International Harvester Co. v. Continental Cas. Co.

• Decision Date: 22 January 1962
• Docket Number: Gen. No. 48224
• Citation: 33 Ill.App.2d 467,179 N.E.2d 833
• Parties: INTERNATIONAL HARVESTER COMPANY, a corporation, Plaintiff-Appellant, v. CONTINENTAL CASUALTY COMPANY, a corporation, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 833

179 N.E.2d 833

33 Ill.App.2d 467

INTERNATIONAL HARVESTER COMPANY, a corporation, Plaintiff-Appellant, v. CONTINENTAL CASUALTY COMPANY, a corporation, Defendant-Appellee.

Gen. No. 48224.

Appellate Court of Illinois, First District, First Division.

Jan. 22, 1962.

Hinshaw, Culbertson, Moelmann & Hoban, Chicago, Oswell G. Treadway, and Thomas J. Weithers, Chicago, of counsel, for plaintiff-appellant.

Yates, Fisk, Haider & Burke, Chicago, Donald H. Haider, L. J. Locke, Chicago, of counsel, for defendant-appellee.

ENGLISH, Justice.

Plaintiff appeals from a summary judgment in favor of defendant entered in plaintiff's suit for a declaration of its rights under a liability insurance policy issued by defendant.

On December 2, 1955 Lawrence Huttel, an employee of Doyle Freight Lines, was standing on plaintiff's freight dock waiting to have his truck unloaded. At the time, employees of plaintiff were unloading a truck of Gateway Transportation Company by means of an electric lift and, in so doing, struck Huttel with the lift, knocking him down and causing him to be injured. Plaintiff's employees reported the injury to their company on the day of the occurrence.

On January 18, 1956 plaintiff received a written notice of claim against it by Huttel, through his attorneys, Rosenbaum & Rosenbaum.

On July 19, 1957 plaintiff reported the accident to its own insurance carrier, Zurich Insurance Company.

On July 26, 1957 Huttel filed suit against plaintiff in the Superior Court of Cook County and plaintiff herein was served with summons as defendant in that suit on August 1, 1957. The summons was transmitted by plaintiff to Zurich on the same day.

Zurich sought to learn the identity of the truck being unloaded at the time of the accident, and in response to its inquiry was advised on August 12, 1957 by letter of Huttel's attorneys that the truck in question belonged to Gateway Transportation Company.

Zurich then sought to learn the identity of Gateway's insurance carrier, and on August 30, 1957 ascertained that such insurer was the defendant in the instant case.

Thereupon, by oral notice on August 30, 1957 and by letter on September 4, 1957 Zurich's attorneys, on behalf of plaintiff, notified defendant of the claim by Huttel and made demand upon defendant to take over plaintiff's defense. Defendant had no knowledge of the occurrence in question prior to this time.

The demand made on defendant was predicated upon its policy covering Gateway which provided that the insurance of Gateway would be extended to cover other persons unloading Gateway's trucks with its permission. ¹

The facts above recited are taken from the pleadings, from interrogatory answers, and from affidavits filed in connection with defendant's motion for summary judgment. They are not in dispute. It is also beyond dispute that plaintiff comes within the definition of an additional insured under defendant's policy covering Gateway.

When plaintiff's demand upon defendant was refused, plaintiff brought this declaratory judgment action to obtain adjudication of its coverage under the Gateway policy and thus require defendant to insure and defend plaintiff against the Huttel claim.

Defendant contends that plaintiff is not entitled to such coverage because, in not giving defendant notice of the accident of December 2, 1955 until approximately September 1, 1957, plaintiff failed to comply with a provision of the policy requiring that defendant be given notice of an accident 'as soon as practicable.' This contention formed the basis of defendant's motion for summary judgment which was allowed by the trial court and is the subject of this appeal.

