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Finnan v. Johnson





Appeal from the Circuit Court of De Kalb County; the Hon. Carl A. Swanson, Jr., Judge, presiding.


Mid-America Fire and Marine Insurance Company (Mid-America) appeals from the trial court's granting of summary judgment to third-party plaintiff, William C. Johnson (Johnson), on his complaint which alleged that Mid-America refused to defend a lawsuit against Johnson and denied liability coverage of Johnson in the accident which was the subject of the lawsuit against him. Mid-America contends on appeal that the decision of the trial court is against the clear and manifest weight of the evidence.

This cause visits the appellate court for the second time. In the first appeal, this court determined in a Rule 23 order (87 Ill.2d R. 23) that the trial court had incorrectly entered summary judgment in favor of Johnson and against Mid-America. (Finnan v. Johnson (1981), 98 Ill. App.3d 1203 (Rule 23 order).) This court remanded the cause for further proceedings to resolve a material issue of fact concerning the date that Johnson acquired ownership of a 1965 GMC truck. Upon remand, and after holding an evidentiary hearing, the trial court again entered judgment in favor of Johnson and against Mid-America after making the required factual determination. The court below concluded that Mid-America was required to defend Johnson because the GMC truck qualified for coverage under the newly acquired vehicle provisions of the insurance policy in question.

Mid-America issued an insurance policy to Johnson for his 1972 Chevrolet and his 1972 Capri. The policy extended for a six-month period; it became effective on February 1, 1977, and was to expire on August 3, 1977. However, the policy was renewable for successive six-month periods upon payment of a renewal premium. Johnson renewed the policy for an additional six months prior to the August 3, 1977, expiration date.

The insurance policy in question contained a provision (Condition 5) entitled "Automatic Insurance on Newly-Acquired Vehicle," which stated in pertinent part:

"The insurance coverage of this policy with respect to the vehicle described in the Declarations shall also apply to an additional vehicle of which the Named Insured or spouse acquired ownership evidenced by certificate of title thereto. If the vehicle acquired is a motor vehicle as defined in Section I this paragraph shall apply if the newly acquired motor vehicle was acquired for the same use as a motor vehicle described in the Declarations and, provided further the Company insures all vehicles and automobiles owned by and titled to the Named Insured or spouse.

The terms of the two preceding paragraphs apply provided notice of delivery of such vehicle to the Named Insured or spouse is given to the Company within the policy period then current, or if delivery is less than thirty (30) days prior to the end of such period, then within thirty (30) days after delivery. This General Condition 5 shall not extend or affect the expiration provisions of this policy. The named Insured shall pay any additional premiums required for such insurance afforded from date of delivery of such vehicle."

In July 1977, Johnson negotiated with Mark List for the purchase of a 1965 three-quarter ton, GMC pickup truck. List signed over title to the truck to Johnson on July 25, 1977, and the transfer of title document was notarized at that time. On that same day, Johnson applied for a title and license plates; the Secretary of State's office received the application on July 28, 1977, and issued the certificate of title to Johnson on August 10, 1977.

Johnson testified at the hearing held upon remand that he gave List $400 for the truck on August 8, 1977, and that the parties had intended that the truck would become Johnson's when he paid List for it. The truck, which was totally inoperative due to a "blown engine," was located at a garage of a third party, who was a friend of both Johnson and List. In September 1977, Johnson began working on the vehicle; he replaced the ruined engine with a good one, did some repair work on the brakes, and painted the truck. The repairs were completed and the vehicle became drivable in November 1977, at which time Johnson removed it from the friend's garage to his own home.

On December 17, 1977, Johnson was involved in an automobile accident while driving the truck. He gave notice of the accident to Mid-America on December 19, 1977. Subsequently, the plaintiffs, Thomas Finnan, driver and owner, Sandra Finnan and Grace Myers who were passengers in the other vehicle involved in the collision, brought lawsuits against Johnson. Thereafter, Johnson sued Mid-America and sought a declaration that the insurance policy which covered his Chevrolet and Capri also extended to his GMC truck. In response, Mid-America filed a motion for summary judgment in which it claimed that Johnson's truck was acquired prior to July 28, 1977, that is, less than 30 days before the policy's expiration date of August 3, 1977, and that no notice of this acquisition had been given to Mid-America within 30 days of acquisition as required by the insurance policy. The trial court denied Mid-America's motion for summary judgment.

Johnson then filed a motion for summary judgment in which he claimed that he paid for and took constructive possession of the GMC truck on August 7, 1977, and that because this acquisition occurred within the policy period of August 3, 1977, to February 3, 1978, his notice to Mid-America on December 19, 1977, complied fully with the provisions of the insurance policy, which required that notice be given to Mid-America before the end of the policy period. As previously noted, the trial court granted Johnson's motion for summary judgment, and this court reversed the entry of summary judgment and remanded the cause for further proceedings.

After conducting the evidentiary hearing upon remand, the trial court found, in a letter of opinion, that Johnson and the seller (List) had intended that the sale of the truck would not be final until the payment of the purchase price, which occurred on August 7, 1977, and, therefore, concluded that Johnson did not acquire ownership prior to August 3, 1977. The trial court also noted that the Secretary of State did not issue title to Johnson until August 10, 1977. In addition, the court found that the truck was in an inoperative condition when Johnson acquired it and was incapable of being used as a vehicle of transportation prior to November 1977.

The issue therefore presented is whether the trial court's finding that Johnson had not acquired ownership of the truck prior to August 3, 1977, and its conclusion that the truck was covered under the newly acquired vehicle provision of the insurance policy is against the manifest weight of the evidence or contrary to law.

Mid-America contends on appeal that the evidence adduced in this cause established that Johnson acquired ownership of the 1965 GMC truck for purposes of insurance coverage on July 25, 1977. If Johnson acquired ownership of that vehicle on July 25, 1977, then he could obtain insurance coverage for it under the newly acquired vehicle provision of his insurance policy only if he gave Mid-America notice of the acquisition within 30 days of delivery. Johnson sent the required notice on December 19, 1977. Mid-America claims that the transfer of title from List to Johnson and Johnson's application for title and license plates, both of which occurred on July ...

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