Appeal from the Circuit Court of Kane County. No. 91-MR-337. Honorable R. Peter Grometer, Judge, Presiding. This Opinion Substituted on Denial of Rehearing for Withdrawn Opinion of November 21, 1994, Previously
Rehearing Denied February 14, 1995.
The Honorable Justice Rathje delivered the opinion of the court: Inglis, P.j., and Doyle, J., concur.
The opinion of the court was delivered by: Rathje
JUSTICE RATHJE delivered the opinion of the court:
After filing a prior opinion, a petition for rehearing was filed by the defendant. The petition for rehearing was filed following the retirement of Justice Alfred E. Woodward. Justice S. Louis Rathjewas substituted and has read the briefs and petition. We have withdrawn the original opinion and now file this new opinion in its stead.
Plaintiff, Chrysler First Corporation (Chrysler), appeals from an order of the circuit court of Kane County granting summary judgment on its complaint for declaratory judgment to the defendant, State Farm Insurance Company (State Farm).
In its complaint, Chrysler alleged that on or about June 4, 1990, it financed Steven M. Spano's purchase of a boat and trailer in the principal sum of $27,000. The retail installment contract provided that Chrysler had a security interest in the boat and trailer as well as any insurance proceeds in order to secure payment of the loan. The installment contract required Spano to obtain property insurance on the boat and trailer. The title to the boat listed Chrysler as the first lienholder.
On or about June 22, 1990, Spano completed an application for insurance with State Farm. In completing the application, Spano denied that within the past three years an insurer had cancelled, refused to issue, or refused to renew a boat or automobile insurance policy. Spano also denied having received any tickets for boating or traffic violations. The application listed Chrysler as the "loss payee."
By letter dated July 13, 1990, State Farm notified Spano that it was unable to insure his boat and that the effective date of cancellation was August 17, 1990. It is disputed whether State Farm notified Chrysler of the cancellation of the coverage. On July 31, 1990, Spano's boat and trailer were stolen. Both the police and State Farm were informed of the theft. By letter dated April 2, 1991, State Farm notified Spano that it was rescinding the insurance coverage because Spano had received two speeding tickets, and his boat insurance had been cancelled by Allstate effective July 12, 1990. After State Farm refused to pay Chrysler the policy proceeds for the loss of the boat and trailer, Chrysler brought the present action.
The trial court granted State Farm's motion for summary judgment and denied Chrysler's motion for reconsideration. This appeal followed.
Summary judgment should only be granted when the pleadings, affidavits, and other evidence on file show that there is no genuine issue of material fact such that the movant's right to judgment is absolutely clear and free from doubt. (735 ILCS 5/2-1005 (West 1992); Green v. International Insurance Co. (1992), 238 Ill. App. 3d 929, 933, 179 Ill. Dec. 111, 605 N.E.2d 1125.) The standard of review is de novo. The appellate court determines whether the trial court's ruling was correct by considering anew the facts and law related to the case. (Wiseman-Hughes Enterprises, Inc. v. Reger (1993), 248 Ill. App. 3d 854, 857, 187 Ill. Dec. 589, 617 N.E.2d 1310.) In making this determination, the evidence is to be construed strictly against the moving party and liberally construed in favor of the opponent. ( Crane v. Triangle Plaza, Inc. (1992), 228 Ill. App. 3d 325, 329, 169 Ill. Dec. 432, 591 N.E.2d 936.) Even if the facts are not in dispute, if reasonable people could draw conflicting inferences from the undisputed facts, the court should deny summary judgment. Green, 238 Ill. App. 3d at 933-34.
Chrysler contends, first, that it is not a loss payee but rather a mortgagee. In Foremost Insurance Co. v. Allstate Insurance Co. (1992), 439 Mich. 378, 486 N.W.2d 600, the court explained the distinction as follows:
"In general, there are two types of loss payable clauses, otherwise known as mortgage clauses, contained in insurance policies which protect lienholders. The first type, commonly known as an ordinary loss payable clause, directs the insurer to pay the proceeds of the policy to the lienholder, as its interest may appear, before the insured receives payment on the policy. Under this type of policy, the lienholder is simply an appointee to receive the insurance fund to the extent of its interest, and its right of recovery is no greater than the right of the insured. There is no privity of contract between the two parties because there is no consideration given by the lienholder to the insured. Accordingly, a breach of the conditions of the policy by the insured would prevent recovery by the lienholder.
The second type of loss payable clause is known as a standard loss payable clause. Under this type of clause, a lienholder is not subject to the exclusions available to the insurer against the insured because an independent or separate contract of insurance exists between the lienholder and the insurer. In other words, there are two contracts of insurance within the policy--one with the lienholder and the insurer and the other with the insured and the insurer. Under the standard loss payable clause, the consideration for the insurer's ...