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01/09/87 Zygmunt Jadczak Et Al., v. Modern Service Insurance

January 9, 1987





et al., Defendants-Appellees; Mieczyslaw

Waluszko, Third-Party Defendant-Appellee)

503 N.E.2d 794, 151 Ill. App. 3d 589, 104 Ill. Dec. 932 1987.IL.11

Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.


JUSTICE MURRAY delivered the opinion of the court. SULLIVAN, P.J., and PINCHAM, J., concur.


This is an appeal by defendant and third-party plaintiff, Modern Service Insurance Company, Inc. (Modern), from entry of the trial court's declaratory judgment in favor of plaintiffs, Zygmunt Jadczak, Teodor Baron, individually and as special administrator of the estate of Grazyna Baron, deceased; William Fallmer, as special administrator of the estate of Maria Krupowicz, deceased; and Marion Krupowicz, and third-party defendant Mieczyslaw Waluszko. The trial court determined that Modern was obligated to provide uninsured-motorist coverage to plaintiffs.

The declaratory judgment action arose out of an automobile accident occurring on February 7, 1982, that resulted in several deaths and serious injuries to plaintiffs. Prior to the accident, defendant George R. Cayer entered into a verbal agreement with his friend, plaintiff Jadczak, who owned a body shop, for the purchase of a 1980 Honda Civic that Jadczak was repairing. The car was being purchased by Mr. Cayer for his wife, Ruth Cayer. Mr. Cayer testified that at this time he was living in Chicago, separate and apart from his wife, who lived in Escanaba, Michigan, but that he did not obtain a formal separation order until September 1982. However, his employer and Jadczak both stated that Mr. Cayer was working in Chicago and returning home on weekends to be with his wife and children in Michigan. Mr. Cayer was registered to vote in Chicago, but had a Michigan driver's license and also had several automobiles insured in Michigan.

Jadczak and Mr. Cayer agreed upon a purchase price of $3,600 for the Honda. On Thursday, February 4, 1982, Mr. Cayer, after giving Jadczak a check for $1,000, called his wife in Escanaba from Jadczak's shop and told her that he had found a car for her and that she should immediately obtain insurance on it. It is undisputed that Ruth Cayer applied for insurance through an agent, William Weissert, who was located in Escanaba. Weissert, in an evidentiary deposition, stated that he was an independent contractor with the authority to bind Modern as to coverage for the interim period until a policy issued; only the home office in Minnesota could issue a policy. The declaration page showed that the policy period commenced on February 5, 1982, and listed Ruth Cayer as the named insured. Coverage included uninsurance liability in limits of $20,000 per person and $40,000 per occurrence. Mrs. Cayer paid a premium on the policy but had not received a policy before the relevant events occurred.

Jadczak testified that after Mr. Cayer called his wife, he (Cayer) drove the car away but returned it the next day, Friday, February 5 to have a faulty radio speaker repaired. Jadczak also stated that he asked for and received permission from Mr. Cayer to use the Honda on the weekend for social purposes. Mr. Cayer stated that he did not take the car home on Thursday because after test driving it, he discovered the speaker problem. He testified that he left it with Jadczak for repairs and planned to pick it up Friday afternoon. He further testified that when repairs were not completed on Friday, he agreed to take possession of the car the following week. Mr. Cayer said that his permission for Jadczak's use of the car was not necessary since the car belonged to Jadczak, not him. However, Mr. Cayer admitted that he had given his friend Jadczak permission to use a truck belonging to him (Cayer) on weekends prior to this occasion.

On Sunday, February 7, 1982, the Honda, while being driven by Jadczak, was involved in an accident with an uninsured motorist. Two passengers in the Honda were killed and the other occupants were seriously injured. Thereafter, Mr. Cayer called his wife and told her to cancel the insurance. According to Mr. Cayer, he did so because the car he anticipated purchasing was destroyed. However, Mr. Cayer's employer and Jadczak testified that Mr. Cayer attempted to retroactively cancel the policy because he feared losing his house in Michigan. Ruth Cayer did cancel the insurance by telephone on February 11, to be retroactively effective February 5, because the vehicle insured was not purchased. No policy was issued and Modern sent a full premium refund to Ruth Cayer on February 19.

After a bench trial, the trial court ruled that coverage existed on the basis of Modern's policy language defining an "owned" automobile and, at the same time, found that Mr. Cayer was not an owner. Modern appeals from that decision contending that the court erred in determining the factual issue of ownership in Modern's favor but concluding that coverage existed based on the policy description. Modern alleges that the Honda never became an owned vehicle and that Jadczak was the owner, not a permissive user, at the time of the accident.

After careful examination of the record, we conclude that the Modern policy afforded coverage for the Honda ...

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