APPEAL from the Circuit Court of Cook County; the Hon. DANIEL
P. COMAN, Judge, presiding.
MR. PRESIDING JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT:
Western Chain Company (Western) brought suit against its insurer, Midland Insurance Company (Midland), to enforce the terms of an umbrella liability policy. The trial court found that Western's notice of occurrence was untimely as a matter of law and granted summary judgment in favor of Midland. The sole issue on appeal is the propriety of the summary judgment.
According to the terms of an umbrella liability policy in effect from March 10, 1971, to March 10, 1974, Midland agreed to indemnify Western to the limit of $1,000,000 for judgments and the settlement of claims against the insured on account of personal injury resulting therefrom; provided, however, that the insurer was liable only for the ultimate net loss in excess of the amount recoverable under the provisions of underlying insurance coverage. The umbrella policy denominated American Mutual Insurance Company (American Mutual) as an underlying insurer and listed its applicable bodily injury limitation as $100,000 per person.
The umbrella policy provided, in pertinent part, as follows:
"The term `occurrence' means an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the Insured.
This policy is subject to the following conditions.
G. Notice of Occurrence. Whenever the Insured has information from which the Insured may reasonably conclude that an occurrence covered hereunder involves injuries or damages which, in the event that the Insured should be held liable, is likely to involve this policy, notice shall be sent to [Midland] as soon as practicable, provided, however, that failure to give notice of any occurrence which, at a later date, would appear to give rise to claims hereunder, shall not prejudice such claims.
H. Assistance and Cooperation. [Midland] shall not be called upon to assume charge of the settlement or defense of any claim made or suit brought or proceeding instituted against the Insured but [Midland] shall have the right and shall be given the opportunity to associate with the Insured or the Insured's underlying insurers, or both in the defense and control of any claim, suit or proceeding relative to an occurrence where the claim or suit involves, or appears reasonably to involve [Midland] in which event the Insured and [Midland] shall cooperate in all things in the defense of such claim, suit or proceeding."
After similarly defining the term "occurrence" and providing for notice thereof, the American Mutual policy undertook the duty to defend suits against the insured which fall within the parameters of the policy and further provided that "[i]f claim is made or suit is brought against the insured, the insured shall immediately forward to [American Mutual] every demand, notice, summons or other process received by him or his representative."
It is undisputed that on January 15, 1973, Arthur Hill, president of Western, received a summons (served and transmitted pursuant to the terms of the Mississippi long arm statute) which informed him that suit against Western had been filed in Simpson County, Mississippi, by Mrs. Nell Brownlee and her four minor children; that the amount actually demanded of Western was stated in the declaration on file in the court clerk's office; that Western was to appear to answer such declaration at a term of court occurring on the second Monday of March, 1973; and that judgment would be demanded at such time. Hill placed a question mark on the summons and set it aside with other correspondence on his desk. It appears that if inquiry had been made, Western would have been informed from the declaration filed by Mrs. Brownlee that a chain allegedly manufactured by it was used to suspend an automobile and that it failed, due to an alleged manufacturing defect, causing the car to fall and kill Billy Brownlee, her husband. The declaration further stated that Billy was 28 years old at the time of his death, earned $80 per week with a work life expectancy of 37 years, and was survived by a wife and four minor children. The ad damnum was $225,000.
The summons remained on Hill's desk until June 23, 1973, when Western received a letter from Mrs. Brownlee's attorney stating that on March 20, 1973, a default judgment had been entered against Western in the amount of $204,160 and that term time had passed. Enclosed with the letter were copies of the interlocutory and final default decrees, which revealed that Mrs. Brownlee et al. had brought a wrongful death action sounding in products liability. Shortly thereafter, Hill notified Midland and American Mutual of the default judgment and requested that American Mutual discharge its obligation to defend by assuming responsibility for vacatur proceedings.
American Mutual declined to represent and defend Western on ground that the Brownlee summons had not been forwarded to it in a timely fashion. Western, through Hill, then retained counsel to set aside the default judgment, but its motion to vacate was denied.
When American Mutual refused to prosecute an appeal from the denial order, Western brought an acton in the Federal court seeking, among other relief, a declaration that American Mutual was bound to defend Western in this matter. It was asserted in this action that the Brownlee summons "did not contain a complaint and thus was indistinguishable from the many other legal notices received by Western; Western's president, Arthur W. Hill was distracted from his duties as president by the death of his wife and his own personal health problems; Western Chain's delay in notifying the insurance company should be excused due to non-culpable negligence." (Western Chain Co. v. American Mutual Liability Insurance Co. (N.D. Ill. 1974), 386 F. Supp. 440, 441.) Finding as a matter of law that Western was negligent in failing to forward the summons in a timely fashion, the court granted summary judgment in favor of American Mutual, which decision was affirmed on appeal. (386 F. Supp. 440, aff'd (7th Cir. 1975), 527 F.2d 986.) Subsequently, the Supreme Court of Mississippi affirmed the trial court's denial of Western's motion to vacate the default judgment. Western Chain Co. v. Brownlee (Miss. 1975), 317 So.2d 418.
Mrs. Brownlee then sued in Illinois to enforce her Mississippi judgment against Western. The registration of the judgment was granted by the trial court and affirmed on appeal. (Brownlee v. Western Chain Co. (1977), 49 Ill. App.3d 247, 364 N.E.2d 926, cert. denied (1978), 435 U.S. 968, 56 L.Ed. 59, 98 S.Ct. 1605.) In that action of Mrs. Brownlee, Western had filed a third-party complaint seeking indemnification from Midland in the amount of the default judgment together with attorney's fees and costs expended for defense and a declaration that Midland was obligated to defend the registration suit. In its complaint, Western alleged that it did not receive information revealing the nature or seriousness of the Brownlee claim until notified of the default judgment on June 23, and that immediately upon receipt of such information it ...