Marketview Motors, Inc. v. Colonial Ins. Co. of California

• Decision Date: 06 February 1997
• Docket Number: No. 80665,80665
• Citation: 222 Ill.Dec. 336,175 Ill.2d 460,677 N.E.2d 870
• Parties: , 222 Ill.Dec. 336 MARKETVIEW MOTORS, INC., Appellee, v. COLONIAL INSURANCE COMPANY OF CALIFORNIA, Appellant.
• Court: Illinois Supreme Court

Page 870

677 N.E.2d 870

175 Ill.2d 460, 222 Ill.Dec. 336

MARKETVIEW MOTORS, INC., Appellee, v. COLONIAL INSURANCE COMPANY OF CALIFORNIA, Appellant.

No. 80665.

Supreme Court of Illinois.

Feb. 6, 1997.

Rehearing Denied March 31, 1997.

John M. Sturmanis and Howard W. Small, Thomas, Mamer & Haughey, Champaign, for Colonial Insurance Company.

John E. Maloney, John E. Maloney, P.C., of Maloney & Davis, Urbana, for Marketview Motors, Inc.

Justice MILLER delivered the opinion of the court:

Plaintiff, Marketview Motors, Inc., filed a declaratory judgment action in the circuit court of Champaign County against defendant, Colonial Insurance Company of California. Marketview alleged Colonial failed to provide proper notice of cancellation of an automobile insurance policy for nonpayment of a premium as required by section 143.15 of the Illinois Insurance Code (215 ILCS 5/143.15 (West 1994)). The trial judge found that proper notice of cancellation had been given and granted summary judgment in favor of Colonial Insurance.

The appellate court reversed. 277 Ill.App.3d 627, 214 Ill.Dec. 388, 660 N.E.2d 1337. The appellate court held that section 143.15 of the Insurance Code requires an insurance company to provide at least 10 days' actual notice before a cancellation for nonpayment of a premium becomes effective.

Colonial Insurance filed a petition for leave to appeal to this court. 155 Ill.2d R. 315(a). We allowed Colonial's petition. For the reasons that follow, we reverse the appellate court and affirm the circuit court.

BACKGROUND

In February 1994, Lawrence Miller purchased a 1987 Chevrolet Monte Carlo from Marketview Motors. Marketview retained a lien on the vehicle. Miller purchased an automobile insurance policy from Colonial Insurance to cover the vehicle. Miller later failed to pay his insurance premium.

On March 17, 1994, Colonial mailed a notice of cancellation of Miller's insurance coverage to Miller and Marketview. As a lien holder, Marketview was entitled by statute to notice of this cancellation. 215 ILCS 5/143.14(a) (West 1994). In addition, section 143.15 of the Insurance Code provides:

"All notices of cancellation of insurance as defined in subsections (a), (b) and (c) of Section 143.13 must be mailed at least 30 days prior to the effective date of cancellation to the named insured and mortgagee or lien holder, if known, at the last mailing address known to the company. All notices of cancellation shall include a specific explanation of the reason or reasons for cancellation. However, where cancellation is for nonpayment of premium, at least 10 days notice of cancellation shall be given." 215 ILCS 5/143.15 (West 1994).

Miller's Monte Carlo was involved in an accident. The accident occurred at approximately 5:15 a.m. on either March 28, 1994, as claimed by Marketview, or March 29, 1994, as claimed by Colonial. As a loss payee under the insurance policy, Marketview demanded payment from Colonial. Colonial denied coverage claiming that the insurance policy was canceled at 12:01 a.m. on March 28, 1994, the 11th day after Colonial had mailed notice of cancellation to Miller and Marketview.

Marketview filed a declaratory judgment action against Colonial. In its complaint, Marketview alleged in the alternative that: (1) it did not receive notice of the cancellation; or (2) it "did not receive ten (10) days actual notice prior to cancellation since letters from California to Illinois take several days to deliver." Under either allegation, Marketview claimed Colonial failed to satisfy the requirements of section 143.15. Therefore, Marketview claimed the Monte Carlo was still insured when the accident occurred.

Colonial filed a motion for summary judgment. Colonial stated it mailed notice of cancellation to Miller and Marketview 11 days prior to canceling Miller's policy for nonpayment of the premium. Colonial stated it was immaterial whether the accident occurred on March 28 or 29, 1994, because either date was subsequent to the cancellation of the policy. Colonial argued that mailing is the operative act under section 143.15 and that neither actual notice nor additional time for mail delivery is required under the language of the statute.

The trial judge agreed with Colonial and granted Colonial's motion for summary judgment. The appellate court reversed the judgment of the circuit court and remanded for factual findings as to when the accident occurred and when notice was received by Marketview. 277 Ill.App.3d at 632, 214 Ill.Dec. 388, 660 N.E.2d 1337.

