APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION
519 N.E.2d 944, 166 Ill. App. 3d 270, 116 Ill. Dec. 729 1987.IL.1841
Appeal from the Circuit Court of Cook County; the Hon. Charles Freeman, Judge, presiding.
JUSTICE BUCKLEY delivered the opinion of the court. QUINLAN, P.J., and O'CONNOR, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE BUCKLEY
This appeal arises out of a declaratory judgment action brought by plaintiff to determine whether it, as successor trustee to a land trust, is entitled to coverage for damage to property under an insurance policy issued by defendant. The circuit court granted summary judgment for defendant while denying plaintiff's motion for summary judgment. For the reasons set forth below, we reverse and remand for a determination whether the transfer of the trust to plaintiff increased the insured's risk.
The following facts are undisputed. On January 4, 1981, Susie Lenorr Edmonds obtained a policy from defendant, Allstate Insurance Company, insuring a building located at 3511 West Adams in Chicago for loss and damage by fire, among other risks. Four days later, Ms. Edmonds conveyed legal title to the property to Exchange National Bank (Exchange National) pursuant to trust No. 38654.
On August 14, 1981, Ms. Edmonds sent defendant a letter and an assignment of insurance form notifying defendant of the transfer to Exchange National, requesting its consent to such transfer, and naming herself as beneficiary of the trust. Defendant failed to sign the form, but it nevertheless renewed Ms. Edmonds' policy annually and continued to collect premiums for five years. Some time following this notification, Ms. Edmonds conveyed her beneficial interest in the trust to another individual while legal title remained in Exchange National. Subsequent to this conveyance, plaintiff, La Salle National Bank, became successor trustee of the property under trust No. 10-38654-09.
On January 17, 1986, the building in question was damaged by fire. Defendant denied any liability to plaintiff on the ground that no valid assignment of the subject policy was ever made to Exchange National, plaintiff, or the current beneficiary. Both parties moved for summary judgment, and the trial court, relying primarily on Founders Mutual Casualty Co. v. Mark (1973), 14 Ill. App. 3d 204, 302 N.E.2d 142, granted defendant's motion but denied plaintiff's. It is from these rulings that plaintiff appeals.
Plaintiff initially contends that defendant is estopped from raising the defense of non-consent to the initial transfer to Exchange National as trustee since defendant, by renewing the policy annually and collecting insurance premiums until the fire, impliedly assented to the transfer. Further, defendant admitted to receipt of the notification of title transfer and of the request to assign the policy. According to plaintiff, these actions constitute "classic estoppel." We agree.
Estoppel involves an abatement, raised by law, of rights and privileges of the insurer where it would be inequitable to permit their assertion; such relinquishment need not be voluntary, intended or desired by the insurer, but it requires some prejudicial reliance of the insured upon some act, conduct or non-action of the insurer. (National Discount Shoes, Inc. v. Royal Globe Insurance Co. (1981), 99 Ill. App. 3d 54, 424 N.E.2d 1166.) The concept of estoppel is further delineated in Couch on Insurance (18 G. Couch, Insurance § 71:24, at 245 (2d ed. 1983)), as follows:
"When the insured relies on the insurer's recognition of the continued existence of the policy, the case presents both a waiver and an estoppel. Thus it has been held that where, after the breach of a condition in a policy, the insurer, with knowledge of the facts constituting the breach, by its conduct, leads the insured to believe that it still recognizes the validity of the policy and considers him protected by it, and induces him, under such impression, to incur expense, it will be deemed to have waived the forfeiture, and will be estopped from setting it up as a defense."
Applying these equitable principles to the instant case, we conclude that defendant is estopped from asserting its non-consent to the assignment to Exchange National as a defense to this action. Defendant was fully apprised of the title transfer to Exchange National approximately five years prior to the damage in question and, subsequent to this notification, continued to renew the policy and retain premiums. Defendant's failure to expressly reject the title transfer, yet continue to collect premiums, would lead a reasonable person to believe that the policy was in full force and effect providing the protection for which it was purchased.
In this regard, National Discount Shoes, Inc. v. Royal Globe Insurance Co. (1981), 99 Ill. App. 3d 54, 424 N.E.2d 1166, is applicable. In that case, the plaintiff purchased property and obtained an assignment of an insurance policy covering the property from the vendor, but failed to obtain the insurance company's consent to the assignment. After the property was destroyed by fire, the insurer paid the vendor the amount of the mortgage but refused to pay the plaintiff the amount of its loss. While the court held that, as a matter of law, the insurer did not waive the consent provision in its policy, it nevertheless remanded the case for a ...