Jadczak v. Modern Service Ins. Co., Inc.

• Decision Date: 09 January 1987
• Docket Number: No. 85-3583,85-3583
• Citation: 151 Ill.App.3d 589,503 N.E.2d 794,104 Ill.Dec. 932
• Parties: , 104 Ill.Dec. 932 Zygmunt JADCZAK, Teodor Baron, individually and as Special Administrator of the Estate of Grazyna Baron, Deceased; William Fallmer, as Special Administrator of the Estate of Maria Krupowicz, Deceased and Marion Krupowicz, Plaintiffs- Appellees, v. MODERN SERVICE INSURANCE COMPANY, INC., a foreign corporation, Defendant- Appellant, and George R. Cayer, Marek Hanula and Andrew K. Hanula, Defendants-Appellees (Mieczyslaw Waluszko, Third-Party Defendant-Appellee).
• Court: United States Appellate Court of Illinois

Page 794

503 N.E.2d 794

151 Ill.App.3d 589, 104 Ill.Dec. 932

Zygmunt JADCZAK, Teodor Baron, individually and as Special Administrator of the Estate of Grazyna Baron, Deceased William Fallmer, as Special Administrator of the Estate of Maria Krupowicz, Deceased and Marion Krupowicz, Plaintiffs- Appellees, v. MODERN SERVICE INSURANCE COMPANY, INC., a foreign corporation, Defendant- Appellant and George R. Cayer, Marek Hanula and Andrew K. Hanula Defendants-Appellees (Mieczyslaw Waluszko Third-Party Defendant-Appellee).

No. 85-3583.

Appellate Court of Illinois,

First District, Fifth Division.

Jan. 9, 1987.

E. Garnet Fay (O'Brien, Hanrahan, Wojcik & Fay, of counsel), Chicago, for defendant-appellant, Modern Service Ins.

Martin J. Healy, Jr., Daniel B. Malone (Healy and Nolan, of counsel), Chicago, for plaintiffs-appellees.

Justice MURRAY delivered the opinion of the court:

This is an appeal by defendant and third-party plaintiff Modern Service Insurance Company, Inc. (Modern) from entry of the trial court's declaratory judgment in favor of plaintiffs, Zygmunt Jadczak, Teodor Baron, individually and as special administrator of the estate of Grazyna Baron, deceased; William Fallmer, as special administrator of the estate of Maria Krupowicz, deceased; and Marion Krupowicz, and third-party defendant Mieczyslaw Waluszko. The trial court determined that Modern was obligated to provide uninsured motorist coverage to plaintiffs.

The declaratory judgment action arose out of an automobile accident occurring on February 7, 1982, that resulted in several deaths and serious injuries to plaintiffs. Prior to the accident, defendant George R. Cayer entered into a verbal agreement with his friend, plaintiff Jadczak who owned a body shop, for the purchase of a 1980 Honda Civic that Jadczak was repairing. The car was being purchased by Mr. Cayer for his wife, Ruth Cayer. Mr. Cayer testified that at this time he was living in Chicago, separate and apart from his wife, who lived in Escanaba, Michigan, but that he did not obtain a formal separation order until September 1982. However, his employer and Jadczak both stated that Mr. Cayer was working in Chicago and returning home on weekends to be with his wife and children in Michigan. Mr. Cayer was registered to vote in Chicago, but had a Michigan driver's license and also had several automobiles insured in Michigan.

Jadczak and Mr. Cayer agreed upon a purchase price of $3,600 for the Honda. On Thursday, February 4, 1982, Mr. Cayer, after giving Jadczak a check for $1,000, called his wife in Escanaba from Jadczak's shop and told her that he had found a car for her and that she should immediately obtain insurance on it. It is undisputed that Ruth Cayer applied for insurance through an agent, William Weissert, who was located in Escanaba. Weissert, in an evidentiary deposition, stated that he was an independent contractor with the authority to bind Modern as to coverage for the interim period until a policy issued; only the home office in Minnesota could issue a policy. The declaration page showed that the policy period commenced on February 5, 1982 and listed Ruth Cayer as the named insured. Coverage included uninsurance liability in limits of $20,000 per person and $40,000 per occurrence. Mrs. Cayer paid a premium on the policy but had not received a policy before the relevant events occurred.

