Squire v. Economy Fire & Cas. Co.

• Decision Date: 30 November 1977
• Docket Number: No. 49147,49147
• Citation: 370 N.E.2d 1044,69 Ill.2d 167,13 Ill.Dec. 17
• Parties: , 13 Ill.Dec. 17 Nancy SQUIRE, a minor, Appellant, v. ECONOMY FIRE & CASUALTY COMPANY, Appellee.
• Court: Illinois Supreme Court

Page 1044

370 N.E.2d 1044

69 Ill.2d 167, 13 Ill.Dec. 17

Nancy SQUIRE, a minor, Appellant, v.ECONOMY FIRE & CASUALTY COMPANY, Appellee.

No. 49147.

Supreme Court of Illinois.

Nov. 30, 1977.

Rathje, Woodward, Dyer & Burt, Wheaton (Henry J. Burt and R. Terence Kalina, Wheaton, of counsel), for appellant.

Peregrine, Stime & Newman, Ltd., Wheaton (Roy I. Peregrine, Wheaton, of counsel), for appellee.

CLARK, Justice:

This case involves the construction of the uninsured motorist coverage provisions contained in an automobile insurance policy and in a subsequent endorsement to that policy.The circuit court of Du Page County entered a declaratory judgment in favor of the insured, holding that the $10,000 coverage of the primary policy could be stacked with the $10,000 coverage of the endorsement for a total recovery of up to $20,000.The Appellate Court, Second District, reversed (43 Ill.App.3d 113, 1 Ill.Dec. 839, 356 N.E.2d 11.21), and we granted the plaintiff's petition for leave to appeal.We reverse.

On April 5, 1973, plaintiff, Nancy Squire, was standing on a parkway in Glen Ellyn, Illinois, when an uninsured motorist drove off the road, striking a parked car which in turn struck and seriously injured her.She filed a claim under the family automobile insurance policy and subsequent endorsement issued to her parents by the defendant, Economy Fire & Casualty Company.As an "insured person" under that policy and endorsement, plaintiff was insured against being injured (by an uninsured motorist) while a pedestrian, as well as while riding in an automobile.

The primary policy was issued for a period covering one year, from July 12, 1972, to July 12, 1973.Initially, the policy contained one declaration sheet which enumerated various "coverages"(e.g., bodily injury, property damage, collision) available for one automobile and the premiums paid for each."Coverage J" indicated that the insureds had received, in return for a premium of $4, "Family Protection," with limits of $10,000 for each person injured, up to a total of $20,000 for each accident.Part IV of the policy explained that Coverage J indemnified family members injured by the operator of an uninsured automobile.In addition, the policy stated as follows:

"The insurance afforded is only with respect to such of the following coverages as are indicated by specific premium charge or charges.* * *

Exclusions: This policy does not apply under Part IV:

(a) to bodily injury to an insured while occupying an automobile (other than an insured automobile) owned by the named insured or a relative, or through being struck by such an automobile;

* * * bo

'(I)nsured automobile' means:

(a) an automobile described in the policy for which a specific premium charge indicates that coverage is afforded,

(a) The limit of liability for family protection coverage stated in the declarations as applicable to 'each person' is the limit of the company's liability for all damages * * * ."

Approximately eight months later, the Squires purchased an endorsement to their primary policy, providing insurance benefits for a second family automobile for a period covering the remainder of the year, March 17, 1973, to July 12, 1973.Toward this end, a second declaration sheet was attached to the primary policy indicating the various "coverages" and the premiums to be paid therefor.It again included "Family Protection"(uninsured motorist coverage), with limits of $10,000 for each person injured, up to a total of $20,000 for each accident, for which the Squires paid a premium of $1.

In settlement of her claim, the defendant insurance company first offered plaintiff $8,000.Then, after the Squires retained an attorney, defendant raised its offer to $10,000, which it contended was the limit of its liability under the primary policy and endorsement.Believing the limit to be $20,000, plaintiff, by John W. Squire, her father and next friend, brought this action for declaratory judgment.The circuit court, relying on Glidden v. Farmers Automobile Insurance Association(1974), 57 Ill.2d 330, 312 N.E.2d 247, granted plaintiff's motion for judgment on the pleadings.The court held that the defendant had failed to limit plaintiff's uninsured motorist coverage to $10,000, that the insurance coverage for each of the two family automobiles included a provision for $10,000 uninsured motorist coverage, and that the policy and endorsement provide for a total coverage of up to $20,000 as a result of plaintiff's injuries.The appellate court, however, distinguished Glidden and found that the uninsured motorist coverage in the policy and endorsement could not be stacked, thus limiting plaintiff's recovery to $10,000.43 Ill.App.3d 113, 115-16, 1 Ill.Dec. 839, 356 N.E.2d 1121.

