Apex Mutual Insurance v. Christner

Corporation, Plain- Company, a Apex Mutual Insurance Christner, al., Defendants- et tiff-Appellee, v. John Appellants. 50,851. No.

Gen. District, Division. Fourth First 18, 1968.

September McCORMICK, J., dissenting. P.

Rosenblum, Lipnick Joseph, & and Bennett H. Shul- Chicago man, (Arthur Rubin, Rosenblum and Erwin counsel), appellants. for Simon, Chicago Gordon,

Brooks and Gilbert (Gilbert Gordon, counsel), appellee.

MR. opinion JUSTICE ENGLISH delivered the court. declaratory judgment brought by proceeding

This is a against plaintiff Christner, John owner of automo- against public insured plaintiff. bile being car in an accident while driven Helen Christner, John’s and a codefendant. Leo Marks wife allegedly Clepp, persons injured in the acci- Louis sought dent, were also named as Plaintiff defendants. relieving duty pay or to it of the to defend declaration ground Christner, any judgment Helen cooperation of the in- had breached the clause that she plaintiff had not waived and that surance all material issues in favor of The court found breach. granting re- the relief decree entered a “judgment notwith- moved for quested. Defendants alternatively, or, for a new standing the verdict” [sic] ap- have denied. Defendants These motions were trial. raising plaintiff waived of whether issue pealed, sole noncooperation as a right Helen Christner’s to assert policy. under the obligations to her to its defense At about dispute over the facts. no material There is Christner, 1962, August 2, Helen while m., on a. 12:40 automobile, with a collided driving husband’s alone her Marks and Leo occupied by Police Officers squad car by the an insured included as Clepp. She was Louis by husband with her carried terms plaintiff. telephone She informed ac- morning, cident m. before 9:30 a. on that which time at appeared plaintiff’s she at inter- local office and was August supervisor. 8, viewed field its claims On signed investigator home a obtained from her her concerning statement the accident. 21, Rosenblum,

On November the law firm of Lipnick on Joseph and filed action be- a Clepp half of and Marks Helen and John Christ- assigned ner. Plaintiff to the law the defense of case attorneys firm of and for the Christ- Gillin Owens.1 As ners, answer, and and and Gillin Owens filed served interrogatories. answered discovery Clepp April depositions

On and Rosenblum, Helen Christner were taken at the office of Lipnick Joseph representative and and with a of Gillin testimony in sub- present. Owens Mrs. Christner’s agreement con- stantial account of the accident given plaintiff’s tained in the statement which had she investigator: permit stopped she her car on the street driveway; police police car out after to back to move completed car started this maneuver following along street, proceeded, be- forward she traveling car hind; three two after forward suddenly and without lengths, police stopped car result, police car warning; as a struck the she rear. had a conversation September Mrs. Christner

On worked where she Marks in the restaurant with Officer attor- telephoned Marks’ Thereafter, she as waitress. his day office ney, Rosenblum, went next concerning executed handwritten statement where she Gillin office notified Rosenblum’s the accident. day Mrs. Christner telephone on the same Owens attorneys filed the who later firm the same This was plaintiff. declaratory judgment behalf given them a statement. This statement asserted

relevant previously facts not plaintiff, disclosed to de- clared that she had deposition, told untruths in her admitted fully that solely she responsible was for the accident.

Rosenblum did not copy furnish a of the statement Owens, Gillin and they but copy on October 3 obtained a (We court request order. would from this assume that copy counsel.) for a had been denied Two weeks they discovery later deposition took of Officer Marks. deposition Part of this dealt with con- Mrs. Christner’s guard, police crossing nection the with as a circum- the meeting restaurant, stances of her Marks in surrounding and the giving events her the statement Rosenblum. 4, 1963, policemen plaintiffs

On November in summary judg- action filed a motion for liability. granted on ment for the issue The court time filing papers opposition in the motion for set hearing on December 17. through counsel, plaintiff,

