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03/22/89 American Country Insurance v. Anthony Wilcoxon

March 22, 1989

AMERICAN COUNTRY INSURANCE COMPANY, APPELLANT

v.

ANTHONY WILCOXON, APPELLEE



SUPREME COURT OF ILLINOIS

537 N.E.2d 284, 127 Ill. 2d 230, 130 Ill. Dec. 217 1989.IL.377

Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. Arthur L. Dunne, Judge, presiding.

APPELLATE Judges:

JUSTICE STAMOS delivered the opinion of the court. JUSTICE CALVO took no part in the consideration or decision of this case. CHIEF JUSTICE MORAN, Dissenting. JUSTICE RYAN joins in this Dissent.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE STAMOS

Plaintiff, American Country Insurance Company (American), filed a complaint for declaratory judgment on July 26, 1984, against defendant Wilcoxon, among others, seeking a finding that it had no duty to pay under a bond issued to insured defendant Checker Taxi Company (Checker), for injuries suffered by Wilcoxon in an accident involving a cab owned by Checker. The trial court granted plaintiff's motion for summary judgment, finding that plaintiff had no duty, pursuant to the terms of the bond, to pay or indemnify the defendants. Defendant Wilcoxon appealed and the appellate court reversed. (159 Ill. App. 3d 884.) We allowed plaintiff's petition for leave to appeal (107 Ill. 2d R. 315).

The primary issue is whether an insurer is permitted to exclude from a surety bond, issued pursuant to the Illinois financial responsibility statute governing taxicab owners (Ill. Rev. Stat. 1983, ch. 95 1/2, par. 8-101 et seq.), coverage for members of the public who are injured through the negligence of a cabdriver who did not enter into a lease with the cab company whose cab he was driving.

Plaintiff's suit for declaratory judgment was prompted by a personal injury suit filed in the circuit court of Cook County by Wilcoxon; Wilcoxon sued Checker and David Overstreet after a cab owned by Checker and being driven by Overstreet struck Wilcoxon on December 5, 1983, while Wilcoxon was a pedestrian. Plaintiff advised Checker that pursuant to the terms of the bond it was not liable to pay any judgments against Checker. Plaintiff then filed the present action. Wilcoxon's suit is not involved in this appeal.

Checker and American executed a bond pursuant to the Illinois financial responsibility statute governing taxicab owners under the Illinois Vehicle Code (Ill. Rev. Stat. 1983, ch. 95 1/2, par. 8-101 et seq.) which stated that American would satisfy any judgment "resulting from negligence of such Owner/Principalhis agent, or any person operating the motor vehicle with his express or implied consent, in the penal sum of Two Hundred Fifty Thousand Dollars." The bond covered the period January 1, 1983, to December 31, 1983. An unsigned rider attached to the bond defined, among other things, the term "express or implied consent." The rider stated:

"(c) Express or implied consent is a motor vehicle described in this instrument which is being used with the express or implied consent of CHECKER when it is being used by

(i) an employee of CHECKER while operating said motor vehicle in the course and scope of his employment;

(ii) a lessee of CHECKER while operating said motor vehicle pursuant to a written lease.

This bond shall not apply to any permitte [ sic ], sublessee, or bailee or an employee or lessee of CHECKER. It is the specifice [ sic ] agreement and intention of CALUMET and CHECKER that the doctrine known as the Initial Permission Doctrine shall not apply."

We note that the way the rider is worded, particularly the language purporting to define "express or implied consent" by equating "consent" with a "motor vehicle," makes it nearly incomprehensible.

Checker leased one of its cabs to Willie White on December 5, 1983. The written lease was for a 24-hour period, from December 5 to December 6, and stated that Checker would provide insurance covering both "[l]essor and [l]essee, in the limits and of the types prescribed by ordinances of the City of Chicago and laws of the State of Illinois." The lease also stated that the lessee agrees "[t]o be the sole driver of the leased vehicle." According to the complaint for declaratory judgment and Wilcoxon's answer, Willie White gave possession of the leased Checker cab to David Overstreet sometime on December 5, 1983. While Overstreet was driving the cab, he struck and injured Wilcoxon, a pedestrian. Wilcoxon subsequently filed a personal injury suit against Checker and Overstreet.

American filed suit seeking declaratory relief against Wilcoxon, Checker and Overstreet. The complaint for declaratory judgment alleged that the bond issued by American (previously known as the Calumet Insurance Company) was in full force and effect on the day of the accident, but provided for coverage only when a Checker cab was being operated with the express or implied consent of Checker. The complaint stated that Willie White's transfer of possession of the rented cab to David Overstreet, who was not an employee, agent or servant of Checker, was without the knowledge, consent or permission of Checker. In his answer to the complaint, Wilcoxon admitted that Overstreet was in possession of the cab that struck him. Neither Checker nor Overstreet filed an answer. The trial court found that all three defendants had defaulted and entered judgment against them. The trial court subsequently vacated that order as to Wilcoxon.

American then filed a motion for summary judgment, contending that the bond clearly and specifically applied only to an employee of Checker or a lessee of Checker operating pursuant to a written lease. The motion also contended that the bond had served notice that the initial permission doctrine would not ...


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