Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division; Wm. H. Holly, Judge.
Before EVANS, KERNER, and MINTON, Circuit Judges.
This action, on an insurance policy issued by defendant, was dismissed because the cause of action was barred by a policy limitation period of twelve months within which plaintiffs were required to institute suit against defendant. For plaintiffs, it is argued that this limitation provision was tolled by the absence of the defendant from the State of Ohio, where the cause of action arose.
Plaintiffs were injured on May 10, 1939, while riding on a ferris wheel in an amusement park in Lorain, Ohio. They sued the owners of the park (whom defendant had insured), and on December 9, 1939, recovered judgments of $7,500, $5,000, and $4,500, respectively. Executions on two of the judgments were returned unsatisfied on April 20, 1940. The instant action was begun, November 5, 1941.
The agent of defendant, Lloyd's of London, had agreed to an insurance binder, insuring the amusement park owners, on April 15, 1939. The policy itself, was dated May 16, 1939. The pertinent provisions of the policy are quoted below.*fn1
Defendant is an English company that does an extensive business in the United States. It is licensed to do business in Illinois, but in no other state. Its policies cover risks in nearly all states. When liability arises or is asserted in any state other than Illinois, claimant is required to bring suit against it in Illinois, and if the action is not brought within one year from its accrual, it is barred.
We assume, and so hold, that the limitations fixed by the contract, which defendant has inserted in its policy, are valid and control this case. The law is settled, and unless the State of Illinois legislates to protect the policy holders, defendant may hedge its liability so as to make coverage of claimants living outside the State of Illinois, merely theoretical. (The Illinois statute, Ch. 83, Sec. 19, protects nonresidents from the running of the statute where the defendant is absent from the State of Illinois. ) The cause of action was barred after the lapse of one year from the date it accrued, even though defendant's policy covered plaintiffs' injuries and plaintiffs lived in Ohio, and in Ohio the defendant was not licensed to do business and service upon it in Ohio was impossible.
This action was brought in Illinois and the one year contractual limitation governs.*fn3
The judgment of dismissal must therefore be upheld. But dismissal should not have been on the merits. It should have been on the ground the suit was prematurely brought.
The policy provided that "no action shall lie against the Underwriters by the Assured or by any other person or persons or party or parties unless broght within twelve months after the right of action accrues as herein provided."
Accrual of the cause of action is determined by paragraph B of the policy.
" * * * no action shall lie against the Underwriters by the injured person or persons or by any other party, or parties * * * except to enforce the liability of the Underwriters under condition (E) of this Policy and then only after ...