Jadczak testified that after Mr. Cayer called his wife, he (Cayer) drove the car away but returned it the next day, Friday, February 5 to have a faulty radio speaker repaired. Jadczak also stated that he asked for and received permission from Mr. Cayer to use the Honda on the weekend for social purposes. Mr. Cayer stated that he did not take the car home on Thursday because after test driving it, he discovered the speaker problem. He testified that he left it with Jadczak for repairs and planned to pick it up Friday afternoon. He further testified that when repairs were not completed on Friday, he agreed to take possession of the car the following week. Mr. Cayer said that his permission for Jadczak's use of the car was not necessary since the car belonged to Jadczak, not him. However, Mr. Cayer admitted that he had given his friend Jadczak permission to use a truck belonging to him (Cayer) on weekends prior to this occasion.

On Sunday, February 7, 1982, the Honda, while being driven by Jadczak, was involved in an accident with an uninsured motorist. Two passengers in the Honda were killed and the other occupants were seriously injured. Thereafter, Mr. Cayer called his wife and told her to cancel the insurance. According to Mr. Cayer, he did so because the car he anticipated purchasing was destroyed. However, Mr. Cayer's employer and Jadczak testified that Mr. Cayer attempted to retroactively cancel the policy because he feared losing his house in Michigan. Ruth Cayer did cancel the insurance by telephone on February 11, to be retroactively effective February 5, because the vehicle insured was not purchased. No policy was issued and Modern sent a full premium refund to Ruth Cayer on February 19.

After a bench trial, the trial court ruled that coverage existed on the basis of Modern's policy language defining an "owned" automobile, and at the same time, found that Mr. Cayer was not an owner. Modern appeals from that decision contending that the court erred in determining the factual issue of ownership in Modern's favor but concluding that coverage existed based on the policy description. Modern alleges that the Honda never became an owned vehicle and that Jadczak was the owner, not a permissive user, at the time of the accident.

After careful examination of the record, we conclude that the Modern policy afforded coverage for the Honda at the time of the accident.

In reaching this conclusion, it is necessary to address the choice of law issue. The accident, injuries and deaths, and alleged purchase of the car occurred in Illinois; the insurance policy was procured by Ruth Cayer, a Michigan resident, in Michigan; and the policy was issued by a Minnesota company through an agent in Michigan. Illinois choice of law rules hold that we need to look to the laws of the state where the policy to be construed was issued or delivered (see Criterion Insurance Co. v. Reed (1978), 66 Ill.App.3d 925, 23 Ill.Dec. 19, 383 N.E.2d 786), or, among other factors, the place of the last act to give rise to a valid contract (Hofeld v. Nationwide Life Insurance Co. (1975), 59 Ill.2d 522, 528, 322 N.E.2d 454). According to the policy language in the present case, the last act to make the policy valid is the signatures of the president and secretary of the insurer located in Minnesota. Thus, it appears that the laws of Minnesota govern the construction of the policy, and such choice of law is not offensive to the principles of due process and full faith and credit. (See Allstate Insurance Co. v. Hague (1981), 449 U.S. 302, 101 S.Ct. 633, 66 L.Ed.2d 521.) This is true except as to the issue of cancellation since the policy incorporates Michigan law regarding procedures necessary for an effective cancellation of the policy. However, we prefer to utilize the principle that unless a court's attention is directed to a decision of another state bearing on a question before it, the law will be presumed to be the same as that of the forum. (Mitchell v. Burnett (1971), 1 Ill.App.3d 24, 26, 272 N.E.2d 393.) Since the parties did not put forth any foreign law, except as to the cancellation procedures, we will apply Illinois law to the case before us. This is especially appropriate here where Minnesota law applicable to the relevant issues is similar to that of Illinois, the forum state.

After reviewing the record, we conclude that the Honda was an owned vehicle, not only because of the policy language relied on by the trial court, but because, as a matter of law, Ruth Cayer had an insurable interest in the vehicle. An insurable interest is not necessarily equated with clear title but may arise whenever a person would profit by or gain some advantage by continued existence of the property and would suffer loss or disadvantage by its destruction. (Reznick v. Home Insurance Co. (1977), 45 Ill.App.3d 1058, 1061, 4 Ill.Dec. 525, 360 N.E.2d 461.) Here, there is no question but that the Cayers were disadvantaged by the destruction of the Honda which Mr. Cayer intended to purchase for his wife and for which he gave a $1,000 partial payment to Jadczak. Jadczak testified that he never...