The appellate court held that section 143.15 of the Insurance Code requires an insurer to provide at least 10 days' actual notice to an insured and any mortgagee or lien holder of the insured property before a cancellation for nonpayment of a premium becomes effective. In support of its holding, the appellate court found that section 143.15 contains in one section two distinct provisions relating to notice and that each provision has its own requirements. 277 Ill.App.3d at 629-30, 214 Ill.Dec. 388, 660 N.E.2d 1337.

The appellate court believed that cancellations for reasons other than nonpayment of premiums are accomplished by mailing notices. These cancellations will be effective if mailed to the proper parties "at least 30 days prior to the effective date of cancellation." 215 ILCS 5/143.15 (West 1994).

The appellate court distinguished the provision regarding cancellation for nonpayment of a premium by focusing on the word "however" and on the phrase "shall be given" in the third sentence of section 143.15. See 215 ILCS 5/143.15 (West 1994). By focusing on this language and contrasting it with the phrase "must be mailed" in the same section, the appellate court concluded that the legislature intended to treat cancellations for the nonpayment of a premium differently than other types of cancellations. The appellate court stated the legislature "intended to shift from a mailing requirement to a requirement of actual notice with respect to cancellations for nonpayment of premiums." 277 Ill.App.3d at 630, 214 Ill.Dec. 388, 660 N.E.2d 1337.

Colonial Insurance filed a petition for leave to appeal to this court (155 Ill.2d R. 315(a)) and we allowed Colonial's petition for leave to appeal.

DISCUSSION

Since the language used by the legislature is the best indication of legislative intent, courts look first to the words of the statute. Nottage v. Jeka, 172 Ill.2d 386, 392, 217 Ill.Dec. 298, 667 N.E.2d 91 (1996). Section 143.15 in its first sentence provides that "[a]ll notices of cancellation * * * must be mailed at least 30 days prior to the effective date of cancellation to the named insured and mortgagee or lien holder." 215 ILCS 5/143.15 (West 1994). Additionally, all notices of cancellation must include a specific reason or reasons for cancellation. Section 143.15 in its third sentence provides that, "[h]owever, where cancellation is for nonpayment of premium, at least 10 days notice of cancellation shall be given." 215 ILCS 5/143.15 (West 1994).

We believe that the third sentence of section 143.15 reduces from 30 to 10 the minimum number of days prior to the effective date of cancellation a notice of cancellation must be mailed when cancellation is for nonpayment of a premium and does not change the method by which that notice is provided. An examination of the statutory history of section 143.15 indicates that in amending the statute the legislature has focused on expanding the number of parties to whom a notice of cancellation must be given in order for an insurance company to cancel a policy. The statutory history does not indicate a legislative intent to shift the notice requirement from mailing to actual notice.

A predecessor section to section 143.15 required an insurance company to mail a notice of cancellation only to the named insured and provided that proof of this mailing satisfied both the 30-day general and the 10-day nonpayment of premium notice requirements. See Ill.Rev.Stat.1973, ch. 73, par. 755.1b. Later, on January 1, 1976, section 755.1b was repealed and replaced by section 755.14. See Pub.Act 79-686, eff. January 1, 1976 (repealing Ill.Rev.Stat.1973, ch. 73, pars. 755.1 through 755.10, and adding Ill.Rev.Stat.1975, ch. 73, pars. 755.11 through 755.24). Section 755.14 increased the number of parties who were to receive notice of cancellation of a policy. The amendment provided that in addition to the named insured, the insured's "agent of record and/or the insured's broker" were also to receive notice of cancellation. Ill.Rev.Stat.1975, ch. 73, par. 755.14.

Subsequently, the legislature separated the provision describing the parties to whom notice was to be given from the provision governing the method by which that notice was to be accomplished by placing each provision in a separate statutory section. See Pub.Act 80-1136, § 1, eff. July 1, 1978 (amending Ill.Rev.Stat.1977, ch. 73, par. 755.14); Pub.Act 80-1128, § 1, eff. July 1, 1978 (amending Ill.Rev.Stat.1977, ch. 73, par. 755.15). Thus, after the amendment effective July 1, 1978, section 755.14 outlined the parties to whom notice must be given and section 755.15 provided the times and the method by which the notice was to be given. See Ill.Rev.Stat.1979, ch. 73, pars. 755.14 755.15. Finally, the legislature added mortgagees or lien holders to the list of those entitled to notice of cancellation. See Ill.Rev.Stat.1989, ch. 73, par. 755.14.

Although the specific reference to giving notice of cancellation for nonpayment of premiums by mail contained in the earlier version of the statute was omitted from the amended 1975 and 1979 statutes and the version of the statute in question here, we believe that the legislature still intended that notice of cancellation was to be made by mail. We believe that in each of the amendments referred to, the focus of the legislature was on the parties to whom notice was to be given and not on the method by which the...