On filed December other were served with action. Defendants time, plaintiff had not process on December 15. Until this rights notified insureds a reservation its served policy it no that under terms of manner longer Mrs. defend Christner. itself bound to considered declaratory relief gist complaint However, gave state- Rosenblum Mrs. Christner when condition admitting responsibility, she breached ment requiring cooperate with her to breach, of this that because the defense and the conduct of lawsuit obligated to defend neither plaintiff was might be any judgment pay nor her behalf narrowing the purpose against her. For the rendered brief their have conceded appeal, defendants issues on a breach constitute did Christner of Mrs. conduct policy. clause of cooperation 17, 1963, On December Gillin and filed Owens summary opposition counteraffidavit in to the motion for judgment injury personal in the affidavit action. This according description contained a to the of the accident testimony discovery deposition, of Helen Christner in her knowledge validity and denied “the circumstances alleged Rosenblum) (to under which the was statement given pending or taken.” It also informed the court of the declaratory requested proceedings action and all in injury stayed. court, however, The action be declaratory judg did not wait for determination of the summary action, judgment ment and entered on the issue against Clepp in favor and and both Marks John Helen and Christner.2 January 17, 1964,

On a motion and filed Gillin Owens summary judgment. to was de- vacate This motion February nied on 18 and

The tried on March plain- May on in 17 the court entered the decree plaintiff’s motion, tiff’s favor. On the court vacated May decree 28 and amended decree nunc on entered an May 17, any declaring pro plaintiff tunc as of free any judg- obligation pay to defend Helen Christner or might against per- her ment be rendered injury entered The as first sonal case. decree Christner, had re- plaintiff’s relief Mrs. but limited to obligation generally plaintiff’s release from the ferred 2 negli- despite fact to the issues of as Without evidence agency relationship gence prerequisite be- Helen and as to “no find there was tween Helen and John. Nor the court did § any Act, 57), genuine (Civil as fact” Practice material issue but, rather, found: at of the Plaintiffs suit are favor this law issues liability. on the the Defendants issue however, judgment (Martino Barra, order, not a This final subject 545) to correction or vacation Ill2d 229 NE2d and is prior disposition of the case. time ultimate

to defend pay any judgment the lawsuit and to rendered therein. The court found “. . . the actions of the defend- ant Helen Christner were in violation of the conditions of insurance and such violation was not waived by any or excused actions or omissions of the Meanwhile, May 24, 1965, plaintiffs per- sonal suit made a motion to advance cause hearing damages. remaining on the The mo- issue of denied, including tion was the order the recital: . . through attorney the defendants and Owens their Gillin having objecting any advancement, court heard regard arguments However, .” of counsel . . . advance, stipulated in motion to the case now it is attorney testi- us that the from Gillin and Owens before (on “judgment not- fied defendants’ motion herein for withstanding verdict”) the that he had told Rosenblum (attorney plaintiffs), the before the presented, the status motion that he did know was time; that Rosen- judgment suit that the denying order prepared in advance the written blum motion; judge Rosenblum told his own that when the necessary, insisted Rosenblum order no written further, anyway; and, order the draft he wanted no attorney made state- and Owens from Gillin hearing any court at the kind ment of before advance. motion to brings an ac injured party an arise when

Difficulties investigation insured, the insurer against an tion tending fact an essential of condition a breach reveals coverage policy. The claim outside place the defending claim while in interest insurer’s pre policy, obligation the terms restricting its strategical problem: urgent insurer sents in court. See Sha insured defend the or not whether 184, 771. 237 NE2d App2d DiGuilio, 95 Ill piro v. 160 It assumption is well settled that of the insured’s ques defense constitutes waiver the insurer of all coverage. Seal, App2d tions of 53 Ill Bourne v. 155, 12; Reading, 203 NE2d Pa. American Cas. Co. of Shely, Ky 80, v. (1950); 314 303 234 SW2d see De Hart Co., 685, If, therefore, v. Illinois Cas. 116 F2d 688. in spite coverage, its doubts as to the insurer elects defense, take it will over insured’s afterwards be estopped denying policy. from own under the estoppel “estoppel pais”; referred to here is it is ordinarily justified ground on the the insurer has right prejudiced insured’s to control own defense. his Co., 116 See dissent in De Hart Illinois Cas. F2d v. 199, 688-689; App2d Gephart, and Rom 30 Ill v. 173 NE2d may wholly view, de

