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Dworak v. Tempel

OPINION FILED SEPTEMBER 24, 1959.

JOSEPH R. DWORAK, FOR THE USE OF ALLSTATE INSURANCE COMPANY, APPELLEE,

v.

MAURICE TEMPEL, DOING BUSINESS AS TEMPEL'S TAVERN, APPELLANT.



APPEAL from the Appellate Court for the Third District; — heard in that court on appeal from the Circuit Court of Champaign County; the Hon. CHARLES E. KELLER, Judge, presiding.

MR. JUSTICE BRISTOW DELIVERED THE OPINION OF THE COURT:

This cause is heard on a certificate of importance issued by the Appellate Court. It involves a proceeding under the Liquor Control Act instituted by plaintiff, Joseph R. Dworak, for the use of Allstate Insurance Company, against defendants, Maurice Tempel, doing business as Tempel's Tavern, and George B. McClellan, whose intoxication from liquor sold at Tempel's Tavern caused a collision between his car and that of plaintiff Dworak. Plaintiff sustained property damage of $545.32, which was paid by his insurer, Allstate Insurance Company, except for the $50 deductible under its collision policy. On appeal from a justice-of-peace court, the circuit court of Champaign County sustained the motion of defendant Tempel for judgment, which the Appellate Court reversed and entered judgment for plaintiff for $495.32. Dworak v. Tempel, 18 Ill. App.2d 225.

The essential issue presented on this appeal is whether an insurance carrier is entitled to assert a claim under the Liquor Control Act, in its own right, or as subrogee of its assured, either before or after the 1955 amendment to that act, for payments made to its assured for property damage caused by an intoxicated person.

The operative facts are stipulated. On December 2, 1955, at approximately 4:10 P.M., as plaintiff Joseph R. Dworak was driving his car in an easterly direction in the 600 block on West Washington Street in Champaign, Illinois, his vehicle was struck by a car approaching from the opposite direction, which veered completely into the eastbound traffic lane. That vehicle was operated by George B. McClellan, whose intoxication from liquors sold to him in Tempel's Tavern was the proximate cause of the collision, in which plaintiff Dworak sustained the property damage paid for by Allstate, his insurer.

The Appellate Court reversed the judgment for defendants, entered by the circuit court, and held that the insurer, Allstate Insurance Company, had a right of action under the Liquor Control Act as amended in 1955, as well as under the doctrine of subrogation, and entered judgment for plaintiff.

In determining the propriety of that judgment, we shall first consider whether Allstate may directly assert a claim in its own right under the terms of the Liquor Control Act, either before or after the 1955 amendments, and then consider whether it may assert any rights of subrogation under the act.

On the date of the collision, December 2, 1955, the relevant portion of the Liquor Control Act provided: "Every husband, wife, child, parent, guardian, employer or other person, who shall be injured, in person or property, or means of support, by any intoxicated person, or in consequence of the intoxication * * * of any person, shall have a right of action in his or her own name * * * against any person or persons who shall, by selling or giving alcoholic liquor, have caused the intoxication, in whole or in part, of such person; and any person owning, renting, leasing * * * any building or premises, and having knowledge that alcoholic liquors are to be sold therein * * * shall be liable * * * with the person or persons selling or giving liquors aforesaid * * *." Ill. Rev. Stat. 1955, chap. 43, par. 135.

Insurance carriers have asserted claims under this statute in several cases adjudicated by our Appellate Courts. While these decisions are not determinative herein, and different factual situations were involved, the reasoning of the courts is relevant in resolving this problem of first impression in this court.

In Economy Auto Insurance Co. v. Brown, 334 Ill. App. 579, the court denied the carrier's dram shop claim in its own right on the ground that its "property loss," through the payment of liability claims to persons injured by its insured, was neither proximately caused by, nor "in consequence of the intoxication," but was merely in consequence of the carrier's own liability policy, entered into voluntarily some time prior to the collision. The court therein also denied the carrier any right of subrogation, since, under this doctrine it would be entitled only to such remedies as its insured could assert, and its insured, as the tortfeasor in the cause, could assert no rights against the dramshop keepers or anyone else.

In New Amsterdam Casualty Co. v. Gerin, 9 Ill. App.2d 545, the court held that a public liability insurance carrier which paid the claims against its insured, a hotel which was set on fire by an intoxicated person, had no right of action against those who served liquor to the intoxicated tortfeasor under the Liquor Control Act, either in its own right, or under any theory of subrogation. The court first reasoned that the statutory rule of construction, ejusdem generis, precluded the extension of the term "other person" in the Liquor Control Act beyond the classes specifically enumerated, and since the insurance carrier was not within the same general classification as those enumerated, it was not entitled to a claim in its own right. The court then found that since the insured, which was the hotel, had no cause of action because of its own apparent negligence, consequently its insurer, the New Amsterdam Casualty Co., as its subrogee, could have no greater rights. In this connection the court stated at p. 548: "But it is basic that the subrogee can have no greater rights than the subragor. We are of the opinion in this case the hotel has no cause of action, and therefore New Amsterdam cannot be subrogated."

In Eager v. Nathan, 14 Ill. App.2d 418, the court, in reliance upon the Economy Auto Insurance and New Amsterdam cases, rejected the right of the compensation carrier to recover in its own right under the terms of the Liquor Control Act. The court held that the carrier could not be included within the category of "other person" under the act, and that the insurance contract, rather than the intoxication, was the proximate cause of the compensation payments the carrier had to make. The court also rejected the dramshop claim made by the hotel for "loss of profits" resulting from the killing of its desk clerk by an intoxicated person, and for "reimbursement for the workmen's compensation award" it had to pay, on the ground that these were not "injuries to property" within the terms of the Liquor Control Act. The court explained that the only kind of property for which damages could be recovered under the Liquor Control Act was real or personal tangible property (Howlett v. Doglio, 402 Ill. 311); therefore, loss of profits and payment of compensation, which are merely pecuniary losses, were not compensable under the act.

The foregoing cases indicate that prior to the 1955 amendments to the Liquor Control Act, insurance carriers, whether liability, workmen's compensation or fire insurance, were denied the right to assert claims in their own right under the act on one or more of the following grounds: that whatever property loss was sustained by the carrier was proximately caused by its own insurance policy, rather than by or in consequence of the intoxication, which was, at best, a remote cause; that the carriers were neither within the enumerated classes, nor within the category of "other persons" authorized to assert claims under the act; that the payment of claims was a pecuniary loss, rather than an injury to tangible property as contemplated by the act; and finally, that the broad purposes of the Liquor Control Act, to discourage the intemperate use of alcohol, are not advanced by transferring the business risks of the carrier to the dramshop keepers. Moreover, subrogation rights were also denied in these cases on the ground that the assured, because of his own culpability, had no rights under the Liquor Control Act to which the insurance carrier could be subrogated.

In 1955 the Liquor Control Act was amended, and although the effective date of the amendment was not until July 1, 1956, which was after the cause of action herein arose, it is ...


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