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Economy Fire & Casualty Co. v. Green

OPINION FILED DECEMBER 11, 1985.

ECONOMY FIRE AND CASUALTY COMPANY, PLAINTIFF-APPELLEE,

v.

PATRICIA M. GREEN ET AL., DEFENDANTS-APPELLANTS (THOMAS F. GREEN ET AL., DEFENDANTS). — BADGER MUTUAL INSURANCE COMPANY, PLAINTIFF-APPELLEE,

v.

PATRICIA M. GREEN ET AL., DEFENDANTS-APPELLANTS (THOMAS F. GREEN, A MINOR, BY HIS MOTHER AND NEXT FRIEND, PATRICIA M. GREEN, ET AL., DEFENDANTS).



Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding. PRESIDING JUSTICE WHITE DELIVERED THE OPINION OF THE COURT:

On December 19, 1979, a truck struck seven-year-old Thomas Green (Thomas) as he crossed a street in Wheaton. Patricia Green (Green), as mother and next friend of Thomas, filed suit against William DiFani, Kenneth Streiler and Harold Lankford to recover damages for personal injuries sustained by Thomas. In the amended complaint Green alleged that the defendants carelessly and negligently operated the truck and thereby caused Thomas' injuries. Defendants DiFani and Streiler filed a counterclaim for contribution against Green, alleging that at the time and place of the accident, she was operating a motor vehicle and supervising her son Thomas. They alleged further that she was guilty of negligent acts, including discharging Thomas from her vehicle in an unsafe place and failing to supervise Thomas properly.

Green tendered the defense of this contribution counterclaim to Economy Fire and Casualty Company (Economy), her automobile liability insurer, and to Badger Mutual Insurance Company (Badger), which insured her under a homeowner's policy. Both companies retained lawyers to enter appearances in defense of the contribution claim; they then filed declaratory judgment actions seeking declarations that there was no coverage of the contribution claim. The actions were consolidated, and both Badger and Economy obtained summary judgments from which Green and the two contribution plaintiffs, DiFani and Streiler, appeal.

THE APPEAL FROM SUMMARY JUDGMENT IN FAVOR OF ECONOMY

Economy's policy insured Green against liability for bodily injury and property damage arising out of the use or ownership of an automobile. Added to the policy is a clause which reads:

"Illinois Exception: — It is agreed that under Part I Coverage A — BODILY INJURY LIABILITY:

There is no coverage for any BODILY INJURY to any member of the family of the INSURED residing in the same household as the insured. The term `insured' as used here means the person against whom claim is made or suit is brought."

Appellants do not contest that the effect of this clause would be to eliminate any coverage for the contribution claim filed against Green for her child's injuries. Rather, they contend that the provisions of section 143.01 of the Illinois Insurance Code (Ill. Rev. Stat., 1984 Supp., ch. 73, par. 755.01), which became law July 11, 1984, after the date of the accident and after the filing of this suit, nullify the above exclusion. It provides:

"(a) A provision in a policy of vehicle insurance * * * excluding coverage for bodily injury to members of the family of the insured shall not be applicable when a third party acquires a right of contribution against a member of the injured person's family."

The trial court held that the amendment does not apply to insurance policies issued prior to July 11, 1984. We agree.

• 1 As a general rule of statutory construction, new statutes and amendments to statutes are given only prospective application, absent express language imposing retroactive application. People ex rel. Baylor v. Bell Mutual Casualty Co. (1973), 54 Ill.2d 433, 298 N.E.2d 167; Swanberg v. Mutual Benefit Life Insurance Co. (1979), 79 Ill. App.3d 81, 398 N.E.2d 299.

• 2 A reading of the amendment in question reveals that subsection (a), which nullifies the family exclusion with respect to contribution claims, does not provide that it shall be applied retroactively. Moreover, at the time Green's policy was issued, there was no statute prohibiting the family exclusion provisions in insurance policies, and such exclusions in recent years have been consistently upheld as valid. (See Allstate Insurance Co. v. Odeh (1984), 126 Ill. App.3d 85, 466 N.E.2d 1269; State Farm Mutual Automobile Insurance Co. v. Suarez (1982), 104 Ill. App.3d 556, 432 N.E.2d 1204.) Under these circumstances, the retroactive application of section 143.01 to the insurance contract would create a new financial obligation on the part of Economy expressly not agreed to, thus impairing its vested contractual right to exclude coverage for family members. (Weisberg v. Royal Insurance Co. (1984), 124 Ill. App.3d 864, 464 N.E.2d 1170.) To avoid this constitutional infirmity we construe section 143.01 as applying only to policies issued on or after its effective date. (Laffoon v. Bell & Zoller Coal Co. (1976), 65 Ill.2d 437, 359 N.E.2d 125.) Therefore, we hold section 143.01 does not operate to nullify Economy's family exclusion provision, leaving it available to Economy as a basis for denying coverage of Green's contribution counterclaim.

Next we address the contention raised by appellants that Economy, by its conduct, has waived its right to deny coverage on the basis of this exclusion. DiFani's and Streiler's complaint for contribution alleged the following against Green:

"5. * * *

a. Discharged a passenger, namely THOMAS F. GREEN, at an unsafe ...


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