Loeber Motors, Inc. v. Sims

• Decision Date: 17 November 1975
• Docket Number: No. 61435,61435
• Citation: Loeber Motors, Inc. v. Sims, 34 Ill.App.3d 342, 340 N.E.2d 132 (Ill. App. 1975)
• Parties: LOEBER MOTORS, INC., Plaintiff-Appellee, v. William E. SIMS et al., Defendants-Appellants.
• Court: Appellate Court of Illinois

Page 132

340 N.E.2d 132

34 Ill.App.3d 342

LOEBER MOTORS, INC., Plaintiff-Appellee, v. William E. SIMS et al., Defendants-Appellants.

No. 61435.

Appellate Court of Illinois, First District, First Division.

Nov. 17, 1975.

W. R. Tribler, Pretzel, Stouffer, Nolan & Rooney Chartered, Chicago (Joseph B. Lederleitner, Chicago, of counsel), for Country Mut. Ins. Co., defendants-appellants.

Stephen Novack, Levy & Erens, Chicago, for Loeber Motors, Inc., plaintiff-appellee.

GOLDBERG, Justice:

Country Mutual Insurance Company (defendant) has appealed from judgments in the circuit court granting Loeber Motors, Inc. (plaintiff) summary judgment against it and also from a subsequent judgment entered against it upon a jury verdict in favor of plaintiff for $6500. As will more fully appear, the appeal also involves a judgment entered against Country Mutual in favor of a counterclaimant, Robert Rogers (Rogers) pertaining to policy coverage and also a money judgment for $5500 entered against Country Mutual in favor of plaintiff pursuant to an assignment by Rogers to plaintiff. Thus, this appeal involves two summary judgments and two money judgments against Country Mutual.

The factual background of the litigation is virtually undisputed. Plaintiff, in the automobile business in Cook County, owned a Mercedes Benz automobile. Plaintiff gave possession of the car to William E. Sims, a prospective purchaser, for a test drive. There are allegations in the pleadings that Sims agreed to insure the car for the trial period, but he did not do so. Sims requested that Rogers drive the automobile to give him an opinion of its performance.

While Rogers was driving and Sims was a passenger, Rogers found it necessary to make a sharp application of the brakes. The car came into forcible contact with a bank on the left side of the road. It turned over and was badly damaged. This occurred on August 2, 1970. At all times pertinent hereto, Rogers was the named insured in an automobile policy issued by Country Mutual.

The intricate problems presented by this record result from the complicated and sophisticated legal actions taken by the parties after the occurrence as follows:

Plaintiff filed a second amended complaint. Count I claimed judgment against Sims and two other defendants subsequently dismissed from the cause. This was based upon the alleged failure of Sims to obtain collision insurance for his test drive. Count II claimed recovery from Sims, and from Rogers as his agent, for property damage on the theory of negligent driving by Rogers. Count III alleged that Country Mutual had denied coverage in violation of an agreement by Rogers to provide collision insurance for Sims. Count IV prayed judgment against Country Mutual for denial of collision coverage to plaintiff and for attorney's fees, for vexatious refusal to pay the loss. Ill.Rev.Stat.1973, ch. 73, par. 767.

The answer of Country Mutual raised an affirmative defense, that the public policy of Illinois prohibited direct action by a claimant against the insurer of an alleged tort-feasor.

Rogers filed a counterclaim against Country Mutual seeking a declaratory judgment requiring it to extend coverage to him under section IV of his policy. Rogers prayed for allowance of costs and attorney's fees. The answer of Country Mutual to this counterclaim denied liability under the policy. It relied upon an exclusion of vehicles used by the insured in an automobile business. In a second count of his counterclaim, Rogers sought recovery against Sims because of the latter's alleged failure to obtain collision insurance covering his operation of the car. Sims filed a counterclaim for indemnity against Rogers based upon active negligence and his own passive conduct.

Various motions for summary judgment were then made. In due course, on January 30, 1974, Nunc pro tunc as of January 9, 1974, the trial court entered summary judgment as to liability in favor of plaintiff and against Country Mutual on Count IV of the second amended complaint and summary judgment in favor of Rogers on his counterclaim against Country Mutual. The same order denied motions by plaintiff and Rogers that these judgments 'include an award of attorney's fees * * *.' It was ordered that plaintiff's claim against Country Mutual (based upon Count IV of plaintiff's second amended complaint) 'proceed to trial on the issue of damages only.' Motions for summary judgment by Country Mutual against plaintiff, by plaintiff against Sims and by Country Mutual against Rogers were all denied.

