AMERICAN COUNTRY INSURANCE COMPANY, Aрpellant, v. ANTHONY WILCOXON, Appellee
No. 65982
Supreme Court of Illinois
Opinion filed March 22, 1989.
127 Ill. 2d 230
MORAN, C.J., joined by RYAN, J., dissenting.
Beermann, Swerdlove, Woloshin, Barezky & Berkson, of Chicago (Alvin R. Becker and Howard A. London, of counsel), for appellant.
Edward J. Bradley, Jr., of Bradley and Bradley, of Chicago, for appellee.
JUSTICE STAMOS delivered the opinion of the court:
Plaintiff, American Country Insurance Company (American), filed a complaint for declaratory judgment on July 26, 1984, against defendant Wilcoxon, among others, seeking a finding that it had no duty to pay under a bond issued to insured defendant Checker Taxi Company (Checker), for injuries suffered by Wilcoxon in an accident involving а cab owned by Checker. The trial court granted plaintiff‘s motion for summary judgment, finding that plaintiff had no duty, pursuant to the terms of the bond, to pay or indemnify the defendants. Defendant Wilcoxon appealed and the appellate court reversed. (159 Ill. App. 3d 884.) We allowed plaintiff‘s petition for leave to appeal (107 Ill. 2d R. 315).
Plaintiff‘s suit for declaratory judgment was prompted by a personal injury suit filed in the circuit court of Cook County by Wilcoxon; Wilcoxon sued Checker and David Overstreet after a cab owned by Checker and being driven by Overstreet struck Wilcoxon on December 5, 1983, while Wilcoxon was a pedestrian. Plaintiff advised Checker that pursuant to the terms of the bond it was not liable to pay any judgments against Checker. Plaintiff then filed the рresent action. Wilcoxon‘s suit is not involved in this appeal.
Checker and American executed a bond pursuant to the Illinois financial responsibility statute governing taxicab owners under the Illinois Vehicle Code (
“(c) Express or implied consent is a motor vehicle described in this instrument which is being used with the express or implied consent of CHECKER when it is being used by
(i) an employee of CHECKER while operating said motor vehicle in the course and scope of his employment; (ii) a lessee of CHECKER while operating said motor vehicle pursuant to a written lease.
This bond shall not apply to any permitte [sic], sublessee, or bailee or an employee or lessee of CHECKER. It is the specifice [sic] agreement and intention of CALUMET and CHECKER that the doctrine known as the Initial Permission Doctrine shall not apply.”
We note that the way the rider is worded, particularly the language purporting to define “express or implied consent” by equating “consent” with a “motor vehicle,” makes it nearly incomprehensible.
Checker leased one of its cabs to Willie White on December 5, 1983. The written lease was for a 24-hour period, from December 5 to December 6, and stated that Checker would provide insurance covering both “[l]essor and [l]essee, in the limits and of the types prescribed by ordinances of the City of Chicago and laws of the State of Illinois.” The lease also stated that the lessee agrees “[t]o be the sole driver of the leased vehicle.” According to the complaint for declaratory judgment and Wilcoxon‘s answer, Willie White gave possession of the leased Checker cab to David Overstreet sometime on December 5, 1983. While Overstreet was driving the cab, he struck and injured Wilcoxon, a pedestrian. Wilcoxon subsequently filed a personal injury suit against Checker and Overstreet.
American filed suit seeking declaratory relief against Wilcoxon, Checker and Overstreet. The complaint for declaratory judgment alleged that the bond issued by American (previously known as the Calumet Insurance Company) was in full force and effect on the day of the accident, but provided for coverage only when a Checker cab was being operated with the express or implied consent of Checker. The complaint stated that Willie
American then filed a motion for summary judgment, contending that the bond clearly and specifically applied only to an employee of Checker or a lessee of Checker operating pursuant to a written lease. The motion also contended that the bond had served notice that the initial permission doctrine would not apply. Attached to the motion were three affidavits in support of the motion.
The first affidavit was that of the president of American; the bond, the affidavit stated, was filed with, and approved by, the Illinois Secretary of State and the administrator of taxicab ordinances for the City of Chicago. The second and third affidavits, of the lease manager and personnel manager of Checker, asserted that no lease record between David Overstreet and Checker, or record of any kind relating to employment of Overstreet by Checker, could be found. After a hearing, the trial judge granted the motion.
Wilcoxon appealed the trial court‘s order, and the appellate court reversed. The court found that the initial permission doctrine applied, notwithstanding the lease provision forbidding White to allow anyone else to operate the cab, because the “protection of the public under financial responsibility stаtutes transcends the private agreement between the parties, where the agreement runs counter to sound public policy.” (159 Ill. App. 3d at 890.) The court held that Checker, therefore, had given
Plaintiff contends that the appellate court expanded the plaintiff‘s liability beyond that imposed by statute and exceeded its authority by rewriting the statute. Plaintiff argues that the initial permission rule is a rule of contract construction that does not apply to the facts of this cause; the rule may be specifically avoided, plaintiff asserts, by parties to an insurance contract. Plaintiff further contends that the appellate court‘s ruling that Checker constructively consented to the operation of the cab by Overstreet conflicts with a provision in the Chicago Municipal Code.
