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04/26/89 the Hanover Insurance v. Willie Smith Et Al.

April 26, 1989





538 N.E.2d 710, 182 Ill. App. 3d 793, 131 Ill. Dec. 335 1989.IL.605

Appeal from the Circuit Court of Cook County; the Hon. Warren Wolfson, Judge, presiding.

Rehearing Denied May 23, 1989; As Amended September 13, 1989.


JUSTICE RIZZI delivered the opinion of the court. FREEMAN, P.J., concurs. JUSTICE McNAMARA,* Dissenting.


Appellant, Joan Fried, appeals from a judgment of the circuit court of Cook County awarding attorney fees and costs to plaintiff, Hanover Insurance Company (Hanover). Hanover cross-appeals the amount of the award. On appeal, Fried argues that (1) Hanover, as indemnitee, was not entitled to indemnification of the fees and costs expended where such expenses arose out of the execution of an appeal bond which was adJudged null and void and (2) Hanover unilaterally breached the agreement that Fried would supply counsel at her own expense by improperly discharging the attorney hired by Fried, hiring its own attorney and charging Fried, as indemnitor, for the costs and expenses of hiring the new attorney. Hanover argues that the trial court erred in denying it the full amount of fees and costs requested for indemnification. We affirm in part and reverse and remand in part.

The dispute involved herein arises out of a personal injury action that was filed in 1975 by Willie Smith against Joan Fried, James Lewis and the Garden of Paradise Missionary Baptist Church (Church). Smith ultimately obtained a judgment against Fried, Lewis and the Church in the amount of $15,000 plus costs.

Desiring to appeal the judgment in favor of Smith, Fried obtained an appeal bond on behalf of herself, Lewis and the Church. The bond obtained by Fried was from Hanover. Fried posted a letter of credit for $18,250 as collateral and entered into an indemnity agreement with Hanover.

In 1981, this court affirmed the judgment against Lewis and the Church and reversed the judgment against Fried. (Smith v. Fried (1981), 98 Ill. App. 3d 467, 424 N.E.2d 636.) Smith then demanded that Hanover make payment for the amount of the judgment. Fried, however, instructed Hanover to deny the claim for payment, contending that the bond was null and void because it was not issued in compliance with Supreme Court Rule 305(a)(1) (107 Ill. 2d R. 305(a)(1)).

Hanover then filed a declaratory judgment in the circuit court of Cook County. Hanover also petitioned for substitution of counsel, costs and fees. The trial court found that the appeal bond was void because it did not comply with Supreme Court Rule 305(a)(1). However, the court then construed the void bond as a contract between Hanover and Fried, Lewis and the Church for the payment of any judgment in favor of Smith. The trial court thereafter granted summary judgment in favor of Smith and directed Hanover to pay $18,250 to Smith. Pursuant to the trial court's order, Hanover paid the bond to Smith.

In a Supreme Court Rule 23 order issued June 29, 1983, this court reversed that judgment, holding that because the trial court found that the appeal bond was null and void, the void bond could not be rewritten to create a liability in Hanover that did not exist. Thus, this court reversed the trial court's finding that Hanover was liable to Smith.

When Hanover moved to compel restitution from Smith, the trial court denied its motion. On appeal to this court, the trial court's order denying Hanover's motion was reversed and Smith was subsequently ordered by the trial court to pay restitution in the amount of $18,250 to Hanover.

Fried thereafter moved for return of the collateral from Hanover. Hanover, in response, moved for fees and costs arguing that it was entitled to offset any repayment based upon its claim of indemnity. The circuit court found that Fried was entitled to the return of her collateral and that Hanover, in returning the collateral, was entitled to offset the fees and costs expended during litigation. Although Hanover sought indemnification in the amount of $24,408.95, the trial court awarded it $8,600 in fees and $600 in costs to be satisfied from the collateral. Hanover was further ordered to return the balance of $9,050 to Fried. This appeal followed.

This court has previously found that the document entered into between Hanover and Fried clearly reflected the intention of the parties that Hanover's liability, if any, be as surety on the appeal bond. We further found that the function of the bond and the intent of the parties was unambiguous. We further stated that the trial court erred in attempting to rewrite the void bond or to substitute a different contract for the one which was actually executed. Thus, we concluded that ...

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