Safeway Ins. Co. v. Harvey

• Decision Date: 25 February 1976
• Docket Number: No. 61470,61470
• Citation: 343 N.E.2d 679,36 Ill.App.3d 388
• Parties: SAFEWAY INSURANCE COMPANY, Plaintiff-Appellee, v. Virginia HARVEY et al., Defendants, v. ALLSTATE INSURANCE COMPANY, Intervenor-Appellant.
• Court: United States Appellate Court of Illinois

Page 679

343 N.E.2d 679

36 Ill.App.3d 388

SAFEWAY INSURANCE COMPANY, Plaintiff-Appellee, v. Virginia HARVEY et al., Defendants, v. ALLSTATE INSURANCE COMPANY, Intervenor-Appellant.

No. 61470.

Appellate Court of Illinois, First District, Fourth Division.

Feb. 25, 1976.

Tim J. Harrington, Chicago (Robert J. T. Guilfoyle, Chicago, of counsel), for intervenor-appellant.

Alvin R. Becker, Block, Levy & Becker, Chicago, for plaintiff-appellee.

JOHNSON, Presiding Justice.

This is an appeal from an order denying the motion of Allstate Insurance Company to intervene and vacate the summary judgment entered in favor of Safeway Insurance Company in a declaratory judgment action to rescind an automobile liability policy.

On May 1, 1971, Felix Robinson was involved in an automobile accident with Virginia Harvey. Harvey subsequently filed a personal injury suit seeking $100,000 in damages against Robinson and his brother, Bobby Gene Robeston, the named insured on an automobile liability policy issued by Safeway. The policy provided liability coverage in the amount of $10,000/20,000 on the insured automobile for 1 year.

On March 8, 1973, Safeway brought suit against Robinson, Robeston and Harvey seeking a declaratory judgment that the policy sued upon was procured through misrepresentation of fact material to the risk and that no duty to pay, defend or indemnify arose. The complaint alleged that the named insured, Robeston, had failed to disclose that Robinson, age 22 and a resident of the household, was and had been a principal driver and operator of the insured automobile. Harvey was served and filed an appearance through her attorneys. Robinson was served but did not appear. Service on Robeston was returned not found and he also did not appear. The court entered summary judgment in favor of Safeway on June 17, 1974. Thirty days later, Harvey moved to vacate the order.

On August 2, Allstate Insurance Company received from Harvey notice of a demand for arbitration under the uninsured motorist clause of a policy issued to her spouse. Shortly thereafter, Allstate served notice on Safeway of its motion to intervene and vacate the summary judgment. Hearing on the motion was set for August 20. Safeway then moved for a hearing on Harvey's motion to vacate. No notice was given to Allstate. The motion was denied on August 14 and Harvey did not appeal.

At the August 20 hearing on its motion to intervene and vacate the summary judgment, Allstate made three principal arguments. First, it claimed to be a necessary party because its obligations under the uninsured motorist provision of the policy issued to Harvey's spouse would be affected by the outcome of the suit. Second, the judgment was alleged to be void since Robeston, the named insured on the Safeway policy and an indispensable party to the suit, had not been served. The last contention was that Safeway was prohibited from rescinding the policy because it contained a financial responsibility endorsement and under Illinois law could not be rescinded after an accident. The court rejected these arguments and denied the motion.

Allstate subsequently filed a motion for reconsideration, reiterating its previous arguments and also urging that the judgment was void for lack of jurisdiction over Felix Robinson, the alleged tortfeasor. The original suit named 'Felix Robetson' as defendant while subsequent pleadings were changed to 'Felix Robinson' without notice or leave of court. In addition, it urged that summary judgment should not have been granted for the reason that the insurance application did in fact identify 'Felix Robetson' as a driver of the insured automobile, thereby presenting a material dispute of fact on the face of the motion itself.

Safeway filed an answer denying the allegations contained in Allstate's motion and positing that Allstate was without authority to question the validity of the judgment. It contended that Allstate lacked standing to intervene in the suit because it would be liable to Harvey under the uninsured motorist endorsement of its policy regardless of the outcome of the litigation. The answer also alleged that the petitioner failed to exercise diligence by not seeking to intervene until after final judgment was entered.

The court entered an order denying the motion. Allstate now appeals to this court, presenting for review four issues which allege error by the trial court in 1) denying its motion to vacate where an indispensable party, the named insured, was not served and therefore was not within the jurisdiction of the court; 2) entering summary judgment in favor of Safeway and denying the motion to intervene where a genuine dispute of fact was presented in the motion; 3) refusing to vacate the judgment rescinding an automobile liability policy written to comply with the Illinois Safety Responsibility Law when the statute prohibits rescission of such a policy; and 4) refusing leave to intervene after judgment when Allstate acted in a timely fashion and presented meritorious defenses to the suit.

