Thornton v. Paul
| Citation | 384 N.E.2d 335,74 Ill.2d 132,23 Ill.Dec. 541 |
| Decision Date | 04 December 1978 |
| Docket Number | No. 49921,49921 |
| Parties | , 23 Ill.Dec. 541 Wayne Lee THORNTON, Appellee, v. Ben PAUL et al., Appellants. |
| Court | Supreme Court of Illinois |
Howard W. Small, of Hayes & Moore, Champaign, for appellants.
James Walker, Ltd., Bloomington, for appellee.
The plaintiff, Wayne Lee Thornton, filed an action in the circuit court of McLean County against Ben's Den, Inc., and Ben Paul for personal injuries suffered in the early morning of January 1, 1973, when Ben Paul struck him on the head with a wooden club. The defendants' insurer, Illinois Founders Insurance Company (hereinafter Illinois Founders) refused to defend and a default judgment for $30,000 was entered against the defendants. Sometime prior to the default, the defendants paid Thornton $100 for an agreement that he would not execute against them on any judgment, but would pursue the insurer. After the default, Thornton initiated a garnishment proceeding against the insurer. After the garnishment hearing, Illinois Founders was ordered to pay the $30,000 judgment plus costs. The insurer's attorneys filed a petition under section 72 of the Civil Practice Act (Ill.Rev.Stat.1975, ch. 110, par. 72) in the defendants' names to vacate the default judgment, which was denied. The insurer appealed from the garnishment order, the defendants appealed from the denial of the petition to vacate, and both were consolidated in the appellate court. The appellate court affirmed the decisions of the circuit court (51 Ill.App.3d 337, 9 Ill.Dec. 537, 366 N.E.2d 1048), and we granted leave to appeal.
The basic issue is whether Illinois Founders is estopped from raising lack of coverage on the claim in the garnishment proceeding because of its failure to defend the lawsuit.
The plaintiff and several friends were drinking in Ben's Den, in Bloomington, in the early morning hours of January 1, 1973. Ben Paul, president of Ben's Den, Inc., told Thornton several times to quiet down. When Thornton persisted in scuffling with his friends and refused to leave, Ben Paul struck him on the forehead with a wooden club, causing a severe laceration from his hairline to just above his eyebrow. Paul was criminally charged with aggravated battery. When the case was set for trial on January 17, 1973, another count charging battery was added and he was found guilty of battery after a bench trial on stipulated facts. On August 7, 1973, the plaintiff filed a two-count complaint with a jury demand, charging the defendants with wilful and wanton misconduct and seeking $14,000 in compensatory and punitive damages.
At the time of the occurrence, the defendants had a liability insurance policy with Illinois Founders which provided that the company will pay all sums which the insureds shall become legally obligated to pay as damages for personal injuries caused by an occurrence arising out of the ownership, maintenance or use of the insured premises and provided further that the company would defend any such suit against the insureds. In addition to the standard policy exclusions, the policy had an appended endorsement which stated:
After receiving a copy of the complaint and a request to defend, Illinois Founders sent the defendants a notice that it was reserving its rights. The insurer then retained counsel to investigate the incident underlying the suit. This investigation showed that the occurrence was in fact a battery by the defendant Paul. After receiving this report, Illinois Founders notified the defendants and their personal attorney that it was denying coverage since assault and battery were excluded. On September 24, 1973, defendants' personal attorney formally entered his appearance for the defendants. An answer and affirmative defense were filed.
On November 12, 1973, plaintiff's attorney and defendants' attorney took discovery depositions of Thornton and Ben Paul in which the deponents gave their respective versions of the incident. According to Thornton, he had worked at an automobile dealership as a truck salesman until 6 p. m., Saturday, December 31, 1972. At 8 p. m., Thornton and his wife attended a New Year's Eve party at the home of his general manager. He stayed at the party for approximately 51/2 hours and consumed seven or eight drinks consisting of whiskey and coke. At 1:30 a. m., he left the party, took his wife home and proceeded to Ben's Den, where he met several friends and business acquaintances. During his stay at Ben's Den, Thornton consumed two or three beers and spent some time playing pool and watching others play. After he had been at the pool table for a short time, Ben Paul walked back and asked him and his friends to quiet down since they were too noisy. Thornton stated that he later walked up to the bar with his friends and talked for 20 to 30 minutes. When a person next to him slumped forward on the bar and knocked over some drinks, Ben Paul approached and asked Thornton to leave. Thornton then told Paul he would leave when his friends left, to which Paul answered "You are going to leave now." Paul then walked out from behind the bar, Thornton turned around, and Paul struck him on the head with a wooden object, similar to a pool cue, which was about three feet long.
