APPEAL from the Circuit Court of Lake County; the Hon. STANLEY
THOMAS, Judge, presiding.
MR. JUSTICE GUILD DELIVERED THE OPINION OF THE COURT:
Rehearing denied June 5, 1975.
On October 31, 1966, the plaintiff, Florence Goetz, was involved in an automobile collision with another car driven by LaRue Pearson, resulting in injuries to both Goetz and Pearson. Shortly thereafter, Pearson died as a result of his injuries. The automobile driven by Goetz was insured by the defendant, Country Mutual Insurance Company, for uninsured-motorist coverage. Goetz demanded arbitration under the uninsured-motorist provisions of the Country Mutual policy to recover for her personal injuries. Country Mutual refused arbitration on the ground that Pearson was not an uninsured motorist but was an insured of the defendant, Travelers Insurance Company, under a policy of that company issued under the Illinois automobile assigned risk plan (Ill. Rev. Stat. 1965, ch. 95 1/2, par. 7-501). Four years later, in November, 1970, Goetz instituted this declaratory judgment action against Country Mutual, Travelers and the administrator of the estate of LaRue Pearson to resolve the question of insurance coverage.
The trial court, sitting without a jury, entered an order finding that at the time of the collision in question Travelers did not insure Pearson or the motor vehicle driven by him and that Pearson was an uninsured motorist driving an uninsured vehicle within the meaning of the Country Mutual policy. Accordingly, the trial court ordered Country Mutual to proceed with arbitration of the uninsured-motorist claim of the plaintiff, Goetz.
The trial court based its order, from which Country Mutual appeals, upon its legal conclusions (1) that compliance with the provisions of rule 14B of the rules and regulations of the Illinois automobile assigned risk plan, a notice provision which will be hereinafter detailed, is not legally required; and (2) that noncompliance with the provisions of said rule 14B does not result in any continuation or renewal of insurance coverage. In addition, the trial court found, as a conclusion of fact, that Travelers had proved its compliance with rule 14B. Country Mutual challenges these conclusions of law and fact and argues (1) that compliance with rule 14B is legally required; (2) that noncompliance with rule 14B results in a continuation of insurance coverage; and (3) that Travelers failed to prove compliance with said rule. Country Mutual concludes its argument by contending that since Travelers failed to prove its compliance with said rule, Pearson's insurance coverage with Travelers continued in effect and thus Travelers should be obligated to Goetz under its policy with Pearson, thereby relieving Country Mutual of its obligation under the uninsured motorist coverage of its policy with Goetz. We find, after due consideration of the record herein and the law applicable thereto, that the contentions of Country Mutual are correct, and accordingly we reverse the judgment below.
Section 7-501 of the Illinois Vehicle Code (Ill. Rev. Stat. 1965, ch. 95 1/2, par. 7-501) provides for an assigned risk plan in Illinois. The salutory purpose of this plan is to provide automobile bodily injury and property damage liability insurance to those individuals who cannot otherwise obtain such insurance. All insurance companies authorized to write automobile bodily injury liability insurance in Illinois are required to be subscribers to the plan. The defendant, Travelers, was a subscriber to the plan. The plan operated under rules which were adopted following approval by the Illinois Director of Insurance.
In 1965 and 1966, the relevant period in the present case, the Illinois automobile assigned risk plan had in effect a set of rules and regulations, a copy of which were admitted into evidence in this case. Under section 13 of the plan, an applicant for insurance was assigned to a specific insurance company, by rotation, for a 3-year period. Under section 14B of the plan, the insurer was required to notify its insured prior to the expiration of the initial policy and the inception of the first and second renewal policies of the amount of premium that would be due and the date it was due in order to renew his policy, or alternatively, that the insurer was unwilling to renew coverage. Specifically, section 14B provides in relevant part as follows:
"B. First and Second Renewal Policies.
At least 45 days prior to the inception date of the first and second renewal policies the designated insurer shall notify the applicant that:
(1) A renewal policy will be issued provided the renewal premium stipulated by such insurer is received at least five (5) days prior to the inception date of such policy, or
(2) A renewal policy will not be issued for the reason that the applicant is not entitled to insurance under the Plan.
A copy of such notice shall be filed with the producer of record and the Plan. In the event the insurer will not issue a renewal policy, the reason supporting such action, together with copy of said notice, shall be filed with the Plan."
Travelers also had its own company rule which was identical with section 14B of the plan. Section 143.5 of the Illinois Insurance Code (Ill. Rev. Stat. 1973, ch. 73, par. 755.5), which requires the mailing or delivery of a certain notice to an insured of an insurer's intention not to renew a policy, has no direct application to the instant case since that statute became effective after the relevant period herein.
On August 27, 1965, the decedent, LaRue Pearson, made application through the Price Insurance Agency for automobile insurance under the plan. Pearson's application was forwarded by the Price Agency to the plan, which assigned the risk to Travelers. Pearson paid the premium upon which the Price Agency received a commission. Travelers issued an automobile insurance policy to Pearson for a 1-year period which commenced on September 8, 1965.
Shortly following the October 31, 1966, collision in question, Travelers investigated the accident, took a statement of Mrs. Goetz, and concluded that the Pearson policy had lapsed on September 10, 1966, for failure of Pearson to pay a renewal premium. However, because of the lapse of time between the collision and the filing of this lawsuit, Travelers had no file material concerning the claim against Pearson and had no records to indicate whether or not it had sent the 45-day notice to Pearson prior to the expiration of his policy. Travelers' proof on the issue of notice was limited to the testimony of Charles Spurgeon, ...