With this insurer coverage cline when to assume the defense insured’s Having litigation, the in refused to enter the doubt. setting subsequently estopped up surer cannot original in the in its own defense matter not decided Co., Country App2d Ill v. Mut. Cas. action. Gould 37 Indemnity Co., 603; American NE2d Potter v. Great Judg 198; 55 NE2d see Restatement Mass hazard, however, ments, presents a 107. Abstention § “collaterally estopped” in the will be since insurer had been decided subsequent as all issues suit Chicago Sanitary United prior Dist. of action. Guaranty Co., Fidelity 65 NE2d Ill & States 160, 364; Mitchell, App2d 206 NE2d 776. Palmer v. 57 Ill substantially estoppel Further, danger is of collateral injured parties are inclined if the insured increased establishing as such facts purpose conspire for the policy’s they may place under themselves select L 4 Okla Rev coverage provisions. Note in See nonliability potentially is Finally, insured the in policy claims bar to effective most making a exists of success- possibility Where surer. ful defense on behalf insured, of the the insurer has gain much to placing upon reliance first action, line declining since defend, it would sacrifice all opportunity injured party’s contest claim.

Clearly, then, very neither of these is two alternatives satisfactory to an insurer. Sims v. Illinois Nat. Cas. Co. of Springfield, App2d 184, 43 Ill 193 NE2d cited approval in Mario’s, Inc., Lincoln Cas. Co. v. Vic & 62 App2d 262, Ill 210 NE2d the in discusses options predicament: surer’s in such a However, agree quite all authorities often an insurer is faced with a dilemma to whether as defend or to refuse to defend. In cases of doubt simple. (1) declaratory judg- answer is Seek obligations rights ment (2) as to its defend rights. under a reservation of rights by which, The reservation of is a means prior insured, to determination of the suspend estoppel insurer operation seeks to through agreement. doctrines a nonwaiver cover When age doubt, in the insurer offer to defend the will reserving agreement, sured under to the in such surer all of its the insured is defenses case agreements generally held such found liable. Courts have App2d Gallaway Schied, 116, 219 g., valid. v. 73 Ill E. 718; 1383; Blashfield, 81 ALE Automobile NE2d Law Practice, 342.23. §

Estoppel pais operates of the insurer’s result as defense, the in- monopolization of the insured’s since seeking thereon, other sured, refrains from in reliance claimed where But no reliance can be counsel. such rights, since defended under reservation has insurer rejected offer the insurer’s have could the insured Hawkeye Cas. Co. v. to do so. had chosen counsel if he 466, 48 623. Also see Schneider Stoker, NW2d 154 Neb Whether, Co., 137, 466. 346 Ill NE Autoist Mut. Ins. 178 reserving rights, also avoids strictures the insurer however, the dis estoppel is, See of unsettled. collateral Richmond, 185 F2d Shelby Mut. Cas. Co. v. cussion in 803, may estoppel arises collateral 805. It be that since agreement does privity nonwaiver and since the suspend the privity, not alter the fact of it would substantially di operation estoppel, collateral thus many rights minishing value of reservation Liability Illegality In McNeely, Factor as a cases. See surance, L 41 Col Rev 26. (as re- dilemma

The to the insurer’s second solution declaratory judg- through Sims, supra) ferred to in is procedure to resolve purpose The is ment. coverage finality to the prior either policy issue injured party or such while commencement of suit pending. suit judicial right obtain a of the insurer coverage ad prior to on the issue of

declaration favored judication claim has been authority. g., weight Lentin v. Con E. of Illinois 735; 158, Co., NE2d Walton 412 Ill 105 tinental Assur. 425, App2d Chicago, Playboy Clubs, City 37 Ill Inc. v. Bergman, 38 719; Country Mut. Co. v. Ins. 185 NE2d Mut. 513; Elevator App2d 185 NE2d Farmers Ill 12; NE2d Burch, App2d 38 Ill 187 Co. v. Ins. Hamblin, App2d 42 Ill Ins. Ass’n v. Automobile Farmers Liability Corp. 450; v. Employers Assur. 192 NE2d 341, 343, 200 NE2d Country Co., App2d Ins. 50 Ill Mut. Co., supra. 8, 12; Lincoln Cas. 98; also 142 ALR Sims Morris, Co. v. Automobile Ins. Contra, Farm Mut. State Maida, 24 590; App2d NE2d Valente Ill 144,164 App2d NE2d Ill perils of the to the cannot ourselves

