APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIFTH DIVISION
NORTHTOWN WAREHOUSE AND TRANSPORTATION COMPANY, INC., et
507 N.E.2d 189, 155 Ill. App. 3d 10, 107 Ill. Dec. 525 1987.IL.476
Appeal from the Circuit Court of Cook County; the Hon. David J. Shields, Judge, presiding.
JUSTICE LORENZ delivered the opinion of the court. SULLIVAN, P.J., and PINCHAM, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LORENZ
Defendants Transamerica Insurance Company and I.I.A., Inc., appeal from a judgment in the amount of $287,428 entered in favor of the Northtown Warehouse and Transportation Company, Inc., and Harry Newberger. Plaintiffs brought this action against I.I.A., an insurance agency, and Transamerica for failure to replace a certain policy of insurance with a duplicate policy. This cause is before us upon remand by the Illinois Supreme Court (Northtown Warehouse and Transportation Co. v. Transamerica Insurance Co. (1986), 111 Ill. 2d 532, 490 N.E.2d 1268), that court having reversed our determination that the matter should be dismissed for lack of jurisdiction (Northtown Warehouse Transportation Co. v. Transamerica Insurance Co. (1984), 131 Ill. App. 3d 274, 475 N.E.2d 901).
On appeal Transamerica contends: (1) it was not liable because the evidence established that I.I.A. was acting as plaintiffs' agent when I.I.A. obtained the faulty replacement policy; (2) the trial court erred
The plaintiffs' contention at trial was that I.I.A., acting through its president Kenneth M. Dickerson, had agreed to replace an insurance policy on plaintiffs' warehouse with a duplicate policy at a lower price. Plaintiffs also contended that at that time Dickerson was acting as an agent for Transamerica as well as a paid insurance advisor to plaintiffs. It is undisputed that when a heavy snow caused the warehouse roof to collapse it was determined that the new policy did not cover this damage whereas the old policy would have done so.
At trial the following pertinent evidence was adduced. Kenneth Dickerson, who was initially called as an adverse witness by plaintiff Northtown, testified that he had been an insurance agent for 27 years. He was a licensed broker and was also licensed to act as an agent. At the time in question, in addition to owning and operating his insurance brokerage firm, I.I.A., Dickerson had contracts as a licensed agent with Providence Washington and with Transamerica. However, his business card identified him only as an "Independent Insurance Advisor."
Dickerson testified that being a licensed agent for a company allowed him to deal directly with that company. A broker would have to deal with a company agent, splitting any commission with him. As a broker he solicited insurance business from the general public without instruction from Transamerica concerning whom to solicit. However Dickerson also testified that he had a sales quota with Transamerica and that failure to meet it could jeopardize his contract with the company. He stated further that 50% of his business was with other companies because he had not had his own companies long enough to switch all the business to those companies. According to Dickerson, when placing business he always tried Transamerica first.
Dickerson's relationship with Harry Newberger began when Newberger purchased the Clark Bus Company. Dickerson had obtained insurance coverage for that company under prior ownership. Newberger then allowed Dickerson to obtain coverage for the company. Dickerson testified that because his companies would not write the coverage, he had to "broker" it through another company's agent.
Subsequently Dickerson and Newberger agreed that Dickerson would be paid to advise Newberger on his insurance needs. Dickerson testified that he would receive compensation from Newberger for this advice but would also receive compensation from Transamerica for business supplied to them.
At the beginning of 1978 Dickerson determined that the premiums paid by Northtown on the warehouse insurance with Firemen's Fund were "rather high." He asked Newberger to switch that insurance to Transamerica, telling him he could get the same coverage for less money. However at trial Dickerson testified that he in fact had not then known what the coverage was because he did not have all of that insurance file.
Dickerson testified that the Northtown coverage was the first business Newberger gave him that he could place with Transamerica. He concluded that at least one other company would have had lower rates, but he chose Transamerica for three reasons: he would not have to split the commission with another agent; if a problem arose he would be able to deal directly with Transamerica because he was their agent; and he had a quota to meet with Transamerica. ...