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Margolin v. Public Mutual Fire Ins. Co.

MARCH 22, 1972.

ROSE MARGOLIN, PLAINTIFF-APPELLEE,

v.

PUBLIC MUTUAL FIRE INSURANCE COMPANY, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. SAMUEL SHAMBERG, Judge, presiding.

MR. PRESIDING JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT:

This action was brought to recover damages under a policy of fire insurance issued by defendant, Public Mutual Fire Insurance Company, and covering plaintiff's premises at 6263-65 South Harper Avenue, Chicago. Plaintiff and defendant each presented a motion for summary judgment based on the facts established by several depositions and affidavits. Defendant's motion was denied, and plaintiff's was allowed. Judgment for plaintiff in the sum of $10,200 was entered. Defendant appeals from the order denying its motion, allowing plaintiff's motion and entering judgment for plaintiff.

On December 9, 1966, plaintiff's insurance agent ordered fire insurance coverage from defendant for an apartment building at 6163-65 South Harper Avenue, Chicago. The order submitted by the agent listed plaintiff's address as 6263-65 South Harper Avenue. On December 20, 1966, the requested coverage was issued. The face of the policy reflected the address of the insured building, but did not reflect the mailing address of plaintiff, which was determined at trial to be 7337 South Shore Drive, Chicago. As the contents of the policy, the parties adopted the standard fire insurance form authorized by Rule 23.01 of the Illinois Insurance Department. In pertinent part, the cancellation provision in the standard form policy reads as follows:

"Cancellation of policy. * * * This policy may be cancelled at any time by this Company by giving to the insured a five days' written notice of cancellation * * *."

There was an endorsement to the policy which substituted for the above cancellation provision the following:

"Endorsement (Change of Cancellation Conditions) THIS FORM SUPERSEDES ANY OTHER FORM OR LIBERALIZATION

By the acceptance of this policy by the named insured to which this endorsement is attached and of which this endorsement forms a part, it is understood and agreed between the insured and all named parties on the policy and the Company that the Cancellation Procedure on Lines 60 to 65 and 68 to 70 now reads as follows:

* * * THE SENTENCE STARTING ON LINE 60 AND ENDING ON LINE 65 SHALL READ:

This policy may be cancelled at any time by this Company by the mailing to the named insured at the address shown in this policy five days' written notice of cancellation * * *."

The policy, as altered, was accepted for filing by the Director of Insurance. On June 23, 1967, defendant placed a notice of cancellation in the mail which was addressed to plaintiff at the South Harper Avenue address. The notice stated that the cancellation was effective as of 12:00 P.M. on June 28, 1967. On July 2, 1967, the insured building was damaged by fire. On July 12th the unopened envelope containing the notice of cancellation was returned to defendant, bearing the stamp, "Unclaimed by Addressee." After defendant's refusal to pay plaintiff's damage claim for $10,000, this action was brought to enforce coverage.

The basic issue raised by the parties is whether the endorsement to plaintiff's fire insurance policy, which provided for effective cancellation by the mere act of "mailing" notice, was valid and enforceable, thereby superseding the mode of cancellation prescribed in the standard form. Because a resolution of this issue hinges upon the scope of authority vested in the Illinois Director of Insurance, we deem it appropriate to briefly review the background of and the enabling legislation pertaining to that office.

In 1893 the power of regulation over insurance in Illinois was transferred from the Auditor and the Attorney General to an independent insurance department headed by an "Insurance Superintendent." *fn1 From 1917 to 1933 the Superintendent of Insurance operated under the control and direction of the Illinois Director of Trade and Commerce. In 1933 legislation re-established the independence of the Department of Insurance, *fn2 and, by amendment to the Civil Administrative Code, the office of Director of Insurance was created to head that department. *fn3 Section 401 of the Insurance Code of 1937 *fn4 was the first statutory provision to deal generally with the powers and duties of the Director of Insurance. It provided:

"General Powers of the Director.) The Director is charged with the rights, powers and duties appertaining to the enforcement and execution of all the insurance ...


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