We blind complaint injury action position. Where insurer’s recovery, of action or theories causes different states policy, the insurer are covered only of which some is bound to defend all policy. those which are within the Canadian Radium Corp. Indemnity and Uranium Ins. Co. America, of North App 456, 342 Ill 97 NE2d 132. The penalty duty any judg failure to fulfill is that this against ment entered it, is conclusive absent fraud. Country Casualty Co., Gould v. App2d Mut. 37 Ill 185 NE2d case, duty 603. In the plaintiff instant indemnify against to defend John Christner and to him any judgment might up policy he suffer to the limits as litigation. personal injury a result of the Plaintiff owed duty the same to Helen time Christner until the when she obligation by excused it of her conceded from this virtue breach of the conditions. The issue on review sole plaintiff estopped from assert thus becomes whether ing respect this excuse virtue of its later conduct with litigation. to the asserting estopped An insurer will not be cooperation it clause insured if of its breach repudiates time after within a reasonable be coming cooperate. failure to aware of the insured’s Krutsinger Co., 10 Ill2d 139 v. Illinois Cas. 767; Allstate Ins. Co. v. ALR2d 1199. See also NE2d ef App2d 44, 50,149 Keller, NE2d to the same Ill fect. de preserved have its

In order for therefore, find, that no policy, must fense under the we given and that Christner to Mrs. disclaimer was tice above, timely. the notifi mentioned notice was As such being of her served her consisted communicated to cation by plaintiff. declaratory action filed process in the as it notice sufficient this constituted We believe ALR2d position. 38 fairly plaintiff’s informed her of by plaintiff was declaratory action filing of the claiming to have been it manifestation a clear by virtue any to Mrs. Christner duties owed relieved failure her due to now-admitted policy, of the insurance cooperate standpoint with the From defense. notice, appear there does not to be material dif- procedure ference between method this method serving through notice of the same intention reser- rights. vation of surety question

. . . The immediate obligated must decide defend the is whether it is court. suit the state Ob- the insured in viously its determination decision cannot await the suit, duty of its nor need the determination respect interfere with the trial state held suit .... In been similar situations has insurer is a number of recent that the cases not entitled court whether or advised the obligated indemnify it the insured is to defend and against upon threatened or claims which suits are already brought. (Aetna Casualty & have been Sure- ty Yeatts, 669; approval 665, v. F2d cited with Co. Simms, 231 Mutual Insurance Co. v. Nationwide involving 787, 789, Supp F a case a which was policy.) cooperation clause of insurance light generalizations, case of Farm of the In the these Janusick, App2d v. 30 Ill ers Automobile Ins. Ass’n of is After an extensive review 174 NE2d of interest. declaratory ac respect of to the use authorities page type case, 359: the court stated tions in this foregoing indicate summarize, authorities To declaratory judgment be liberal- that statutes should ly construed; an insurance the construction that declaratory judg- subject of a policy proper may action; company that the insurance and ment prior to the time policy construed have ask to prosecuted against has been a the insured that suit Declaratory judgment should statutes judgment. delay rather than promote and facilitate be used meting justice. impede out In Janusick, attorneys “the for the insurance carrier ad- vised they they right [the that that court] felt to defend waiving any Janusick without defenses they might reply contention, have.” In to this court stated: holding

It is question of this Court that coverage declaratory judgment raised action Further, ruling is not moot. in view of Court’s declaratory judgment may not be delay damage suits, used to further trial holding attorneys is the this Court that the right the insurance carrier have the such defend and, waiving question coverage suits without question may either be resolved in the pending declaratory judgment action or in subse quent garnishment or direct action instituted (P 360.) (Emphasis added.) the insurance carrier. Janusick, agreement and, executed In nonwaiver also, represented were both insureds attorneys damage company suits. How- insurance ever, Hankins, Supp Knapp F the court in stated: attempted argue Company that the has

Plaintiffs agreement make a de- to obtain nonwaiver rights. The court can- under a fense reservation required to ex- why Company the be not should see money void if the pend for defense the an shown that such it has not been and in event defendant. This agreement could be obtained Company should argument point. The the is beside defending and not to between forced choose counsel be- rights by employing its own waiving its validity con- of the the adjudication of fore it has & Builders See Manufacturers of insurance. tract page Supp supra, Paquette, 21 F Co. v. Mut. Cas. page argument Knapp At 47 the court considered the company idly the could let the defendant sit employ choosing damage counsel of his own to defend the suit, company it and dismissed unfair the as because by any Further, judgment would be bound entered. duty only cooperate insured no to in has defend but to damages. Therefore, defense the action for unless might company defend, insurance be no to there were at all. defense