The paragraph of the policy providing for notice of accident reads as follows:

'When an accident occurs written notice shall be given by or on behalf of the insured to the company or any of its authorized agents as soon as practicable. Such notice shall contain particulars sufficient to identify the insured and also reasonably obtainable information respecting the time, place and circumstances of the accident, the names and addresses of the injured and of available witnesses.'

A notice provision such as this is not to be considered as a technical requirement included in policies merely for the convenience of the insurance company. Rather is it a matter of substance imposing a valid prerequisite to coverage. (Imperial Fire Ins. Co. v. Coos County, 151 U.S. 452, 14 S.Ct. 379, 38 L.Ed. 231.) Upon the happening of an accident, A prompt, as distinguished from a delayed, investigation of the facts of the occurrence can so greatly affect the efficiency of the defense as to change the very character of the risk insured. (Clements v. Preferred Accident Insurance Co., 8 Cir., 41 F.2d 470, 76 A.L.R. 17.) It follows, therefore, that the notice requirements of a policy apply not only to the named insured but also to unnamed additional insureds under an omnibus clause. (Royal Indemnity Co. v. Morris, 9 Cir., 37 F.2d 90, c.d. 281 U.S. 748, 50 S.Ct. 353, 74 L.Ed. 1160; 72 A.L.R. 1425.)

Plaintiff contends, in effect, that notice was given 'as soon as practicable' because time should not be considered as starting to run against it until after plaintiff (through its own insurer) had ascertained the identity of the Gateway truck and thereupon learned defendant's identity as Gateway's insurer. Thus, says plaintiff, the necessary knowledge prerequisite to the giving of notice was not acquired until August 30, 1957 and notice was promptly given orally that day and in writing only a few days later.

The question is not that simple. We realize that plaintiff could not possibly give notice to defendant so long as it was ignorant of the existence of defendant's policy and its own inclusion as an insured thereunder. To operate as an effective excuse for delay, however, lack of knowledge must be without negligence or fault on the part of the person seeking to be excused. The beneficiary's ignorance of the policy, then, becomes only one of the circumstances to be considered in determining whether or not due diligence was exercised in the giving of notice 'as soon as practicable.' (Allstate Ins. Co. v. Hoffman, 21 Ill.App.2d 314, 158 N.E.2d 428; Unverzagt v. Prestera, 339 Pa. 141, 13 A.2d 46; Sanderson v. Postal Life Ins. Co. of New York, 10 Cir., 87 F.2d 58; Sheehan v. Aetna Life Ins. Co., 296 Mass. 535, 6 N.E.2d 777; 75 A.L.R. 1504; 18 A.L.R.2d 478; 29A Am.Jur. § 1390.)

When we examine all the circumstances, we must give due consideration to the fact that the plaintiff is the International Harvester Company, a large industrial corporation, and not a person unsophisticated in the world of commerce and insurance. We must decide whether the plaintiff, with all the record-keeping and investigative services at its command, acted with anything less than due diligence in being unable for twenty-one months to ascertain the identity of the truck being unloaded at the time of the injury to Huttel, an accident which was promptly reported by plaintiff's employees concerned, on the day of its occurrence. To state the problem is to indicate its proper solution.

When plaintiff eventually reported the claim to its own insurance carrier, the Zurich attorneys very quickly obtained the necessary information by the simple expedient of asking for it from the attorneys for the claimant, who had made themselves known to plaintiff some twenty months earlier. This action was taken by Zurich not in perfection of any rights of its own, but rather on behalf of plaintiff, and cannot be separated from the action or inaction of plaintiff over the entire period from December, 1955 to September, 1957. ²

It is the contention of plaintiff that the counteraffidavit of its employee, Woods, satisfactorily explained why plaintiff did not give notice until the identity of defendant was discovered by Zurich. This affidavit stated:

'Lewis G. Woods, being first duly sworn, on oath deposes and says that he is Director, Supply and Inventory of International Harvester Company, a corporation; that International Harvester Company, or any agent thereof, did not have knowledge of the identity of a truck which was being unloaded at its dock at the...