Appeal from the Circuit Court of Cook County; the Hon. WALKER
BUTLER, Judge, presiding. Affirmed.
MR. JUSTICE MURPHY DELIVERED THE OPINION OF THE COURT.
This is an action by an insolvent British insurance company to recover the balance of premiums collected for it in Illinois by defendant, an Illinois licensed insurance broker. Defendant appeals from a decree in favor of plaintiff for $5,999.90.
Defendant contends (1) that section 121(4) of the Illinois Insurance Code (Ill Rev Stats, c 73, ¶ 733) bars plaintiff from maintaining this action in any court in Illinois; and (2) in any event, payment of losses out of funds collected as premiums was proper and necessary to the fulfillment of the agreement between the parties. The matter was submitted to the court on the pleadings and a stipulation of facts.
In February 1954, plaintiff, British Commercial Insurance Company, Limited, was a British corporation, engaged in a general insurance business, but it was not authorized or licensed by the Illinois Director of Insurance to write contracts of insurance in the State of Illinois.
Defendant, Associated International Insurance Managers, Inc., an Illinois corporation, engaged in insurance brokerage in Chicago, was licensed as a broker and "surplus line" agent under section 445 of the Illinois Insurance Code (c 73, ¶ 1057) on July 20, 1953, and is currently so licensed.
On February 26, 1954, British Commercial and defendant Associated entered into a so-called "Open Cover Agreement," which authorized Associated to issue policies or other documents binding British Commercial as insurer on certain types of insurance risks located in the United States. Pursuant to this agreement, defendant Associated negotiated risks in Illinois, underwritten by British Commercial in accordance with the agreement on a "surplus line" basis, pursuant to section 445 of the Illinois Insurance Code. Defendant represented other similar insurers and would bind each of the insurers for a specific portion of the risk insured.
Under the agreement, defendant Associated collected the premium on the "surplus line" risks, usually at rates considerably higher than standard. From these premiums Associated deducted its commission and deposited the balance of the premium in separate bank accounts in Chicago for British Commercial and the other similar insurers, in accordance with their percentage participation in the "surplus line" risk. The bank account for plaintiff was entitled "Associated International Insurance Managers, Inc. British Commercial Account, . . ."
As losses occurred and expenses were incurred, Associated would withdraw from these bank accounts funds sufficient to pay the losses and expenses, and if the accounts did not contain sufficient funds to pay them, Associated would request the companies involved to transfer additional funds to Chicago. Associated reported monthly to British Commercial the nature and indentity of risks bound, the gross and net premiums collected, losses reported to it, and losses and expenses paid by it. The agreement was terminated on December 31, 1957. After the termination, under the terms of the agreement plaintiff remained liable for losses arising out of risks incurred prior to termination, and defendant continued to pay losses from the funds which it had on hand.
On September 14, 1959, British Commercial failed, and joint liquidators were appointed in Great Britain. On or about September 14, 1959, defendant was notified by the liquidators of the voluntary liquidation, and that no action of any kind should be taken on behalf of British Commercial without prior written consent of the liquidators.
On November 23, 1959, plaintiff received a statement from defendant Associated for the month of October, showing a balance in the British Commercial account of $5,999.90 as of September 30, 1959. On November 23, 1959, a letter was sent by the liquidators to defendant Associated demanding payment of the $5,999.90. On June 6, 1960, defendant Associated withdrew the balance of the British Commercial account but did not forward it to the plaintiff liquidators, and the instant action was filed in September, 1960.
The amended complaint substantially alleged the foregoing. Defendant's answer included as separate defenses (1) that plaintiff may not maintain the cause of action in Illinois, and (2) "that all the funds by it at any time held for British Commercial Insurance Company, Limited, have been exhausted, properly paid to persons having claims against said British Commercial prior to the time of the liquidation." The court decreed that "plaintiff has standing to bring and prosecute this action in this Court," and "that judgment be and is hereby entered in favor of plaintiff, British Commercial Insurance Company, Limited for the benefit of said joint liquidators. . . ."
Initially, defendant contends that "subsection 4 of section 121 of the Illinois Insurance Code . . . effectively bars this plaintiff from maintaining the present action in this or any other court of this state." Defendant relies on the following part of subsection (4):
". . . no company transacting insurance business in this State without a certificate of authority shall be permitted to maintain an action at law or in equity in any court of this State to enforce any right, claim or demand arising out of the transaction of such business until such company shall have obtained a certificate of authority. . . ."
Defendant argues that although "section 121 of the Illinois Insurance Code legalizes the transaction of certain types of insurance business by unauthorized companies, to-wit: permitting agents licensed under section 445 to place business with these unauthorized companies, . . . this limited grant of authority does not impliedly and certainly does not expressly carry with it any right on behalf of an unauthorized company to bring an action in the courts of this State. The ...