United States District Court, Eastern District of Illinois
March 16, 1961
MAXINE G. PAWLIK NOW KNOWN AS MAXINE G. SHEARIN, PLAINTIFF,
WILLIAM R. NICHOLS, DEFENDANT, STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., GARNISHEE.
The opinion of the court was delivered by: Platt, Chief Judge.
This is a garnishment proceeding against State Farm Mutual
Insurance Company. Maxine J. Pawlik, the plaintiff and garnisher,
now known as Maxine J. Shearin, obtained a verdict of $18,500
against William R. Nichols, and a verdict of $2,000 against
Lawrence Nichols. Both verdicts were returned on October 22 and
judgment was entered on the verdicts for the full amount on
October 23, 1958. Originally this was a personal injury action
against the defendant, William R. Nichols, for injuries resulting
from a vehicle collision which occurred on November 22, 1956.
Nichols was driving a Ford 1 1/2 ton truck which collided with
the automobile in which the plaintiff was riding. The truck was
owned by Kenneth Hodge, who was also a defendant in the action.
Joined with this action was a suit under the Dram Shop Act of
Illinois against Lawrence Nichols, (no relation to William R.
Nichols) who allegedly sold liquor to William R. Nichols, causing
him to become intoxicated. On February 17, 1959, on motion of
plaintiff and defendant, Lawrence Nichols, judgment against
Lawrence Nichols was set aside and a new trial granted. This
action was then dismissed against Lawrence Nichols pursuant to
On the date of the collision there was in effect an automobile
liability insurance policy issued by State Farm to Kenneth Hodge
on his truck. Hodge employed the defendant, Nichols, as a farm
hand. The policy contained the usual permissive user clause.
Hodge was dismissed at the close of the plaintiff's evidence in
the original action because Nichols was not driving the truck at
the time of the collision within the scope of his employment but
was on a mission of his own.
In reply to the interrogatories in the garnishment action State
Farm made the following answer:
"Because of lack of cooperation on the part of said
William R. Nichols, as required by said policy. We
are not willing to pay anything towards said
The policy provided as follows:
"13. Assistance and Cooperation of the Insured. The
insured shall cooperate with the company and,
upon the company's request, shall attend hearings and
trials and shall assist in effecting settlements,
securing and giving evidence, obtaining the
attendance of witnesses and in the conduct of
suits. * * *"
In the collision between the truck driven by Nichols and the
automobile in which the plaintiff was riding one occupant of the
automobile received injuries from which he died, and State Farm
settled this claim for $4,000. Another occupant of the same car
suffered personal injuries as a result of the collision and State
Farm paid in settlement of this claim $3,960.
Nichols gave a complete statement of the description of the
occurrence to the Attorney at Danville, Illinois, who represented
State Farm shortly after the collision. In this statement Nichols
said he was not intoxicated and related facts which indicated he
was not negligent in the manner in which he drove the truck at
the time of the collision. Thereafter, Nichols was indicted by
the grand jury of the Circuit Court of Vermilion County,
Illinois, and charged with reckless homicide. State Farm arranged
bond for Nichols. Nichols had been staying at Cissna Park,
Illinois, but after informing the Danville Attorney for State
Farm of his address where he could be reached he went to his home
in Big Stone Gap, Virginia. He returned to Danville, Illinois, at
his own expense when the homicide case was set for trial in
Danville in the Circuit Court of Vermilion County, Illinois, but
the cause was continued. He again returned at his own expense for
the second setting, at which time the case was tried and Nichols
In May, 1957, before the instant personal injury case was filed
on September 6, 1957, in this court, Kenneth Davenport and
another representative of State Farm located Nichols at Valley
Lake, Virginia, after stopping at his father's home where Nichols
was staying. Davenport informed Nichols that should a civil suit
be started against him that he should contact him at Bristol,
Virginia, and the Company would arrange for his expenses to
attend the trial. Nichols was served with summons in the
plaintiff's personal injury action on September 7, 1957, in
Danville, Illinois, while he was on trial in the criminal action.