Defendant argues that the initial permission rule applies here and extends coverage to all successive permittees operating a vehicle used in public transportation. Defendant asserts that this court‘s earlier decision in Maryland Casualty Co. v. Iowa National Mutual Insurance Co. (1973), 54 Ill. 2d 333, rejected the contention that an owner or insurance compаny may exclude coverage under an insurance bond by expressly disclaiming application of the initial permission rule. Defendant further argues that
In Maryland Casualty Co. v. Iowa National Mutual Insurance Co. (1973), 54 Ill. 2d 333, this court held that
The court held that Horton was covered under the Smythe insurance policy, adopting the initial permission rule that “‘once the initial permission has been given by the named insured, coverage is fixed, barring theft or the like.‘” (Maryland Casualty, 54 Ill. 2d at 342, quoting Odolecki v. Hartford Accident & Indemnity Co. (1970), 55 N.J. 542, 550, 264 A.2d 38, 42.) The court adopted the view that the initial permission rule not only applied to cover deviations by the first permittee from the permission given him by the insured concerning how or where the car was to be driven, but also encompassed situations where the first permittee exceeds the scope of permission by allowing a second permittee to drive the insured car. The court quoted approvingly from a New Jersey Supreme Court opinion that stated:
“‘We fail, however, to see the distinction between a case where a first permittee exceeds the scope of permission in terms of use of time, place, or purpose, and a case where he exceeds the scope of permission in terms of use
of the vehicle by another. Once an owner voluntarily hands over the keys to his car, the extent of permission he actually grants is as irrelevant in the one case as in the other.‘”
(Maryland Casualty, 54 Ill. 2d at 341, quoting Odolecki v. Hartford Accident & Indemnity Co. (1970), 55 N.J. 542, 549-50, 264 A.2d 38, 42.) The court noted that “‘the rule is based on the theory that the insurance contract is as much for the bеnefit of the public as for the insured, and that it is undesirable to permit litigation as to the details of the permission and use ***.‘” Maryland Casualty, 54 Ill. 2d at 342, quoting Konrad v. Hartford Accident & Indemnity Co. (1956), 11 Ill. App. 2d 503, 515.
In United States Fidelity & Guaranty Co. v. McManus (1976), 64 Ill. 2d 239, this court expanded the coverage of the initial permission rule by holding that when the owner‘s policy contains an omnibus clause extending coverage to any person using the car with the permission of the insured, and the insured had given a person permission to use the car, “a further grant of permission from the initial permittee need not be shown in order to invoke the coverage.” (McManus, 64 Ill. 2d at 243.) The court noted that, as suggested in Maryland Casualty, the initial permission rule does not extend coverage to a driver who has obtained possession by theft or tortious conversion. McManus, 64 Ill. 2d at 243; see Western States Mutual Insurance Co. v. Verucchi (1977), 66 Ill. 2d 527.
Plaintiff first contends that the appellate court, in finding that the Illinois legislature has codified the initial permission rule, exceeded its authority by rewriting the statute. Plaintiff argues that
We do not believe that the appellate court erred in finding that
Plaintiff argues that our decision in McManus established that the initial permission rule is a rule of contract construction that is founded on “a broad provision extending liability coverage to persons operating or using a
It is a basic axiom of statutory construction that in determining the intent of the legislature, a court may properly consider not only the language of the statute, but also “the reason and necessity for the law, the evils sought to bе remedied, and the purpose to be achieved.” (Stewart v. Industrial Comm‘n (1987), 115 Ill. 2d 337, 341; City of Springfield v. Board of Election Commissioners (1985), 105 Ill. 2d 336, 341.) The legislative intent to insure that members of the public, injured through the negligence of cabdrivers driving cabs owned by others, are not left uncompensated for their injuries is reflected in the plain requirements of the financial responsibility law. The statute requires taxicab owners to
As we mentionеd earlier, the initial permission rule is grounded on the fact that the insurance contract is as much for the benefit of the public as for that of the insured. Here, the bond was issued in compliance with the financial responsibility statute requiring such bonds so as to afford recovery on judgments by aggrieved parties from negligent cabdrivers. Unlike private insurance contracts, the bond required in the case at bar is designed to insure that an owner operating a public conveyance business is financially rеsponsible. The reasons underlying the initial permission rule are seldom stronger than in the present situation, where the insurance bond is required for the benefit of the public.
