APPEAL from the Circuit Court of Cook County; the Hon. DAVID
A. CANEL, Judge, presiding.
MR. JUSTICE ROMITI DELIVERED THE OPINION OF THE COURT:
Opinion filed March 6, 1980. Rehearings denied April 15, 1980,
This case actually consists of two separate cases consolidated during proceedings in the lower court. The first is a suit against certain parties alleging that on theories of agency and negligent entrustment they are liable for the actions of a driver who caused an automobile accident. The trial court granted summary judgment for the defendants on the ground that any implied authorization had been terminated before the accident. The second case is a garnishment action against the first defendants' insurer to recover on the judgment against the driver; the insurer had refused to defend the action against the driver and a default judgment was entered. The trial court granted a judgment for the plaintiffs for the total amount of the tort judgment plus interest although the policy limits were considerably less. We reverse the judgment in the first case, finding that the evidence presented in the affidavits and depositions raises questions of fact to be determined. In the second case we affirm the trial court's ruling that the insurer, because of its failure to defend, is estopped to deny coverage and, accordingly, is liable on the judgment against the driver up to the policy limits of $100,000, plus interest on the total judgment until the amount owed by the insurer is paid, plus costs. We hold, however, that the plaintiff cannot sue for the amount of the judgment in excess of the policy limits absent an assignment from the insured.
For purposes of clarity and convenience, we will discuss the two cases separately.
THE CASE AGAINST URSO AND EDGEWATER
Late in the evening of September 1, 1971, the defendant, Clancy, while driving a motorbus owned by Marilyn Urso and Edgewater Preschool and Primary School collided with some parked automobiles. Allegedly he was intoxicated at the time. The plaintiff, Joyce Murphy, who was a guest in the bus was injured in the collision. She sued Clancy, Urso and the school. Clancy was served through the Secretary of State. He apparently left the State shortly after the accident and did not file an appearance in the case. A default was entered against him on March 11, 1975, in the amount of $750,000.
Murphy's claims against Urso and the school are based on the theories of agency and negligent or wilful and wanton entrustment. Both sides moved for summary judgment; the court denied the plaintiff's motion and granted the defendants' motion on the grounds that it was clear Clancy's employment had terminated prior to the occurrence and he had no implied authority.
In entering the order, the trial court had before it the affidavits and depositions of Urso, Joanne Chandler and Pamela Sabo and the affidavits of Thomas Coleman, Sue Tario, Joyce Murphy and her attorney, George Murphy.
Urso was one of the three stockholders of the school and its principal. In her affidavit she swore that Clancy had been discharged as an employee of the school before the occurrence, that he had taken the vehicle without her consent, permission or knowledge and was using it for a purpose totally unrelated to its designated use to transport children attending the preschool nursery. Chandler's affidavit was to the same effect.
In her deposition, Urso stated: Clancy had been employed as a driver until the day before the accident. There were three runs: a morning run of two or 2 1/2 hours, a run in the middle of the day and an evening run from 4:30-6:30 p.m. Otherwise the buses were kept at a Standard Service Station. The keys to the buses were kept in the office of the station when the buses were not in use, so that a substitute driver could drive the bus if needed. Moreover, the station required that the keys be accessible.
Clancy was fired on August 31 by Chandler at Urso's instructions because the fall enrollment was less than expected and they had had prior difficulty with his tardiness. When asked whether any notification was given to the Standard Station that he was not to have access to the bus anymore, she answered "No, no * * * by us, by me right. No. No." She did not know if he had taken the bus to the station after his last run on that date and then subsequently returned and retrieved it. The drivers were not permitted to use the buses for personal use, and as far as she knew Clancy had never done so prior to the accident. They never had problems with his being intoxicated.
In her deposition, Chandler stated: She was a director of the school at the time of the accident, her duties included hiring and firing. When Clancy was a driver for the school, he had a morning run (7-9 a.m.), a noon run (12-1:15) and two evening runs (3:30-5, 5-6:15). The buses were parked at a service station when not in use. The keys were left at the service station which was responsible for them. Prior to the accident she and Urso heard reports that Clancy had been using the bus late at night. They told him not to do so again. Urso, in Chandler's presence, also called the service station, and told them that at no time were any of the drivers to remove the buses from the premises, and all the buses should be parked there no later than 6:30 every evening.
Chandler knew of no other instances where drivers had used the buses without authority. Clancy was terminated by Chandler before noon on September 1, 1971. Clancy had failed to make the morning run. Chandler, therefore, asked Sabo to get in touch with Clancy and find out what had happened. Clancy came by at about noon. She told him that as far as she was concerned he was terminated then and there. Urso had not told Chandler to fire him, but Chandler had the authority to do so. She paid him by check. (This check was never produced.) The bus at that moment was at the service station; it had never been used that morning and Chandler had called the station and been told the bus was there. She asked Clancy if he had the keys. He threw them on the desk and walked out. Chandler then told Urso what had happened. Urso told her to call the station and inform the station manager Clancy could not take a bus out. Chandler, however, did not state that she did, in fact, call the station.
Chandler, all that day, kept the keys Clancy had given her. As far as she knew this was the only set of keys. Moreover, as far as she knew, the bus was never used that day. No one took over as a bus driver because the runs were doubled up that day.
Chandler turned the keys over to Urso the next morning. After she heard of the accident, she never attempted to find out how Clancy was able to drive the vehicle without keys.
Chandler had recommended firing Clancy once before but was overruled by Urso on that occasion. Urso wrote on Clancy's termination card that he was terminated because of negligence and unreliableness.
Sabo in her affidavit swore in part:
1. that she had been a driver for the school on or about September 1, 1971;
2. that she was familiar with how the buses were used;
3. that prior to that date she and the other drivers used the buses after working hours for other than employment purposes;
4. that Urso had some knowledge of this and did not forbid their use;
5. that the drivers, including Sabo, usually did not park the buses in a regular location after working hours or surrender the keys;
6. that on July 15, 1971, Clancy had negligently caused a collision of the bus with another vehicle and that Urso had been informed of this.
In her deposition Sabo stated, in part: Until after the accident she was not told by the school what to do with the bus on weekdays after the day was completed, although she was told the bus was to be at the garage on weekends. Furthermore, during the day, between runs, the bus was hers to use. She either parked it near her apartment or used it for errands. Once she even went on an errand for Urso. Both Urso and Chandler knew she was using the bus for personal reasons. Chandler was very friendly with all of them and knew what was going on. One of them, Chandler or Urso, remarked if they were going to continue using the buses so much on their own, they (the drivers) would have to supply the gas on their own because she was not going to pay for all the gas they were using. Clancy always parked the bus near Sabo's apartment.
Sabo did not know if Clancy made the morning run on September 1, 1971. She knew he made the night run because they had been moving stuff all day and they stopped to make the run. She did not actually see him drive the children but nothing out of the ordinary occurred. Her kids got on her bus and all the kids were put on buses.
Clancy's bus had been smashed up before, at the end of May. That was when he was high and could not remember what he had done with the bus. Sabo never saw him intoxicated with the children.
When the school hired Sabo they never examined her. She had no references. She also had no driver's license.
Coleman in his affidavit swore:
1. that several times prior to September 1, 1971, he spoke to Urso and Chandler who assured him he could have Clancy's job ...