On June 2, 1958, Nichols was married. Nichols had a seventh
grade education, and was a man of no financial means.
On September 20, 1957, Mr. Kurtock, Superintendent of Claims
for State Farm Mutual, sent a registered letter to Mr. Nichols,
Rural Route 2, Box 180, Milford, Illinois, informing Mr. Nichols
that its Danville Attorney would represent him in the law suit
against him by Miss Pawlik. He also requested that he comply with
the requests of this Attorney and should co-operate in "the
handling of this litigation." The letter also informed Mr.
Nichols that the claim in the suit was in excess of the
protection afforded by the policy, and that it was agreeable with
the company for him to procure his own attorney, at his own
expense, in addition to the attorney that the State Farm would
employ and compensate. The receipt on this registered letter was
returned signed, "William R. Nichols, Mrs. Ray Akers, September
24, 1957." Mrs. Akers was Nichols' sister, and her husband was in
the truck with Nichols at the time of the collision. There was no
proof that Nichols received this letter.
The personal injury action was set for trial in this court on
August 19, 1958. On August 21, 1958, the Danville Attorney for
State Farm sent a letter to both Kenneth Hodge at Wellington,
Illinois, and to William R. Nichols, P.O. Box 65, Big Stone Gap,
Virginia, informing them that the case was set for trial on
Monday, October 20, 1958, at 9:30 a.m. D.S.T., and to "Save this
time." Enclosed with the letter was a copy of the court's notice
of the trial date. In this letter Nichols was also informed "we
will be in touch with you before trial time."
On October 2, 1958, the Danville Attorney representing State
Farm again wrote a letter to Nichols at P.O. Box 65,
Big Stone Gap, Virginia, informing him that the Pawlik suit would
be tried on October 20, 1958, in this court, and also suggested
that he meet him in his office at 8:00 o'clock in the morning, to
be ready to go to trial. Nichols admitted receiving both of these
On the morning of the trial October 20, 1958, Nichols was not
present in court. The Danville Attorney for State Farm
representing him appeared in court and the following colloquy
"The Court: On what grounds?
"Mr. Stifler: And we say that immediately upon
receipt of notice of setting we sent notice to the
defendant, William R. Nichols at Big Stone Gap,
Virginia. That was in August, 1958, and that on
October 2nd, 1958 we sent to Mr. Nichols, William R.
Nichols notice of the setting and asking that he be
in our office at eight o'clock this morning ready for
trial which was to be held at 9:30 this morning.
"Now Mr. Nichols hasn't shown up by eleven o'clock
in the morning. Therefore, we ask that the cause be
continued to give us a chance to have him present.
"The Court: Is there any objection by any of the
"Mr. Zimmerly: We object, your Honor, on the basis
that we have subpoenaed our witnesses for the
plaintiff. Included among those we have down here a
witness from Chicago, a specialist whose practice is
such that he can't come down tomorrow, and we
therefore object and ask that the case be heard at
"The Court: Mr. Stifler, would you consent to the
one witness — your other witnesses will be here
"Mr. Zimmerly: So far as I know.
"The Court: Would you consent to pick the jury and
examine this one witness?
"Mr. Stifler: That would be out of order, your
"The Court: I know.
"Mr. Stifler: We don't want to consent to that.
"The Court: All right. Let the record show that we
have waited until eleven o'clock. The jury is here.
How about the other defendants the other defendant
Nichols, and Hodge? How about Hodge. Is he here ready
"Mr. Stifler: Yes. Mr. Hodge is here.
"The Court: How about Nichols, the tavern owner?
"Mr. Bates: Through some mix up he is not here.
However, he is on his way.
"The Court: Are you ready for trial?
"Mr. Bates: We are ready for trial.
"The Court: All right.
"Mr. Stifler: Has the Court ruled on that?
"The Court: Just a minute. How about this
defendant, Robert Leverenz? Is he here?
"Mr. Zimmerly: He is the one that is dismissed.
"The Court: You have agreed to dismiss as to him?
"Mr. Zimmerly: That's right.