In to order effectuate result consonant with right plaintiff’s Janusick), (as pronounced defend in to fairly protect estoppel to it from the strictures declaratory pais, hold we service brought by preserved defenses enumerated those though complaint declaratory for relief even insurer, objection by insured, continued without represent to insured action. meanwhile its Krutsinger Co., supra, Cf. Illinois at 526. Cas. declaratory unequivocal complaint A relief is an nonliability by assertion of Personal service insurer. re- proper notice. To the insured formal affords declaratory judgment impresses quire. The route us as redundancy not re- which the law does not and should quire. judgment impresses us as route may being eminently sound, preserve its as the insurer losing right contract under the without its defenses invalid, and if found represent defense is insured employ private counsel unless is not forced to insured opts he to do. so case, defend John

In was bound the instant defense regardless John’s conduct. his wife’s Christner nonliability or failure necessarily hinged of Helen relationship prove agency injured plaintiffs sought her con- they hold him liable for upon the insurer was obli- Therefore, or not whether duct. de- Helen, to continue to gated bound defend it was Further, interests John’s on John’s behalf. fend the suit in personal injury presented action no conflict situa- they tion since thoroughly were consistent with Helen’s manifestly interests and adverse to interests of the allegedly injured officers.

Helen Christner was in served action attorneys A firm December 1963. retained plaintiff per had filed an on her answer behalf in the sonal suit. At no time did indicate a to she desire attorneys (Gillin have other than those someone things Owens) All con act as her counsel in that action. plaintiff’s position. sidered, fairly informed of she was filing respect estoppel declara pais, of the With legal tory (after service) effect as a had the same rights. Cf. 38 ALR2d The insurer’s reservation 1167. the in disclaimer was manifested intent to assert its acquies may sured, from her consent be inferred whose Ins. Co. of Ancateau v. Commercial Cas. cence. See 553, 556, 48 440. Chicago, App Ill NE2d argue However, plaintiff’s fail defendants discovering upon promptly ure to disclaim rights cooperation clause waived breach the breach. a result of might accrued as otherwise have right to as an insurer waives it is true that While acting rea policy condition a breach sert did assert instant promptness, sonable apt time. disclaimer informed plaintiff was September

On given to Rosenblum had been a new statement it indicates Nothing record Mrs. Christner. until of this statement contents precise learned court in order a motion it resorted when October unreasonably in delay it copy. Nor did procure a October Marks for deposition of Officer scheduling the into came way the statement in which In view of necessary part have been existence, consider we Marks’ taken have investigation it to for plaintiff’s able time, plaintiff was when, the first deposition pertinent learn of the essential facts and circumstances surrounding being A the statement. the waiver relinquishment right, plaintiff aof known could there- fore not have waived the breach before October With- thereafter, in less than two action months the upon was filed and the De- service obtained defendants. contend, however, fendants that two months was too long. only that this was a reasonable Plaintiff counters necessary law, period time, to research the as was digest evaluation, facts, on a the make an and decide authority action, approval course of those to make such a determination. Keller, court supra,

In Co. v. at Allstate Ins. pointedly “plaintiff did not re- to the fact that referred year rights against its defendant until almost one serve filing and a the answer in the half after although knowledge breach action it had cooperation (Emphasis at that time.” clause] [of long added.) court a time and considered this too delay informing “[p]laintiff’s held de- extended deny clearly of its intention to con- fendant Quoting Krutsing- stituted waiver of the breach.” from er, supra, the court reasoned: non-liability an insurer

When wishes assert policy, notify under without it must insured delay. might The reason claim “[t]he damages re- a character that the amount of such as [sic; injured?] covered in a lawsuit insured indemnity subject and party would exceed damage, and there- loss insured to considerable right to know with have a fore the insured should indemnity promptness attitude of the reasonable might position to take company, be in so that he indemnity only protect the would not such as damages.” company, from loss but save himself Co., Casualty Creek Coal v. Wallins (Interstate Co. Ky 778, 781, 217, 219.) (Emphasis SW added.)

