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INDIANA LUMBERMENS MUTUAL INS. CO. v. MITCHELL

June 5, 1968

INDIANA LUMBERMENS MUTUAL INSURANCE COMPANY, A CORPORATION, PLAINTIFF,
v.
BONNIE MITCHELL; THOMAS P. O'DONNELL, ADMINISTRATOR OF THE ESTATE OF VIOLA HUCKENSTINE, DECEASED; MATTHEWS CHEVROLET COMPANY; MICHAEL BRESNAHAN; AND ALLSTATE INSURANCE COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Juergens, Chief Judge.

MEMORANDUM AND JUDGMENT

By this declaratory judgment action, the Court is called upon to determine the rights, obligations and liabilities of Indiana Lumbermens Mutual Insurance Company, a corporation, hereinafter referred to as "Lumbermens"; Allstate Insurance Company, hereinafter referred to as "Allstate"; Bonnie Mitchell; Thomas P. O'Donnell, Administrator of the Estate of Viola Huckenstine, deceased; Matthews Chevrolet Company; and Michael Bresnahan, under the provisions of a policy of insurance issued by Lumbermens and a policy issued by Allstate.

The cause is submitted on a stipulation of facts. Plaintiff is a citizen of the State of Indiana; none of the defendants are citizens of that state; and the amount in controversy fairly exceeds the sum of $10,000.00, exclusive of interest and costs.

On September 13, 1963, Matthews Chevrolet Company loaned one of its automobiles to Michael Bresnahan for his use while his own 1963 Chevrolet automobile, which he had recently purchased from Matthews, was being repaired. On September 13, 1963, while driving the loaned automobile, Bresnahan, accompanied by two passengers, struck a bridge railing, resulting in the death of one of his passengers and injury to the other.

The injured passenger brought suit in the Circuit Court of Madison County, Illinois, against Bresnahan and Matthews Chevrolet Company. The jury returned a verdict in favor of Matthews Chevrolet Company and against Bresnahan for the sum of $18,000.00.

Suit was filed in the Circuit Court of St. Clair County, Illinois, by the estate of the deceased passenger. This case is still pending.

At the time of the occurrence out of which this cause arises, Lumbermens by an Automobile Garage Liability Policy insured Matthews Chevrolet Company. At the time of the incident Allstate had insured Michael Bresnahan as the owner of a 1963 Chevrolet.

Subsequent to the accident, both Lumbermens and Allstate were notified. Each made an investigation. Each insurance company took the position that it was the responsibility of the other to defend Michael Bresnahan. On several occasions Allstate called upon Lumbermens to assume the defense of Bresnahan. Lumbermens furnished defense to Matthews Chevrolet Company, its insured, but consistently refused to furnish a defense to Bresnahan. Upon refusal by Lumbermens to furnish the requested defense, Allstate furnished and is furnishing a defense for Bresnahan in both the injury and the death case.

At all times material, the Financial Responsibility Law of the State of Illinois, among other provisions, specified minimum limits of liability coverage of $10,000.00 because of bodily injury to or death of any one person in any one accident, $20,000.00 because of bodily injury to or death of two or more persons in any one accident, and $5,000.00 because of injury to or destruction of property of others in any one accident.

Lumbermens' policy issued to Matthews Chevrolet Company was, at all times pertinent, amended by Endorsement AL8522 which provided for limited coverage for certain insured and is in part as follows:

  "In consideration of the reduced rate of premium
  made applicable to the insurance under Part 1, it
  is agreed that the policy is amended as follows:
    1. Paragraph 3 of `Persons Insured' is amended
    to read as follows, and Paragraphs 4 and 5
    below are added, all subject to exceptions (i),
    (ii), (iii) and (iv) as set forth in the
    policy.
    `(3) With respect to an automobile to which the
    insurance applies under paragraph 1(a) of the
    Automobile Hazards, any of the following
    persons while using such automobile with the
    permission of the named insured, provided such
    person's actual operation or (if he is not
    operating) his other actual use thereof is
    within the scope of such permission:
    (a) any employee, director or stockholder of
    the named insured, any partner therein and any
    resident of the same household as the named
    insured, such ...

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