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Bost v. Paulson's Enterprises

OPINION FILED FEBRUARY 24, 1976.

JOHN F. BOST, INDIVIDUALLY AND AS ADM'R OF THE ESTATE OF ROBERT T. BOST, DECEASED, ET AL., PLAINTIFFS-APPELLEES,

v.

PAULSON'S ENTERPRISES, INC., D/B/A PAULSON'S LOUNGE, ET AL., DEFENDANTS. — (ALLSTATE INSURANCE COMPANY, INTERVENOR-APPELLANT.)



APPEAL from the Circuit Court of Kane County; the Hon. JOSEPH T. SUHLER, Judge, presiding.

MR. JUSTICE GUILD DELIVERED THE OPINION OF THE COURT:

This case concerns the subrogation rights of the intervening appellant, Allstate Insurance Company (hereinafter Allstate). At issue is the construction of a certain trust agreement entered into between Thomas Peabody, father of the injured minor Lynn Peabody, and Allstate.

On June 18, 1971, Robert T. Bost was driving his grandfather's car and Lynn Peabody was his passenger. Edward Bost, owner of the vehicle, was insured by Allstate. The vehicle was involved in a head-on collision with a vehicle being driven by George Skinner. As a result of this collision Robert T. Bost died and Lynn Peabody suffered severe injuries. Under section II of Edward Bost's policy, "Protection Against Bodily Injury by Uninsured Automobiles," Lynn Peabody, as a passenger in the insured vehicle was, apparently, an insured. The policy further provided that in the event of any payment under the uninsured motorist section of the policy:

"1. Allstate shall be entitled to the extent of such payment to the proceeds of any settlement or judgment that may result from the exercise of any rights of recovery of the insured against any owner or operator of an uninsured automobile." (Emphasis added.)

On November 16, 1971 Thomas Peabody, father of Lynn Peabody who was then a minor, entered into the trust agreement under consideration herein as set forth below. The italicized portion of the trust agreement below quoted was added to the trust agreement form by Lynn Peabody's attorney.

" Date November 16, 1973

Lynn Peabody

(Name of Insured or Parent or Guardian or Surviving Spouse) hereinafter referred to as the Trustee, having sustained damages because of bodily injury, sickness, or disease or death from an event which occurred on 6-18-71, as a result which claim has been made (Date) to Allstate Insurance Company hereinafter referred to as the Beneficiary, (Name of Company) under its policy 02 461 242 and in consideration of the payment to be (Policy No.) made pursuant to said Bodily Injury Benefit Coverage, it is hereby agreed that the Trustee will hold for the benefit of the Beneficiary all rights, claims, and causes of action which the Trustee has or may have against any person or persons, organization, association or corporation other than the Beneficiary because of bodily injury, sickness, or disease or death which is the subject of the claim made against the Beneficiary, pursuant to the provisions of the policy.

The Trustee agrees to take, through any representative designated by the Beneficiary, such action as may be necessary or appropriate to recover the damages suffered by the Trustee from any person or persons, organization, association or corporation other than the Beneficiary who may be legally liable therefor, such action to be taken in the name of the Trustee, the Beneficiary to pay all costs and expenses in connection therewith. It is further agreed that any monies recovered by the Trustee as a result of judgment, settlement, or otherwise will be held in trust and paid to the Beneficiary, provided, however, any sum recovered in excess of the total amount paid by the Beneficiary to the Trustee under the terms of the above-mentioned policy, shall be retained by the Trustee for his own use and benefit.

/s/ Thomas Peabody (Insured or Parent or Guardian or Surviving Spouse)

Accepted: __________________________ (Company-Beneficiary) By "

On December 2, 1971, the Circuit Court of Kane County issued letters of guardianship to Thomas Peabody as guardian of the person and estate of Lynn Peabody, the minor. On December 11, 1971, Allstate paid the sum of $9,000 to Thomas Peabody as guardian of the estate of Lynn Peabody, pursuant to the settlement agreement. On December 16, 1971, the agreement to pay $9,000 to Thomas Peabody as guardian of the estate of Lynn Peabody was submitted for approval in the Circuit Court of Kane County in the estate of Lynn Peabody and the court entered an order approving the settlement in the amount of $9,000, plus $500 for medical payment coverage.

On November 29, 1971, a multicount complaint was filed, and subsequently amended, by Thomas Peabody as father and next friend of Lynn Peabody, a minor, among others, stating a claim under the Dram Shop Act (Ill. Rev. Stat. 1971, ch. 43, par. 135) for damages based upon the injuries suffered in the June 18, 1971, collision. The amended complaint was subsequently further amended to show Lynn Peabody Bero as plaintiff upon Lynn Peabody reaching her majority and marrying. On July 27, 1973, pursuant to a settlement stipulation, Lynn Peabody Bero obtained a judgment for $15,000.

On August 24, 1973, Allstate filed a motion for leave to intervene in the Dram Shop action and also filed a petition, subsequently amended, seeking "its equitable portion" of the judgment obtained by Lynn Peabody Bero. Allstate was granted leave to intervene and Lynn Peabody Bero filed her answer thereto. On July 12, 1974, the court entered an order denying Allstate's claim, finding, inter alia, that the trust agreement involved herein "was not legally sufficient to support ...


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