Following application the usual “rule of reason” nonspecific requirements,3 time it has thus been determined that in this situation a notification is delay” “without if it is communicated with “reasonable promptness.” It apparent is also delay is reason able long if it is not so prevent as to the insured from taking such action as would him save loss dam ages. It implicit ascertaining is also “reasonable promptness” learning that all the time between the of the breach and the notification to the insured cannot be “delay,” considered as period because within that some part of the time —reasonable in relation to the status of pending litigation allowed to the insurer —must position evaluate its and to determine what route it will follow.

Applying case, this standard to the instant noti fication certainly within two months was most “without delay,” cognizant as complexity we must be of the problem applying insurer’s particular in facts —both certainty deciding to the law with and in which of possible pursue. Further, only proceeding courses transpired question period in the here two-month in summary liability judgment was the motion for toas filed midway period. True, about in the action on such a mo stage proceedings tion ais in the and one which critical possibility prejudice of to the carries substantial in Yet, position. here noted: sured’s several factors must be (1) No action was taken on the motion until after service declaratory action; (2) objection granting of to the futile Helen this motion would have been if Christner’s true; accepted (3) final were as Helen statement urged by way story upon the court Christner’s first was 3 (10th Cir); Andrews, 118 F2d Prudence Simms v. See App2d 304, 308, Sturms, 185 NE2d 37 Ill Mut. Cas. Co. v. Owens; (4) and counteraffidavit filed Gillin requested

Gillin to act on Owens the court not summary judgment disposition of the pending motion for declaratory action; (5) no at- Helen Christner made by attorneys tempt representation than obtain other Gillin and was Owens. that Helen Christner We conclude protection practical afforded the maximum under the (which In she circumstances. of her final statement view only truth), spoke the line of contends Mrs. Christner’s question damages, defense was on the which issue re- summary judgment. mained unaffected Lastly, plaintiff contend waived the defendants condition virtue of the con- defense breach continuing per- defend the duct of Gillin and Owens learning As sonal action after breach. we the breach as of have held that had not waived (the December on defendants date of service only necessary action), to consider legal subsequent events. effect May 17,1965, ordered the declaration On the trial court sought by During plaintiff. interim in the injury action, opposition mo- to the counteraffidavits filed, summary judgment tion for were sum- mary judgment granted, a motion made to was summary judgment. vacate the Allstate, the attention to direct court’s Defendants ground finding held to waiver was be for where further attorneys retained the insurer the the conduct of (at 53). In All- page representation of the insured their attorneys deposition the for state the took insured’s strengthening position in the an- purpose insurer’s Although the then aware of ticipated action. interest, they no to existing made disclosure conflict of the insured. stated, page 52: court at

The Allstate attorney an is that law of this State It is the and cir- to client all facts required disclose his to 171 cumstances' within knowledge, his which, in his judgment, might honest likely be per to affect duty formance of his for that client. Catherwood v. Morris, 360 Ill (1935). 481 may A pre client sume from attorney’s an failure to disclose matters material employment to his attorney has no interest which will interfere with his devotion to him, cause confided betray judgment. his Troup, Hunter v. (1925).... Ill unprofessional “It is represent conflicting interests, ex cept by express Hawkeye consent all concerned . . .” . Stoker, Cas. supra, Co. v. Citing at 481. American Em ployers Ins. Co. v. Specialties, Inc., Goble Aircraft Misc 131 NYS2d the Allstate court 401-402, continued, pages 52-53: duty

“. . . paramount. His to the assured Canons of Professional pellucid Ethics make it there are standards, not two applying one to counsel privately client, retained and the other to coun- paid sel an insurance carrier. . . .” attorney “Where insurer’s has reason to believe discharge client, of his duties to his insured, employer, will conflict with his duties his insurer, upon becomes incumbent him to termi- (Citations.) relationship nate his with the client. It duty learning plaintiff’s attorneys upon was the possible plaintiff conflict of interests between defendant, immediately notify defendant of Their this fact. to take such action can failure strengthen plain- only attributed to their desire to position preparation filing in- tiff’s suit. under circum- stant It would be untenable such under stances allow disclaim policy.” added.) (Emphasis 172 applied Allstate, As to the facts in these statements are However, irrefutable. in the instant case no conflict appears plaintiff between the interests of those respect represen- Mrs. professional Christner with to the Nothing by helpful tation afforded Gillin her and Owens. plaintiff divulged declaratory to in the action was attorneys by Christner, any attempt Mrs. nor made was any procure information her would have been which helpful damaging Impor- plaintiff to her. either tantly, respect there was no issue raised with possibility injury reach or exceed would claims admittedly bound limits. Since insured, any judgment pay rendered John accident, Christner, growing out this its interests way conflicted with those action in no agent. does of Helen The record who sued as John’s all not involved at indicate that were Gillin Owens declaratory any event, Helen had notice action. In declaratory plaintiff’s action. position virtue of attorney a case the insurer in While the retained this, represents not the insurer the insured and such as Liability Co., (Thrasher 19 NY2d Ins. v. States United 793, (1967)), no breach 225 NE2d 503 278 NYS2d merely fee is duty because his imputed will to him be responsibility being Professional paid his client. contrary is presumed to the until some evidence should — Rptr —, Lysick Walcom, Cal Cal adduced. See distinguishable though on the is of interest which facts. concluding entry