"The Court: As I understand, that is a covenant not
"Mr. Zimmerly: That's right, your Honor.
"The Court: Defendant, Robert Leverenz, is
dismissed out of the case.
"Mr. Stifler: If the Court please we would like to
ask leave to withdraw on the part of William R.
Nichols, insofar as he has failed to cooperate in the
defense of this suit, he being a permissive user of
truck in question, according to our viewpoint.
"Mr. Zimmerly: We certainly object to that, your
Honor. There's been no real showing of any attempt to
get in touch with this man; never tried to track him
down among his friends and acquaintances at his usual
haunts. Actually Mr. Stifler represents State Farm.
It has agents and adjusters everywhere in the
country. There is no showing that they have made an
attempt to contact this man or tender the man
expenses to come back here, which is a necessary
pre-requisite to his co-operation.
"Mr. Stifler: Mr. Zimmerly, I think you have the
wrong viewpoint. We have had no idea the man wouldn't
appear here this morning. As a matter of fact, we
have Mr. Hodge and Mr. Akers, the man riding with the
defendant William Nichols, who lives in Iroquois
County, both of them. They waited this morning until
almost time for court to be here, thinking that he
would appear and waited for him to come down this
"The Court: I can't accommodate you with a
continuance, unless you will agree.
"Mr. Stifler: We are asking now to be allowed to
"The Court: On the withdrawal part, that is a
matter of contract, whether you have the legal right
to withdraw. The court cannot consent for Mr. Nichols
since he's had no notice of this, and therefore I
couldn't permit you to withdraw at this time, so as
to William R. Nichols the motion is denied.
"Mr. Stifler: All right.
"The Court: So far as the court is concerned, it is
a legal proposition as to whether you can withdraw as
attorney for him.
"We are all ready then to pick our jury. * * *
"The Court: You request the court not to state to
the jury that you represent Mr. Nichols?
"Mr. Stifler: Yes, sir.
"The Court: And I will not do it.
"Mr. Stifler: Thank you.
"The Court: So I leave the legal proposition up to
"Mr. Stifler: That will come later, your Honor."
Whereupon counsel for State Farm withdrew from the case.
On the evening of October 20, Mr. Davenport, the same
representative who had contacted Nichols before again saw Nichols
in Big Stone Gap, and told him that it was necessary for him to
go to the trial, and the Company would pay the expenses of the
trip. Nichols consented to go and Davenport then made air
reservations for Nichols to Danville, Illinois, leaving Tri-City
Airport, Bristol, Virginia, which was 60 to 65 miles from Big
Stone Gap. On October 21, 1958, at about 8:45 o'clock a.m.
Davenport again telephoned Nichols and told him to meet him at
the office of the Company's Attorneys in Gate City, Virginia, a
distance of some 34 miles from Big Stone Gap, informing him of
the plane reservation, and that the departure time was 11:30
o'clock a.m. The airport was a 30 mile drive from Gate City,
Virginia. Nichols said he could obtain a ride from Big Stone Gap
to Gate City, and meet him at the suggested place. Only one plane
a day was available to reach Danville. Nichols arrived in Gate
City between 11:00 o'clock a.m. and 12:00 o'clock noon, at the
appointed place. He said he was delayed because of car trouble.
It was too late to catch the plane. At the office of the
Attorneys for the Company Nichols gave a statement of the facts
and signed a non-waiver agreement which in effect allowed the
Company to make a defense in the suit, but reserved to the
Company its rights under the policy. Nichols
then returned home. The personal injury action proceeded through
a portion of the morning of October 22, 1958, and the jury
returned a verdict the same day. On October 24, 1958 the Attorney
for State Farm informed Nichols by mail that due to his failure
to attend the trial the Company did not appear for or defend him.
The letter stated in part:
"Of course, you realize that the judgment against
you in the amount of $18,500.00 is a personal
liability on your part, and, while we feel that the
judgment was brought about by your failure to appear
when we know that you knew that you were supposed to
be present, and had been told that it would
jeopardize the position of Mr. Hodge's insurer if you
failed to appear, we do feel that we should advise
you that the disposition of the judgment, settlement
and payment of the judgment is your problem."
