Landando v. Bluth

• Decision Date: 20 November 1968
• Docket Number: No. 66 C 1479.,66 C 1479.
• Parties: Joan LANDANDO and Joseph Landando, Plaintiffs, v. Raymond BLUTH, Defendant.
• Court: U.S. District Court — Northern District of Illinois

292 F. Supp. 975

Joan LANDANDO and Joseph Landando, Plaintiffs, v. Raymond BLUTH, Defendant.

No. 66 C 1479.

United States District Court N. D. Illinois, E. D.

November 20, 1968.

William J. McKenna, James Kirk Perrin, of McKenna, Storer, Rowe, White & Haskell, Chicago, Ill., for Security Ins. Co.

Thomas McGarry, St. Louis, Mo., for Raymond Bluth.

MEMORANDUM OPINION

WILL, District Judge.

This is an action for damages for injuries sustained in an automobile accident. At the time of the accident, defendant Bluth was insured under an automobile liability insurance policy issued by Security Insurance Company. This policy covered Mr. Bluth in the maximum amount of $25,000.00 for personal injuries sustained in one occurrence by one person. The policy also included a promise by Security to provide legal defense for Mr. Bluth as to claims payable under the terms of the policy.

With respect to its obligation under the policy to defend Mr. Bluth against claims presented in this suit, Security has moved to deposit its draft in the amount of $25,000.00 with this court on behalf of the defendant, to be applied to the claims of Joan Landando, thereby exhausting the monetary limit of Security's insurance of defendant Bluth as to claims made as a result of her injuries. Security also seeks an order of this court relieving it of any further obligation to defend Raymond Bluth against any claims of Joan Landando for personal injuries.

The insurance company contends that the opinion of the Seventh Circuit Court of Appeals in Denham v. La Salle-Madison Hotel Company, 168 F.2d 576 (7th Cir.1948), requires that Security's motion be granted. Defendant Bluth disputes the wisdom of Denham and cites numerous cases to support his position, but seems to concur in Security's view of what the Denham decision would dictate in this case.

The only general statement in Denham directly relevant to the instant motion, however, is that each case involving a promise to defend must be considered independently on the basis of the particular language in the contract at issue, and contrary to Security's assertion that the Denham court was "construing the same policy provisions now before this court", the relevant language here involved is considerably different than the language in Denham. The insurance policy in Denham provided,

It is further agreed that as respects insurance afforded by this policy, Underwriters shall—

(1) Defend the Assured in his name and behalf any suit against the Assured alleging such loss and seeking damages on account thereof, even if such suit is groundless, false or fraudulent * * *. 168 F.2d at 584 (italics supplied)

The Court of Appeal's opinion as to this obligation to defend reads in part as follows,

Numerous cases are cited wherein the courts have considered a similar provision. It would serve no useful purpose to enter into an analysis of such cases as they all depend upon the phraseology of the particular provision under consideration. By analogy, however, they are of no benefit to the defendant's contention. True, paragraph (1) gives some color to the defendant's argument, but that paragraph is limited to the phrase which proceeds it, "as respects insurance afforded by this policy." Upon plaintiff's tender of $10,000, its liability for the payment of losses was extinguished. It was only obligated to defendant "as respects insurance afforded by this policy," and there being no further insurance afforded, we are of the view that its obligation to defend was likewise terminated. Defendant's theory would produce the incongruous situation that plaintiff would have a continuing obligation to defend, notwithstanding its obligation to pay has been exhausted. We are of the view that no such liability was intended by the provision in question and that it cannot reasonably be so construed. Id. at 584.

The essential thrust of Denham is plainly that a court should consider the specific language in the particular contract at issue. It is also clear that in Denham ...