Considering period 1965), there (May we find decree however, Defendants, by plaintiff. no waiver been complex more lay great on two events stress by plaintiff they say waiver chronology indicate analyzed disposing of this must be and therefore May modifying May 28, order appeal. On declaration entered pro May was nunc tunc as of 17. In substance this provided only modification Helen and not John Christner had breached cooperation clause, and therefore obliga- relieved was of its only tions toas Helen. simply This was a correction to express the court’s decision accurately, more and is of no consequence here.

Meanwhile, May 24, on a motion to person- advance the injury al assignment judge. was denied The presence attorney of an from Gillin and Owens court on behalf of the Christners at the time of motion this is upon relied part defendants as waiver on the Referring plaintiff. again apparently to what occurred court, in that any we note that: no statement of kind attorney was made and Gillin Owens at the hear- ing motion; hand, this on the other he did tell Rosen- nothing blum that he knew of the status of declara- tory being presented; action at the time motion this was denying Rosenblum drafted the order own motion in his hearing, obtaining entry persisted advance of the judge’s despite order written the trial statement necessary. that a written order was not nothing episode substance to We find by plaintiff. support defendants’ of waiver contention attorney appeared mo- on the from Gillin Owens by Rosenblum, completely response to notice tion in decree a earlier week unaware that responsibility to of its furnish such relieved the insurer Rosenblum, judge he told representation.4 the trial As motion would be have known that his or should knew pre-prepared presentation of the denied, and Rosenblum’s that, corrected under the decree in mind as It be borne should obligated days appear on later, were still four Gillin and Owens Furthermore, the court of John Christner. behalf permission given to withdraw and and Owens had not Gillin case presumably done so without the substitution not have would attorney Christner. for Mrs. another

draft order indicates the truth this statement. No other inference is reasonable but that the entire incident merely It, course, attempt to establish waiver. prejudice rights in no resulted Helen whatsoever to Christner.

The decree of the Circuit Court affirmed. Affirmed.

DRUCKER, J., concurs. dissenting:

McCORMICK, J.,P. respectfully holding majori- I must dissent to the of the ty only opinion. question The involved the is in case plaintiff, Apex whether or not the Mutual Insurance Com- pany, ample of notified the defendant Christners time rights no policy. reservation under the There is its of coverage question, a the in doubt where is because tending place an of condition fact breach essential coverage policy, if the the the of the claim outside notify company must insured of insurance defends it the rights. its intention to stand its majority opinion pointed as- In the out that the it is sumption constitutes of the insured’s defense waiver coverage. questions policy The of all the insurer “If, therefore, spite doubts as opinion of its states: de- insured’s coverage, elects take over the the insurer denying fense, estopped own its it will afterwards be from coverage in doubt liability policy.” the is If under the may company, refuse it opinion of the insurance the opinion points the out in all. The court enter the case at litiga- company to enter the refuses if insurance estopped subsequently from be cannot the insurer tion decided in setting matter not up in own defense presents However, original such abstention action. “collaterally estopped” be the insurer will hazard since prior in the subsequent decided as to issues suit majority opinion states: action. rights

“The reservation of which, is means prior determination insured, suspend insurer operation seeks to estoppel through agreement. doctrines a non-waiver coverage doubt, When is in insurer will offer to defend the agreement, under insured an such re- serving to the insurer all of its defenses in case the [Emphasis sup- insured is found liable.” plied.] Gallaway Schied,

