APPEAL from the Circuit Court of Cook County; the Hon. IRVING
R. NORMAN, Judge, presiding.
MR. JUSTICE MCGLOON DELIVERED THE OPINION OF THE COURT:
Plaintiffs Nancy Navlyt, Jo Ann Navlyt and Donald Navlyt, minors, by their mother and next friend, Mary Heidemann, sued defendant State Farm Fire & Casualty Company on a liability insurance policy allegedly insuring the employer of the deceased Joseph Navlyt. Joseph Navlyt was killed when a ditch, in which he was installing a sewer system for Paul Kalinich, collapsed on him. In an action by plaintiffs against Kalinich for the wrongful death of Joseph Navlyt, defendant refused to participate, contending that no contract of insurance existed since Kalinich never paid a premium on the $100,000 policy. However, no request was ever made on Kalinich to pay the premium and further, he believed the premium was to be paid by the mortgage lender.
After a bench trial, a $125,000 judgment was entered against Kalinich. A co-insurer, Glens Falls Insurance Company paid $25,000 on the judgment and Kalinich personally paid $10,000. In consideration for a promise not to execute on the judgment, Kalinich assigned his rights under defendant's policy to plaintiffs.
Thereafter, plaintiffs, as assignees of Kalinich, instituted the subject action against defendant to recover on the policy insuring Kalinich. After a bench trial, the trial court entered a judgment in favor of plaintiffs. Defendant appeals.
On appeal, defendant argues: (1) that there was no contract of insurance since there was no "meeting of the minds" as to who would pay the premium; (2) that any contract of insurance that may have existed was terminated by Kalinich's failure to meet certain provisions of the policy; and (3) that defendant's liability under the policy is limited to the $10,000 Kalinich paid in partial satisfaction of the judgment.
On June 12, 1968, Joseph Navlyt was killed when a ditch in which he was working, suddenly collapsed on him. At the time, he was working on the installation of a sewer system for townhouses. Paul Kalinich was the developer of the townhouses and Navlyt's employer.
Kalinich had previously obtained financing for the development through Howard Savings and Loan Association (hereinafter referred to as Howard). As was the usual practice, Howard obtained insurance for the premises through Glens Falls Insurance Company (hereinafter referred to as Glens Falls), insuring Kalinich for $25,000. However, three months before Navlyt's death, Kalinich discovered that the premises did not have fire or liability coverage. He then decided to obtain insurance, unaware of the Glens Falls policy.
Kalinich realized that, as a general rule, Howard and other savings and loan institutions write their own insurance. However, Kalinich wanted to obtain insurance from a company of his choice. As a consequence, he telephoned Paul Buckholtz, an agent for defendant State Farm and requested that policies for both fire and liability coverage be sent to Howard, as an additional insured, as soon as possible. Kalinich further informed Buckholtz that the premiums would be paid by Howard. Buckholtz agreed and defendant later sent the policies to Buckholtz for delivery to Kalinich and Howard. However, Buckholtz never delivered them to Kalinich nor requested that he pay the premium. Involved were policies containing $39,000 coverage for fire protection and $100,000 coverage for liability.
On June 12, 1968, almost immediately after learning that Navlyt had been killed, Kalinich phoned Buckholtz to advise him of the accident. Buckholtz replied that he could see no basis for liability and that Kalinich should not worry.
On or about July 2, 1968 (approximately 20 days after Navlyt's death), defendant mailed to Kalinich, notices of cancellation of the liability policy, effective July 14, 1968. The reason stated was the failure to pay the $13 premium.
Kalinich immediately phoned Buckholtz for an explanation. Buckholtz told Kalinich that Howard had insisted upon writing its own insurance and had rejected defendant's coverage. Buckholtz stated further that Kalinich should ignore the July 2, 1968, notice of cancellation since the policy was already cancelled. This conversation with Buckholtz was Kalinich's first knowledge that Howard had rejected defendant's coverage.
After learning that Howard had rejected defendant as an insurance carrier, Kalinich phoned Howard in order to advise them of defendant's cancellation. Kalinich spoke to a Mr. Podromas who advised him not to worry because he was covered by a $25,000 liability policy with Glens Falls. It is undisputed that this was the first time Kalinich became aware of the Glens Falls policy. Up to this time, Howard had been paying the premium on the Glens Falls policy.
Later that year, an action was commenced in Du Page County by Navlyt's wife and three minor children, plaintiffs here, against Kalinich for damages under the Illinois Structural Work Act (Ill. Rev. Stat. 1975, ch. 48, par. 60). The complaint alleged that at the time of Navlyt's ...