Although the bond issued by plaintiff to Checker contained an omnibus clause with language tracking the statute that coverage extended to any person operating the motor vehicle with the owner‘s express or implied consent, a rider that was unsigned, untitled and not referenced in the bond document itself was attached to the bond. The rider purported to define “express or implied consent” to limit coverage under the bond solely to drivers who were employees of Checker or lessees of Checker. The rider also disclaimed application of the initial permission rule. By including the required omnibus clause in the bond, and attempting to then limit its coverage through an unsigned, untitled and unreferenced rider attached to the bond, plaintiff revealed that it was fully cognizant of the requirements of
A provision in a bond or policy, mandated by a financial responsibility law, that conflicts with the law is void and the statute controls. (12A G. Couch, Insurance §§45:770, 45:738 (rev. 2d ed. 1981); see Harper v. City Mutual Insurance Co. (1978), 67 Ill. App. 3d 694, 697; Bertini v. State Farm Mutual Automobile Insurance Co. (1977), 48 Ill. App. 3d 851, 854; American Home Assurance Co. v. Hartford Insurance Co. (1983), 190 N.J. Super. 477, 486, 464 A.2d 1128, 1133; Atlantic National Insurance Co. v. Armstrong (1966), 65 Cal. 2d 100, 106, 416 P.2d 801, 805, 52 Cal. Rptr. 569, 573.) Because the rider conflicts with the requirements of the statute, it is void.
In a similar case, the supreme court of California held that provisions in an insurance policy required under a California financial responsibility law, seeking to limit coverage to certain classes of permissive users and others whose injuries were compensable, were invalid. (Atlantic National Insurance Co. v. Armstrong (1966), 65 Cal. 2d 100, 416 P.2d 801, 52 Cal. Rptr. 569.) A California financial responsibility law required companies renting automobiles to the general public to “provide cover-
“the Legislature intended to leave the description of the class of persons whоse injuries are compensable wholly to the discretion of private parties. As has been said with regard to an analogous issue, ‘The statute is founded upon principles of public policy[,] and an anomalous situation would be created if the rights of third parties, for whose protection the law was adopted, could be hindered, delayed, or defeated by ... private agreements....’ [Citation.]”
(Armstrong, 65 Cal. 2d at 106-07, 416 P.2d at 806, 52 Cal. Rptr. at 574.) For all of the above reasons, we find that the rider is invalid.
For the same reаsons, the provision in the lease requiring White to be the sole driver of the cab cannot restrict the application of the statute.
Plaintiff contends that the appellate court opinion conflicts with a provision in the Chicago Municipal Code. Because Chicago Municipal Code section 28-9 (1982) provides that only a lessee or a contractor can operate a cab during the term of the lease or contract, the plaintiff argues that it had the right to exclude coverage for drivers barred from driving a cab under the municipal ordinance.
The Chicago ordinаnce regulates who may drive a cab in the City of Chicago. It has no relevance to cab owners and their sureties’ responsibilities under
Plaintiff finally argues that because the Illinois Secretary of State and the City of Chicago have approved the bond provision at issue, an inference is created that the bond conforms to the law. (Kirk v. Financial Security Life Insurance Co. (1978), 75 Ill. 2d 367.) In Kirk this
For all of the above reasons, the judgment of the appellate court reversing the trial court‘s order granting summary judgment is affirmed.
Judgment affirmed.
JUSTICE CALVO took no part in the consideration or decision of this case.
CHIEF JUSTICE MORAN, dissenting:
“The surety of [a] bond shall provide for the payment of each judgment by the owner of the motor vehicle *** for any injury to or death of any person or for damage to property other thаn such motor vehicle, resulting from the negligence of such owner, his agent, or any person operating the motor vehicle with his express or implied consent ***.” (
Ill. Rev. Stat. 1985, ch. 95 1/2, par. 8-104(2) .)
The last substantive amendment to
Sixteen years later, this court interpreted what is commonly called an “omnibus clause” contained in a pri-
Today, 15 years after the decision in Maryland Casualty, and 32 years after the last substantive change in
The flaw in the majority‘s argument is evidenced by this court‘s decision in United States Fidelity & Guaranty Co. v. McManus (1976), 64 Ill. 2d 239. In McManus we stated that:
“[w]e adhere to the view expressed in Maryland Casualty that where an insurer elects to include in its policy a broad provision extending liability coverage to persons operating or using a car with the permission of the owner, a further grant of permission from the initial permittee need not be shown in order to invoke the coverage.” (Emphasis added.) (McManus, 64 Ill. 2d at 243.)
By using the word “elect,” this court made clear in McManus that the initial permission doctrine, as adopted in Maryland Casualty, is a rule of contract construction. The rule is invoked when interpreting an omnibus provision contained in a private contract of insurance. As a rule of contract construction, there can be no doubt that even in the face of an omnibus provision, the parties
The majority now takes our 1973 decision in Maryland Casualty, which interpreted a private contract of insurance, and uses it to interpret a statutory provision passed 16 years earlier, in 1957. In essence, the rule of contract construction announced in Maryland Casualty has, by judicial legislation, been elevated to the level of substantive law.
As the majority states, a fundamental principle of statutory construction is to give effect to the intent of the legislature. (In re Petition of the Village of Kildeer to Annex Certain Property (1988), 124 Ill. 2d 533, 545.) Citing Maryland Casualty, the majority holds that the intent of the legislature in passing
Whether the result reached in this case is desirable from a public policy standpoint is best left to the legislature. The majority‘s conclusion is unsupported by any evidence of legislative intent and conflicts with the terms of the policy at issue in this case. I would therefore reverse the decision of the appellate court and affirm the trial court‘s order granting summary judgment in favor of the plaintiff.
JUSTICE RYAN joins in this dissent.