APPEAL from the Circuit Court of Lake County; the Hon. HARRY
D. STROUSE, Judge, presiding.
MR. JUSTICE DIXON DELIVERED THE OPINION OF THE COURT:
The plaintiff in this case, Great Central Insurance Company, filed a complaint for a declaratory judgment against the defendants, Robert E. Bennett, Richard Cackovic, and Charlotte Davis. In its complaint, Great Central asked the court to find that there was no coverage under an insurance policy it had issued to Bennett, for either Bennett or Cackovic, with respect to a claim arising out of an accident of Davis. Bennett and Cackovic in their answers asked the court to construe Great Central's policy to give both of them coverage. Bennett subsequently filed a counterclaim against Great Central, asking that Great Central be required to issue a policy conforming to the agreement made by its agent with Bennett, or be held liable to pay the $25,000 judgment Davis had meanwhile obtained. Bennett also filed a third-party complaint against Continental Casualty Company, which had issued a policy to Cackovic, seeking a determination that Bennett as well as Cackovic was covered by Continental Casualty's policy. Following a bench trial, the Circuit Court of Lake County, Illinois, found that Great Central's policy afforded coverage to both Bennett and Cackovic with respect to the claim of Davis, and that Continental Casualty's policy did not cover Bennett as an insured. Its order required that Great Central indemnify Bennett and Cackovic in accordance with the policy it had issued, and held that Continental Casualty had no obligation to Bennett. Great Central has appealed.
It appears that Bennett is the operator of a service station and an adjoining car wash at 901 Sheridan Road, in Winthrop Harbor, Illinois. Cackovic is the owner of the real estate where the two businesses are conducted. The premises extend a distance of 200 feet north and south on Sheridan Road and run east approximately 140 to 150 feet to an alley. When Cackovic purchased the north 100 feet in 1963, there was a service station on the property. Within a year he purchased another 100 feet of property south of and adjoining the site of the service station, and there, in 1967, he constructed a three-stall car wash.
The north wall of the car wash building was 40 feet south of the south wall of the service station building. Behind the service station building, to the east, there were two coin-operated vacuum cleaners. The car wash building consisted of three stalls, one automatic and two do-it-yourself stalls. South of the entrance to the car wash building, on a pylon on the south line of the premises, was a large round sign which said "United," to announce the proximity of a United Oil Products service station, and below the round sign was another which said "car wash." The southernmost do-it-yourself stall in the car wash building was where Davis fell and was injured, on March 9, 1972, causing questions to arise as to what premises and what persons were covered by the insurance policies which Bennett and Cackovic had purchased.
Cackovic operated the service station and car wash in Winthrop Harbor with employees of his own, prior to August 1, 1968. He was also a jobber, and supplied a number of stations he owned or leased with petroleum products. Bennett worked for him as a supervisor at the Winthrop Harbor service station and car wash, and was paid a weekly salary. Cackovic decided that instead of continuing to operate that station and the car wash he would put in a dealer, so he asked Bennett if he wanted to go into business for himself at that location. Bennett agreed to do so, and to take over on August 1, 1968.
The agreement the two of them made was that Bennett would operate the premises with his own employees, as a dealer; would purchase the station's inventory of automotive products and other merchandise for $13,000; would receive gasoline from Cackovic on consignment, sell it at the price set by Cackovic, and retain five cents for each gallon sold; would make weekly reports on receipts from car washes, for which the price would be set by Cackovic, and retain ten percent of gross receipts from the car wash business; and would maintain the premises and take care of the equipment. Cackovic, under their agreement, was to supply the gasoline, offer oil and other automotive products for sale to Bennett at wholesale prices and pay for electricity, water, soap, wax, and repairs for the entire premises.
Cackovic knew Percy J. Moran, an insurance agent. At that time he had known Moran about 25 years. Moran had been an agent for Great Central for 14 years. He wrote insurance exclusively for Great Central, could write all of Great Central's lines of insurance, and could bind coverage without prior authorization from Great Central. Cackovic had done business with Moran and knew that his company specialized in small business deals and collected premiums monthly. Cackovic therefore called Moran, according to the testimony given by Cackovic at the trial of this case, and arranged for a meeting of Moran, Cackovic, and Bennett to discuss Bennett's insurance needs.
