APPEAL from the Circuit Court of Cook County; the Hon.
NICHOLAS J. BUA and the Hon. ALLEN HARTMAN, Judges, presiding.
MR. JUSTICE JIGANTI DELIVERED THE OPINION OF THE COURT:
Rehearing denied March 13, 1979.
The circuit court of Cook County dismissed the complaint of the plaintiff, Benny Clark, ruling that a settlement agreement barred his cause of action. Earlier in the case, the court denied the motion of the Commissioner of Insurance for the State of Oklahoma (the Commissioner), representing the defendant, Standard Life and Accident Company of Oklahoma (the Company), while it was in liquidation proceedings in Oklahoma, for a stay of the Illinois case during the pendency of the liquidation. An appeal by Clark from the dismissal of his complaint and an appeal by the Commissioner from the denial of the stay were consolidated; both are now before this courl for our consideration.
In May 1971, Clark bought a disability insurance policy from the Company in conjunction with the purchase of a home and a mortgage for that home. Under the benefits clause of that policy the Company agreed to pay Clark $262.50 per month "[w]hen injury or sickness shall totally and continuously disable [Clark] * * * for more than 30 days * * * so long as he is continuously disabled * * * until the date of expiration of the mortgage agreement * * * or until * * * [Clark] attains his 65th birthday, whichever shall occur first." The clause in the policy labeled "Termination of [Clark's] Protection" states that, among other things, "[the] protection afforded by the policy to * * * [Clark] shall terminate upon * * * the date the principle indebtedness is paid * * *."
In October 1974, Clark filed a complaint in the circuit court alleging that, although he was totally disabled by multiple sclerosis since July 1973, the Company, in bad faith, refused to honor its obligations to pay him the monthly indemnity. He asked for the entire amount of the policy, $110,250, in damages and he requested $27,562 in costs and attorney's fees. (This is designated as count I.)
In January 1975, insolvency proceedings for the Company were initiated in Oklahoma. On February 3, 1975, the Company was placed in receivership; the Commissioner was named its conservator and given control over it. An injunction, issued by an Oklahoma court as part of its order appointing the Commissioner, contemplated the stay of all then pending actions against the Company.
On February 24, 1975, the Company and Clark agreed to settle the Illinois case and the following consent judgment was entered:
"[I]t appearing to the court that all matters in controversy having been fully compromised, settled and adjourned, and it further appearing that the defendant has agreed to make certain payments to the plaintiff and his attorney on a regular monthly basis during the period of disability; IT IS THEREFORE ADJUDGED as follows:
1. The above entitled cause is hereby dismissed with prejudice and without costs.
2. In the event the defendant fails to make payments as here and above provided, the plaintiff may petition the court to reinstate the * * * cause upon proper notice to the defendant."
This is the only rendering of the settlement. Pursuant to it, the Company made a lump sum payment to Clark and began to make monthly payments to him.
On August 18, 1975, Clark quit-claimed his right, title and interest in the house to the mortgagee, the principle indebtedness was paid and Clark was released from the mortgage. Sometime in October 1975, the Company notified Clark that it would no longer continue payments to him.
On November 11, 1975, Clark filed a petition entitled "Petition under Section 72 to Vacate Order of Dismissal." In the petition he alleged that the Company violated the settlement agreement contained in the consent judgment of February 1975, by failing to continue payments to him. He asserted that pursuant to the consent judgment, a breach of the settlement permits him to petition the court to vacate the dismissal and reinstate his original complaint. An order granting that petition and reinstating the original complaint, consisting of count I, was entered that same day. Although notice was given, no one appeared for the Company.
On December 5, 1975, the Commissioner made a motion in the circuit court to stay the action against the Company, requesting the court to respect the injunction order of the Oklahoma court until the proceedings in Oklahoma were concluded. The motion was denied.
In January 1976, during the Oklahoma liquidation proceedings, a rehabilitation plan for the Company was implemented. All the assets of the Company were transferred to an entity which would be known as Standard Life and Accident Insurance Company (New Standard). New Standard, infused with capital, assumed all policy liability of the Company, that is, the contract liability. It did not take on any "extra contractual liability." An entity called Oklahoma City Life and Accident Insurance Company (Old Standard) remained subject to tort claims and ...