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JENCO v. JEFFERSON INSURANCE COMPANY OF NEW YORK

November 21, 1983

PAUL JENCO, D/B/A ACRE INN, PLAINTIFF,
v.
JEFFERSON INSURANCE COMPANY OF NEW YORK; CUPAC, INC.; GLENN ROUSSEAU COMPANY, INC.; AND JAMES CONFER, DEFENDANTS. JEFFERSON INSURANCE COMPANY OF NEW YORK, CROSS-PLAINTIFF, V. STATE BANK OF HERSCHER, CROSS-DEFENDANT.



The opinion of the court was delivered by: Aspen, District Judge:

  MEMORANDUM OPINION AND ORDER

Plaintiff, Paul Jenco, d/b/a Acre Inn ("Jenco"), sued the Jefferson Insurance Company of New York ("Jefferson"), Cupac, Inc. ("Cupac"), Glenn Rousseau Co. and James Confer*fn1 in the Circuit Court of Will County for a sum representing the damages incurred from a fire, payable to Jenco under an insurance policy issued by Jefferson. Jefferson removed the action to this Court. Presently before the Court are: Cupac's motion for summary judgment; Jefferson's motion for summary judgment; and Jefferson's motion for summary judgment on its cross-claim for a declaratory judgment against the State Bank of Herseher ("Herscher").*fn2 For reasons set forth below, Cupac's motion for summary judgment is granted; Jefferson's motion for summary judgment is denied; and Jefferson's motion for summary judgment on its cross-claim is denied.

Jenco owned a building in which he operated a restaurant, the Acre Inn, located at Route 115, West 1600 South in Buckingham, Illinois. Fire destroyed the building on January 8, 1982. On April 28, 1981, Jefferson executed and delivered to Jenco an insurance policy covering the building, the personal property therein and any loss of earnings — from the restaurant due to the destruction of the premises.

On or about that same date, Jenco borrowed $66,800 from Herseher and executed a note in that amount, secured by a mortgage on two tracts of land in Buckingham. Herscher was listed as mortgagee on the insurance policy issued by Jefferson to Jenco. On or about May 5, 1981, Jenco and Cupac entered into an agreement whereby Cupac would finance the premium for Jenco's insurance policy with Jefferson. Jenco now claims that the premium finance agreement lacked a properly executed power of attorney enabling Cupac to cancel the underlying insurance contract: he also disavows any signature appearing on the agreement with Cupac. Jenco also alleges that Cupac cancelled the underlying insurance contract without sending him ten days written notice of their intent to cancel, as required by Ill.Rev.Stat. ch. 73 ¶ 1065.68.

On May 7, 1981, the real property securing the $66,800 note was conveyed to Trust No. 1058 at Herscher. Jenco assigned all beneficial interest in Trust No. 1058 to Herseher on July 10, 1981; on that same date, Herscher as trustee of Trust No. 1058 borrowed $30,000 from the State Bank of Herscher. The bank executed a note in that amount, which was secured by a second mortgage on the two tracts of real estate in Buckingham. Jefferson claims that it did not receive price of the existence of the second message until many months after the January 8, 1982, fire.

On December 30, 1981, Jefferson executed to Jenco a change of endorsement, which increased the insurance coverage under his policy with Jefferson in exchange for additional premiums. James Confer, an insurance agent, procured the change of endorsement for Jenco through Glenn-Rousseau Co., which is the successor in interest to the Modern American Insurance Agency ("Modern"). Jenco asserts that while the insurance policy was in effect, fire damaged his property, He adds that he subsequently notified Jefferson of the loss and provided it with proof of loss, but that Jefferson has refused to pay him pursuant to the policy.

In considering motions for summary judgment, we emphasize that the "party moving for summary judgment has the burden of clearly establishing the non-existence of any genuine issue of fact that is material to a judgment in his or her favor." Cedillo v. International Association of Bridge & Structural Iron Workers, Local Union No. 1, 603 F.2d 7, 10 (7th Cir. 1979); any doubts as to the existence of material issues of fact must be resolved against the moving party. Moutoux v. Gulling Auto Electric, Inc., 295 F.2d 573, 576 (7th Cir. 1961). The non-moving party is entitled to all reasonable inferences that can be made in its favor from the evidence presented, United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). In the present matter, Jenco has chosen not to respond to defendants' motions.

Cupac's Motion for Summary Judgment

Jenco and Cupac entered into an agreement which provided that Cupac would finance the insurance premium due Jefferson. Modern applied for this premium finance agreement as Jenco's agent. The signature "P. Jenco" appears on the premium finance agreement; Jenco's complaint asserts that the premium finance agreement lacked a properly executed power of attorney enabling Cupac to cancel his insurance contract with Jefferson, and that any signature on the agreement is not his.*fn3 Cupac thus lacked the power to cancel the insurance on Jenco's behalf. Jenco also claims that Cupac did not provide him with ten days written notice of Cupac's intent to cancel the insurance policy pursuant to Ill.Rev.Stat. ch. 73 ¶ 1065.68.*fn4

In its motion for summary judgment, Cupac points to deposition testimony by Jenco that he received a notice of acceptance from Cupac, which was dated May 18, 1981. The notice of acceptance provided that:

  [y]our copy of the Premium Finance Agreement shows the
  date each payment is due and payments must be made
  promptly. Failure to make payment when due shall be
  considered as a direction to cancel your policy(ies)
  as provided in the Agreement. . . .

An examination of the statutory notice requirement contained in Ill.Rev.Stat. ch. 73 ¶ 1065.68, see note 4 supra, indicates that Cupac has complied with the statute. Cupac sent a written notice of intent to cancel to Jenco on December 15, 1981, and did not request cancellation of the policy until December 30, 1981. Cupac is therefore entitled to summary judgment with respect to this aspect of Count II.

Cupac's other argument focuses upon the relationship between it, Jenco and Modem. According to Cupac, Modern had the apparent authority to enter into the premium finance agreement on behalf of Jenco, its principal; Jenco is therefore bound by the cancellation provisions of that agreement. Additionally, Jenco's six monthly payments to Cupac after receipt of the ...


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