Kenilworth Ins. Co. v. McDougal

• Decision Date: 08 July 1974
• Docket Number: No. 72--293,72--293
• Citation: 313 N.E.2d 673,20 Ill.App.3d 615
• Parties: KENILWORTH INSURANCE COMPANY, a corporation, Plaintiff-Appellee, v. Willie E. McDOUGAL et al., Defendants-Appellants.
• Court: United States Appellate Court of Illinois

Page 673

313 N.E.2d 673

20 Ill.App.3d 615

KENILWORTH INSURANCE COMPANY, a corporation, Plaintiff-Appellee, v. Willie E. McDOUGAL et al., Defendants-Appellants.

No. 72--293.

Appellate Court of Illinois, Second District.

July 8, 1974.

Melvyn L. Medansky, Medansky, Cohan, Medansky & Valentino, Chicago, for defendants-appellants.

Rathje, Woodward, Dyer & Burt, Wheaton, for plaintiff-appellee.

SEIDENFELD, Justice:

The plaintiff Kenilworth Insurance Company (Kenilworth), a corporation, filed a declaratory judgment suit against the defendants, seeking a declaration that there was no insurance coverage under the uninsured motorist provision of its policies which insured the driver and the owner of the car involved in an accident. (The policies are identical and will be referred to as the policy.) By its verdict the jury found that there was no physical contact between the insureds' vehicle and that of an unidentified motorist. Thereupon the court entered judgment which adjudicated that no coverage existed under the terms of the policy.

Defendants appeal from the declaratory judgment, contending that DuPage County was improper venue for the action, that Kenilworth is estopped from asserting noncoverage, that the verdict of the jury is against the manifest weight of the evidence, and that certain evidentiary errors require a new trial.

The accident occurred in DuPage County when the car which the defendant Willie E. McDougal was driving and in which the remaining defendants were passengers, crossed the median on Interstate 55 into the wrong lane of travel causing a multiple collision. The defendants filed a timely limited appearance challenging venue in DuPage County and moving for a change of venue to Cook County. In support of their motion they alleged their residence in Cook County, the execution of the insurance policy in Cook County, and the policy requirement that arbitration take place in Cook County. Defendants contend on appeal that dealings with third parties are not to be considered in fixing venue and that the court erroneously denied their motion on the mistaken basis that the accident itself was a part of the 'transaction' for determining venue.

Section 5 of the Civil Practice Act (Ill.Rev.Stat.1971, ch. 110, par. 5) provides as material here:

'Venue--Generally. Except as otherwise provided in this Act, every action must be commenced (a) in the county of residence of any defendant who is joined in good faith and with probable cause for the purpose of obtaining a judgment against him and not solely for the purpose of fixing venue in that county, or (b) In the county in which the transaction or some part thereof occurred out of which the cause of action arose.' (Emphasis added)

'Transaction' has been defined to include every fact which is an integral part of a cause of action. (People ex rel. Carpentier v. Lange (1956), 8 Ill.2d 437, 441, 134 N.E.2d 266; Beatrice Foods Co. v. Gallagher (1964), 47 Ill.App.2d 9, 15, 197 N.E.2d 274; Christopher v. West (1952), 345 Ill.App. 515, 528, 104 N.E.2d 309.) The facts of the accident, particularly with reference to whether or not there was physical contact between the insureds' vehicle and the vehicle of the uninsured motorist, clearly appear to be an integral part of plaintiff's cause of action to establish noncoverage under the policy. We agree with plaintiff's view that the real question to be decided in the declaratory judgment action does not lie in the interpretation of the insurance contract but in the resolution of the facts of the automobile accident. An action for declaratory judgment is neither legal nor equitable and the forum depends on the issues involved and the relief sought. (Vermilion County Good Govt. League v. Smith (1965), 64 Ill.App.2d 270, 275, 211 N.E.2d 391.) The 'transaction' which is determinative of the relief sought in the declaratory judgment action, the declaration of noncoverage, is the accident which occurred in DuPage County.

