Appeal from the Municipal Court of Chicago, First Municipal
District of the Circuit Court of Cook County; the Hon. MARK E.
JONES, Judge, presiding. Reversed and remanded with directions.
MR. JUSTICE BURMAN DELIVERED THE OPINION OF THE COURT.
This controversy arises from a dispute between two insurance companies concerning the interpretation of their respective insurance policies. Plaintiff, Continental Casualty Company, after paying a $6,350 claim settlement brought this action against Travelers Insurance Company for reimbursement of $5,772.72, 10/11ths of the settlement. The facts were stipulated and the trial judge held in a memoranda decision that the two excess provisions in the policies of the respective companies nullified each other and held both companies to be primarily liable. Judgment was entered in favor of Continental and against Travelers for $5,521.70, which was 20/23rds of the settlement and Travelers appeals.
It appears from the stipulation of facts that on July 5, 1961, Robert P. Graeser rented a 1961 Ford from Avis, Inc., and/or Avis Rent-A-Car System, Inc. in Chicago. On July 11, 1961, he was involved in an accident which plaintiff Continental settled for $6,350. At the time of the accident Graeser was an agent and employee of Aeroquip Corporation and was operating the vehicle with their permission.
Continental issued its policy, DCL 3460982-R, to Avis, Inc., a corporation, engaged in the business of leasing or renting motor vehicles, and to Robert P. Graeser, with liability limits of $100,000 each person and $300,000 each accident for bodily injury and $25,000 each accident for property damage. The Continental policy contained the following clauses:
#17 The insurance under this policy shall be excess insurance over any other valid and collectible insurance available to the insured, either as an insured under another policy or otherwise.
#9 When this policy is certified as proof of financial responsibility for the future under the provisions of the motor vehicle financial responsibility law of any state or province such insurance as is afforded by this policy for bodily injury liability or for property damage liability shall comply with the provisions of such law. . . .
Travelers issued its policy, SLA 2691399, to Aeroquip Corporation, and covered Graeser, its employee, under the omnibus clause, with limits of liability of $1,000,000 each person and $2,000,000 each accident for bodily injury and $100,000 each accident for property damage. It was also stipulated that the rented car was a hired automobile insured on a cost of hire basis within the meaning of condition 13 of the Travelers policy, which is as follows:
#13 If the insured has other insurance against a loss covered by this policy the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declaration bears to the total applicable limit of liability of all valid and collectible insurance against such loss; provided, however, the insurance under this policy with respect to loss arising out of the maintenance or use of any hired automobile insured on a cost of hire basis or the use of any non-owned automobile shall be excess insurance over any other valid and collectible insurance.
The Travelers policy also contained the following provision under the heading "Insuring Agreement":
III. The unqualified word "insured" includes the name insured and also includes any person while using an owned automobile or a hired automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission, and any executive officer of the named insured with respect to the use of a non-owned automobile in the business of the named insured. The insurance with respect to any person or organization other than the named insured does not apply;
(d) with respect to any hired automobile, to the owner, or a lessee thereof other than the named insured, or to any agent or employee of such owner or lessee;
Travelers contends that Continental's policy issued to Avis on its rental cars was "primary" insurance and that Travelers' policy issued to Aeroquip was "excess" insurance as to the car rented from Avis. Therefore Travelers, not Continental, was entitled to judgment. In the alternative Travelers contends that the apportionment formula of 20/23rds to 3/23rds used by the trial court was incorrect and the judgment should be reduced to a 50/50 ratio or $3,175.
Continental contends that both policies were excess insurance and such applicable clauses cancel each other; that the excess clause is permitted by the Illinois Statute; that in any event as between the parties the policy provisions apply; and that the loss was properly prorated in accordance with the respective policy limits.
The Travelers' policy provides that coverage for a hired automobile or the use of any non-owned automobile shall be excess insurance over any other valid and collectible insurance. It is stipulated that the car Aeroquip rented from Avis and which Graeser drove is a hired automobile within the meaning of clause #13 of the Travelers' policy. Continental issued its policy to Avis (which also covered Graeser the driver) which provides under clause #17 that, "[t]he insurance under this policy shall be excess insurance ...