Safeway does not dispute the fact that Bobby Gene Robeston, the named insured, was never served and never appeared in these proceedings. Under such circumstances, the court had no jurisdiction over this defendant and he would not be bound by the adjudication. (Flexner v. Farson (1915), 268 Ill. 435, 109 N.E. 327, Aff'd 248 U.S. 289, 39 S.Ct. 97, 63 L.Ed. 250.) Allstate contends, however, that the judgment was void ab initio for the reason that the named insured is an indispensable party to a declaratory judgment action rescinding his policy.

If the interest of an absent party in the matter in controversy is such that no judgment could be entered which would do justice between the parties actually before the court without injuriously affecting the rights of such absent party, that party is indispensable. (Oglesby v. Springfield Marine Bank (1944), 385 Ill. 414, 423, 52 N.E.2d 1000.) The subject matter of this litigation is a policy of liability insurance issued to Robeston, the absent party. By obtaining a summary judgment granting rescission of the policy, Safeway was relieved of its contractual duty to pay, defend or indemnify the insured. It is apparent that Robeston's interests were injuriously affected since his rights in the policy were purportedly determined. Accordingly, we find that Robeston was an indispensable party to the action.

Basic notions of due process forbid the entry of a decree affecting the interests of a party not before the court. (Clark v. Village of Milan (1972), 3 Ill.App.3d 569, 572, 277 N.E.2d 895.) In fact, it has been repeatedly held that it is error for a court to proceed to a hearing and disposition on the merits of a cause without jurisdiction of indispensable parties. (Glickauf v. Moss (1974), 23 Ill.App.3d 679, 683, 320 N.E.2d 132.) The legal effect of a judgment rendered without jurisdiction over an indispensable party is that the order is null and void. (People ex rel. Meyer v. Kerner (1966), 35 Ill.2d 33, 36, 219 N.E.2d 617.) We hold that the summary judgment order entered without jurisdiction over Robeston, the named insured and an indispensable party, was void in its entirety.

Safeway argues that Allstate is without standing to challenge the validity of the summary judgment because it was not a party to the proceedings at the time the order was entered. Strader v. Board of Education (1953), 413 Ill. 610, 110 N.E.2d 191 is cited for the proposition that a petitioner seeking review of a denial of intervention may not raise issues relating to the final judgment entered by the trial court.

Notwithstanding this proposition, if the trial court lacked jurisdiction and therefore had no power to enter the judgment, the order is void and may be attacked at any time by the parties themselves or by any other person who is affected thereby. (Oak Park National Bank v. Peoples Gas Light & Coke Co. (1964), 46 Ill.App.2d 385, 394, 197 N.E.2d 73.) A void judgment may be vacated even after expiration of the prescribed time within which judgments may ordinarily be vacated, based on the inherent power of the court to expunge from its records void acts of which it has knowledge. Irving v. Rodriguez (1960), 27 Ill.App.2d 75, 79, 169 N.E.2d 145.

The trial court erred in granting summary judgment for an additional reason. The liability policy issued by Safeway contained a financial responsibility endorsement in its declarations. By providing such endorsement, we believe that the insurer contracted to issue a policy in conformity with and subject to the provisions of article III of the Illinois Safety Responsibility Law, known as the Financial Responsibility Act (Ill.Rev.Stat.1971, ch. 95 1/2, § 7--301 et seq.). In other words, the financial responsibility endorsement was a voluntary adoption by Safeway of the requirements of the Act. Statutory provisions which are applicable to an insurance policy either mandatorily or by voluntary adoption and in force at the time of contracting form a part of the contract and should be construed in connection with the policy. (Konrad v. Hartford Accident & Indemnity Co. (1956), 11 Ill.App.2d 503, 137 N.E.2d 855.) Accordingly, Safeway was subject to section 7--317(f) which provides:

'Provisions incorporated in policy.--Every motor vehicle liability policy is subject to the following provisions which need not be contained therein:

1. The liability of the insurance carrier under any such policy shall become absolute whenever loss or damage covered by the policy occurs and the satisfaction by the insured of a final judgment for such loss or damage shall not be a condition precedent to the right or obligation of the carrier to make payment on account of such loss or damage.

2. No such policy may be cancelled or annulled as respects any loss or damage, by any agreement between the carrier and the insured after the insured has become responsible for such loss or damage, and any such...