A meeting with Moran was held shortly before August 1, 1968. Cackovic testified that the meeting was held at his office, which was located at the intersection of State Line Road and Green Bay Road in Zion, Illinois; that he, Moran, and Bennett were present; that he explained what the arrangement was, that Bennett was going to sell gasoline for five cents a gallon, have ten percent of the gross from the car wash, and have all of the profits from the sale of the other products; and that he said to Moran that Bennett needed workmen's compensation insurance, liability insurance, and fire insurance "on the operation."
Bennett testified, similarly, that the meeting to discuss his insurance needs took place in Cackovic's office; that the three of them were present; that Cackovic explained to Moran what the financial arrangement was for gasoline, car washes, and merchandise; that Bennett told Moran he would have five employees who would be pumping gas, selling merchandise, and cleaning and operating the car wash; that he told Moran to "cover the whole thing"; and that by "the whole thing" he meant all the property he operated, including both the car wash and the station.
Moran testified that he had known Cackovic and Bennett for some time; that he believed he canvassed Bennett for insurance because he knew Cackovic was leasing out his other stations rather than operating them himself; that the conference on insurance took place on August 1, 1968, at the service station, and only he and Bennett were present; and that he knew Cackovic owned the entire premises, but Bennett asked him to insure only the service station, and the service station was all they discussed. In the course of the meeting on insurance, Moran filled out an insurance application form for Bennett to sign. He doubted that Bennett read it before signing it. At that time he also collected the first month's premium, which was based on employees' salaries. Later he delivered the policy to Bennett. Afterwards he went back to the station a number of times to collect monthly premiums. Once Bennett gave Moran a free car wash, Bennett recalled. But Moran did not remember that Bennett ever said anything to him with regard to the car wash.
The policy which Moran delivered to Bennett was a 17-page policy for multi-use application entitled "General Automobile Liability Policy," consisting of three parts, with attached endorsements, one of them being a garage insurance coverage part. Bennett read most of the policy when he received it. Great Central sent him a new policy each succeeding year, but he did not read any which came after the initial one. The policy did not specifically refer to a car wash. Bennett said: "It doesn't say anything about a car wash or not a car wash." Moran testified that a policy for a car wash would have been not a garage liability policy based on payroll, but an owner's landlord liability policy based on income from the car wash operation, and he would have earned more money by writing an owner's landlord liability policy in addition to the garage liability policy.
The policy provided that Bennett was the named insured, and his business was service station operator. It defined "garage" to include a service station. It defined "garage operations" to mean the ownership, maintenance, or use of premises for the purposes of a garage and "all operations necessary or incidental thereto." It stated that "premises" means premises where the named insured conducted garage operations, but not any portion of such premises "upon which business operations are conducted by any other person or organization." It protected the named insured and also "any person or organization having a financial interest in the garage operations of the named insured." It stated, however: "This insurance does not apply to bodily injury or property damage arising out of the conduct of any partnership or joint venture of which the insured is a partner or member and which is not designated in this policy as a named insured."
Cackovic had a general liability policy with Continental Casualty, a commercial casualty policy covering all his real estate, including the station and the car wash in Winthrop Harbor. Persons insured under the Continental Casualty policy included "any person other than an employee of the named insured or organization while acting as a real estate manager for the named insured." "Real estate manager" was not defined in the policy. The trial court held that Bennett was not a real estate manager of the Winthrop Harbor property but was engaged in his own business operation there as a lessee, and was therefore not covered by Cackovic's policy. It appears that the contention is no longer made, in this court, that the Continental Casualty policy covers both Cackovic and Bennett. Before the accident of Davis, Bennett sent a few minor car wash claims to Cackovic, or to Cackovic's insurance agency, for payment by Continental Casualty. But when he received a notice of attorney's lien, following the Davis accident, Bennett promptly got in touch with Moran, his own insurance agent.
After receiving the notice of lien, Bennett testified, he phoned Moran that night and asked whether he were covered all right, and Moran said to him, "I believe you are." Moran testified, however, that there was no discussion of where the accident happened, how it happened, or whether Bennett was covered; that Bennett called and told him he had received an attorney's lien ...