According to Ben Paul, Thornton had made a nuisance of himself the entire time he was there and despite repeated warnings, refused to quiet down or leave when asked. Upon Thornton's arrival he had a beer and then went over by the pool table. Several minutes later, he became rowdy and began staggering and falling into people. When several customers complained of Thornton's conduct, Paul walked up to him and told him "to be quiet and behave if he wanted to stay." Thornton replied that he wouldn't leave and Paul then returned behind the bar. About 10 minutes later, a "bouncer" told Thornton to be quiet or he would be thrown out, to which Thornton replied, "Don't try it, I will resist." It appears that Paul warned Thornton to stop disturbing people at least two more times, both at the pool table and near the bar. Finally, while behind the bar, Paul told him to leave. Thornton refused, and Paul walked around the bar and told him to get out the door. Thornton said he wouldn't leave. When his friends tried to hold him back, Thornton broke away from them and took a swing at Paul's head. Paul avoided the blow by ducking and then hit Thornton on the forehead with a wooden club which he described as a cut-off cane, approximately 11/2 feet long and 2 to 3 inches in diameter.
During the course of Paul's deposition, the plaintiff's attorney was shown a copy of Illinois Founders letter to the defendants notifying them that it would not defend the suit since the occurrence fell within the assault and battery exclusion. When questioned by plaintiff's attorney, Paul stated that he had no insurance coverage for the incident: "I have an insurance policy but it doesn't cover this."
On July 24, 1974, plaintiff's attorney, with leave of court, filed an amended complaint against the defendants alleging that while the plaintiff was on the premises using ordinary care, "Defendant negligently struck Plaintiff on the head." The amended complaint sought $30,000 damages. The plaintiff filed a jury waiver and served notice on defendants' attorney. An order was entered directing defendants to answer within 21 days.
On July 29, 1974, the defendants' personal attorney demanded that Illinois Founders defend the defendants on the amended complaint. In a letter dated August 19, 1974, Illinois Founders notified defendants' attorney that it would not defend the action, since its previous investigation had shown that the occurrence was outside coverage and no new facts indicated otherwise. This letter was shown to plaintiff's attorney.
At some time between July 24, 1974, and March 16, 1975, the plaintiff and the defendants entered into an agreement, wherein plaintiff agreed to settle his right to pursue Ben Paul and Ben's Den, Inc., for any portion of a judgment which may be rendered, for the sum of $100. The agreement further provided "This agreement is not a release of Plaintiff's cause of action for his injury nor a satisfaction of any judgment which might be rendered, but is merely an agreement limiting the source of collection of any judgment which might be rendered, it being the intention of the parties that Plaintiff is free to pursue his suit to a judgment and to collect that judgment from Illinois Founders Insurance Company in any manner possible."
This agreement was not disclosed to the court or to the defendants' insurer. Illinois Founders learned of its existence for the first time when taking depositions in October 1975, more than 7 months after a default judgment had been entered.
After the amended complaint and jury waiver were filed, the defendants did not file a responsive pleading as ordered by the court. On December 23, 1974, the court entered an order reciting that plaintiff had waived his jury demand and directed any defendant desiring a jury trial to file a jury demand on or before January 3, 1975. Defendants failed to demand a jury trial. On January 7, 1975, the trial court set the case for a bench trial on January 28, and ordered the defendants to file an answer by January 21. They failed to do so and on February 7, the court reset the bench trial for March 17, 1975. In a later deposition, defendants' attorney admitted that he had notice of the trial court's order but did not file an answer to the amended complaint because he believed that his clients were fully protected from exposure by the agreement they had entered into with plaintiff.
On March 17, 1975...
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