Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division; Charles G. Briggle, Judge.
Before EVANS and TREANOR, Circuit Judges, and LINDLEY, District Judge.
This is an appeal from a declaratory decree of the District Court. The plaintiff appellee brought suit for the purpose of obtaining a judicial construction of certain provisions of a contract of indemnity insurance issued by the plaintiff, Universal Indemnity Insurance Company, to the defendant North Shore Delivery Company. The specific relief sought was a declaration that the plaintiff insurer had been relieved of liability under the indemnity insurance contract by reason of the violation of certain conditions therein by the defendant North Shore Delivery Company.
The District Court entered a decree declaring that the insured had violated certain terms and conditions of the contract of insurance and that such violation had relieved the insurer from liability in relation to injuries alleged to have been sustained by the co-defendants of the insured.
The policy of insurance in question indemnified the insured against all loss occasioned by the operation of certain automobile trucks described in the policy. The policy contained the following limitation on coverage:
"3. This policy does not cover any liability * * * (e) in respect of injuries caused in whole or in part by any automobile insured hereunder while being operated or manipulated (i) by any person violating regulations governing the licensing of motor vehicle operators, or when driven by any person whose right to drive has been enjoined by proper authority or whose license to drive has been suspended or revoked."
The liability for which the insured was claiming indemnity from the insurer was for claims based upon injuries suffered by the occupants of an automobile which was struck by a truck owned and operated by the defendant North Shore Delivery Company. At the time of the accident the truck was being driven by one John Mead who had obtained a chauffeur's license from the Secretary of the State of Illinois in the year 1928. Mead had renewed his chauffeur's license from time to time, the last renewal prior to the date of the accident having been obtained in the year 1932. The license had not been renewed for the year 1936 at the time of the accident on December 25 of that year.
The plaintiff insurer denied liability under the indemnity contract on the ground that the facts of the case brought it within the exception above noted.
At the time of the happening of the accident out of which this suit arose there was in full force and effect the Motor Vehicle Act of Illinois which defines a "chauffeur" and contains various provisions regulating the issuance of chauffeur's licenses. The act contains the following provision: "No person shall operate or drive a motor vehicle as a chauffeur upon a public highway of this State, unless such person shall have complied in all respects with the requirements of this section: * * * Licenses may be renewed annually in the same manner as first registration, upon the payment of fee of $3.00, and shall take effect on the first day of January of each year."*fn1
It is undisputed that the chauffeur's license of the driver of the truck had expired long before the accident and it necessarily follows that he was not a licensed chauffeur and that the injuries, in respect to which indemnity liability is being asserted, were caused by an automobile while being operated or manipulated by a person violating regulations governing the licensing of motor vehicle operators, and when driven by a person whose license to drive had been suspended or revoked by reason of the chauffeur's failure to renew the same.
The first proposition stated and relied upon by defendant depends upon the rule that an ambiguous provision of a policy of insurance must be construed most strongly against the insurer. In support of its contention that the foregoing rule is applicable the defendant states that the coverage exception, if construed literally, would work an exclusion of coverage upon the most trifling violation of any licensing regulation; and defendant urges that it is apparent from the language of the exception that it was intended to compel the insured to obey only those provisions of the license regulations which affected insurer's risk. Also, defendant calls attention to a regulation requiring chauffeurs to wear a badge "pinned upon his clothing in a conspicuous place at all times." Granting that there might be doubt as to whether the foregoing instance, or others that might be imagined, should be held to constitute a violation of "regulations governing the licensing of motor vehicle operators," there can be no doubt that the facts in the instant case come squarely within the language of the coverage exception. There is no ambiguity of language as applied to the facts of the instant case. It is not material to our present question that there might be doubt about the applicability of the language of the coverage exception to some hypothetical violation of the licensing regulations.
Under the law of Illinois the person driving the insured's truck was not a licensed chauffeur and he clearly was violating the law governing licensing of motor vehicle operators; furthermore, by operation of law, his license had expired upon his failure to secure a renewal and he was in ...