Appeal from the Circuit Court of Cook County, Law Division;
the Hon. FRANK H. BICEK, Judge, presiding. Affirmed.
MR. PRESIDING JUSTICE LYONS DELIVERED THE OPINION OF THE COURT.
This is an appeal by the plaintiff, Willard Anderson, as the unsatisfied judgment creditor of one Robert Powell, from the entry of a final order by the Circuit Court of Cook County, which order dismissed plaintiff's garnishment action, after hearing, upon the motion and in favor of the defendant-garnishee, Prudence Mutual Casualty Company (hereinafter referred to as Prudence), the vehicular public liability insurance carrier of the aforesaid judgment debtor, Powell. The order was entered and the cause dismissed without prejudice on February 4, 1966.
The facts are that the plaintiff, Willard Anderson, on November 26, 1957, had sustained personal injuries as a result of an automobile collision involving two vehicles, one being operated by Robert Powell and the other by Thomas Lewis. Plaintiff, who was a pedestrian at the scene of the collision, was struck by the automobile of Thomas Lewis, which was involved in a collision with the automobile driven by Robert Powell, at or near the intersection of LaSalle Street and Adams Street in the City of Chicago. Civil proceedings for damages were brought by the plaintiff, Willard Anderson, against Powell and Lewis, as co-defendants. This case was submitted to the jury on the issues of plaintiff's due care, the defendants' (Powell and Lewis) joint or several negligence and the measure of damages, if any. There was a finding for the plaintiff against defendant-Powell only, with damages being assessed in the sum of $65,000. Plaintiff had been represented in this former action by an attorney from Prudence.
Powell, the resulting judgment debtor, concurrent with these aforementioned events, was insured by Prudence for personal automobile liability with maximum policy limits of $10,000 (together with interest and costs) for injuries to any one person.
Lewis held, at the same time, a similar liability policy with State Farm Mutual Automobile Insurance Company, with an individual limit of $25,000. After return of the verdict in the personal injury case, Prudence, in accordance with the terms of its insuring agreement with Powell and by leave of court, deposited with the Clerk of the Circuit Court $10,262.30, for the benefit of the plaintiff and in full satisfaction of its obligation under the terms and limits of the aforesaid policy.
Thereafter in February of 1965, the judgment in the original action having remained unsatisfied, plaintiff, as judgment creditor of Robert Powell, filed an affidavit for garnishment, together with attached interrogatories, against the garnishee-insurer Prudence, requesting garnishment of $69,137.80, this sum representing the $65,000 judgment together with interest and costs. Such garnishment proceedings were predicated upon the alleged bad faith, fraud, and/or negligence of Prudence in failing to settle its insured's liability within the limits of his policy, when such an out of court settlement allegedly could have and should have been effectuated. The averment has been persistently denied by Prudence throughout the proceedings which followed.
In response to the affidavit for garnishment and attached interrogatories, Prudence filed a motion to dismiss the garnishment action and to strike interrogatories five (5) through seventeen (17) as being irrelevant and outside the scope of garnishment proceedings. Interrogatories five (5) through seventeen (17) were stricken by the court, Prudence being ordered to answer to those which remained, within 20 days. Thereafter upon a full and extensive hearing, the court below sustained Prudence's motion to dismiss the action as being outside the scope of the garnishment statute. An order was entered accordingly from which plaintiff appeals.
It is the plaintiff's theory of the case that garnishment was and is the proper remedy for a judgment creditor, against the insurance carrier of his judgment debtor, for the recovery of a judgment rendered in excess of policy limits occurring as a consequence of the bad faith, fraud, and/or negligence of that insurance carrier.
It is the defendant's theory of the case that garnishment is a strict statutory proceeding to test the limited issues of being indebted to, or being in the possession, custody and control of property belonging to a judgment debtor. Accordingly, the instant action, while available to an insured against his insurer in a direct proceeding, does not involve a claim in the nature of those contemplated by and within the realm of the garnishment statute.
The instant case involves an attempted implementation of the provisions of the Garnishment Act (Ill Rev Stats (1965) c 62, par 33, et seq.) to a factual situation which has heretofore eluded precise judicial construction. Essentially, there is but a single issue presented; to wit, whether the provisions of the Garnishment Act were intended by our General Assembly to afford a remedy to an unsatisfied judgment creditor, against the insurance carrier of the judgment debtor, for recovery of a judgment rendered in excess of policy limits. The averred misconduct of said insurance carrier notwithstanding, this court cannot envision such far-reaching application and must resolve the question in the negative.
Not every specie of liability owing by a garnishee to his judgment debtor is within the reach of an affidavit for garnishment. Rather, the garnishment statute itself clearly manifests an intention to confine the garnishing process to but two classes of assets; namely, (1) a debt, for the collection of which, the garnishee might have properly maintained the traditional actions of debt or assumpsit, or (2) property belonging to the judgment debtor in the possession, custody, or control of the garnishee. Capes v. Burgess, 135 Ill. 61, 25 NE 1000 (1890). Garnishment is a purely statutory proceeding unknown to the common law and accordingly must be strictly construed so as to not be extended to cases beyond its intended realm of application. Freeport Motor Cas. Co. v. Madden, 354 Ill. 486, 188 NE 415 (1933). An analysis of the nature of the purported asset made the subject of the garnishment writ necessarily follows.
It is well established that an insurer has no duty to initiate negotiations for the settlement of an action accruing against its assured. To impose such a duty would be to place the insurer at a negotiating disadvantage with adverse litigants unencumbered by an equal burden. Oda v. Highway Ins. Co., 44 Ill. App.2d 235, 194 N.E.2d 489 (1963). It has been similarly established that an insurer's refusal to settle a case within maximum policy limits, resulting in a judgment against its assured in excess of that limit, does not render the insurer liable per se to its assured under the policy. Quite to the contrary, the insurer is simply held to a standard of reasonable conduct and avoidance of fraud, negligence, and/or bad faith (as questions of fact for a jury, and upon which issue the insured has the burden of proof) in refusing a proffered settlement within policy limits. Olympia Fields Club v. Bankers Indemnity Ins. Co., 325 Ill. App. 649, 60 N.E.2d 896 (1945); General Cas. Co. of Wisconsin v. Whipple, 328 F.2d 353 (7th Cir, 1964).
Plaintiff, relying on the case of Comunale v. Traders & General Ins. Co., 50 Cal.2d 654, 328 P.2d 198 (1958), alludes to the theory that there exists in every contract of insurance an implied covenant of good faith and fair dealing for a breach of which a garnishor, as an assignee, subrogee, or third-party creditor beneficiary thereof, can properly maintain an action in garnishment. Prudence responds arguing that the asserted claim, if at all, is one in tort, as such is nonassignable in Illinois, and hence cannot be made the subject of a garnishment action, absent specific authorization in the Garnishment Act. Prudence cites Holowaty for Use of Cherka v. Prudential Ins. Co. of America, 282 Ill. App. 584 (1935) in support of its contention on the point.
The foregoing theories notwithstanding, plaintiff cannot prevail in garnishment even if this court were to accept his implied covenant theory as an accurate reflection of the applicable law. Plaintiff himself, citing Zimek v. Illinois Nat. Cas. Co., 370 Ill. 572, 19 N.E.2d 620 (1939), candidly acknowledges that for a debt to fall within the legislative purview of the Garnishment Act, it must be both due without contingency and represent a liquidated or ...