APPEAL from the Appellate Court for the First District;
heard in that court on appeal from the Circuit Court of Cook
County; the Hon. FRANK H. BICEK, Judge, presiding.
MR. JUSTICE MAXWELL DELIVERED THE OPINION OF THE COURT:
Rehearing denied May 22, 1956.
Petition for leave to appeal from a judgment of the Appellate Court reversing a judgment of the circuit court of Cook County, favorable to petitioner, has been granted. Garnishment action against respondent, Continental Casualty Company, hereinafter referred to as insurer, was based upon a judgment recovered by one Osterman against Donald McCann. Osterman will hereinafter be referred to as plaintiff and one Kenealy will hereinafter be referred to as the insured.
The insurer had issued its policy to the insured covering a certain motor scooter. Although the original policy included a standard omnibus clause, by special endorsement and rider the coverage was purportedly restricted to the insured and any relatives of and residents of his household while using the vehicle with the permission of the insured. It appears that McCann was neither a relative nor member of the insured's household and was using the scooter by permission of the minor son of the insured and while engaged in its operation caused injury to plaintiff. Original action brought by plaintiff against the insured and McCann resulted in a default judgment being entered against McCann in the sum of $7500. At the conclusion of the evidence in the subsequent garnishment suit, the trial court directed the jury to return a verdict against the insurer in the sum of $5000, said sum being the limitation of coverage of the policy in question. From a judgment entered upon said verdict the insurer appealed here, and the cause was transferred to the Appellate Court. McCann v. Continental Casualty Co. 4 Ill.2d 170.
The policy in question provided that insurer agreed to pay on behalf of the insured all sums which he became legally obligated to pay as damages due to bodily injury or property damage caused by accidents arising out of the ownership, maintenance, or use of the motor scooter. The rider referred to, amending the definition of insured in the policy, reads as follows:
"The unqualified word `insured' wherever used in Coverages A and B and in other parts of this policy, when applicable to such coverages, includes the named insured and, except where specifically stated to the contrary, also includes any relative of and a resident of the household of the named insured while using the vehicle described in the policy provided the actual use of the vehicle is with the permission of the named insured."
As pointed out by the Appellate Court opinion, reported in 6 Ill. App.2d 527, the scooter was bought for the use of the minor son of the insured and the evidence revealed the insured gave his son permission to allow his friends to drive the scooter if they were dependable. On the date of the accident, the son permitted McCann to operate the scooter and it appeared that McCann was also the owner of his own scooter and regarded as dependable by the insured's minor son.
The principal issue in this case arises because of clause 8 of the policy containing the following provision:
"Financial Responsibility Laws Coverages A and B:
"Such insurance as is afforded by this policy for bodily injury liability or property damage liability shall comply with the provisions of the motor vehicle financial responsibility law of any state or province which shall be applicable with respect to any such liability arising out of the ownership, maintenance or use of the automobile during the policy period, to the extent of the coverage and limits of liability required by such law, but in no event in excess of the limits of liability stated in this policy. The insured agrees to reimburse the company for any payment made by the company which it would not have been obligated to make under the terms of this policy except for the agreement contained in this paragraph."
Another clause of the policy also provides that: "Terms of this policy which are in conflict with the statutes of the State wherein this policy is issued are hereby amended to conform to such statutes."
The present problem brings into focus various provisions of the Illinois financial responsibility law, sections 42-2 to 42-11, inclusive, of the Motor Vehicle Act. (Ill. Rev. Stat. 1947, chap. 95 1/2, pars. 58b to 58k, incl.) It is this law which gives the power to the Secretary of State to suspend the operator's license, registration certificate and license plates issued to a person named as judgment debtor, where the judgment grows out of the operation of a motor vehicle and is not satisfied within thirty days of its rendition; unless the party against whom the judgment is rendered satisfies it and makes proof of financial responsibility to respond in damages for any liability for personal injuries, etc., incurred as a result of the ownership, maintenance, use and operation of the motor vehicle. Proof of financial responsibility may be satisfied by a policy of insurance. It is provided in section 42-11 (par. 58k) of the act that a motor vehicle liability policy "shall insure the person named therein and any other person using or responsible for the use of said motor vehicle or vehicles with the express or implied permission of said insured."
The Appellate Court was of the opinion that the trial court erred in incorporating section 42-11 (par. 58k) in the policy in conformity with clause 8 of said policy. The Appellate Court pointed out that the original policy contained an omnibus clause which extended insurance to any person using the vehicle with the insured's permission but that the rider was substituted in lieu of the omnibus clause and narrowed and limited the coverage as above stated. The opinion further points out that the laws of certain States require the inclusion of the omnibus clause in every such policy but that in other States such a clause is only required in an insurance policy produced as proof of financial responsibility. A difference is then noted in these two types of statutes, namely, that in the former the purpose is to protect the public against negligent operation of vehicles by permissive users thereof, and in the latter type the chief purpose is to regulate the provisions of such policies as proof of financial responsibility for the future by the owners of a vehicle who, by prior accident or otherwise, have fallen within the scope of the financial responsibility law. The opinion further states that the fundamental basis for both type of statutes is the protection of the general public as well as providing compensation to persons injured by vehicles negligently operated on the public highways.
It is, of course, true that no Illinois law requires the purchase of insurance as a condition precedent to the use of Illinois highways by most automobiles and pleasure vehicles in the first instance. It is to be noted, however, that the Illinois financial responsibility law specifically requires the inclusion of an omnibus clause in insurance policies issued thereunder. In the instant case, the insurance policy in question was a ...