Appeal from the Circuit Court of Cook County; the Hon. CHARLES
S. DOUGHERTY, Judge, presiding. Judgment affirmed.
MR. JUSTICE SCHWARTZ DELIVERED THE OPINION OF THE COURT.
Rehearing denied June 28, 1968.
Michigan Mutual Liability Company (Michigan Mutual) instituted this suit for a declaratory judgment. It seeks a finding that it is not obligated under a policy issued to Hoover Bros., Inc. to defend and indemnify the insured in an action arising from a collision involving a truck owned by the insured. It contends that a policy of insurance issued by the defendant Illinois National Casualty Company (Illinois National) to J. Phil Hoover and Dick B. Hoover, d.b.a. Hoover Brothers (a partnership separate and distinct from Hoover Bros., Inc.) covers the risk in question. Illinois National likewise contends that its policy does not cover the risk. The trial court held that both policies covered the risk and indemnified their insureds for the liability incurred. Both insurance companies have appealed. The facts follow.
J. Phil Hoover and Dick B. Hoover conduct their business through two entities a corporation known as Hoover Bros., Inc. and a partnership known as Hoover Brothers. The corporation is a dealer in farm implements, while the partnership is engaged primarily in livestock and general hauling. Both are located in Milton, Illinois. On September 19, 1961, the partnership required an extra vehicle for use in the cartage business and to meet that temporary need borrowed from the corporation the truck involved in the accident. John R. Kern, an employee of the partnership, was driving the truck loaded with livestock when in Jerseyville, Illinois, it struck Harold Russell, a pedestrian, who by his conservator instituted the personal injury action.
Michigan Mutual's contention that its policy does not provide coverage for the accident is based on the following clause in its policy, referred to as an "exclusion" clause:
"This policy does not apply:
"(c) under coverages A [bodily injury liability] . . . (1) to the use by the insured of any automobile as a public or livery conveyance or for carrying property for a charge. . . ."
It argues that the operator of the vehicle was carrying property for a charge and that coverage for such activity was specifically excluded by the terms of the policy. It further contends that the language of the exclusion is unambiguous; that it must be applied as written and that so applied, it absolves the insurance company of any liability arising from the carriage of property for hire. Notwithstanding the contention that the exclusion is clear and requires no interpretation, it appears to us that we must consider other portions of the policy and the prior negotiations between the parties in order to determine the limits of the coverage.
The Michigan Mutual policy is described as a garage liability policy covering, among other risks, those attendant on the operation of an automobile dealership, repair shop or parking garage, together with the use of any vehicles in connection with the business. Coverage is also extended to incidental and nonbusiness use of vehicles under various circumstances. The negotiations conducted prior to the issuance of the policy reveal the nature of the activities intended to be covered as incidental operations, and we proceed to a consideration of those negotiations.
Prior to 1958 Hoover Bros., Inc. was insured through a different company. In October 1958 the King Gem Insurance Agency, the agency with which the Hoover brothers dealt, asked Michigan Mutual to quote a premium for the liability coverage, with a view to transferring the account from the previous insurer to Michigan Mutual. In its letter, the King Gem Agency described Hoover Bros., Inc. as an implement dealership which was also engaged in seasonal fertilizer hauling and spreading activities. In addition, the agency pointed out that the corporation was engaged in occasional cartage work under a so-called "grandfather permit." The letter further stated as follows:
"This operation also has been covered under the auto garage policy and I am wondering whether your company would consider these two operations as incidental operations. Please let me know your answer at your earliest convenience."
On the back of the letter from the King Gem Agency, Michigan Mutual replied as follows:
"The garage liability quote contemplates coverage for the operation outlined in the last paragraph of your letter of October 15, 1958. These two operations will be considered ...