Albert Levy and Ethel Levy, Plaintiffs-Appellees, v. American Automobile Insurance Co., a Corporation, Defendant-Appellant
Gen. No. 48,143
First District, Second Division
April 18, 1961
Rehearing denied and opinion modified May 9, 1961
Judgment is reversed and the cause is remanded.
Judgment reversed and cause remanded.
BURKE, P. J. and FRIEND, J., concur.
Harry S. & Fred S. Posner, of Chicago (Fred S. Posner, of counsel) fоr appellees.
MR. JUSTICE BRYANT delivered the opinion of the court.
The plaintiffs filed an action against the defendant insurance company to recover under their “Uninsured Motorist Insurance” endorsement for damages sustained by them as a result of an accident with an allegedly uninsured motorist. They obtained a judgment for $10,500 from the defendant insurance company аnd this appeal followed.
The principal questions on this appeal are: (1) whether the plaintiffs’ action in reducing the claim to judgment against the allegedly uninsured motorist without first obtaining the written consent of the insurance company, as required by the endorsement to the policy, prevents their recovery on thе policy, and (2) whether competent evidence was adduced at the trial to prove the uninsured status of the person allegedly liable for the injury and the amount of damages for bodily injury.
The “Family Protection Coverage“, (commonly known as the Uninsured Motorist Insurance), endorse-
An uninsured automobile is defined in the endorsement as “an automobile with respect to the ownership, maintenance or use of which there is no bodily injury liability bond or insurance policy applicable at the time of the accident with respect to any person or organization legally responsible for the use of such automobile...“.
Under “Conditions“, the insured is required “as soon as practicable” to give to the Company a written proof of claim, under oath if required, including full particulars of the nature and extent of the injuries, treatment and other details entеring into the determination of the amount payable hereunder. He is also required to submit to physical examinations by physicians selected by the Company when and as often as the Company may reasonably require and to submit to examinations under oath by any person named by the Company, and subscribe the same, as often as may be reasonably required.
It is further provided under “Conditions“:
“3. Notice of Legal Action. If, before the Company makes payment of loss hereunder, the in-
sured or his legal representative shall institute any legal action for bodily injury against any person or organization legally responsible for the use of an automobile in the accidеnt, a copy of the summons and complaint or other process served in connection with such legal action shall be forwarded immediately to the Company by the insured or his legal representative.” “6. Arbitration. If any person making claim hereunder and the Company do not agree that such person is legally entitlеd to recover damages from the owner or operator of an uninsured automobile because of bodily injury to the insured, or do not agree as to the amount of payment which may be owing under this endorsement, then, upon written demand of such person, the matter or matters upon which such person and the Compаny do not agree shall be settled by arbitration in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Such person and the Company each agree to consider itself bound and to be bound by any award made by the arbitrators pursuant to this endorsement.”
“...
“9. Action Against Company. No action shall lie against the Company unless, as a condition precedent, thereto, the insured or his legal representative has fully complied with all the terms of this endorsement.”
It is admitted that the policy was in full force and effect on thе date of the accident, December 1, 1957. The driver of the allegedly uninsured automobile was identified in the Police Report as Howard Perkins and
The defendant‘s basic premise is that proof of a right to recover and the amount recoverable may be made in an action on the contract directly against the insurance company and that no other action is necessary or relevant. We are not informed as to how this
The parties failed to agree and the plaintiffs’ attorney declined to submit the dispute to arbitration. The only other recourse available was to obtain a judgment against the third party, however, the insurance endorsement required the written consent of the insurer as a condition precеdent to the ascertainment of its liability by this method of enforcement. The undisputed evidence is that the defendant refused to grant its written consent unless the plaintiffs submitted the dispute to arbitration. The defendant had no right to demand arbitration for the express terms of the endorsement provide that only the insured had the option to select arbitration. To condone this improper use of the “written consent” provision would in effect force the insured to submit the entire future controversy to arbitration, and it is well established that such provisions are not valid in this state. Niagara Fire Insurance Company v. Bishop, 154 Ill. 9, 39 N. E. 1102; White Eagle Laundry Co. v. Slawek, 296 Ill. 240, 129 N. E. 753; Cocalis v. Nazlides, 308 Ill. 152, 139 N. E. 95; Hill v. Mercury Record Co., 26 Ill. App. 2d 350, 168 N.E.2d 461.
