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Groth v. Standard Accident Insurance Co.

May 18, 1959

FRED O. GROTH, PLAINTIFF-APPELLANT,
v.
STANDARD ACCIDENT INSURANCE COMPANY, DEFENDANT-APPELLEE.



Author: Parkinson

Before DUFFY, Chief Judge, and PARKINSON and KNOCH, Circuit Judges.

PARKINSON, Circuit Judge.

The District Court dismissed plaintiff's complaint on defendant's motion grounded on the premise that it appears on the face of the complaint that 1) "the plaintiff has failed to comply with conditions 7 and 9 of the contract" in suit and 2) "there has been prior adjudication in a Court of the State of Illinois that the plaintiff was in fact served with process, and the plaintiff is estopped" thereby. This appeal by the plaintiff followed.

The complaint alleges in substance relevant here that on October 29, 1953 one Nova Pyle sustained personal injuries on premises where the plaintiff had constructed a model home against which liability the plaintiff was protected under a policy of insurance issued by the defendant insurance company; that plaintiff made timely report of the accident to the defendant and defendant negotiated with Miss Pyle to settle her claim; that plaintiff heard nothing further in connection with the claim until February 15, 1956 when he was served with an execution on a $18,500 default judgment rendered against him in favor of Miss Pyle in the Circuit Court of Cook County, Illinois on December 16, 1955.

The complaint further alleges that plaintiff immediately gave notice to the defendant of the execution, which was the first and only notice received by the plaintiff of the suit; that the defendant refused to accept defense of the action and plaintiff employed counsel and on February 26, 1956, contending he had never been served with summons, filed petition to vacate the default judgment; that, after hearing by the Cook County Circuit Court, the judgment was vacated whereupon the defendant, under a nonwaiver agreement, undertook the defense of plaintiff; that on August 28, 1956, when Miss Pyle appealed to the Appellate Court of Illinois, the defendant withdrew its defense of the plaintiff; that the Appellate Court of Illinois reversed the order of the Cook County Circuit Court vacating the default judgment and the Supreme Court of Illinois denied plaintiff's petition for leave to appeal whereby the default judgment has become final. This action on the policy ensued.

Defendant contends that plaintiff's failure, for any reason, to notify it of the summons in the Pyle suit absolved it from any and all liability under its insurance contract and that plaintiff is estopped from now contending that he did not receive the summons by virtue of the decision of the Illinois Appellate Court.

Broadly speaking the issue here is whether or not the complaint states a claim upon which relief can be granted. Resolution of that issue depends wholly upon the determination of two factors. Whether as a matter of law the defendant is liable under the insurance contract even though it had no notice of the summons when, if in fact, plaintiff himself received none, and, if so, whether the decision of the Illinois Appellate Court estops plaintiff from pleading that he received no summons and having that question determined as a matter of fact upon a trial of the case at bar.

The defendant cites cases holding that the conditions contained in an insurance contract are binding upon the insured and that a failure of the insured to comply therewith bars his recovery. We agree. Hawkeye-Security Ins. Co. v. Myers, 7 Cir., 1954, 210 F.2d 890; Stollery Bros., Inc. v. Inter-Insurance Exchange, 1957, 15 Ill.App.2d 179, 145 N.E.2d 768. However, where there is no breach there is no bar to recovery.

The defendant contends that plaintiff has failed to comply with condition 7 of the policy which reads as follows:

"7 - Notice of Claim or Suit * * "If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative ." (Our emphasis.)

Condition 9 of the policy, which reads in part as follows:

"9 - Action against Company * *

"No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with ...


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