APPEAL from the Circuit Court of Marion County; the Hon.
GEORGE KASSERMAN, JR., Judge, presiding.
MR. JUSTICE EBERSPACHER DELIVERED THE OPINION OF THE COURT:
Plaintiff, The Farmers Automobile Insurance Association, brought suit to obtain a declaratory judgment contending that a policy of automobile insurance issued by it to Rosemary Pursley on a 1965 Pontiac, purporting to cover the period September 6, 1966 to March 6, 1967, was void and of no force and effect because of misrepresentations allegedly made. Defendant, Steven N. Pursley, a son of Rosemary, while driving the 1965 Pontiac, was involved in a collision with defendant Roland F. Autenreith on January 20, 1967. Defendant Russell Pursley was the husband of the named insured, Rosemary Pursley. In a bench trial the court found the issues for defendants holding the policy was in force at the time of the collision.
An amended complaint alleged Russell Pursley as agent for Rosemary on September 6, 1966 signed an application for coverage on a 1965 Pontiac which contained a declaration which was materially false, and that as a result of such application plaintiff issued its policy to Rosemary as the named insured. Plaintiff's further alleged that the false representation was that neither Russell Pursley nor Rosemary Pursley had ever been cancelled whereas Russell Pursley listed on said application as a driver had been cancelled and refused renewal by an insurer, and further that the representations were false in that Russell and Rosemary Pursley knew that their sons, including defendant Steven N. Pursley, frequently drove the automobile and continued to drive it after September 6. The Pursleys, by their answer, denied that false representations were made in the application and that their sons frequently drove and continued to drive after September 6.
Plaintiff produced evidence to the effect that Illinois National Insurance Company had cancelled an automobile policy issued to Russell and Rosemary Pursley with a student endorsement and that that policy covering the period of July 31, 1965 to July 31, 1966 was cancelled for non payment of premium; and that an automobile policy issued to Russell and Rosemary Pursley by Union Indemnity Company was not renewed on its expiration in July of 1965 although there is evidence neither of the insured requested any renewal. Union Indemnity's agent testified that he had no official notice from his company that the policy would not be renewed and that 15 days prior to its expiration he wrote Pursleys to the effect that the policy would expire but said nothing concerning renewal.
On September 6, 1966, according to the evidence presented and objected to by defendants, Russell Pursley signed the name of his wife Rosemary to an application prepared by a secretary of plaintiff's agent at Salem, in response to questions asked of Russell Pursley, on which was printed "During the past three years no insurer has cancelled insurance issued to the named insured, similar to that afforded hereunder" and no exceptions thereto were designated. The application was admitted into evidence over the objection of defendants. Plaintiff acknowledges that the application was not attached to the policy.
Subsequently a policy was issued to which was attached an automobile declaration countersigned September 16, 1966 by plaintiff's authorized agent and containing no other signatures, which named Rosemary Pursley as the insured and the policy period was stated as from 09/06/66 to 03/06/67 on the 1965 Pontiac. It contained the following Item 7(b). "During the past three years no insurer has refused to issue or cancelled insurance, issued to the Named insured, similar to that afforded hereunder". No exception to the item was designated. The agent did not testify and there is no evidence that he relied on any alleged misrepresentation in making the declaration.
There was also evidence that plaintiff gained knowledge of the alleged misrepresentation no later than September 21, 1966, some four months before the collision of January 20, 1967, and within 30 days of the issuance of the policy (9/16/66) and the declarations of plaintiff's agent (9/16/66). The policy, by condition 33(1) provided, "Cancellation By Company-Limited (1) Effective thirty days after the inception of this policy or, if the policy is a renewal, effective immediately, the company shall not exercise its right to cancel the insurance afforded". During that period plaintiff could have cancelled for any reason it wished, and by virtue of condition 33(3)(b) they were not limited by 33(1) if the insurance was obtained by fraudulent misrepresentation. But plaintiff never at any time, according to the record, clearly and unequivocally took any steps to cancel the policy, or advise Rosemary Pursley that the policy was cancelled but stated instead that the company gave her oral notice of their discoveries and asked that she request cancellation. The reason given to explain this unique approach to cancellation was that the insured would not then have a cancellation upon her record, a position inconsistent with the testimony that insured had a cancellation, known to plaintiff at the time.
On October 13th, beyond the 30 day period, the plaintiff did write the following letter to defendant Rosemary Pursley:
"Rosemary Pursley 1317 North Rotan Salem, Illinois
"Policy Number 655078, for insurance coverage on your 1965 Pontiac was recently issued.
We wish to advise that no insurance coverage has been in force because we believe certain of your declarations, forming a part of the application, to be materially incorrect. Should our contention that no coverage has been in force fail for any reason, then this letter alternately becomes formal notice of termination of any coverage which may have been in force, such termination to be effective March 6, 1967, at 12:01 A.M. Standard Time.
You should contact your agent, Glen Atkinson, for any return premium that may be due you."
It is noted that the letter makes no mention of cancellation and neither that word, nor the words "cancel" or "cancelled" are used in it.
Plaintiff contends that this letter was to inform the defendant Rosemary Pursley that she did not have insurance coverage and also to provide notice that under condition 33(2) "Unless the company, at least 25 days in advance of the end of the policy period, made to the insured named in Item I (Mrs. Pursley) of the declarations at the address shown in the policy notice of its ...