APPEAL from the Circuit Court of Cook County; the Hon. EDWARD
F. HEALY, Judge, presiding.
MR. JUSTICE DRUCKER DELIVERED THE OPINION OF THE COURT:
Rehearing denied July 13, 1971.
Continental Casualty Company (hereinafter "Continental") appeals from the entry of a summary judgment entered in favor of the plaintiffs for $63,392.26. Plaintiffs had recovered a judgment against defendant, an attorney-at-law, for alleged negligence in the performance of his duties as their counsel. Plaintiffs then instituted garnishment proceedings against Continental which had written a professional liability insurance policy in favor of defendant. Subsequently summary judgment was entered against Continental, from which it appeals.
We summarize the facts based on the pleadings, affidavits, depositions and exhibits.
In 1960 the defendant, an attorney-at-law admitted to the practice in Illinois in 1947, represented plaintiffs, who are his parents, in connection with their purchase for $35,000 of a parcel of real estate consisting of four stores and a six room apartment located at 1147-1151 North Pulaski Avenue. At the time of the purchase defendant advised plaintiffs that title to the real estate should be held in the name of a bank as trustee and that he should be named as beneficiary under the trust to hold the beneficial interest for their benefit. Plaintiffs accepted defendant's advice and defendant arranged for the creation of a trust agreement in which he was designated as beneficiary. Title to the real estate was then transferred to the bank as trustee under the trust agreement. Defendant then proceeded to collect rents for his parents, sign leases in his own name, bring suits for rent in his own name and arrange for insurance.
In May 1964 plaintiffs' real estate was sold for $191.41 to Bonded Municipal Corporation at a tax sale because of the non-payment of the first installment of a special assessment levied against the property. Plaintiffs claimed they were not aware of the tax sale.
On or about November 2, 1966, Bonded Municipal delivered a notice to defendant and to the bank, as trustee, stating that on May 12, 1964, Bonded Municipal had purchased the property at the sale; that the period of redemption would expire on February 23, 1967, and if redemption were not made, then on February 24, 1967, it would apply to the Circuit Court of Cook County for the issuance of a tax deed to plaintiffs' real estate. The bank also forwarded its copy of the notice to defendant on November 4, 1966.
Defendant did not advise plaintiffs of his receipt of the aforementioned notices from Bonded Municipal Corporation or the bank, not of the facts related in the notices, nor did he appear on behalf of plaintiffs before the Circuit Court on February 24, 1967, in the proceedings in which application was made for the issuance of a tax deed to plaintiffs' real estate. Further, defendant also did not appear in behalf of plaintiffs before the Circuit Court on April 12, 1967, at which the court ordered that a tax deed to plaintiffs' real estate be issued to S.A.S. Co. which had taken an assignment from the original tax purchaser. A tax deed conveying plaintiffs' real estate was thereafter issued to S.A.S. Co. and filed with the Recorder of Deeds.
Plaintiffs, in their complaint filed on June 19, 1967, sought to recover damages from their son, the defendant, for the loss of their real estate caused by defendant's following failures to fulfill his duty to them as their attorney: (1) to inform them of his receipt of the notice from the tax purchaser within a reasonable time prior to February 24, 1967, the date the notice was returnable in court, and (2) to represent them on February 24, 1967, and April 12, 1967, before the Circuit Court of Cook County in the proceedings in which the issuance of a tax deed to plaintiffs' real estate was ordered.
A Lawyer's Professional Liability Policy was applied for and issued to defendant by Continental for a policy period of November 15, 1966, *fn1 to November 15, 1969. The policy provided for a limit of liability of $300,000 for each claim, subject to a deductible amount of $500 as to each claim and it included an agreement by Continental to defend actions brought against defendant to recover damages for professional errors. On June 6, 1967, in response to a notice of claim by the defendant, Continental informed defendant by letter that it disclaimed any obligation to him in the matter of the claim against him by his parents, and he engaged his own counsel. On June 23, 1967, defendant's counsel forwarded a copy of the summons and complaint in this action to Continental and demanded that it assume the defense of defendant. Defendant's counsel received a letter from Continental dated July 11, 1967, refusing to assume the defense and reaffirming the position taken in its letter of June 6, 1967, to defendant, that it had no obligation to him in that regard because the policy provided no coverage against the claim.
On July 18, 1967, defendant's counsel forwarded to Continental a copy of the appearance and answer filed by him in this action on behalf of defendant. On October 25, 1967, plaintiffs filed a motion for summary judgment against defendant on the issue of his negligence and the issue of his liability to plaintiffs, and on November 6, 1967, defendant's counsel forwarded to Continental a copy of plaintiffs' reply to defendant's answer and copies of plaintiffs' motion for summary judgment and the answer of defendant to that motion.
On November 20, 1967, a summary judgment as to liability was entered against defendant. Subsequently the issue of plaintiffs' damages was tried and a judgment in the amount of $60,000, plus costs, was entered against defendant.
Plaintiffs then instituted garnishment proceedings against Continental (hereafter "Garnishee") based on garnishee's indebtedness to defendant under the policy of insurance issued by it to him. On February 26, 1969, plaintiffs filed a motion for summary judgment against garnishee, supported by affidavits. Garnishee thereafter filed counter-affidavits and depositions in opposition to plaintiffs' motion for summary judgment. On May 16, 1969, summary judgment was entered against garnishee in favor of plaintiffs in the amount of $59,500 (the amount of plaintiffs' judgment against defendant less the deductible amount provided for in the policy issued by garnishee to defendant) plus $3,892.26 in interest. Garnishee appeals from the summary judgment.
Garnishee contends that the entry of the summary judgment was improper since there were actual disputes as to five questions of fact. The first three include:
1. Coverage never attached to plaintiffs' claim against the defendant and therefore there was no obligation on garnishee to defend;
2. Plaintiffs' loss arose from the conduct of a business enterprise controlled by the defendant acting in a fiduciary capacity; and
3. The liability of the defendant did not arise out of his performance of professional services for others ...