On July 10, 1974, on plaintiff's motion, the court dismissed without prejudice the actions by plaintiff against Rogers and Sims and the actions by Rogers against Sims and by Sims against Rogers.

On July 16, 1974, plaintiff filed a motion for summary judgment. Country Mutual had continued to refuse coverage to Rogers under his policy. An arrangement was then made by Rogers, Sims and plaintiff, by their attorneys, in which Rogers paid plaintiff $3000 and Sims paid plaintiff $1000. In return each received from plaintiff dismissal of the suit against him without prejudice and a covenant not to sue. Rogers assigned to plaintiff all of his rights against Country Mutual under his policy including the summary judgment declaring his right to coverage against the insurer.

The motion also showed that the attorneys for Rogers had accrued, but not billed, legal fees of $5165 and 'upon completion of this matter, will bill Rogers $2500 as their fee * * *.' The motion therefore prayed summary judgment for $5500 in favor of plaintiff as assignee of Rogers and against Country Mutual.

In due course, the cause was assigned for trial. The trial judge entered summary judgment on plaintiff's motion in its favor and against Country Mutual for $5500. The order recited that the cause of action against Country Mutual was assigned to plaintiff by Rogers.

The issue of the damages due plaintiff from Country Mutual was then submitted to a jury in accordance with the previous summary judgment in favor of plaintiff on Count IV of the second amended complaint. There was conflicting expert testimony as to the amount of damage done to plaintiff's automobile.

The jury returned a verdict assessing damages of $6500 due plaintiff from Country Mutual. Judgment for plaintiff was entered accordingly. Country Mutual has appealed from the order granting summary judgment (January, 1974) in favor of Rogers, against it, regarding liability and from both of the judgments entered against it in favor of plaintiff as assignee of Rogers for $5500 and in favor of plaintiff for $6500.

What are the rights of these parties? The first step in answering this question is elimination of the deep crust of legal obfuscations presented by this record. We have here plaintiff as owner of an automobile it wished to sell, loaned to a prospective purchaser, driven by a friend of the latter and damaged while the driver had a policy of collision insurance in force and effect. Perhaps answering a few basic questions will present us with a solution of the entire problem.

I.

Does The Collision Policy Issued By Country Mutual Afford

Coverage To Rogers?

Section IV of the policy issued by Country Mutual to Rogers relates to physical damage. It grants coverage F--1, or a $50 deductible collision insurance. The insurer agreed 'To pay for loss caused by collision to a Vehicle as defined herein or to a Non-Owned Vehicle * * *.' The term 'Non-Owned Vehicle' as defined in section IV of the policy means a private passenger automobile 'operated by or in the possession or custody of, but not owned by, registered in the name of, or furnished or available for the regular use of (the named insjred) provided the actual use of such vehicle is with the permission of the vehicle owner.'

In our opinion, the situation shown by this record comes directly within this definition. In addition, the permissive use of the car by Rogers, the policyholder, seems clear particularly in view of the fact that Sims retained control of the car but merely turned over its physical operation to Rogers while he was a passenger. (See Hays v. Country Mutual Ins. Co., 28 Ill.2d 601, 608, 192 N.E.2d 855.) We reject the argument of Country Mutual that this occurrence did not involve a collision to the vehicle driven by the named insured but only property damage to the vehicle of another person. As defined in section IV of the policy, 'collision' includes 'upset of such vehicle.' In our opinion, the automobile was a non-owned vehicle damaged by upset. This policy covered the liability, if any, of Rogers to plaintiff for property damage.

Section IV of the policy adopts exclusion 8 under section I and Country Mutual urges strongly that this exclusion is operative here. Exclusion 8 applies to: 'a Non-Owned Vehicle while used by the Insured in an Automobile Business.'

Upon careful examination of this clause, it would seem that the exclusion is not applicable because Rogers was not using a vehicle in an automobile business. The phrase 'by the insured' modifies and limits the remaining language, 'Automobile Business'. This conclusion is supported by authority cited in behalf of Rogers.

In Caster v. Motors Ins. Corp., 28 Ill.App.2d 363, 171 N.E.2d 425, a prospective purchaser took an automobile from a dealer on a test ride. He allowed his friend to drive and the car was damaged. This court held that damage to the automobile was covered by the driver's collision policy. There was an exclusion in the policy applying "to any accident arising out of the operation of an automobile sales agency, repair shop, service station, storage garage, or public parking place." This court held that the interpretation of the exclusion depended upon the occupation of the named insured. In view of the close similarity of the facts in Caster to the case at bar, we believe that it is authoritative in determining that the exclusion is not applicable in the case before ...