Independent Trust Corporation v. Kansas Bankers Surety Company
64 N.E.3d 1109
| Ill. App. Ct. | 2016Background
- Intrust purchased a Kansas Bankers financial-institution crime bond (Dec 20, 1999–Dec 20, 2000) containing multiple insuring agreements (including fidelity) and contractual timing provisions: 30 days notice, 6 months for proof of loss, and suit no later than 24 months after discovery.
- Intrust sent an initial letter to Kansas Bankers on March 10, 2000, warning of a potential covered loss; receiver was appointed April 14, 2000; receiver discovered ≈$68M shortage on June 1, 2000.
- Intrust submitted an unsworn “Proof of Loss” Oct 25, 2000, and an amended notarized proof on Nov 30, 2000; Kansas Bankers requested more documentation and later refunded/prorated premium after receivership; Intrust cashed reissued refund in 2003.
- Intrust filed suit for indemnity under the bond on March 19, 2004 (more than 24 months after the June 1, 2000 discovery date).
- The circuit court and this Court previously addressed tolling under the Illinois Corporate Fiduciary Act (205 ILCS 620/6-7.1) and dispute over notice/proof; on remand, the dispositive issue became whether the suit deadline (24 months) was tolled under 215 ILCS 5/143.1 or otherwise.
- The appellate court held the crime bond qualifies as "fidelity" insurance, so §143.1’s tolling provision (which exempts fidelity and surety policies) did not apply; equitable tolling also did not apply, and Intrust’s suit was untimely.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §143.1 tolled the bond’s 24‑month suit limitation | §143.1 tolled the 24‑month period because Kansas Bankers never denied the claim before suit | §143.1 excludes fidelity and surety policies, so no tolling | Held: §143.1 does not apply because the financial institution bond is fidelity insurance; no statutory tolling — suit untimely |
| Whether the crime/financial‑institution bond is "fidelity" insurance for §143.1 purposes | Bond is multiperil and not purely a fidelity policy (so §143.1 should apply) | Financial‑institution/banker’s blanket bonds are a form of fidelity insurance | Held: Financial institution (banker’s blanket) bonds are a form of fidelity insurance; bond falls within §143.1 exemption |
| Whether equitable tolling saves Intrust’s claim | Tolling should apply because Kansas Bankers left claim open and never issued a denial, preventing timely suit | No extraordinary misconduct; insurer requested documentation and Intrust failed to provide it; long inactivity by Intrust | Held: Equitable tolling not warranted — no active misleading or extraordinary barrier; Intrust failed to diligently pursue claims |
| Whether proof/notice/termination defects barred coverage (procedural defenses) | Intrust: provided sufficient notice/proof (Oct/Nov 2000) and Fiduciary Act tolling affected deadlines; termination provision voided by statute/ public policy | Kansas Bankers: proofs insufficient/timeliness and termination upon receivership barred claim | Held: Court previously resolved many notice/proof issues in part; but because suit was untimely under the 24‑month limit (and §143.1 inapplicable), the timeliness ruling was dispositive and affirmed |
Key Cases Cited
- Private Bank & Trust Co. v. Progressive Casualty Insurance Co., 409 F.3d 814 (7th Cir.) (unambiguous bond terms are enforced as contracts)
- First State Bank of Monticello v. Ohio Casualty Insurance Co., 555 F.3d 564 (7th Cir.) (financial institution bonds treated as fidelity bonds)
- RBC Mortgage Co. v. National Union Fire Insurance Co. of Pittsburgh, 349 Ill. App. 3d 706 (Ill. App. Ct.) (refers to financial institution bond as a fidelity bond)
- Universal Mortgage Corp. v. Wurttembergische Versicherung AG, 651 F.3d 759 (7th Cir.) (banker’s blanket/financial institution bonds provide bundled indemnity for forgery, employee dishonesty, etc.)