APPEAL from the Circuit Court of Vermilion County; the Hon.
WILLIAM J. SUNDERMAN, Judge, presiding.
MR. JUSTICE REARDON DELIVERED THE OPINION OF THE COURT:
Plaintiffs, Lilbert and Bernice Ross, appeal from the judgment entered against plaintiffs, at the close of plaintiffs' case, and in favor of Heritage Insurance Group (hereinafter Heritage), Lincolnwood Towers Insurance Agency, Inc. (hereinafter Lincolnwood), and Denise and Tom Seaman, doing business as the Seaman Insurance Agency (hereinafter Seaman).
On January 25, 1973, David A. Thomas applied for an automobile liability insurance policy through Seaman and paid $50 to the agency as a deposit for "full insurance coverage." At this time Seaman and Lincolnwood had an informal broker-agent relationship. Lincolnwood is an agent and represents several insurance companies in Illinois, including Heritage. Apparently all previous automobile liability applications generated by Seaman were placed with Heritage through Lincolnwood. The Thomas application was processed on January 25 or 26, 1973, in this way through Lincolnwood. Between January 25, and February 3, 1973, Denise Seaman consulted Lincolnwood as to the status of the Thomas application and was told that the policy was being processed.
On February 3, 1973, the Thomas vehicle collided with plaintiff's automobile. Plaintiffs were injured and their automobile damaged. After the accident Denise Seaman again inquired of Lincolnwood regarding the status of the policy application, both by telephone and letter. The application could not be found and Lincolnwood declined to issue a policy for Thomas.
Plaintiffs filed a complaint against Thomas on November 26, 1973. On June 28, 1974, a default judgment was entered against Thomas in which Lilbert Ross was awarded $15,000 for personal injuries and $1,050 for property damages; Bernice Ross was awarded $2,500 for personal injuries.
Thereafter, in an effort to recover the award amounts, plaintiffs, in reliance upon the Garnishment Act of Illinois (Ill. Rev. Stat. 1973, ch. 62, par. 33 et seq.), sued Heritage, Lincolnwood, Seaman, and Dairyland Insurance Company (hereinafter Dairyland). Dairyland was dropped from the case prior to trial. The garnishment affidavit alleged that the garnishees (Heritage, Lincolnwood, Seaman) were indebted to the judgment debtor (Thomas) or had in their possession, control, or custody property belonging to Thomas or property in which Thomas had an interest, i.e., an insurance policy. The evidence submitted at the bench trial, including the testimony of Roger Wolf, the officer manager and vice-president of Lincolnwood, strongly indicated that Seaman had no power to bind or issue policies for Lincolnwood or Heritage. Although Denise Seaman believed that coverage was bound she admitted that she had no policy binding authority for garnishees and that she never informed Thomas that he was insured or covered, either temporarily or pursuant to an issued policy. Thomas did not testify in the garnishment proceeding nor did he appear in the earlier proceedings which resulted in the judgments. No copy of the application was introduced in evidence.
At the close of plaintiffs' case, the trial court determined that plaintiffs had failed to prove the existence of an insurance policy or a binder for temporary insurance and judgment was entered in favor of garnishees. It is from this judgment that plaintiffs bring their appeal.
Section 490 of the Illinois Insurance Code defines the term "agent" to mean:
"* * * any person, partnership, association or corporation, who or which solicits, negotiates or effects for or on behalf of any company, policies or contracts for insurance covering property or risks in this State * * *"
and the term "Broker" to mean:
"* * * any person, partnership, association or corporation, who or which acts or aids in the manner in the solicitation or negotiation, for or on behalf of the assured, with or without compensation, of policies or contracts for insurance covering property or risks in this State * * *." Ill. Rev. Stat. 1975, ch. 73, par. 1065.37.
In Galiher v. Spates (1970), 129 Ill. App.2d 204, 262 N.E.2d 626, this court held:
"An insurance broker is one who procures insurance and acts as middleman between the insured and the insurer, and solicits insurance business from the public under no employment from any special company, but, having secured an order, places the insurance with the company selected by the insured, or, in the absence of any selection by him, with the company selected by such broker. 22 ILP, Insurance, § 71, at 102. Insurance agents have a fixed and permanent relation to the companies they represent and have certain duties and allegiances to such companies. Whether a person is an agent or a broker is determined by his acts or what he does. [Citation.]" (129 Ill. App.2d 204, 206-207, 262 N.E.2d 626, 627.)
In essence, the Galiher court held that the relationship between the alleged broker or agent and the insurer is a question of fact for the trier of fact, unless the relationship is so clearly established that the issue becomes one of law. A broker by definition is an agent of ...