In App2d 116, Ill NE2d page the court at said 126: long

“It has been settled that an insurer will not estopped setting up the defense of non- cooperation participating in the defense insured, if, time, it same gives not ” notice to insured that does waive [Citing defense. benefit such cases.] agreement necessary In Illinois it is not that a formal giving into, and the of notice to the insured be entered adjudi- the insured desires to have sufficient. Where can, course, under he of cation liabilities of its declaratory judgment by way action. How- proceed of ever, if he it would seem starts the attor- pending and judgment after suit is action company entered their by have neys hired the insurance insured, practice would be the better appearance for rights. reserving to file notice right “The of the insured majority opinion states: The policy cov- of judicial on the issue declaration to obtain claim adjudication of the erage prior to authority. weight by Illinois favored has been ” entirely in That statement [Citing numerous cases.] this dissent. accord with estopped be will not “An insurer opinion states:

The cooperation clause its asserting breach time a reasonable within repudiates it if insured 176 becoming cooper to after aware of the failure insured’s 518, 526, Krutsinger Co., 10 Ill2d ate. v. Illinois Cas. Keller, App2d 767; Ill NE2d . . Ins. Co. v. . Allstate Krutsinger 44, 50, court said ...” In NE2d page 526: nonliability- an insurer wishes to assert its “When notify without policy, under it must the insured might delay. claim be of is that reason ‘[t]he damages amount a character as that such injured party in a would recovered lawsuit indemnity subject the insured exceed the damage, the in- and therefore considerable loss right reasonable have a to know with sured should indemnity com- promptness of the attitude might position take such pany, in a so that he indemnity only com- protect the not as would ” damages.’ pany, from loss and but save himself company insurance the defendant The court found very inception the last of June knew from —about responsibility de- accepting for the it 1953—that was nothing March until the action. It did fense a declara- county, an action for filed, it in another when nonliability. page 527: tory judgment The court said at July 3, “By repudiate the failure to answer it unsatis- leave amend it if was to seek anything further to do factory, and its failure ef- later, that defendant many think we until months might rights any it have had fectively waived on.” policy conditions relies claim a breach App2d 44, Keller, 149 NE2d 17 Ill Co. v. Allstate Ins. declaratory judgment entered appeal for anwas exempting company, it from of the insurance favor judgment the holder of obligation pay any per policy, in action for an insurance automobile page 50: injuries. The court said sonal “We plaintiff must now consider whether waived by co-operation the breach defendant of the clause. generally The law is well settled that failure an promptly liability, insurer to elect to disclaim upon discovering indicating facts a breach of the co-operation insured, clause constitutes rights might any waiver the insurer of otherwise accrue to it as a result the breach.” Krutsing- opinion quoted In its in Allstate the from court er. year elapsed

In the case a a half Allstate and knowledge acquired company time the insurance had part the breach on the insured before it took case, action. In the instant was filed on November insured assigned company insurance the defense that case answer, Owens, filed and and Gillin who served interrogatories. 17, 1963, September On Helen answered attorney that Christner informed for the she in her had made statements and had told false untruths day plaintiff in- deposition. counsel for the On same given that Helen Christner formed Gillin and Owens no record the statement. There is indication they copy, for a but October asked Gillin Owens seem if copy court order. It would obtained have it would they counsel for the statement had asked given to them. been discovery took a and Owens

Two weeks later Gillin Marks, (as part of which stated deposition of Officer con- Helen Christner’s majority opinion) dealt with crossing guard, circum- police as with the nection restaurant, and meeting Marks in the of her stances surrounding giving the statement her events taking this to conclude difficult It is Rosenblum. representing Christ- and Owens were deposition Gillin company. insurance representing the ners 11, 1963, company On filed an December the insurance declaratory judgment, action and the defendants were Treating filing served on December disclaimer, too as formal was nevertheless late, appear case, and it in All- would as duty state, attorneys, plaintiff’s learn- it was the ing possible conflict of between interests notify defendants, immediately defendants of this fact. judgment of the Circuit Court should be reversed. Krantz, Plaintiff-Appellant,

Leonard v. Albert

O’Neil, Defendant-Appellee. 52,201.

Gen. No. District, First First Division.

July 29, 1968.

Case Details

Case Name: Apex Mutual Insurance v. Christner

Court Name: Appellate Court of Illinois

Date Published: Sep 18, 1968

Citation: 240 N.E.2d 742

Docket Number: Gen. 50,851

Court Abbreviation: Ill. App. Ct.