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Johnson v. Cape Industries

OPINION FILED DECEMBER 4, 1980.

WILLIAM JOHNSON ET AL., PLAINTIFFS-APPELLEES,

v.

CAPE INDUSTRIES, LIMITED, DEFENDANT-APPELLEE. — INSURANCE COMPANY OF NORTH AMERICA ET AL., PETITIONERS-INTERVENORS-APPELLANTS. — INA INSURANCE COMPANY OF ILLINOIS ET AL., PLAINTIFFS-APPELLANTS,

v.

CAPE INDUSTRIES, LIMITED ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of McLean County; the Hon. LUTHER H. DEARBORN, Judge, presiding.

MR. PRESIDING JUSTICE MILLS DELIVERED THE OPINION OF THE COURT:

We deal primarily with procedure here.

In the personal injury action, the petitions to intervene were denied. They should have been allowed.

We reverse.

In a personal injury action, 27 plaintiffs filed a complaint in the circuit court of McLean County against Cape Industries, Limited (Cape), alleging that Cape acted as an agent and shareholder of North American Asbestos Corporation (NAAC) in selling asbestos to a plant where the plaintiffs worked. Insurance Company of Illinois and Insurance Company of North America (INA) issued two policies of liability insurance for the benefit of NAAC as the named insured during the period of July 12, 1974, through March 1, 1976. In our General No. 16299, INA and NAAC sought leave to intervene in the personal injury action, and intervention was denied. In our General No. 16326, INA appeals the denial of a preliminary injunction filed in its declaratory judgment action, which in turn was filed to determine questions of insurance. INA sought to enjoin further proceedings in the personal injury action, pending resolution of the insurance questions.

The policies of insurance issued by INA contain the following in the description of the "persons insured":

"c. If the Named Insured is designated in the Declarations as other than an individual, partnership or joint venture, the organization so designated and any executive officer, director or stockholder thereof while acting within the scope of his duties as such; * * *."

On February 4, 1980, 27 plaintiffs filed a complaint naming Cape, a corporation, as the sole defendant. Each of the 92 counts contains the following allegation:

"Defendant, acting as an agent and shareholder of North American Asbestos Corporation and while acting within the scope of its duties as an agent and shareholder of North American Asbestos Corporation, sold asbestos owned by North American Asbestos Corporation to the operators of the asbestos plant at 1111 W. Perry St., Bloomington, Illinois."

On the same date, plaintiffs' counsel sent a copy of the complaint, along with a copy of one of the insurance policies issued by INA, to the INA offices in Chicago. On March 19, counsel corresponded with INA and others stating his position on the insurer's duty to defend. He cautioned INA against a position of not defending Cape and stated a default would be taken against Cape on March 28, 1980.

On March 28, 1980, a motion for default was filed and an order allowing same was entered. The cause was set for presentation of evidence on damages on May 8, 1980.

On April 7, 1980, INA filed a declaratory judgment action and filed a petition to intervene in the underlying personal injury action. Attached to the petition as the initial proposed pleading was a motion to stay pending the resolution of the declaratory judgment action. On March 31, 1980, NAAC filed a petition to intervene in the personal injury action, and on that same date filed an amended petition to intervene. The petitions to intervene were denied.

On April 29, 1980, the circuit court heard evidence on the request by INA for injunctive relief. Judicial notice was taken of the underlying personal injury action. There was testimony that INA had issued two insurance policies. INA's claims manager testified that Cape had not tendered the defense of the personal injury suit to INA. INA had not received any request from NAAC to take over or to assume the defense of the underlying action. Instructions had been received from Cape by telephone and from counsel for NAAC. The instructions were that no one was to make any appearance on behalf of Cape. (Cape is a British corporation.) The court was asked to note the case of Henry v. Geoprosco International Ltd., (1976), 1 Q.B. 726, holding that under English law the filing of a special and limited appearance would be construed by English law as a general appearance subjecting an English corporation to jurisdiction in a foreign country and subjecting it to being garnished in England pursuant to a judgment in a foreign court.

The claims manager testified also that the potential liability in the personal injury case exceeded the limits of the policies issued by INA to NAAC. He identified exhibits as photocopies of the policies of insurance, but was not able to say whether they were true and accurate copies of the policies. The circuit court, after hearing arguments, entered an order denying the request for injunctive relief on the grounds of insufficiency of evidence. The insufficiency was the lack of production of true and correct copies of the ...


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