The opinion of the court was delivered by: Campbell, District Judge.
This is an action for declaratory judgment. The complaint
alleges in substance that Jessie A. Hall was the insured under a
policy of automobile liability insurance covering a certain
Pontiac automobile; that the defendant Hall thereafter acquired
a Buick automobile, but failed to give the plaintiff notice of
such change within the thirty-day period prescribed in the policy
of insurance; that an accident occurred more than thirty days
after Hall had procured the Buick automobile, in which accident
the Buscher defendants claim to have been injured. The complaint
concludes with a prayer for a judgment declaring that the
defendant Hall was not covered by the above-mentioned insurance
policy at the time of the accident with the Buscher defendants.
It is the position of defendants that Hall obtained the
insurance coverage through one Paul Levy, an insurance broker;
that Levy was the agent of plaintiff, at least insofar as this
transaction is concerned; that Hall requested Levy to transfer
the policy to the Buick within the prescribed thirty-day period;
and that, in any event, plaintiff suffered no prejudice as a
result of the substitution of the Buick for the Pontiac. Issue
having been joined, a trial of the cause was had upon the merits,
after which the Court took the matter under advisement upon the
briefs of the parties.
In addition to the fact that the Court is by no means convinced
by the testimony of Hall that he requested transfer of insurance
coverage to the Buick, it appears that under the law of Illinois
a request, such as was made under the circumstances of the
instant case, would not constitute a request or notice to the
insurer. The recent decision of the Supreme Court of Illinois in
France v. Citizens Casualty Co., 400 Ill. 55, 79 N.E.2d 28, 29,
seems determinative of the issue presented here. In that case the
insured, Young, obtained a liability insurance policy from one
Abramson, an insurance broker, on a 1932 truck. Subsequently,
Young acquired a 1934 truck to which Abramson transferred the
insurance. After the transfer had been made, Young's 1932 truck
struck the plaintiff causing personal injuries. Plaintiff sued
Young and obtained a judgment against him. Being unable to
recover the amount of the judgment from Young, plaintiff
commenced an action against the insurance company to recover
under the policy as an injured third party. The Supreme Court
"The question is as to whether Abramson, at the time he caused
the insurance to be transferred from the 1932 truck to the 1934
truck, was the agent of Young or the agent of the defendant.
Additional facts pertinent to such inquiry are that the defendant
charged the premium to Abramson and not to Young. Defendant
delivered the policy to Abramson. Young was paying the yearly
premium in monthly installments, all of which were made at
Abramson's office, and Abramson retained the policy in his
possession until all of the premium was paid, which was after
plaintiff's accident. Defendant's agent made four copies of the
endorsement transferring the insurance from one truck to the
other, one of which endorsements was sent to Abramson. No notice
of the transfer of the insurance was given by defendant to Young.
Young testified that he had no knowledge of the transfer having
been made until after the accident when he received the policy
"The rule is that an insurance broker, like any other broker,
is the agent of the person who employs him. If an insurance
broker is engaged to purchase insurance covering property of the
one employing him, he becomes the agent of the insured and not
the insurer. Lycoming Fire Insurance Co. v. Rubin, 79 Ill. 402.
It is true that under certain circumstances a broker may become
the agent of the insurer or, on full disclosure to both parties,
he may be the agent for both the insurer and insured as to some
particular matters. An analysis of the evidence will show that
such circumstances are not present in this case. The evidence
shows that Abramson referred Young's application to Kurt Hitke &
Company, Inc., which was the duly authorized agent of the
defendant, and that such agent allowed Abramson a commission for
the insurance procured for it. Such fact did not change the
character of Abramson's actions and constitute him the agent for
the insurer. Merchants' Ins. Co. v. Union Ins. Co., 162 Ill. 173,
44 N.E. 409; Lycoming Fire Ins. Co. v. Rubin, 79 Ill. 402. When
Abramson received the policy from defendant's agent he accepted
it in the role of agent for Young and was engaged, in
consummating the deal for which he had been employed. The
evidence shows that Kurt Hitke & Company, Inc., charged Abramson
and not Young with the yearly premium, and that Abramson
collected the premium in installments from Young, and that he
retained possession of the policy until the premium was paid.
This was in his capacity as agent of Young and in accordance with
the arrangement that he had made to meet Young's convenience.
Middle Western Telephone Co v. U.S. Fire Ins. Co., 296 Ill. App. 260,
16 N.E.2d 188. Young's inquiry of Abramson as to what effect
the substituted use of the 1934 model would have on his insurance
on the 1932 truck was on the same basis as his application for
insurance. He constituted Abramson his agent to furnish such
information and if Abramson
misadvised him, or, as is claimed by plaintiff, caused the
coverage to be transferred without authority, then it was an act
of Young's agent and not the act of the insurer."
The Court is unable to perceive any material distinction
between the essential facts of the France case and the case at
bar, and is bound to apply the law of Illinois as pronounced by
the Supreme Court of that State.
Defendants' contention that the insurance company is obliged to
prove affirmatively that it was prejudiced by reason of the
failure of the insured to notify the company of the acquisition
of a different automobile than that described in the policy, is
untenable. The authorities cited by defendants in support of this
argument are not pertinent to the issue before the Court.
Conceding that a misstatement must be both material and
prejudicial in order to constitute a breach of a cooperation
clause of a liability insurance policy, it does not follow that
an alleged lack of prejudice will serve to create an insurance
coverage that never actually came into existence.
Judgment will, therefore, enter in favor of plaintiff for the
relief sought in the complaint. Plaintiff is directed to submit
to the Court for entry within 15 days hereof, a judgment, proper
as to form.
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