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State Farm Mutual Auto Ins. v. Differding





APPEAL from the Circuit Court of Cook County; the Hon. ARTHUR L. DUNNE, Judge, presiding.


This is an appeal from a declaratory judgment by the circuit court of Cook County rendered in favor of State Farm, whereby State Farm sought to determine whether or not liability coverage is extended to Miss Differding.

The issues presented for review are (1) whether Miss Differding qualified for insurance coverage, as a resident of the Differding household; (2) whether the automobile driven by Miss Differding qualifies as a non-owned automobile under her family's policies of insurance; and (3) whether Miss Differding used the automobile beyond the scope of the permission of the owner, thereby precluding coverage under the State Farm policies.

The automobile which Miss Differding was driving at the time of the accident was owned by a third party (Yip Lieng, a Vietnamese citizen teaching at Northern Illinois University) who carried public liability insurance of $10,000 per person, $20,000 per accident. This amount is agreed between the parties to be the primary coverage. On the date of the accident, Miss Differding's family had three policies of auto insurance in effect for its three vehicles, with State Farm as insurer. Eugene Panici brought suit against Miss Differding, who tendered the defense of her claim under the non-owned automobile coverage provisions of her family's automobile policies. State Farm then instituted the case at bar in order to declare Miss Differding did not come within this coverage. The defendant, Eugene Panici, brings this appeal in an effort to establish the State Farm policies as secondary insurance.

In 1972, Miss Differding was attending Northern Illinois University on a post-graduate basis. While at the University, she would rent various apartments to live in as her needs arose and her choice of locations varied. During her enrollment at Northern she maintained a permanent residence with her mother and father at 8 Oak Lane, Park Forest, Illinois. She used this address on various personal documents to denote her permanent home. These items include her Illinois driver's license, voter's registration card, library card, checking account, income tax statements and student activities fees receipt from Northern. Throughout her attendance at Northern she would regularly return to Park Forest on weekends, semester breaks and school vacations.

In the summer of 1972, Miss Differding sublet an apartment at 631 Lucinda, DeKalb, Illinois from Yip Lieng, for the sole purpose of attending summer school at Northern. The period of this subtenancy was to run from June 1, 1972, until the end of the summer school term, which was the first week in August of 1972. However, she stayed beyond the subtenancy because she was able to find part-time work at a convention for a few weeks after the summer school session. Miss Differding and her roommate paid no rent during this additional stay in the apartment.

As part of the agreement to sublet, it was understood between Yip Lieng, Miss Differding and her roommate, Joan Luzbetak, that Mr. Lieng would leave certain items of personal property in the apartment which both Miss Differding and Joan agreed to care for. In addition, Yip Lieng left his auto in the parking space provided with the apartment. Although Miss Differding's bicycle was her primary means of transportation, Yip Lieng requested her to maintain his auto in the City of DeKalb, Illinois, in order to prevent its deterioration, and he specifically limited her usage of the car in two respects. Due to the vehicle's poor brakes, it was only to be used in the DeKalb area, and it was only to be used for the summer. Since Joan did not have a driver's license Miss Differding was primarily entrusted with the auto. She had the only keys to the car. Nobody drove it from June to August except Miss Differding. She had gas and oil put in it, and took it to the gas station to have the brakes checked. After examination, the gas station mechanic said the brakes were all right, at least for the time being.

On August 18, 1972, Miss Differding was driving Yip Lieng's auto from DeKalb to 8 Oak Lane, Park Forest. As she was making a left turn in front of Eugene Panici's motorcycle, she struck him and caused severe injuries, one of which resulted in the amputation of his right leg below the knee.

In each of the three Differding family auto insurance policies, coverage was provided for use of non-owned autos. The clause, standard in most policies, and contained in each of the Differding family policies, provided coverage as follows:


If the named insured * * * owns a motor vehicle covered by this policy * * * such insurance as is afforded by this policy with respect to the owned motor vehicle * * * applies to the use of a non-owned automobile by:

(a) the first person named in the declarations or,

(b) if a resident of the same household, his spouse or the relatives of either * * *."

Under the Differding family policies in order to qualify for coverage in the use of a non-owned auto, it would be necessary for Miss Differding to be a resident of the ...

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