APPEAL from the Circuit Court of Cook County; the Hon. DANIEL
A. COVELLI, Judge, presiding.
MR. JUSTICE MCNAMARA DELIVERED THE OPINION OF THE COURT:
Plaintiff, the holder of a land trust of certain premises, brought this action in the circuit court of Cook County against the defendant insurance company under an "all risk" casualty insurance policy seeking recovery for loss and damages to a building on those premises. Plaintiff's complaint requested the trial court either to determine that the loss was covered by the policy written by defendant because the exclusion provision of the policy was not applicable to the loss and damages sustained by plaintiff, or alternatively, that the policy, if so required, be reformed to provide by its terms insurance to the plaintiff for the damage sustained by it in accordance with the intention of the parties. After a trial without a jury, the trial court entered judgment for plaintiff for $16,472.79 including prejudgment interest.
In entering judgment for plaintiff, the trial judge gave no specific reasons for his decision. However, because at the time of rendering judgment the judge stated that "the equities are with the plaintiff," it appears that he based his decision upon a reformation of the policy. Nevertheless, we shall consider both of defendant's contentions: that, as a matter of law, plaintiff's loss was excluded by the express terms of the policy, and that no basis was shown for a reformation of the policy to include the loss suffered.
The policy in question was issued on a one-story commercial building located at 300 Fay Avenue, Addison, Illinois. During the term of the policy the southwest portion of the premises sustained damages consisting of cracked walls, sinking floors, cracked and sagging ceilings, distorted lintels, the shifting of overhead beams, and the shifting of sinks and urinals mounted on walls. The beneficial owners were compelled to pay $14,960.00 to remedy these conditions. The policy, in the portion relevant to this appeal, provided:
This policy insures, subject to the exclusions and conditions of this form and the policy to which it is attached, All Risks of direct physical loss or damage from any external cause.
This policy Does Not Insure Loss or Damage Caused or Resulting from:
(p) Marring, settling, cracking, shrinkage or expansion of pavements, foundations, walls, floors or ceilings; * * *."
Coverage was in the amount of $50,000, and the annual premium was $175.
Sam Rothbart, one of the beneficial owners of the premises, testified that he had occasion to inspect the premises in early 1966, and at that time observed only a slight settling and cracking. In October, 1966, he again visited the premises and noticed an additional settling and buckling. In December, 1966, he received a letter of complaint from the building's tenant, and in January, 1967, Rothbart again inspected the premises. At this time he found a severe deterioration. A general contractor was hired to repair the damage. On March 15, 1967, Rothbart notified the defendant of a claim of loss under the policy, which claim was rejected. Rothbart denied telling defendant's adjuster that he delayed making a claim against defendant because he did not believe there was coverage under the policy.
Charles Dann had been Rothbart's regular insurance broker for many years. Rothbart testified that Dann had told him that "for a fair premium I can sell you an all risk policy on your property which is exclusive of fire and miscellaneous damages and this will insure you against all risk and anything else that will happen to the property." Rothbart purchased the policy with Dann acting as broker. It was stipulated that Dann was Rothbart's agent and broker, and not an agent of defendant. Rothbart never read the policy prior to the rejection of the loss claim by defendant. Rothbart testified that there also was a fire, extended coverage, vandalism, and malicious mischief insurance policy on the building.
Charles Dann testified that he obtained the policy in question in 1965 through Paul F. Lange, an agent of defendant. Dann was familiar with the insurance business and had previously handled all risk policies. All such policies with which he was familiar were subject to some exclusions. Dann had received a "speed memo" from Lange offering, subject to inspection of the building, a policy described in the memo as "D.I.C. on the bldg. All-risk X Fire, E.C., V.M.M., $50,000 with $1000 deductible, annual premium $175." Dann testified that, in describing the policy in question, he had told Rothbart that there was a new type of coverage available by which he could obtain broader coverage than that previously obtainable.
Paul F. Lange, called by plaintiff under section 60 of the Civil Practice Act (Ill. Rev. Stat. 1971, ch. 110, par. 60), testified that he had 15 years experience in all areas of insurance. The policy in question was issued over Lange's signature, and at the time of its issuance, Lange had an agency agreement with the defendant. The phrase "D.I.C." was a generally used term in the insurance business standing for "difference in conditions," which refers to an all risk form of policy subject to certain standard exclusions as well as any optional exclusions ...