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Howard v. Reserve Ins. Co.

DECEMBER 8, 1969.

MAJOR HOWARD, LUCILLE HOWARD, AND THE EXCHANGE NATIONAL BANK OF CHICAGO, AS TRUSTEE UNDER TRUST NO. 6262, PLAINTIFFS-APPELLEES,

v.

RESERVE INSURANCE COMPANY AND MARKET INSURANCE COMPANY, DEFENDANTS-APPELLANTS, AND MIDLAND NATIONAL INSURANCE COMPANY, DEFENDANT.



Appeal from the Circuit Court of Cook County; the Hon. SAMUEL B. EPSTEIN, Judge, presiding. Affirmed.

MR. PRESIDING JUSTICE ADESKO DELIVERED THE OPINION OF THE COURT.

This is an appeal from a decree against the Reserve Insurance Company, Market Insurance Company and Midland National Insurance Company, on a claim for a fire loss in a building at 1523 S. Pulaski Road, Chicago, Illinois, owned by the plaintiffs. It was insured by three separate insurance policies issued by the defendants. The judgments were pro rata of the amounts of the applicable insurance in each defendants' policy. The Midland National Insurance Company satisfied the judgment against it and is not a party to this appeal.

Each policy contained identical provisions which are involved in this appeal. They are designated in Exhibit A of the record under the subhead "Requirements in case loss occurs," in lines 90 to 122 and provide:

"The insured shall give immediate written notice to this Company of any loss, protect the property from further damage, forthwith separate the damaged and undamaged personal property, put it in the best possible order, furnish a complete inventory of the destroyed, damaged and undamaged property, showing in detail quantities, costs, actual cash value and amount of loss claimed; and within sixty days after the loss, unless such time is extended in writing by this Company, the insured shall render to this Company a proof of loss, signed and sworn to by the insured, stating the knowledge and belief of the insured as to the following: the time and origin of the loss, the interest of the insured and of all others in the property, the actual cash value of each item thereof and the amount of loss thereto, all encumbrances thereon, all other contracts of insurance, whether valid or not, covering any of said property, any changes in the title, use, occupation, location, possession or exposures of said property since the issuing of this policy, by whom and for what purpose any building herein described and the several parts thereof were occupied at the time of loss and whether or not it then stood on ground, and shall furnish a copy of all the descriptions and schedules in all policies and, if required, verified plans and specifications of any building, fixtures or machinery destroyed or damaged. The insured, as often as may be reasonably required, shall exhibit to any person designated by this Company all that remains of any property herein described, and submit to examinations under oath by any person named by this Company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices and other vouchers, or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by this Company or its representative, and shall permit extracts and copies thereof to be made."

The policies provide further under the subhead "Company's options" in lines 141 to 147 as follows:

"It shall be optional with this Company to take all, or any part, of the property at the agreed or appraised value, and also to repair, rebuild or replace the property destroyed or damaged with other of like kind and quality within a reasonable time, on giving notice of its intention so to do within thirty days after the receipt of the proof of loss herein required."

The appellant insurance companies maintain that the sole issue before this court is whether the plaintiffs breached the policy contracts by depriving the insurance companies of the opportunity to exercise the option reserved to them in the policies to repair or rebuild. The plaintiffs-appellees claim that this is an oversimplification of the issues here involved. Let us examine the agreed statement of facts submitted by the parties and their ideas of the issues.

The first occurred late on June 14, 1963, or early the following day. The insurance companies were notified on June 17, 1963. On June 25, 1963, John Hagensick, fire loss manager for the Reserve and Market Insurance Companies wrote the Exchange National Bank, which was the named insured, as follows:

"You have notified us of a fire at the captioned address which occurred June 14, 1963, under Market Insurance Company Policy No. 5425-1167 and Reserve Insurance Company Policy No. 1025-1509.

"Your attention is invited to the fact that we will insist upon compliance with the policy provisions which are set forth in lines 90 to 122 inclusive.

"We also wish to point out lines 141 to 147 of the insurance policy which state, `It shall be optional with this Company to take all, or any part of the property at the agreed or appraised value, and also to repair, rebuild or replace the property destroyed or damaged with other of like kind and quality within a reasonable time, on giving notice of its intention so to do within thirty days after the receipt of the proof of loss herein required.'

"The submission of this letter to you and the copies to the respective interested parties is not intended to be nor is it a waiver of any of the rights of the Reserve Insurance Company under their Policy No. 1025-1509 and the Market Insurance Company under their Policy No. 5425-1167.

"If we can assist you in the adjustment of this claim, please contact the writer at WE 9-7031."

On June 28, 1963, John Hagensick as adjuster for Reserve and Market Insurance Companies and Mr. Hillman, as adjuster for the Midland National Insurance Company, having received certain information as to the amount of the loss, checked the damage caused by the fire, the claim presented by the public adjuster, and reached the opinion that the damage by fire was $6,493.

Joseph Risberg, a public adjuster representing the insured, testified that he examined the fire loss and prepared a claim. He met Wilbur Hillman, representing Midland National Insurance Company and John Hagensick, representing the appellants who checked the estimated claim. Hillman then said: "We're going to get together and get up a set of figures for you." Subsequently Risberg met Hillman who showed the figures he and Hagensick decided on. Risberg and Hillman met a few times again but did not agree and Hillman then told Risberg, "Go ahead and sue."

In the meantime, on July 8, 1963, Louis Seiden, President of Central Fire Adjusting Bureau, also representing the insured, sent Reserve Insurance Company a bill for temporary electrical work, re: fire loss at 1523 S. Pulaski Road. On July 19, 1963, Louis Seiden wrote Hagensick as follows:

"Mr. John Hagensick, Adjuster for Reserve ...


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