Defendants' contention that dealings with third parties are not to be considered in fixing venue is overbroad when applied in the context of this case. There are cases which use the language that the transaction refers only to dealings between the parties themselves and not to dealings which one of the parties had with third persons which are incidental or preliminary to and do not form the basis for the cause of action. (See American Oil Co. v. Mason (1971), 133 Ill.App.2d 259, 260--261, 273 N.E.2d 17; Winn v. Vogel (1952), 345 Ill.App. 425, 431--432, 103 N.E.2d 673.) But where dealings with third parties have a definite and direct bearing on the cause of action (for the purpose of determining venue), such dealings are part of the transaction out of which the cause of action arose. (See Bagarozy v. Meneghini (1955), 8 Ill.App.2d 285, 288--291, 131 N.E.2d 792; First Nat. Bank of Lacon v. Bauer Poultry Corp. (1952), 345 Ill.App. 315, 103 N.E.2d 160.) Our conclusion is buttressed by the fact that section 5(b) of the Civil Practice Act (Ill.Rev.Stat.1971, ch. 110, par. 5(b)) is intended for the convenience of witnesses (Christopher v. West 345 Ill.App. 515, 527, 104 N.E.2d 309), and the ease of proving local surroundings where these may be material, as in the case of an automobile accident. (Mapes v. Hulcher (1936), 363 Ill. 227, 230--231, 2 N.E.2d 63.) The court correctly ruled below that venue was proper in DuPage County.

In reaching the merits of the case, we view the estoppel issue as crucial and examine the facts bearing on that question.

The accident took place on August 10, 1969, and claims were asserted under the uninsured motorist provisions of the policy on August 27, 1969. The declaratory judgment action was filed on June 23, 1970, and there is no indication in the record that prior to that time Kenilworth either denied coverage or proceeded under a reservation of rights.

Defendants filed an answer to the complaint on November 23, 1970, in which they conceded that there must be physical contact with a hit-and-run vehicle under the terms of the policy, but alleged that such physical contact did occur. Kenilworth thereafter provided a bill of particulars and answered interrogatories in response to defendants' demands. Essentially Kenilworth informed defendants of the names of persons, including the defendants, from whom statements or information had been received to support Kenilworth's allegations in the declaratory judgment action that the car crossed into the wrong lanes for no ostensible reason or, in the alternative, to avoid a collision with an unidentified automobile with which there was no physical contact. Following this, on January 20, 1972, defendants, pursuant to leave granted, filed an amendment to their answer which added an affirmative defense of estoppel.

In their affirmative defense, defendants set forth that they had furnished, pursuant to Kenilworth's request, documentation of the facts of the accident on August 27, 1969; had answered interrogatories under oath on September 3, 1969, and on October 20, 1969; that defendants, pursuant to Kenilworth's request, submitted medical reports and information as to expenses incurred, and that at no time prior to July 6, 1970, did Kenilworth advise defendant of the policy defense of no physical contact.

Kenilworth filed a motion to strike the affirmative defense, but the record discloses no formal disposition of the motion nor any reply to it. On February 7, 1972, defendants moved for dismissal or judgment on the pleadings based upon the affirmative defense and upon the failure to reply. Kenilworth argued at the hearing on defendants' motion that no estoppel could lie because the declaratory judgment action was brought within one year of the accident. The court denied defendants' motion for judgment on the pleadings adding that the estoppel argument would have had merit if lengthy settlement negotiations had taken place, that as the court understood it no such lengthy negotiations had taken place, but rather that there was a delay alleged by Kenilworth in the investigation of the matter. Counsel for the insureds made no mention at this point of any settlement negotiations.

We can find no reference in the record to support the court's 'understanding' that there has been no lengthy negotiations or that the delay was caused by the insurance company's investigations. Moreover, it is not entirely clear from the record whether the court, in addition to denying defendants' motion for a dismissal of the complaint or in the alternative for judgment on the pleadings, was also granting Kenilworth's prior motion to strike the affirmative defense. It appears from the record that the court's repeated conclusion that estoppel did not lie as a matter of law was understood by the parties as withdrawing presentation of the estoppel issue from the jury. No evidence bearing on the estoppel issue was presented to the jury at the trial of Kenilworth's declaratory judgment suit.

Nevertheless both parties, in the hearing on the post-trial motion and in briefs and argument have alluded to factual matters on the estoppel issue. Although no such findings of fact were made below, defendants argue that Kenilworth took the court-reported statements of all occurrence witnesses and of the defendants between September 8, 1969, and November 11, 1969; that although subsequent statements were...