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Bourne v. Seal

OCTOBER 8, 1964.

MAUREEN BOURNE, ET AL., PETITIONERS-APPELLANTS,

v.

HUGH KYLE SEAL AND MULTI-STATE INTER-INSURANCE EXCHANGE (FORMERLY RURAL INSURANCE EXCHANGE), DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. CHARLES S. DOUGHERTY, Judge, presiding. Affirmed.

MR. JUSTICE DEMPSEY DELIVERED THE OPINION OF THE COURT.

Rehearing denied October 30, 1964.

The plaintiffs obtained a judgment in Kentucky against the defendant, Hugh Kyle Seal, and brought this action to enforce the judgment against him and his insurer, Multi-State Inter-Insurance Exchange. The trial court found for the insurer and the plaintiffs have appealed.

The original litigation arose out of an automobile accident. Seal, who had been in Tennessee, was returning to his home in Illinois accompanied by the plaintiffs Blanche Johnson, Marcella Mullins and James Willis, all residents of Tennessee. While driving through Kentucky on February 10, 1957, he collided with an auto driven by a Louisiana resident, Reginald J. Bourne, whose wife, the plaintiff Maureen Bourne, was in the car with him. All six were injured. Seal, represented by Armer Mahan, a Kentucky attorney, sued Bourne in Kentucky. Bourne filed a counterclaim and his wife an intervening complaint. The three occupants of Seal's car sued both Seal and Bourne. The husbands of Blanche Johnson and Marcella Mullins intervened and filed derivative actions.

After the counterclaim and the other actions were started, Attorney Mahan wrote to Seal's insurance carrier, Rural Insurance Exchange, and informed it of the claims against Seal. Rural Insurance, which was later merged into the defendant Multi-State Inter-Insurance Exchange, retained Attorney Mahan to defend these claims. Mahan undertook the defense and from that time on kept Rural, or Multi-State, fully informed of the progress of the case, the steps taken by him and by the attorneys representing the plaintiffs, and the offers and counteroffers of settlement.

Seal was 20 years of age, a married man with two children, a mechanic by trade and without funds. At one time the combined plaintiffs, under the impression that Seal's insurance coverage was $10,000, offered to settle for $9,000. Upon learning that the coverage was $20,000 for injuries arising from one accident, the $9,000 offer was withdrawn. The company then authorized a settlement of $10,000, which the plaintiffs refused. Before the case went to trial, settlement negotiations were renewed and the figure of $15,000 was arrived at by the attorneys. Attorney Mahan repeatedly advised Multi-State to accept this figure because he thought Seal would be found liable and he feared the jury verdict would exceed the policy limit. The company did not follow his advice. The case was tried in October 1960; the jury found Seal and Bourne equally guilty and awarded the plaintiffs total damages of $24,255.50. Judgments were entered against Seal for this amount. Maureen Bourne's judgment was entered against Seal only; the judgments of the other plaintiffs were entered against both Bourne and Seal. The company and Attorney Mahan discussed the possibility of appeal and of post-trial settlement but the case was neither appealed nor settled and the judgments were never paid.

In 1961 the plaintiffs filed the present action under the Uniform Enforcement of Foreign Judgments Act, Ill Rev Stats 1961, c 77, pars 88-105. The petition prayed for an Illinois judgment against Seal and against Multi-State as his insurer. Both defendants defaulted and judgment was entered against them. Multi-State moved to vacate the default but Seal did not. Multi-State's motion was granted and it forthwith filed an answer to the plaintiffs' petition. In the answer the intimation was made for the first time that the insurance policy was not in force at the time of the collision. This defense was developed further in subsequent pleadings.

The plaintiffs, by leave of court, amended their petition to include, as judgment creditors of Seal, a complaint against the company under Section 73 of the Civil Practice Act. Ill Rev Stats 1961, c 110, § 73(2) (f). The petition, or complaint, as finally amended was in six counts. The first and second of these were the same as those in the original petition and asked, in count I, that the Kentucky judgments be registered in Illinois in full against Seal and, in count II, that they be registered against the company for the maximum provided by the policy. Count III asserted that Multi-State, because of its negligent conduct and bad faith throughout the pendency of the case, was liable to Seal for the full amount of the judgments and that the plaintiffs were entitled to recover in behalf of Seal. Counts IV and V were stricken. Count VI asserted that Multi-State was estopped from denying coverage because it had misled and damaged the plaintiffs by representing that the insurance was in force on the date of the accident.

After hearing the case without a jury, the court found that the policy which had been issued to Seal expired two days before the occurrence in Kentucky, and that the company was under no legal obligation to pay the judgments. Counts II, III and VI were dismissed.

