Standard Acc. Ins. Co. v. Leslie
| Decision Date | 13 May 1944 |
| Docket Number | Civil Action No. 807. |
| Citation | 55 F. Supp. 134 |
| Parties | STANDARD ACC. INS. CO. et al. v. LESLIE et al. |
| Court | U.S. District Court — Eastern District of Illinois |
Farmer-Klingel & Baltz, of Belleville, Ill., for plaintiff.
Dan McGlynn, Jr., of East St. Louis, Ill., for defendants William Kerrigan and Harry Kelly.
Harold J. Bandy, of East St. Louis, Ill., for defendant Veronica Leslie.
The plaintiffs are foreign insurance companies and the defendants are residents and citizens of the State of Illinois. A principal amount in excess of $3,000 is in controversy. Plaintiffs seek a declaratory judgment to establish their claim of nonliability under a certain automobile liability policy issued by plaintiffs to the defendant Veronica Leslie on May 18, 1942, for which she had paid the required premiums to plaintiffs' agent.
Plaintiffs in their complaint filed January 24, 1944, aver that subsequent to the issuance of the policy they cancelled the policy, under its provisions, effective July 29, 1942; that on September 6, 1942, an accident occurred involving defendant Leslie and the automobile described in said policy; that thereafter, on or about December 8, 1942, the defendant Harry Kelly, claiming an injury in the accident to his automobile, brought suit before a justice of the peace in East St. Louis against defendant Leslie, alleging damages in the amount of $303.06 and costs; that defendant Kerrigan, claiming injuries received in said accident, brought suit on or about November 23, 1943, in the City Court of East St. Louis against defendant Leslie, alleging damages in the amount of $5,000 and costs; that defendant Leslie claims that by virtue of said policy plaintiffs are bound to defend her in said actions and to pay any judgments obtained against her within the limits of said policy; that the defendants Kelly and Kerrigan, if they obtain judgments in said suits, will assert claims against plaintiffs by virtue of said policy for payment of the judgments. Plaintiffs deny all liability under said policy due to the alleged cancellation of the policy. Plaintiffs pray a judgment declaring such non-liability.
Defendant Leslie answered denying the cancellation of the policy but admitting that she claimed that plaintiffs are liable under the policy, as averred. Defendants Kelly and Kerrigan answered admitting the pendency of said suits against defendant Leslie in the state courts but neither admitting nor denying the other allegations in the complaint.
The case came on for trial on the complaint and answers on April 4, 1944, and evidence was heard. The evidence showed that after said policy was delivered to the defendant Leslie on May 23, 1942, and paid for by her, plaintiffs, having conducted an investigation, decided that the insured was not a good risk and on July 23, 1942, mailed a notice of cancellation to insured by registered mail, which notice stated that cancellation would be effected and insurance terminated at 12:01 A.M. Standard Time, July 29, 1942. The notice of cancellation was sent under the provisions of the policy which read as follows:
The notice was not accompanied by the unearned premium on the policy and plaintiffs did not thereafter refund or pay said unearned premium to the insured. Plaintiffs' agent who had written the policy and delivered it to the insured testified that she notified him that she had received the cancellation notice and requested him to retain the premium money and secure other insurance for her in lieu of the cancelled policy; that pursuant to her request he undertook to procure other insurance and did so, in part, but was not able to secure other public liability insurance for her; that later he sent her a credit notice that certain unearned and unexpended premium was due her and in his hands for her. Defendant Leslie, the insured, testified that she told said agent that she had received the cancellation notice and that he replied that he would find out about it, whether it was really cancelled. She said that she did not understand that the policy was actually cancelled; that she did not authorize him to procure other insurance for her and was not aware that he had done so; that he did not return any premium money to her and that she did not receive any premium credit slip from him; that no unearned premium has been refunded or tendered to her at any time.
Plaintiffs claim that if a duty rested upon plaintiffs under the policy and the law of Illinois to refund the unearned premium with the notice of cancellation, which they deny, defendant waived such requirement by her conduct and actions after receiving the notice of cancellation and by arranging with said agent to procure other insurance for her. Plaintiffs' said claim of waiver by defendant Leslie of any right she might have to a refund of unearned premium in order to effectuate the cancellation was not mentioned in the complaint nor referred to in the pleadings. It was advanced by the plaintiffs at the trial without retreating from the position that the notice of cancellation was effective under the provisions of the policy without refunding the unearned premium.
The evidence bearing on the question of waiver alone is conflicting and fairly evenly balanced. It is of doubtful sufficiency to support a declaratory judgment for plaintiffs who carry the burden of proof, if such judgment were to rest entirely upon proof of waiver.
After the trial it came to the attention of the court that several weeks prior to the trial the defendants Kelly and Kerrigan had obtained judgments against the defendant Leslie in the damage suits in the state courts above described, in which defendant Leslie claimed it was the duty of plaintiffs to defend. A stipulation of facts showing the judgments has been filed and made part of the record by counsel for the respective parties.
That the issue of liability or non-liability under the policy in view of the notice of cancellation is governed by the law of Illinois is not disputed. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487. No Illinois statute or decision has been presented and I have found none which is controlling or which involves a like cancellation provision in a like insurance policy. That, under a policy of this character, in the absence of provisions to the contrary in the policy, the refund or tender of unearned premium is required to make effectual a notice of cancellation by the insurer has become the established law in Illinois. ?tna Insurance Co. v. Maguire, 51 Ill. 342; Peoria Marine & Fire Insurance Co. v. Botto, 47 Ill. 516; Dickerson v. Northwestern Mutual Life Insurance Co., 200 Ill. 270, 65 N.E. 694; Annes v. Carolan, Graham, Hoffman, Inc., 336 Ill. 542, 168 N.E. 637; Hansell-Elcock Company v. Frankfort Marine Accident & Plate Glass...
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