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United States Fidelity v. Maren Eng'r Corp.

OPINION FILED FEBRUARY 22, 1980.

UNITED STATES FIDELITY & GUARANTY COMPANY, PLAINTIFF-APPELLEE,

v.

MAREN ENGINEERING CORPORATION ET AL., DEFENDANTS-APPELLANTS.



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

MR. JUSTICE WILSON DELIVERED THE OPINION OF THE COURT:

Rehearing denied April 8, 1980.

Defendant appeals from an order granting plaintiff's motion for summary judgment. The trial court found that defendant failed to give timely notice of a claim as required by an insurance policy issued by plaintiff and that defendant failed to establish any recognized excuse for the delay. As a result, the court held that plaintiff had no duty to defend or indemnify defendant on the claim. The sole issue on review is whether defendant's two-year delay in giving notice constitutes reasonable notice. We affirm the judgment of the trial court. The facts relevant to this issue follow.

In 1971, plaintiff, United States Fidelity and Guaranty Company (U.S. Fidelity), issued an insurance policy to defendant, Maren Engineering Corporation (Maren), a manufacturer of balers and shredding equipment. The policy covered general liability and products liability for a term of three years commencing in 1971 and expiring in 1974. A provision of the policy provided, in pertinent part, as follows:

"Insured's duties in the event of occurrence, claim or suit

(a) In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the Company or any of its authorized agents as soon as practicable. The named insured shall promptly take at his expense all reasonable steps to prevent other bodily injury or property damage from arising out of the same or similar conditions, but such expense shall not be recoverable under this policy.

(b) If claim is made or suit is brought against the insured, the insured shall immediately forward to the Company every demand, notice, summons or other process received by him or his representative."

In 1970, defendant sold a baler to General Mills Corporation through its distributor, Potter-Mac Company. On October 19, 1973, Frank Morris, an employee at General Mills, caught his left arm in the baler, which resulted in the loss of that arm. At approximately 8:50 a.m. on that day Wayne Potter, president of Potter-Mac, telephoned Andrew Pasztor of Maren and informed him of the accident. A written memorandum of that conversation stated as follows:

"Wayne indicated that he had received a call from Ken R. at General Mills. They had an accident the previous evening, a man was cleaning out the baler at the rear clean out door and lost an arm. Wayne was going in for a meeting with General Mills personnel. It was his understanding that the man had his arm in the small clean out door and the baler continued to run and the ram frame came back pinching his arm."

A second memorandum of another conversation between Potter and Pasztor which occurred at approximately 3:30 p.m. contained the following remarks:

"Wayne indicates that the baler apparently is not functioning properly. He noted that on the manual position, that is when the selector switch is on manual the motor will automatically start and cycle.

Wayne asked that we send him a wiring diagram for this baler.

His supposition at this point was that there had been some rewiring done on this baler and it was not wired as we had originally sent into the field."

On October 17, 1975, defendant was served with summons and complaint in an action brought by Frank Morris (Morris v. Maren Engineering Corp). On that same day, defendant forwarded the documents to its insurance agent, who forwarded them to plaintiff. On November 3, 1975, a letter was sent to defendant acknowledging receipt of the documents and further reserving plaintiff's rights due to the ...


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