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December 23, 1985


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


This is an action for a declaratory judgment under 28 U.S.C. § 2201, 2202 (1982). Plaintiff Casualty Indemnity Exchange ("CIE") seeks a determination that it is not liable to indemnify defendant Impact Engineering and Construction Company ("Impact") or defendant City of Chicago for the alleged wrongful death of a construction worker, Arnett Banks, Jr. All parties have filed motions for summary judgment. For the reasons stated herein, each of the motions is denied.

I. Uncontroverted Facts*fn1

CIE issued its general liability policy No. GL 012518 to Impact for the term of September 15, 1982 through September 15, 1983. The negotiations for the policy were handled through the Weiss Insurance Agency, Inc. ("Weiss") and United Commercial Affiliated ("UCA"), an authorized representative of CIE. Toward the end of the term, Impact contracted with the City of Chicago to perform repair work on a masonry stack at the North Park Village Boiler Plant. As a condition of the contract, Impact was required to secure an endorsement to its insurance policy naming the City as an additional insured for purposes of the boiler plant project. Impact subcontracted its work to Allied Chimney and Construction, Inc.

On September 9, 1988, an employee of Allied Chimney, Arnett Banks, Jr., fell to his death from a scaffold at the boiler plant project. The City of Chicago received notice of the accident the same day. On February 29, 1984, Banks's wife, defendant Margaret Banks, filed suit against the City in the Circuit Court of Cook County. The City of Chicago was served with a summons and complaint on March 6, 1984 and, three weeks later, transferred these documents to Weiss. CIE did not receive the documents until July 5, 1984.

II. Analysis and Controverted Facts

In order to obtain summary judgment, the movant must establish the absence of genuine issues of material fact by competent proof Adickes v. S.H. Kress & Co., 398 U.S. 144, 158 n. 17, 159 n. 19, 90 S.Ct. 1598, 1608 n. 17, 1609 n. 19, 26 L.Ed.2d 142 (1970). The proof may consist of affidavits, answers to interrogatories, admissions, depositions, or other verified evidence that would be admissible at trial. Martz v. Union Labor Life Ins. Co., 757 F.2d 135, 188 (7th Cir. 1985); 6 Moore's Federal Practice ¶ 56.11 (2d ed. 1985). It is not sufficient merely to rely upon the allegations of one's pleadings or memoranda or to summarize the contents of documents that are not in the record. Pfeil v. Rogers, 757 F.2d 850, 859-63 (7th Cir. 1985). In this case, none of the parties has presented a properly supported motion.*fn2 Those few facts that have been properly established and appear without substantial controversy are set forth in the preceding section. They do not provide an adequate basis for judgment in favor of any party. Nevertheless, since it appears likely that many of the "facts" asserted in the parties' memoranda may indeed be undisputed, we will undertake to shed some light on the issues, rather than disposing of the motions on purely formal grounds.

Two main issues are presented: (1) whether the City was added as an additional insured under Impact's policy for the period in question; and (2) whether the City and Impact notified CIE of the accident "as soon as practicable," thus precluding CIE's liability under the policy.

The first issue involves CIE's potential liability only as to the City. (Apparently, Impact has been joined as a defendant in the state case, so CIE would still run a risk of liability even if it prevails on this issue.) CIE contends that the only endorsement it issued for the City of Chicago attached to policy No. GL 012600 ("renewal policy") for the year September 15, 1983 through September 15, 1984, not policy No. GL 012518 ("original policy") for the year in which the accident occurred. While CIE concedes that a certificate of insurance issued to Impact by Weiss indicated that the City was covered under the original policy, CIE maintains that Weiss had no authority to issue the certificate.

The resolution of this question turns upon principles of the Illinois law of agency. The Illinois cases tend to distinguish between an "insurance agent," who acts solely for the insurer, and a "broker," who is not permanently employed by any principal, but acts in each case as a special agent for a single object. See, e.g., City of Chicago v. Barnett, 404 Ill. 136, 88 N.E.2d 477 (1949); Browder v. Hanley Dawson Cadillac, 62 Ill. App.3d 623, 20 Ill.Dec. 138, 379 N.E.2d 1206 (1978). Since Weiss appears not to have been permanently employed by CIE, it may be appropriate to refer to Weiss as a "broker." This designation, however, does not assist in the ultimate determination of whether Weiss had authority to bind CIE, Impact, or both. That question in every case "is dependent upon who called [the agent] into action, who controls his movement, who pays him, and whose interests he represents." Id. at 629, 20 Ill.Dec. at 143, 379 N.E.2d at 1211. These are questions of fact, to be determined from the particular circumstances of the case. Davidson v. Comet Casualty Co., 89 Ill. App.3d 720, 44 Ill.Dec. 943, 412 N.E.2d 19 (1980). Where the evidence clearly shows that the broker is acting on behalf of a particular principal, however, they may become matters of law. Id. at 723, 44 Ill.Dec. at 946, 412 N.E.2d at 22.

Apparently, Weiss negotiated the original policy through UCA and may have dealt with UCA in regard to the certificate of insurance. Documentary evidence submitted in this case shows that the policy was signed by J.J. Carroll of UCA acting as the "authorized representative" of CIE. We therefore conclude that UCA had actual or apparent authority to bind CIE. The further question is whether Weiss was a subagent for CIE or an agent for Impact.

CIE maintains that Weiss was subject to Impact's direction at all times relevant to the suit. In response, the defendants contend that Weiss received actual authority from an officer of UCA and that, regardless of actual authority, CIE ratified Weiss's actions by acquiescing in them. See Old Security Life Ins. Co. v. Continental Illinois Nat. Bank, 740 F.2d 1384, 1392 (7th Cir. 1984); Copley v. Pekin Ins. Co., 130 Ill. App.3d 299, 302, 85 Ill.Dec. 643, 646, 474 N.E.2d 57, 60 (Ill.App.Ct. 1985) (discussing principles of ratification under Illinois law).

Although both sides have developed viable theories of agency, neither has presented sufficient evidence to support them. The best either side can do is to cite deposition transcripts. See supra note 2. Moreover, there appears to be a significant factual dispute as to whether Weiss received actual authority from a UCA officer. See Mem. in Support of City of Chicago's Motion for Summary Judgment at 2-3. In sum, the record in this case is not so clear as to justify converting the essentially factual question of agency into a question of law.

The second issue — timeliness of notice — focuses on the following provisions of the insurance policy:

  ¶ 4(a) In the event of an occurrence, written
  notice containing particulars reasonably sufficient to
  identify the insured and also reasonably obtainable
  information with respect to the time, place and
  circumstances thereof, and the names and addresses of
  the injured and of available witnesses, shall be given
  by or for

  the insured to the company or any of its authorized
  agents as soon as practicable.
  (b) if claim is made or suit is brought against the
  insured, the insured shall immediately forward to the
  company every demand, notice, summons or other process
  received by him or his representative.
  ΒΆ 5. No action shall lie against the company
  unless, as a condition precedent thereto, there shall
  have been full compliance with all ...

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