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Security Mutual Casualty Co. v. Harbor Ins.

OPINION FILED SEPTEMBER 11, 1978.

SECURITY MUTUAL CASUALTY COMPANY, PLAINTIFF-APPELLANT,

v.

HARBOR INSURANCE COMPANY ET AL., DEFENDANTS-APPELLEES.



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

MR. JUSTICE BUCKLEY DELIVERED THE OPINION OF THE COURT:

Rehearing denied October 30, 1978.

This is an appeal of an order compelling arbitration under a declaratory judgment action filed by Security Mutual Casualty Company (hereafter Security) to establish its rights and duties under its policy insuring Harbor Insurance Company (hereafter Harbor). Security alleges error in the circuit court of Cook County's issuance of such an order without first determining whether the matter to be arbitrated is within the terms of the parties' arbitration agreement.

• 1 Although Harbor has not contested this court's jurisdiction to entertain the appeal of the order to arbitrate, we note that an order to compel or stay arbitration has been determined to be equivalent to an order granting or refusing injunctive relief (Medline Industries, Inc. v. Pascal (1975), 23 Ill. App.3d 346, 319 N.E.2d 310; Property Management, Ltd. v. Howasa, Inc. (1973), 14 Ill. App.3d 536, 302 N.E.2d 754; School District 46 v. Del Bianco (1966), 68 Ill. App.2d 145, 215 N.E.2d 25), and is appealable pursuant to Supreme Court Rule 307(a)(1) (58 Ill.2d R. 307(a)(1)).

On September 9, 1960, Security entered into a reinsurance treaty in Chicago, Illinois, with Harbor, designated "Reinsurance Agreement No. 308071." Under the treaty, Security undertook to reinsure Harbor on certain classes of risks in the amount of $1,975,000 in excess of $25,000, the latter amount being retained by Harbor. Security agreed to provide reinsurance coverage for those risks insured by Harbor with respect to the following exposure:

"Third Party Bodily Injury Liability (including medical payments) and Property Damage Liability Business; Workmens Compensation and Employers' Liability Business; Motor Cargo Business."

The treaty likewise contained an arbitration clause in article XIII:

"In the event of any dispute between the Company and the Reinsurer in connection with this Agreement, such dispute shall be submitted to arbitration."

The policy of reinsurance remained in effect until January 1, 1965, when it was terminated by the mutual consent of Security and Harbor.

Sometime prior to August 1963, John Bertero was employed as President of National General Corporation (hereafter National), the primary assured under insurance policy No. 5-1585 issued by Harbor to National.

At the request of the Board of Directors of National, John Bertero resigned as president effective November 12, 1959. Thereafter a dispute arose between Bertero and National. On June 8, 1962, suit was filed in Los Angeles Superior Court by Bertero against National seeking a declaratory judgment with respect to the validity of his employment contract with National. On August 28, 1963, National filed a counterclaim in the suit alleging in part that Bertero had obtained the contract through duress, undue influence and for no consideration.

On October 1, 1963, National amended its previously filed answer to include a cross-complaint for money had and received. National's cross-complaint later became the basis of a malicious prosecution action by Bertero.

In August of 1965, eight months after Security's policy of reinsurance with Harbor had been terminated, a jury verdict was returned and judgment entered in favor of Bertero in the amount of $500,000. The cross-complaint filed against him by National was dismissed. The judgment was affirmed on appeal on September 6, 1967 (Bertero v. National General Corp. (1967), 254 Cal.App.2d 126, 62 Cal. Rptr. 714), and became final December 5, 1967.

In March 1968, after the original judgment had become final, Bertero filed suit in the Los Angeles Superior Court against National, alleging that National was guilty of malicious prosecution ...


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