The principal contentions of the plaintiffs in this appeal are that the trial court erred in: (1) vacating the default judgment against the defendant; (2) not finding that a policy of insurance was in force on the date of the occurrence; (3) denying the plaintiffs' motion for the production of the company's accounting records relating to premium payments, which records, it is said, were of importance in proving the existence of insurance coverage at the time of the accident; (4) not finding that the defendant was liable to Seal and that the plaintiffs were entitled to recover in his behalf, and (5) not finding that the company was estopped from denying liability to the plaintiffs. Although the plaintiffs state that they are also appealing from the order striking counts IV and V of their complaint, the point is not argued in their brief and is not among those listed in the brief's Points and Authorities. The point, therefore, is waived. Rule 5(2) (k), Appellate Court Rules (1964) Ill Rev Stats 1963, c 110, § 101.39(1); Pipitone v. Mandala, 33 Ill. App.2d 461, 180 N.E.2d 33; Samples v. Morgan Mines, Inc., 347 Ill. App. 70, 106 N.E.2d 139.

As to the first alleged error, neither the petition to vacate the default judgment, nor the record on appeal nor the briefs of the parties indicate whether the petition was made pursuant to Section 50 or Section 72 of the Civil Practice Act. Ill Rev Stats 1961, c 110, §§ 50 and 72. The petition was subscribed to 28 days after the default judgment was entered but, according to the record, was filed 33 days after the judgment. No point is made of the filing date; the only issue raised is that the petition showed neither a meritorious defense nor due diligence. No objection to the petition appears in the record and it seems to have been treated by court and counsel as a simple petition under Section 50 rather than one under Section 72. If the petition was timely presented under Section 50, it was addressed to the discretion of the court [50(6)] and in our opinion the discretion was not abused. If the petition was under Section 72 and was presented after thirty days had elapsed, it had to show that the defendant acted with due diligence to protect its rights and that it had a meritorious defense. Till v. Kara, 22 Ill. App.2d 502, 161 N.E.2d 363; Lusk v. Bluhm, 321 Ill. App. 349, 53 N.E.2d 135. The petition alleged both but did so in terms which the plaintiffs contend were conclusional. No motion to strike was made, however, and an objection to the sufficiency of a petition to vacate under Section 72 cannot be raised on review unless it was properly presented and preserved in the trial court. Smyth v. Fargo, 307 Ill. 300, 138 N.E. 610; Boyle v. Veterans Hauling Line, 29 Ill. App.2d 235, 172 N.E.2d 512; Thomas v. Melmed, 310 Ill. App. 262, 33 N.E.2d 919.

The principal factual issue at the trial was whether Seal was insured on the date of his accident, February 10, 1957. The court found that he was not and this finding constitutes the plaintiffs' second charge of error. Seal was the only witness at the trial; the balance of the evidence was documentary. The plaintiffs introduced 49 exhibits which for the most part consisted of interoffice memoranda of the defendant and correspondence between the defendant and Attorney Mahan. These exhibits proved either that Seal was insured on February 10, 1957, or that the company believed he was. One interoffice memorandum was a preliminary report of November 1957, which said: "Coverage on Policy No. 14904 [Seal's policy] appears to be in order" and "Law suit has been filed on behalf of our assured . . . in . . . Kentucky." Another, in March 1960, contained the following: "Policy number 14904 issued to Hugh K. Seal. We insure Mr. Seal 10/20 liability, 4,000 property damage and 1,000 medical pay coverage. . . . Since we have 5 people who will testify against our named insured. . . . I would recommend that we go $10,000, if we can pick up all of these claims on releases." Another, in April 1960, said this: "We have 20 coverage. I am not inclined to go to 15,000 at this time."

In November 1957 the company wrote Attorney Mahan: "Please accept the assignment of representing our interests in regard to the counterclaims that have been filed against your client, and our assured, Mr. Seal." In August 1958 a letter to Mahan said: "Please be advised at this time that the policy limits on this particular assured are 10/20. . . . Also advise if there have been any settlement overtures tended [sic] you by any of the attorneys." A letter to Mahan in March 1960 replied to his inquiry as to whether the company would make a settlement offer: "I am willing to grant authorization for $10,000.00, only on the following condition: that this $10,000.00 settles each and every claim whatsoever, either the Bourne car or ours."

Other important plaintiffs' exhibits were: Seal's report of the accident made to the company in March 1957, informing it that the accident took place on February 10, 1957; a letter from the company to Seal in December 1959 informing him that the claims made in the Kentucky suit were in excess of "Policy 14904 which our company issued to you" and advising him that he could engage personal counsel to collaborate with its attorneys in defense of these claims; a check issued to Seal in 1962 by the company in partial payment of his medical expenses, and a discovery deposition taken from Seal in August 1960 in which Seal stated that he had liability insurance of $10,000 and $20,000, and in which Attorney Mahan, who was present, confirmed Seal's statement. However, the ...


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