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Manchester Ins. & Indem. v. Universal Underwriters

MAY 24, 1972.




APPEAL from the Circuit Court of Jefferson County; the Hon. CHARLES E. JONES, Judge, presiding.


Mr. JUSTICE EBERSPACHER delivered the opinion of the court:

Plaintiff, Manchester Insurance and Indemnity Company (hereinafter called Manchester), an Ohio corporation sued defendants, Universal Underwriters Insurance Company (hereinafter called Universal), a Missouri corporation, Regency Motors, Incorporated (hereinafter called Regency), Freda Curtis, Administratrix of the estate of Clayton Curtis, deceased, and Marion and Gloria Sparks (hereinafter called Sparks) in an action for declaratory judgment claiming that, concerning an action instituted by Sparks for personal injuries arising out of an accident between an automobile owned by Regency and rented or borrowed and driven by Curtis, the suit should be defended and any judgment should be satisfied primarily by Universal (Regency's insurer) and only secondarily by Manchester (Curtis' insurer).

On January 28, 1968, Regency did, "for good and valuable consideration received from Clayton R. Curtis, deceased, rent to, and grant permission" to use, drive or operate an automobile owned by Regency while the Curtis owned automobile was being repaired. Later on that same day, Curtis, driving the car furnished him by Regency, was involved in an accident with an automobile driven by Marion Sparks and in which his wife Gloria was a passenger. Curtis died as a result of that collision and the Sparks filed a complaint against Curtis' estate. These are the facts alleged in Manchester's pleading which stands uncontroverted. The suit was decided adversely to Manchester on the pleading, and Manchester appeals.

• 1 Manchester contends that the lower court erred in dismissing its complaint without deciding on the merits. Supreme Court Rule 273 (ch. 110A, sec. 273, Ill. Rev. Stat. 1969) provides that an involuntary dismissal, other than for lack of jurisdiction, improper venue or failure to join parties, operates as an adjudication upon the merits. Here, there being no dispute as to the facts, the court determined the issues as posed by Manchester's complaint for declaratory judgment.

It is clear that if Curtis was, in fact, covered under the provisions of the insurance policy issued to Regency by Universal than Universal's coverage is primary and Manchester's secondary. This particular issue is not disputed by Universal, nor well could it be. The Manchester policy provides that "the insurance with respect to temporary substitute automobiles * * * shall be excess insurance over any other valid and collectible automobile medical payments insurance", while the Universal policy provides that "the insurance afforded by this policy is primary insurance except when stated to apply in excess of or contingent upon the absence of other insurance". There is, of course, no statement so limiting Universal's liability with regard to the provisions at issue here.

The significant question, then, is whether Curtis was covered by the policy issued by Universal to Regency. The Universal policy describes certain events which are covered, and certain persons whom Universal will protect against the consequences of these events. Universal admits that the accident, (the event) was within the scope of the "hazards" clause. Appellees urge that in analyzing the policy reference should be made to an article "How to Read a Liability Insurance Policy" by G.F. Hartwick, 13 Hast. L.J. 175. We have no quarrel with Professor Hartwick's approach, but would point out that the record does not disclose that Universal advised of the availability or made available, to its customer Regency, that article when they sold and collected the premiums for either the policy or subsequent endorsements. One subdivision of that clause provides that the policy covers any hazard that arises out of "the ownership, maintenance or use of any automobile owned by the named insured while furnished for the use of any person."

However, we hold that Curtis was not a "person insured" by the policy as originally written. The pertinent parts of the "Persons Insured" provision are reproduced here:

"U. Persons Insured

Each of the following is an insured under this insurance to the extent set forth below: Under the garage bodily injury and property damage liability coverages:

(1) * * *

(2) * * *

(3) With respect to the automobile hazard:

(a) Any partner, or paid employee or director or stockholder or a member of the household of the named insured or such partner or paid employee or director or stockholder while using an automobile covered by this policy or when legally responsible for the use thereof, provided the ...

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