Appeal from the Circuit Court of Cook County; the Hon. ABRAHAM
W. BRUSSELL, Judge, presiding. Decree affirmed.
MR. PRESIDING JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT.
Rehearing denied July 18, 1967.
This is an appeal from a decree dismissing plaintiff's complaint, (a creditor's bill) for want of equity and assessing all costs against plaintiff.
Plaintiff is a judgment creditor of defendant, Davis. The debt arose out of legal services rendered and money loaned by plaintiff to Davis. By his creditor's bill plaintiff seeks to reach and apply to the satisfaction of the judgment moneys due to Davis by virtue of a partnership of Davis and defendant, Green, which moneys may have come into the hands of defendant, South Side Bank and Trust Company, (Bank).
Plaintiff contends on appeal that (1) the partnership of Davis and Green was not illegal and that, even if it were, that defense would not be available to Green and/or the Bank; (2) Green should be made to account for the profits of Merit Insurance Agency, and (3) he (Bluestein) is entitled to recover Davis' share of the City Wide profits from the Bank.
On November 13, 1952, Davis, then operator of Liberal Motors Corporation, a used car dealership, formed City Wide Insurance Agency, a partnership with Green, for the purpose of "carrying on of the business of insurance brokers." It should be noted that Liberal Motors was financed by defendant Bank, and that Green was the owner of ninety-five percent of the Bank's stock. Under the partnership agreement Green was to secure all of the insurance and Davis was to run the business aspects of the venture. The business was operated from Liberal Motors' offices. City Wide's only source of business was the Bank. It wrote insurance on automobiles on which the Bank held chattel mortgages and in which the Bank was named as a "loss payee." All of its policies were placed with Reserve Insurance Company, with which Green, doing business as City Wide Insurance Agency, held an agency agreement.
Green was a licensed insurance broker but Davis had no such license. There is a conflict in testimony as to whether Green had requested that Davis procure a broker's license, but the partnership agreement did not require him to do so.
City Wide's income was derived from premiums paid to Reserve. Eighty-five percent of the premiums paid in were credited to City Wide but held by Reserve against claims payable. The difference between the eighty-five percent and the losses paid was the net commission earned by the partnership. Fifteen percent was Reserve's charge for issuing the policies.
Davis at that time was also operating Liberal Motors. However, sometime in November or December of 1953, according to Davis' testimony, he experienced financial difficulty because the Bank was requiring that he buy back all defaulted automobiles at full contract price, although he was under no legal obligation to do so. When he complained of this to Green, he was told that was the only way the Bank would do business. Thereafter Davis closed Liberal Motors, claiming that the Bank discontinued his line of credit.
Once Liberal Motors ceased operations, City Wide was left without an office. Davis then turned over the City Wide books and records to the Bank. The Bank used two of its employees to service the outstanding policies on about three thousand automobiles, until those policies expired. City Wide issued no new policies thereafter, and the insurance business of the Bank was transferred to Green, doing business as Merit Insurance Agency. When the records were turned over to the Bank, City Wide had a deficit of twenty-five thousand dollars ($25,000), but by June of 1956, when the last policy expired, there had accrued net profits of $8,429.17 in the City Wide account.
In September, 1953, Davis was indebted to plaintiff in the amount of $13,252, for which amount he gave plaintiff an assignment of any moneys due him from the partnership. On July 26, 1954, plaintiff recovered a judgment against Davis in the amount of $14,511.66; execution was returned no property found. The Bank introduced evidence that Davis, when he obtained financing for Liberal Motors, orally pledged his share of City Wide's profits as extra collateral for the Liberal Motors' loan. Richard P. Larsen, president of the Bank, testified that in November, 1953, Davis stated that his interest in the profits could be used to defray the Bank's expenses in liquidating City Wide. Davis also was indebted to the Bank on personal promissory notes.
Plaintiff first contends that the partnership of Green and Davis was not illegal and that, even if it were, that defense would not be available to Green and/or the Bank. The question of illegality arises because Davis was at no time a licensed insurance broker. The Illinois Insurance Code (Ill Rev Stats 1957, c 73), and the Municipal Code of Chicago (c 113) regulate the business of insurance. Among other things, these acts seek to protect the general public from unqualified and/or unscrupulous insurance salesmen. Section 489 of the Illinois act provides:
"This article shall apply to all agents, brokers and solicitors as may ...