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New Amsterdam Cas. v. Underwriters





APPEAL from the Appellate Court for the First District; heard in that court on appeal from the Municipal Court of MR. JUSTICE HOUSE DELIVERED THE OPINION OF THE COURT:

Rehearing denied May 18, 1966.

The municipal court of Chicago entered a judgment on the pleadings in favor of the defendants (Lloyds) holding the plaintiff, New Amsterdam Casualty Company, solely liable for damages when its named insured, Chester A. Fiske, was involved in an accident while driving a rented automobile insured by Lloyds. The Appellate Court, First District, reversed the judgment and ruled that each insurer was liable for damages and costs in proportion to the amount of insurance provided in its policy. (56 Ill. App.2d 224.) We granted plaintiff's petition for leave to appeal.

The plaintiff contends that Lloyds is liable for the full amount of the damages and costs and that plaintiff's policy provided only insurance in excess of the amount covered by the Lloyds policy. On February 23, 1954, Fiske was involved in an accident while driving an automobile belonging to HAV-A-KAR, an auto rental company. Chuinard, the other driver involved in the accident, filed suit against Fiske, who forwarded the summons to plaintiff. Upon Lloyds refusal to defend Fiske, plaintiff proceeded with the defense. It then settled the case and brought this action for reimbursement of the amount paid in settlement and for the expenses of the defense.

Prior to the date of the accident, Fiske had purchased an insurance policy from the plaintiff protecting him from liability arising out of the operation of his automobile, a Chevrolet, and any other car which he might operate. The pertinent provisions of plaintiff's policy are as follows:

"V. USE OF OTHER AUTOMOBILES. If the named insured is an individual who owns the automobile classified as pleasure and business * * * such insurance as is afforded by this policy for bodily injury liability, for property damage liability, and for medical payments with respect to said automobile applies with respect to any other automobile, * * *.

"18. OTHER INSURANCE * * * [T]he insurance with respect to * * * other automobiles under Insuring Agreement V shall be excess insurance over any other valid and collectible insurance available to insured, either as an insured under a policy applicable with respect to said automobile or otherwise."

Lloyds had issued a blanket policy to certain named persons doing business as HAV-A-KAR, covering all their vehicles. This policy, which was in force at the time of the accident, included as insured any person driving the insured automobiles with the permission of the named insured. The pertinent provisions of the Lloyds policy are as follows:

"OMNIBUS CLAUSE: — except where specifically stated to the contrary, the unqualified word `Assured' wherever used in this policy includes not only the Named Assured, but also any person while using the automobile described herein and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is `Pleasure and Business' as defined herein, and provided further the actual use is with the permission of the Named Assured.

"6. OTHER INSURANCE * * * If any person, firm, or corporation other than the Assured named in the Schedule is, under the terms of this policy, entitled to be indemnified hereunder and is also covered by other valid and collectible insurance, such other person, firm or corporation shall not be indemnified under this policy."

Both parties agree that Fiske was driving the HAV-A-KAR vehicle with the permission of the named insured. It is clear that had either policy been in force without the existence of the other, either company would have assumed full liability under its policy. The question here presented is what effect the "other insurance" clauses have, if any, as to the ultimate liability for the damages.

Plaintiff contends that it provided "excess" insurance coverage only, that is, insurance in excess of other insurance available to the insured when driving an automobile other than the car named in his policy. Therefore, plaintiff argues that the limits of Lloyds insurance coverage should be exhausted before plaintiff's coverage becomes available, and since the amount of the damages and expenses was within the limits of the Lloyds policy, plaintiff should not have to bear any of the loss.

Lloyds contends that Fiske was covered by "other valid and collectible insurance" at the time of the accident, that is, by the plaintiff's policy, and therefore, Lloyds provided no coverage by virtue of its "other insurance" clause (known as an "escape" clause) specifically denying coverage should other valid and collectible insurance be available. It argues, in the alternative, that if the court does not hold plaintiff primarily liable the loss should be prorated between the two insurers. This result could be reached, it is argued, by holding that neither "other insurance" clause comes into effect because there is no "other valid and collectible insurance" within the meaning of either policy, therefore both are liable pro rata.

The cases dealing with this question are in conflict. Counsel have not cited nor are we aware of any case decided by this court concerning the precise question presented. The Appellate Court cited three earlier Appellate Court cases as being consistent with their holding in this case. (Continental Casualty Co. v. New Amsterdam Casualty Co. 28 Ill. App.2d 489; Laurie v. Holland America Ins. Co. 31 Ill. App.2d 437; Economy Fire & Casualty Co. v. Western States Mutual Ins. Co. 49 Ill. App.2d 59.) Those cases involved policies with practically identical "other insurance" clauses. In each case each policy provided that each company was not liable except for the excess of other valid and collectible insurance available to the insured. In those cases, reliance was placed on Oregon Auto Ins. Co. v. United States Fidelity & Guaranty Co. (9th cir.) 195 F.2d 958. The court held that "other insurance" clauses similar to those here involved were indistinguishable in meaning and intent and were "like clauses." It went on to say that where both policies carry "like" other insurance provisions, they are "mutually repugnant" and must be disregarded, and the damages and expenses of defending the suit must be prorated.

The Oregon Auto Ins. Co. case has been followed in several cases decided under Oregon law. (Gillery v. Andrew Weir Ins. Co. (9th cir.) 291 F.2d 132, (applying Oregon law under a conflict-of-laws rule); Travelers Ins. Co. v. Peerless Ins. Co. (9th cir.) 287 F.2d 742; General Accident Fire & Life Assurance Corp., Ltd. v. Continental Casualty Co. (9th cir.) 287 F.2d 464; Lamb-Weston, Inc. v. Oregon Automobile Ins. Co. 219 Ore. 110, 341 P.2d 110, 76 A.L.R.2d 485.) In each of the above cited cases from the 9th circuit, the court stated that under the ...

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