Under the law of this State, in a garnishment proceeding, the
plaintiff can not recover from the garnishee unless the insured,
Nichols, could do so. Schneider v. Autoist Mutual Ins. Co., 1931,
346 Ill. 137, 139, 178 N.E. 466; Muthart for use of Zitnik v.
Burik, 1945, 327 Ill.App. 170, 183-194, 63 N.E.2d 635. Before an
insured is able to collect under a policy of insurance such as is
present in this case, it is necessary that he comply with the
provisions of the policy, including the co-operation clause. A
clear statement of the law on this point was enunciated in the
case of Allstate Ins. Co. v. Keller, 1958, 17 Ill.App.2d 44,
48-49, 149 N.E.2d 482, 484, 70 A.L.R.2d 1190, where the court
"A contract of automobile liability insurance is
more than a simple agreement between two parties that
the insurer will indemnify and defend the insured for
losses incurred by him in the negligent operation of
his automobile. It is a contract which protects both
the insured and the public from the hazards of
financial distress to which they may become victims
as a result of engaging in traffic upon our streets
"When we consider the millions of vehicles
operating on our highways, and the ever increasing
number of accidents, it is apparent that a contract
of insurance is of vital concern to all who own and
operate such vehicles, to their passengers, and to
all who venture forth as mere pedestrians. It is not
just an agreement limited to the parties but by its
very nature has become one cloaked with a public
interest. Integrity should be the essence of the
agreement. The cost of insurance is based upon the
ratio of the claims paid to the risk written. * * *
Compliance with its terms is therefore vital to all
who may benefit, either directly or indirectly, from
its provisions. For this reason we are of the opinion
that strict compliance is in the best interest of the
public * * *."
It was therefore necessary under the law of this State that
Nichols fully comply with the terms and conditions of the policy
of insurance. Until Nichols failed to appear at the trial he had
complied with all requests the Company had made. It was
stipulated at the pretrial conference that the Illinois law would
The questions presented as to the breach of the policy are: (1)
whether Nichols breached the co-operation clause by failing to
appear at the trial; and (2) whether State Farm acted in good
faith and gave reasonable and timely notice of the trial. Panczko
for Use of Enright v. Eagle Indem. Co., 1952, 346 Ill.App. 144,
104 N.E.2d 645. These are questions of fact for the court to
determine based upon the competent evidence. Panczko for Use of
Enright v. Eagle Indem. Co., supra.
State Farm had the burden of proving non-co-operation on the
part of Nichols. Gregory for Use of Cusimano v. Highway Ins. Co.,
1960, 24 Ill.App.2d 285,
297, 164 N.E.2d 297. State Farm has sustained this burden. This
court finds from a preponderance of all the competent evidence
that Nichols never intended to come back to Danville for the
trial of the Pawlik case. He first gave the excuse that his wife
was about to have a baby. The child was born November 26, 1958,
and the trial was October 20. The Company was entitled to have
him present and testify in defense of the action. The plaintiff
on the other hand has not shown that there was any reasonable
excuse for Nichols not appearing at the trial as he was
instructed to do. Muthart for use of Zitnik v. Burik, supra.
The proof is conclusive that State Farm acted in good faith in
carrying out the terms of its contract. The Company informed
Nichols considerably before the time of the trial as to the date,
time and place of trial, and requested his presence at the
Danville Attorney's office so that they could discuss the case
more fully before trial. Nichols gave no indication to the
Company that he would not appear at the trial and never requested
that the Company send him any money which he might need in order
to make the trip. Nichols had been told that the Insurance
Company would pay for his expenses to the trial. He was also
given the card of an agent of the insurer so that he could
contact him for any reason whatsoever. He had previously made two
trips to Danville for the criminal case, at his own expense. Had
Nichols any reasonable excuse for not attending the trial, it
would have been a simple matter for him to contact the Danville
Attorney or Mr. Davenport, as he was told he should do, and
inform them of any complication. While Nichols was not a man of
means he certainly could have written a letter which required but
four cents postage to either the Attorney or Mr. Davenport. He
had ample time to do this.
