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Radtke v. International Heater Co.





Appeal from the Circuit Court of Cook County; the Hon. Charles A. Alfano, Judge, presiding.


This is a subrogation action brought in the name of plaintiff-appellee Edith Radtke by her insurer, Economy Fire & Casualty Company. Radtke's home was damaged by fire and smoke on April 23, 1979. Her amended complaint sought recovery from defendants International Heater Company, Inc., the furnace manufacturer, Honeywell, Inc., the manufacturer of a switch used in the furnace, and K & K Heating, the installer. After a jury was selected, but before trial began, defendant-appellant Honeywell moved to strike Radtke as the party plaintiff. The court denied the motion, and a jury returned a verdict for $6,695.95 in plaintiff's favor. Honeywell appeals. The only issue is whether Radtke is the proper party plaintiff.

Radtke's home sustained smoke and fire damage as a result of a defective limit switch that was used in the furnace. A limit switch is a safety device that keeps a furnace from overheating. Radtke filed a claim with her insurer, the Economy Fire & Casualty Company. She admitted in response to interrogatories submitted by International Heater Company, Inc., that she "received reimbursement." The insurer, a subrogee, filed a complaint in Radtke's name, seeking recovery from defendants. Defendant International Heater Company, Inc., is not a party to this appeal. A second defendant, K & K Heating, reached a settlement agreement with plaintiff for $1,000, and it is not a party. Plaintiff and the third defendant, appellant Honeywell, Inc., the manufacturer of the limit switch, went to trial.

Before trial, but after the jury was chosen, Honeywell moved to strike plaintiff Radtke as the party plaintiff. Honeywell argued that plaintiff was claiming $7,200 in damages and had a $100 deductible. Because she received a settlement of $1,000, she had been reimbursed for her deductible and thus had no real interest in the litigation. In response, plaintiff argued that her deductible is satisfied on a pro rata basis. Because the $1,000 represented only 14% of the amount that was sought, only $14 of the deductible had been reimbursed, thus giving her an interest in the litigation.

Defendant relied on section 143b of the Insurance Code of 1937 (Ill. Rev. Stat. 1979, ch. 73, par. 755b). The court, in responding to the argument, ruled:

"This [section] I am familiar with. However, this pertains to collision coverage. * * * [A]nd even there it says that the client, the insured

is entitled to a full share of the net settlement. * * *

Here, I think, gentlemen, we have a partial recovery which is set off, and therefore, I still think there is an interest, and she should be named as a party plaintiff. That's going to be my ruling. * * *"

The court then granted plaintiff's motion to bar any evidence that showed that the insurer was the subrogee.

The jury returned a verdict in plaintiff's favor. The verdict was reduced by the amount of the settlement, and a judgment for $5,695.95 was entered. Defendant appeals, and argues that the insurer should have been named as the party plaintiff.

• 1 Subrogation actions are governed by section 2-403(c) of the Code of Civil Procedure, which states:

"(c) Any action hereafter brought by virtue of the subrogation provision of any contract or by virtue of subrogation by operation of law shall be brought either in the name or for the use of the subrogee; and the subrogee shall in his or her pleading on oath, or by his or her affidavit if pleading is not required, allege that he or she is the actual bona fide subrogee and set forth how and when he or she became subrogee." (Ill. Ann. Stat., ch. 110, par. 2-403(c) (Smith-Hurd 1985 Supp.).)

A long line of cases has established the principle that if an insured plaintiff has even a de minimus pecuniary interest in the suit, that interest is sufficient to allow a subrogation action to be maintained in the plaintiff's name. (Nitrin, Inc. v. Bethlehem Steel Corp. (1976), 35 Ill. App.3d 577, 592, 342 N.E.2d 65, appeal denied (1976), 63 Ill.2d 552.) It is also equally clear that if the plaintiff has no right to recovery, the interest of the subrogee cannot be concealed, and "`[i]t must be either named as the plaintiff or disclosed as the real party in interest.'" Nitrin, Inc. v. Bethleham Steel Corp. (1976), 35 Ill. App.3d 577, 592, quoting Shaw v. Close (1968), 92 Ill. App.2d 1, 4, 235 N.E.2d 830, appeal denied (1968), 38 Ill.2d 629.

The narrow issue in this case is whether the $1,000 settlement was prorated between Radtke and her insurer. The record is deficient in two respects. First, it does not contain a copy of the policy, so we cannot determine whether the parties were obligated contractually to prorate the settlement. Second, there is no ...

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