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Smith v. Richard





Appeal from the Circuit Court of Macon County; the Hon. Donald W. Morthland, Judge, presiding.


On February 4, 1981, plaintiff, James A. Smith, filed suit in the circuit court of Macon County against defendant, George L. Richard, seeking to recover for personal injuries resulting from a multivehicle collision in which a truck driven by defendant was involved. At the time of the collision, Richard was driving a mail route pursuant to a transportation services subcontract with the United States Postal Service (Postal Service). Negligence was charged.

On April 23, 1982, a second amended complaint was filed which not only sought damages for personal injuries as aforesaid, but also sought a declaratory judgment against defendant, State Farm Mutual Automobile Insurance Company (State Farm), providing that a policy of liability insurance issued by State Farm to Richard covered Richard's liability to plaintiff arising from the collision. In the alternative, plaintiff sought a declaration against defendant, Economy Fire and Casualty Company (Economy), that the uninsured motorist provision of its policy issued to plaintiff covered plaintiff's damages arising from the collision.

A bench trial was held concerning plaintiff's request for declaratory judgment. On March 27, 1984, the court entered a judgment declaring that Richard's State Farm liability policy covered any tort liability of Richard to plaintiff arising from the collision. The court also declared that because of the coverage of the State Farm liability policy, the uninsured motorist's provision of the Economy policy did not impose any liability on Economy. The judgment contained a finding pursuant to Supreme Court Rule 304(a) (87 Ill.2d R. 304(a)) making the judgment appealable. State Farm appeals. Plaintiff cross-appeals. We affirm.

On appeal, State Farm maintains that (1) the trial court erred in determining that if State Farm failed to notify the Postal Service of the termination of Richard's insurance coverage with State Farm, the termination was ineffective as to members of the general public; (2) the trial court's finding that State Farm failed to provide that notice to the Postal Service was contrary to the manifest weight of the evidence; (3) the record does not contain sufficient evidence to support a finding that the particular vehicle operated by Richard at the time of the accident was covered under the terms of the State Farm liability insurance policy in question; and (4) the trial court erred in refusing to allow State Farm to introduce certain evidence.

The evidence presented at the hearing concerning plaintiff's request for declaratory judgment indicated that on September 8, 1978, Richard executed a transportation services subcontract with the Postal Service which was effective August 12, 1978, through June 30, 1981. This subcontract, a copy of which was introduced into evidence, provided that Richard was to deliver mail over a specified route between Springfield and Shelbyville and to maintain public liability insurance on the vehicle being used to drive the mail route in accordance with the insurance requirements of Postal Service Regulation 7407. This regulation provides in part:

"The maintenance of insurance coverage * * * shall be a continuing obligation of the contract, and the lapse or termination of insurance coverage without replacement coverage being obtained shall be grounds for termination of the contractor's right to perform under the contract.

The contractor shall notify the contracting officer of any lapse in insurance coverage as far in advance of the beginning date of such lapse as possible."

The evidence further indicated that (1) on November 3, 1979, Richard obtained a public liability insurance contract from State Farm and paid a six-month premium; (2) on April 16, 1980, the liability coverage was increased by endorsement; and (3) prior to the end of the six-month policy period, State Farm extended the coverage of the policy beyond the original termination date.

Mike Reisinger, a State Farm insurance agent, testified that a certificate of insurance, prepared by the State Farm office in Bloomington on April 16, 1980, and countersigned by Reisinger on May 16, 1980, was sent to, and received by, the Postal Service Transportation Management Office in Hazelwood, Missouri. This certificate identified Richard's insured vehicle as a 1977 Mercedes van and indicated that his liability insurance coverage had been increased to $300,000 for the personal injuries of one individual.

This certificate further provided:

"This endorsement is a part of your policy. Except for the changes it makes, all other terms of the policy remain the same and apply to this endorsement. It is effective at the same time as your policy if issued with it. If issued at a later date the name, policy number and effective date must be shown.

We have coverage in force as shown below for the named insured. If the coverage is changed or terminated we will give the interested party 10 days written notice. U S Postal Service, Trans Mgmt Office, PO Box 6, Hazelwood MO 63042

This Certificate of Insurance neither affirmatively nor negatively amends, extends nor alters the coverage ...

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