On the date of the trial the Insurer's Attorney was justified
in withdrawing from the case as defendant's counsel. Had he not
done so he would have waived the defense of non-co-operation, and
the Company would have been held liable, although they were
without fault. Panczko for Use of Enright v. Eagle Indem. Co.,
supra. See Snyder for Use of Brooks v. United States Mut. Ins.
Co., 1941, 312 Ill.App. 337, 38 N.E.2d 540. Also see Pennsylvania
Casualty Co. v. Miller, 7 Cir., 1944, 145 F.2d 292.
Furthermore, State Farm, in compliance with the insurance
contract settled two claims against Nichols with two other
occupants of the car that collided with the truck Nichols was
driving. The total amount paid was $7,960.
The insurer had no duty after he failed to appear to arrange
for Nichols to come to the trial since the insured had breached
the co-operation clause by his actions. They still attempted to
protect his interest by trying to insure his appearance at the
trial in time to offer testimony. They arranged for him to fly to
Danville the next day. Although Nichols had plenty of time to get
to Gate City and meet with Mr. Davenport he failed to appear in
time to catch the plane. He claimed the delay was due to car
trouble. State Farm did take a non-waiver agreement which it was
entitled to do under the circumstances in order to save its
rights under the policy if its Attorney re-entered the case.
There is the further question in the case as to whether the
plaintiff should be entitled to recover under the endorsement to
the State Farm policy. Attached to the policy is a rider entitled
"Endorsement for Motor Carriers Policies for Bodily Injury
Liability and Property Damage Liability under Section 16 of the
Illinois Truck Act." Ill.Rev.Stat., 1953, Motor Vehicles, Ch. 95
1/2, § 253. Under the Illinois Truck Act supervision of the Act
was in the Department of Public Works and Buildings, and the
policy of insurance was required to be filed with this
Department. Ill.Rev.Stat., 1953, Motor Vehicles, Ch. 95 1/2, §§
241 and 253. The entire Truck Act was repealed by the Act of the
Illinois Legislature approved July 7, 1953. Ill.Rev.Stat., 1959,
Motor Vehicles, Ch. 95 1/2, page 765. The
repeal of the Truck Act did not cancel the provisions in the
endorsement. See Hanover Fire Ins. Co. v. Dallavo, 6 Cir., 1921,
274 F. 258, 266. The endorsement specifically states:
"This endorsement expires with the policy and may
not be cancelled without cancellation of the policy
to which it is attached."
State Farm produced the instant policy with the endorsement and
this policy was in force at the time of the collision in
State Farm urges that it could not cancel the policy as
provided in the endorsement. The endorsement stated:
"Such cancellation may be effected by the Company
or the Insured giving thirty (30) days' written
notice thereof to the Department of Public Works and
Buildings, Division of Motor Carriers, at
Springfield, Illinois * * *." (Emphasis supplied.)
Division of Motor Carriers of the Department of Public Works and
Buildings was abolished when the Act was repealed, but State Farm
could have canceled the endorsement by notice to the insured and
issued a new policy. The policy ran from year to year. So far as
the record shows Hodge, the insured, paid the same premium and
State Farm accepted it on the same policy with the endorsement
The plaintiff in the instant action would be entitled to
recover under the endorsement although the co-operation clause
was breached. The endorsement stated:
"Nothing contained in the policy * * * nor the
violation of any of the provisions of the
policy * * * by the Insured, shall relieve the
Company from Liability hereunder or from the payment
of any such final judgment."
Therefore, the breach of the provisions of the policy does not
affect the right of the plaintiff to recover under this
State Farm's liability is limited by the endorsement of the
policy to $10,000 "in any one accident." State Farm has paid
$7,960 on account of this accident, leaving a balance of $2,040,
which the plaintiff may recover from this garnishment action.
Findings of fact, conclusions of law and final order in
accordance with this opinion may be submitted for approval of
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