defendants were insured under a policy of insurance issued by Union Automobile Insurance Company (Union). The bodily injury limits applicable to each person injured or killed was $25,000. Union assumed the defense of Dickerson and Roberson pursuant to the defense provisions of its policy. On June 22, 1995, a jury returned a verdict in favor of Halloran in the amount of $2.5 million. Judgment was entered on the verdict the same day.

In addition to the $25,000-per-person bodily injury limits, the policy provided:

"Supplementary Payments

In addition to our limit of liability, we will pay on behalf of an "insured":

* * *

3. Interest accruing after a judgment is entered in any suit we defend. Our duty to pay interest ends when we offer to pay that part of the judgment which does not exceed our limit of liability for this coverage."

On July 31, 1995, Union mailed a check for $49,041.16 to the Madison County circuit clerk's office to be placed in an escrow account and held by the clerk "until such time as there is a final resolution" of the case. Receipt by the clerk was logged as occurring at 11:57 a.m., August 1, 1995. The check represented what Union believed to be the accrued interest to July 31, 1995, ($24,041.16) along with the $25,000 policy limits. In August 1995, counsel for plaintiff requested the circuit clerk to release the funds from the account to plaintiff. However, when the court approved disbursement of the funds to plaintiff, Union objected. Union faxed a letter to the clerk stating that posttrial motions were pending and that the money was not to be released until a final resolution of the case had occurred. The court then vacated its order to disburse the funds. On September 13, 1995, plaintiff mailed to Union's vice president of claims a list of claimed taxable costs. The total costs claimed amounted to $1,991.60. On April 30, 1996, Union paid the plaintiff $1,991.60, which it designated as payment of court costs.

On September 15, 1995, plaintiffs filed a "Motion to Disburse Funds". The motion recited that a request had been made to release the funds deposited with the clerk, and it asserted that due to Union's objection no disbursement was ordered. It further asserted that the tender to the clerk was improper and invalid, and that in any event the interest amount as computed by Union was deficient. The prayer for relief requested the "court to disburse the funds deposited by Union Insurance Group in this case and to compel payment of all further accrued interest up to the date of valid tender."

On October 6, 1995, following discussions between the parties, it was agreed to suspend the accrual of interest as of that date. The precise terms of the agreement are discussed later in this decision. However, as part of this agreement, Union agreed that no hearing would be necessary on that part of plaintiff's September 15, 1995, motion which sought disbursal of the funds.

Plaintiff finally gained control of the $49,041.16, less a $1,226.03 handling fee (2.5% of the funds held) assessed by the clerk's office, on December 6, 1995. The fee was charged by the clerk pursuant to section 27.1a(bb)(1) of the Clerk of Courts Act (705 ILCS 105/27.1a(bb)(1) (West 1992)).

On April 10, 1996, plaintiff informed Union that its October agreement to stop the accrual of interest was terminated.

On April 26, 1996, a hearing was held on that part of plaintiff's September 15, 1995, motion which sought a court determination as to the amount of interest owed. The court in an order dated May 9, 1996, ruled as follows:

"ORDER

Cause comes on for hearing on Plaintiff's Motion to Disburse Funds. After hearing argument of counsel, the Court finds:

1. Judgment was rendered in the amount of $2,500,000.00 on June 22, 1995;

2. Interest runs at a rate of 9% per annum on said judgment, or $616.44 per diem;

3. On July 31, 1995, Union Automobile Insurance Company sent a check pursuant to its contract with its insured for $49,041.16 to the office of the Circuit Clerk of Madison County, which sum represented the policy limit of $25,000.00 plus $24,041.16 in accrued interest to that date.

4. The court ordered disbursement of the Clerk's fund on August 16, 1995, but Union Insurance objected to this disbursal. The Court then vacated the order to disburse until Union Insurance agreed to disbursement.

5. The Plaintiff was not given access to or control over these funds and, therefore, the Court finds that no valid tender was effected to plaintiff.

