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08/01/89 Continental National v. Aetna Life and Casualty

August 1, 1989





542 N.E.2d 954, 186 Ill. App. 3d 891, 134 Ill. Dec. 608 1989.IL.1188

Appeal from the Circuit Court of Cook County; the Hon. Harold A. Siegan, Judge, presiding.


JUSTICE HARTMAN delivered the opinion of the court. SCARIANO and DiVITO, JJ., concur.


We are asked to review the issue of whether an insurance policy underwritten for the lessor of a truck, or a different insurance policy underwritten for the lessee of the truck, provides coverage for an accident involving the truck. An amended complaint for declaratory judgment and an amended counterclaim seeking the same relief brought this matter to issue, followed by a motion and cross-motion for summary judgment on the issue of which policy applied. The circuit court declared that both policies of insurance provided co-primary coverage for the truck's lessor, lessee and driver. Plaintiffs/cross-defendants Continental National America Insurance Company and Glen E. Meyer Cartage Company (sometimes collectively CNA) appeal.

Plaintiff/cross-defendant Glen E. Meyer Cartage Company (Meyer) is an Illinois corporation engaged in the business of transporting "various materials" such as dirt, sand and gravel within Illinois. Defendant/counterplaintiff F. Smith Cartage, Inc. (Smith), also an Illinois corporation, similarly transports "materials" within the State. On March 30, 1983, Smith and Meyer entered into a written agreement whereby Meyer leased to Smith a 1972 Mack truck for three years, and under which they agreed that for the "duration" of the lease the truck would remain in Smith's "exclusive possession, control, use and responsibility during the periods the vehicle is operated by or for [Smith]." Another paragraph in the agreement obligated Smith to "maintain and provide insurance coverage for the protection of the public pursuant to the requirements of section 18--701 of the Illinois Motor Carrier of Property Law2 and the requirements of the Illinois Commerce Commission promulgated thereunder." The lease further provided Smith with a Meyer employee, Junior Martin (Martin), to drive the truck.

On June 18, 1984, the leased truck, driven by Martin, collided with an automobile, fatally injuring the automobile's driver, Michael McLeod (McLeod). The special administrator of McLeod's estate filed a wrongful death claim in the circuit court of Cook County (McLeod or McLeod claim) and, in his amended complaint filed April 24, 1986, named Smith, Martin and Glenn E. Meyer, owner of Meyer, as defendants.

CNA, liability insurer for Meyer and Martin, filed a complaint on January 29, 1986, and on September 16, 1986, an amended complaint, for declaratory judgment. CNA, among other things, alleged: it tendered defense of McLeod to defendant/counterplaintiff Aetna Casualty & Surety Company, liability insurer for Smith (sometimes collectively Aetna); Meyer "enjoyed liability coverage under [Smith's] policy with Aetna"; and "Aetna was the primary insurer of the leased truck under the terms of the lease agreement and the insurance policies," which Aetna denied and refused to defend McLeod. CNA requested that the circuit court declare Aetna the primary insurer, "obligated to defend . . . Martin and Meyer in the suit brought by McLeod's Administrator" and find CNA the excess insurer for purposes of the McLeod litigation.

Aetna answered the complaint and filed a counterclaim and an amended counterclaim for declaratory judgment in which the first count requested that the circuit court declare neither Martin nor Meyer qualified as insureds under the Aetna policy, relieving Aetna of any burden to defend or indemnify them against allegations raised in McLeod. In count II, Aetna sought a ruling that, with regard to McLeod : CNA and Aetna must bear equally the expenses incurred defending Smith; Meyer's CNA policy obliges CNA to provide Meyer and Martin with primary coverage; and the Aetna policy purchased by Smith provides no coverage to Meyer.

CNA moved for summary judgment, to which Aetna responded and filed its own cross-motion for summary judgment. Aetna asked the circuit court in its motion to find CNA the primary insurer of Martin, Smith and Meyer for the McLeod claim. Each party subsequently filed replies in support of their motions and responses to the opposing parties' objections.

The circuit court declared that "each carrier . . . shall bear 50% of the expense involved in defending each defendant in the underlying action and each carrier shall bear 50% of any indemnification obligation which shall arise up to the limits of their respective policies of insurance." CNA appeals.

CNA identifies error in the circuit court's failure to find Aetna obligated to furnish primary coverage to Meyer, Martin and Smith in the McLeod claim and CNA responsible only for excess coverage.

The parties stipulated below to the material facts defining this case, including the operative clauses of the insurance contracts and the leasing arrangement between the insureds; this court may decide the issue, therefore, as a matter of law. Rockford ...

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