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Bergmann v. Multi-state Inter-ins. Exchange

JANUARY 18, 1963.

ERNST S. BERGMANN, CLAUS HAAGE, AND AMERICAN SURETY COMPANY OF NEW YORK, A CORPORATION, PLAINTIFFS-APPELLEES,

v.

MULTI-STATE INTER-INSURANCE EXCHANGE, FORMERLY KNOWN AS RURAL INSURANCE EXCHANGE, DEFENDANT-APPELLANT, AND THE INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, DEFENDANT-APPELLEE.



Appeal from the Superior Court of Cook County; the Hon. DONALD S. McKINLAY, Judge, presiding. Affirmed.

MR. PRESIDING JUSTICE BURMAN DELIVERED THE OPINION OF THE COURT.

This is an appeal from a judgment entered against defendant, Multi-State Inter-Insurance Exchange, declaring that plaintiffs, Ernst S. Bergmann and Claus Haage, were entitled to insurance coverage and defense in two pending lawsuits against them.

Plaintiff Bergmann, who, in partnership with co-plaintiff Haage, ran an automobile repair shop at 2158 West Belmont Avenue, was the owner of a 1952 Chrysler automobile, insured by Multi-State, the successor to Rural Insurance Exchange, the original insurer. The Haage & Bergmann partnership had a garage liability policy issued by co-plaintiff American Surety Company of New York. On July 6, 1959, a Dr. Zoltan brought his car to the Haage & Bergmann garage for repairs, and, because the physician needed a car for emergency calls, plaintiff, Bergmann, loaned Dr. Zoltan the Chrysler automobile insured by Multi-State. Several days later, Dr. Zoltan was in an accident with the borrowed automobile. Subsequently, two separate lawsuits were instituted, by Angelo Ritas, and by Adrian Equitz and Joseph Broderick, against Bergmann, Haage and Dr. Zoltan for personal injuries and property damage resulting from the accident.

Haage and Bergmann, along with American Surety, which was then defending both Haage and Bergmann in the two cases pending, brought this declaratory judgment action against Multi-State and The Indemnity Insurance Company of North America, Dr. Zoltan's insurer, praying:

(a) That this Court determine and adjudicate the rights and liabilities of the parties hereto with respect to the policies of insurance hereinabove described;

(b) That this Court find and declare that the plaintiffs, Ernst S. Bergmann and Claus Haage, be entitled to coverage under the policies of insurance issued by the defendants with respect to the accident described in the complaint and the lawsuits arising therefrom, and to pay any judgments which may be entered in the said cases within the limits of coverage provided in the said policies of insurance;

(c) That this Court find and declare that the plaintiff, American Surety Company of New York, be not obligated to defend Ernst S. Bergmann and Claus Haage in the suits hereinabove described, and that this Court enter judgment in such sum as may be proper in favor of the plaintiff, American Surety Company of New York, and against the defendants for the expenses incurred by the said plaintiff in defending Ernst S. Bergmann and Claus Haage in the suits hereinabove described;

(d) That this Court grant the plaintiffs such further relief as it may deem meet and proper.

After answers were filed by Multi-State and Indemnity, subparagraph (c) of the prayer was stricken on motion of plaintiffs.

The trial judge found that the Multi-State policy covered Bergmann and Haage as to the accident and that the American Surety policy was excess insurance over and above that of the Multi-State policy. Indemnity was dismissed without prejudice and is not involved in this appeal. Multi-State seeks a reversal of the finding that its policy covered the accident.

Multi-State first contends that the complaint should have been dismissed as being in violation of legal ethics and contrary to public policy. The argument is that plaintiffs' counsel, who represents both the insurance company and assured, is guilty of a breach of ethics in filing suit in the name of the insurance company and also in the name of the assured, the object being to relieve the insurance company of its liability to the assured. Defendant relies on Allstate Ins. Co. v. Keller, 17 Ill. App.2d 44, 149 N.E.2d 482. There it was held untenable to permit a disclaimer of liability for lack of co-operation under a policy where the attorney failed to disclose to the assured a conflict of interest and failed to terminate his relationship with the assured. The attorney had proceeded to take the assured's deposition for the admitted purpose of placing the insurance carrier in a position to disclaim liability under the policy. This is completely different from the situation present here. Sub-paragraph (c) of the prayer, which sought a declaration that American Surety is not liable to defend Haage and Bergmann in the two suits, was stricken from the complaint. As it now stands, the complaint merely seeks additional protection for the assureds. And, unlike Allstate, there has been no concealment of the relationship between the parties, as it is with Haage's and Bergmann's obvious consent that this suit has been instituted.

Multi-State's contention is primarily based on the fact that, in its answer, it averred that the complaint involved a conflict of interest in direct violation of the Canons of Professional Ethics and is in violation of public policy and, argues, since no reply was filed to this affirmative matter, it stands admitted. This affirmative averment presented a question of law only and hence required no reply. Farley v. Security Ins. Co. of New Haven, Conn., 331 Ill. App. 448, 73 N.E.2d 662.

Multi-State next argues that the withdrawal of subparagraph (c) constituted a disclaimer to the relief plaintiffs obtained by the judgment. This contention is untenable. Sub-paragraph (b) of the prayer requested a judgment declaring that Bergmann and Haage were entitled to coverage and defense by Multi-State and Indemnity. The relief granted, that Multi-State is primarily liable for coverage and defense, is part of the relief requested ...


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