Rockford Mut. Ins. Co. v. Economy Fire & Cas. Co., 5-90-0363

• Decision Date: 19 July 1991
• Docket Number: No. 5-90-0363,5-90-0363
• Court: United States Appellate Court of Illinois
• Parties: , 160 Ill.Dec. 187 ROCKFORD MUTUAL INSURANCE COMPANY, a corporation, Plaintiff-Appellant, v. ECONOMY FIRE & CASUALTY COMPANY, a corporation; Estate of John M. Durbin, Deceased; Suzanne Fred; Charles E. Fred; Defendants-Appellees (Barbara A. Grace, Individually and as Administrator of the Estate of Larry Gene Sneed, Deceased, Defendant-Appellant).

Page 1141

576 N.E.2d 1141

217 Ill.App.3d 181, 160 Ill.Dec. 187

ROCKFORD MUTUAL INSURANCE COMPANY, a corporation, Plaintiff-Appellant, v. ECONOMY FIRE & CASUALTY COMPANY, a corporation; Estate of John M. Durbin, Deceased; Suzanne Fred; Charles E. Fred Defendants-Appellees (Barbara A. Grace, Individually and as Administrator of the Estate of Larry Gene Sneed, Deceased Defendant-Appellant).

No. 5-90-0363.

Appellate Court of Illinois Fifth District.

July 19, 1991.

Patrick T. Moos, Moos, Schmitt & O'Brien, Peoria, Barbara A. Grace, Paul R. Lynch and Melissa S. Ellison of Craig & Craig, Mt. Vernon, for Rockford Mut. Ins. Co.

Richard A. Cary and Jennifer W. Price, Wham & Wham, Centralia, for Economy Fire & Cas. Co.

Justice WELCH delivered the opinion of the court:

This is a declaratory judgment action brought in the circuit court of Marion County by plaintiff, Rockford Mutual Insurance Company, against defendants, Economy Fire & Casualty Company, the estate of John M. Durbin, deceased, Suzanne Fred, Charles E. Fred, and Barbara A. Grace, individually and as administrator of the estate of Larry Gene Sneed, deceased. The dispute revolves around which of the two insurance companies must provide coverage for the death of Larry Gene Sneed, who was killed when riding as a passenger in a motor vehicle owned by Suzanne and Charles Fred but driven by John M. Durbin. On March 29, 1990, the circuit court of Marion County entered a summary judgment finding that the insurance policy issued by Economy Fire & Casualty Company (hereinafter "Economy") to Suzanne and Charles Fred was not applicable to the instant loss. Rockford Mutual Insurance Company (hereinafter "Rockford") and Barbara A. Grace appeal.

Economy had issued a policy of insurance to Suzanne and Charles Fred in which the Freds were the named insureds and a 1984 Ford Tempo automobile was the named vehicle. That standard policy provided "uninsured motorist" coverage as follows:

"We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by a covered person and caused by an accident. The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the uninsured motor vehicle. * * *

"Covered person" as used in this Part means:

1. You or any family member.

2. Any other person occupying your covered auto."

The policy also contains a separate "named driver exclusion endorsement" which provides:

"In consideration of the premium at which this policy is written, it is agreed that all coverage afforded by this policy is void and shall not apply to any claim or suit which occurs as the result of any auto being operated by the following person(s):

John M. Durbin

* * * * * *

All other conditions, stipulations, representations and limitations stated in the policy not in conflict herewith remain the same."

John M. Durbin is the son of Suzanne Fred. This endorsement is attached to the standard policy and is signed by the Freds.

On January 17, 1987, Larry Gene Sneed was killed while riding as a passenger in the Fred's 1984 Ford Tempo automobile, operated by John M. Durbin. Durbin was also killed. Sneed was the son of defendant Barbara A. Grace and, at the time of the accident, resided in the same household with Grace. Grace was insured by Rockford and, after Economy denied coverage for the death of her son based on the named driver exclusion endorsement, she made a claim against the uninsured motorist portion of her Rockford-issued policy.

On January 6, 1988, Rockford filed its complaint for declaratory judgment against defendants alleging that, despite the named driver exclusion endorsement in Economy's policy, the uninsured motorist provision of that policy provided coverage for the death of Sneed. The complaint further alleges that, to the extent the named driver exclusion endorsement bars uninsured motorist coverage with respect to the death of Sneed, it violates the public policy of the State of Illinois expressed in section 143a of the Illinois Insurance Code (Ill.Rev.Stat.1989, ch. 73, par. 755a) and is therefore unenforceable and void.

On January 17, 1990, Economy filed a motion for summary judgment asking the court to find as a matter of law that the named driver exclusion endorsement is valid and enforceable and that it voids all coverage under the policy, including uninsured motorist insurance, when the named vehicle is operated by Durbin. On February 20, 1990, Rockford filed a cross-motion for summary judgment in its favor.

On March 29, 1990, the circuit court of Marion County granted Economy's motion for summary judgment. The trial court found that there was no conflict between the named driver exclusion endorsement and the uninsured motorist provision of the policy and no resulting ambiguity. "This policy is not ambiguous. If John Durbin drives the car, the policy is void and will not apply to any claim."

The trial court then addressed the question whether the named driver exclusion endorsement violates public policy to the extent it voids uninsured motorist coverage for the death of a passenger in a car operated by the excluded driver. The court found that section 143a of the Illinois Insurance Code, which makes uninsured motorist coverage mandatory in every policy issued after July 1, 1963, was intended to protect only policyholders and named insureds against "other vehicles", that is, vehicles not owned or occupied by the policyholder or not covered under the policyholder's policy. The court found that the statute does not require uninsured motorist coverage for nonpolicyholders who did not bargain for the policy coverage when they are injured by a driver who, by virtue of a specific and bargained-for exclusion, is uninsured as to the particular occurrence in which the nonpolicyholder is injured. On May 21, 1990, the court entered an order denying Rockford's cross-motion for summary judgment and finding that in the event there is no other insurance applicable to this occurrence, then Rockford shall provide primary insurance coverage with respect to the death of Sneed.

Both plaintiff Rockford and defendant Grace appeal from the trial court's orders and both appellants have filed briefs containing similar arguments. They argue first that, by virtue of a conflict between the named driver exclusion endorsement and the uninsured motorist provision, the insurance policy is ambiguous and, in accordance with well-established principles of construction, should be construed against the insurer and in favor of coverage. Thus, they argue, the uninsured motorist provision should provide coverage for the death of Sneed.

Alternatively, appellants argue that application of the named driver exclusion endorsement to void the uninsured motorist provision violates public policy of the State of Illinois as expressed in section 143a of the Illinois Insurance Code. That section requires that every insurance policy issued after July 1, 1963, provide coverage

"for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom * * *." Ill.Rev.Stat.1989, ch. 73, par. 755a.

Appellants also argue that, in the event we reverse the orders of the trial court and find that the uninsured motorist provision of the Economy policy provides coverage, we should also find that the uninsured motorist provision of the Rockford policy is not primary, but secondary, and provides coverage only to the extent that its policy limits exceed those of Economy's policy. Because we affirm the orders of the trial court, we do not address this final issue.

Like the trial court, we find no ambiguity in the terms and provisions of the Economy policy. While that policy does provide for uninsured motorist coverage, the named driver exclusion endorsement clearly provides that all coverage is void and does not apply to any claim or suit which occurs as a result of any auto being operated...