6. The Circuit Clerk's office deducted $1,226.03, or 2 1/2%, as a handling fee.

7. The defendant failed to pay costs of $1,991.60 until Tuesday, April 30, 1996.

8. On October 6, 1995, plaintiff's counsel agreed with defense counsel, Robert Schultz, to suspend the further accrual of interest as settlement negotiations were beginning.

9. Accrued interest to that date totalled $65,959.08.

10. On December 6, 1995, plaintiff was first given access to and control over the $49,041.16 deposited by defendant with the Madison County Circuit Clerk.

11. At that point, the judgment was reduced by $25,000.00, to $2,475,000.00,; the accrued interest reduced to $41,917.92; with taxable costs of $1,991.60 outstanding and payable by the defendant.

12. On April 10, 1996, plaintiff sent a letter to defense counsel, Robert Schultz, indicating that, due to an apparent lack of interest in settlement negotiations on the part of the defendant, the agreement to stop the further accrual of interest was terminated and that interest was again running.

13. The interest on the modified judgment amount of $2,475,000.00 at 9% per annum totals $610.27 per diem.

THE COURT HOLDS that plaintiff is entitled to collect accrued interest from Union Automobile Insurance Company in the amount of $52,292.58, with said amount representing interest accrued to April 26, 1996. Plaintiff is further entitled to interest at a rate of $610.27 per day until paid in full. Defendant is ordered to reimburse plaintiff $1,226.03 as and for fees withheld by the Circuit Clerk's office.

SO ORDERED"

On appeal, Union contends that:

(1) Payment of the funds to the circuit clerk constituted sufficient tender of the funds so as to relieve Union of further liability for interest;

(2) The circuit clerk's fee deduction did not affect the sufficiency of Union's tender;

(3) Plaintiff's failure to object to Union's payment of the funds to the court waives any objections regarding the mode of tender;

(4) Other jurisdictions impose a less stringent standard for determining an insurer's compliance with the terms of its policy;

(5) Public policy demands that no further interest be found due; and

(6) The October 6, 1995, agreement of the parties to stop the accrual of interest precludes the award of any interest beyond that point.

Illinois law provides for a statutorily mandated accrual of interest on judgments. 735 ILCS 5/2-1303 (West 1992). Specifically, section 2-1303 of the Code of Civil Procedure (Code) provides:

"Judgments recovered in any court shall draw interest at the rate of 9% per annum from the date of the judgment until satisfied * * *. When judgment is entered upon any award, report or verdict, interest shall be computed at the above rate, from the time when made or rendered to the time of entering judgment on the same, and included in the judgment. Interest shall be computed and charged only on the unsatisfied portion of the judgment as it exists from time to time. The judgment debtor may[,] by tender of payment of judgment, costs and interest accrued to the date of tender, stop the further accrual of interest on such judgment notwithstanding the prosecution of an appeal, or other steps to reverse, vacate or modify the judgment." 735 ILCS 5/2-1303 (West 1992).

Nothing less than full, formal tender in compliance with the statute will operate to stop the accrual of interest on the judgment. Thomas v. Missouri-Illinois R.R. Co., 30 Ill.App.3d 40, 42, 332 N.E.2d 139, 141 (1975).

An inquiry essential to this analysis is a determination of what makes up the "judgment" that interest accrues upon. Illinois law has long held that all recoverable costs are to be added to the verdict amount when computing the amount of the judgment for purposes of interest computation. Blakeslee's Storage Warehouses, Inc. v. City of Chicago, 369 Ill. 480, 484, 17 N.E.2d 1, 3 (1938); Robinson v. Robinson, 140 Ill.App.3d 610, 611, 95 Ill.Dec. 6, 8, 488 N.E.2d 1349, 1351 (1986)("[W]e note that a judgment for costs is as much the judgment of the court as the damages awarded and that interest may therefore be awarded upon the judgment for costs"). In addition, interest begins running on the verdict amount from the date of the verdict. Illinois State Toll Highway Authority v. Heritage Standard Bank & Trust Co., 157...