In the case at bar, the condition of the company‘s promise to pay is the ascertainment of the legal liability of the third party. The company can prevent this determination by the simple device of refusing to grant the insured its written consent to prosecute the action to judgment. There was an implied promise on the part of the Insurance Company thаt it would not unreasonably or arbitrarily withhold its written consent. The company gave no reason for its refusal to allow the plaintiffs to obtain a judgment against the uninsured motorist. It appeared that the company wanted the matter arbitrated and that if the insured refused to submit to arbitration, it would prevent a determination of its liability on the policy. Under these circumstances, the action of the company in arbitrarily withholding its written consent constitutes a violation of the implied provisions of the policy and consequently the exclusion clause is not a bar to this action.
These views are consistent with the opinion of the Supreme Court of Oklahoma in Boughton v. Farmers Insurance Exchange, 354 P.2d 1085, the only other case where this type of insurance endorsement was judicially interpreted. The court there held that an unenforceable compulsory arbitration provision did not invalidate the contract, since the “primary and essential part
We will next proceed to the question as to whether competent evidence was adduced to support the finding that an uninsured motorist was involved in the accident. The proof of the non-insurance of the motorist was presented by the attorney for the plaintiffs. He testified that after he failed to get a response from the letters requesting that Perkins and Smith notify their insurance company, he made a personal investigation of the matter, and that both individuals told him that they were nоt insured. Their remarks were introduced into evidence as declarations against financial interest, an exception to the hearsay rule. The defendant objected and the testimony was admitted over the objection.
There was no showing that Perkins was unavailable. The plaintiffs state that the mere recent weight of authority allows the use of the declaration, without a showing of excusable unavailability. However, the cases cited in support of their contention do not substantiate this position. The rule in Illinois is that a showing of unavailability of the declarant is a necessary element for the introduction of the declaration against financial interest, particularly where the declaration is oral. 18 I. L. P., Evidence, section 114, p. 253-4. German Insurance Co. v. Bartlett, 188 Ill. 165, 58 N. E. 1075. Equally without merit is the argu-
Finally, we are of the opinion that the finding with respect to damages is not supported by competent evidence. This finding was based entirely upon the proof that default judgments in the amount оf $10,500 were entered in the Superior Court against the third party. No evidence as to damages was received at the trial. The record clearly shows that the plaintiffs’ action against Perkins, the allegedly uninsured motorist, was not limited to bodily injury, but included a demand for reimbursement for repairs to and loss of the use of their automobile. Yet the judgments which include this amount were accepted as proof of the amounts due under the endorsement which provides for no such coverage. The defendant did not undertake to pay any judgment rendered against the third party, but only to pay all sums which the insured shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of “bodily injury“.
Judgment reversed, and cause remanded.
FRIEND, J., concurs.
BURKE, P. J., dissenting:
In my opinion the judgments should be reversed and the cause remanded with directions to enter judgment for the defendant. The Family Protection Coverage endorsement does not apply. The provisions are clear and unambiguous. The endorsement to the agreement states clearly that its provisions shall not apply whenever an insured takes judgment without the written consent of the insurer. The plaintiffs, after due deliberation, took judgment without securing the written consent of the insurer. Where the provisions of a contract are clear and explicit, as in this instance, it is the duty of the court to enforce them. O‘Daniell v. Missouri Ins. Co., 24 Ill. App. 2d 10, 164 N.E.2d 78. Since plaintiffs claim no right to their judgments under any other provision of the contract and since the endorsement under which they claim does not apply, the judgments should be reversed.
The contract is not contrary to public pоlicy. It makes no attempt to relieve the third party of any responsibility for his acts. Plaintiffs’ argument that the contract is without consideration and without mutuality cannot stand. If these arguments were valid, there would be no contract at all and no basis for any action by plaintiffs. The law does not require con-