Plaintiff maintains that by paying an additional $1 premium for "family protection,"plaintiff's parents purchased an additional $10,000 per person in uninsured motorist coverage.Under such circumstances, she contends, where an insurance company does not otherwise limit its uninsured motorist coverage, and an insured, while a pedestrian, is injured by an uninsured motorist, the insured should be able to recover up to the maximum limitations of the uninsured motorist provisions covering each of the two automobiles.Plaintiff argues that defendant's attempt to limit its liability is ambiguous in that defendant failed to provide in the uninsured motorist clause that stacking of coverage is prohibited or that $10,000 per person is the limit of the company's liability "regardless of the number of insured automobiles to which this insurance applies," as it specifically stated under the "Basic Personal Injury Protection" coverage.Because such a limitation easily could have been included had defendant so intended, and because the ambiguity must be resolved in favor of the insured, plaintiff maintains that she is entitled to recover up to $20,000.

The defendant responds that its provision is plain and unambiguous in limiting recovery to $10,000 per person, and that simply because the personal injury section is clearer in precluding stacking does not mean that the limitation under "Family Protection" is ambiguous.Defendant further contends, and the appellate court agreed, that the parties did not contract for additional indemnification.Rather, plaintiff paid for and received protection, up to $10,000, against accidents caused by uninsured motorists while the insureds were riding in the second car.Plaintiff's parents, they argue, never reasonably expected to receive an additional $10,000 in indemnification when they paid the second premium, as evidenced by the reduced rate of $1, compared with $4 for the first automobile.

Although a number of other jurisdictions have considered issues very similar to the one presented here (seeAnnot., 28 A.L.R.3d 551(1969);see alsoFederated American Insurance Co. v. Raynes(1977), 88 Wash.2d 439, 563 P.2d 815), the decision of each necessarily turns upon the particular uninsured motorist statute involved.In any event, the various jurisdictions which have considered this issue are not unanimous, and it is still too early to identify a "majority rule."

This court last considered the question of stacking uninsured motorist coverage in Glidden v. Farmers Automobile Insurance Association(1974), 57 Ill.2d 330, 312 N.E.2d 247, where the defendant insurance company had issued three separate policies on three different automobiles to one insured, each policy providing uninsured motorist coverage of $10,000 for each person injured.Notwithstanding the "other insurance" provision in each policy (which called for a prorating of uninsured motorist coverage among all other insurance policies)this court held that an insured who was struck and injured by an uninsured motorist could stack his coverage and collect up to $30,000.The court reasoned that "(a)n insurance policy is not to be interpreted in a factual vacuum," that in determining the possible ambiguity of a policy under particular factual circumstances it is important to determine what the parties reasonably contemplated, and that under the specific circumstances in Glidden (where three separate policies were written by the same company) the "other insurance" clauses were ambiguous and inapplicable because the plaintiff could reasonably expect to receive additional coverage in consideration of the additional premiums paid (57 Ill.2d 330, 336, 312 N.E.2d 247, 250).

The appellate court sought to distinguish Glidden on the ground that Glidden involved the effect of "other insurance" clauses on the insureds' right to stack the coverage of three separate policies issued by the same company, whereas the instant case does not involve an "other insurance" clause and concerns "just one policy"(43 Ill.App.3d 113, 115, 1 Ill.Dec. 839, 356 N.E.2d 1121).That distinction is inapposite, because even though Glidden, unlike the instant case, did involve an "other insurance" clause, the applicability of the court's reasoning in Glidden is not confined to the effects of other insurance clauses upon stacking the coverage contained in separate policies.Rather, the court also was addressing the broader question of the construction of the intent of insureds who pay more than one premium to a single insurer for uninsured motorist coverage.(See generallyGlidden, 57 Ill.2d at 335-36, 312 N.E.2d 247.)Similarly, in the instant case, the parties agree that the question presented is, "What did the parties reasonably contemplate when plaintiff's parents paid an additional premium for an endorsement to their existing policy?"

To the extent that it is possible to reconstruct such "intent,"we think the parties must have intended the additional $1 premium to purchase one of two categories of additional insurance benefits: Either they intended it to purchase (1) indemnification for injuries resulting from additional risks beyond those covered by the primary...