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07/13/95 ILLINOIS INSURANCE GUARANTY FUND v.

July 13, 1995

ILLINOIS INSURANCE GUARANTY FUND, PLAINTIFF-APPELLEE,
v.
FARMLAND MUTUAL INSURANCE COMPANY, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County. Honorable Aaron Jaffe, Judge Presiding.

Released for Publication September 6, 1995.

The Honorable Justice Cahill delivered the opinion of the court: Theis and S.m. O'brien, JJ., concur.

The opinion of the court was delivered by: Cahill

JUSTICE CAHILL delivered the opinion of the court:

We review a complex but undisputed set of facts that ultimately brought the Illinois Insurance Guaranty Fund and the Farmland Mutual Insurance Company before the trial court to resolve a question of law: Can the phrase "other collectible insurance" in an Illinois policy include the resources of the Guaranty Fund? The trial court answered no. We affirm.

This litigation arose when the Fund sought a declaratory judgment that Farmland was obligated to defend and indemnify certain defendants in underlying litigation. Farmland counterclaimed and asked for a declaration that the Fund was obligated to defend and indemnify because the Fund assumed the obligations of a now insolvent primary insurer. The Fund and Farmland then filed cross motions for summary judgment. The trial court granted summary judgment for the Fund. Farmland appealed.

Donald Hileman was involved in a car collision on November 6, 1990. He was employed by S&S Transportation and was driving a car in the course of his employment. Shields Soil Service owned the car. It gave permission to Hileman, as an employee of S&S Transportation, to drive it.

The driver of the other car filed a personal injury action against Hileman and S&S Transportation. Edison Insurance Company insured S&S Transportation and its employees for $1 million for bodily injury and property damage. Farmland Mutual Insurance Company insured Shields Soil Service as a named insured and S&S Transportation and Hileman, when permissive users of the car, as additional insureds, also for $1 million.

Edison became insolvent. The Illinois Insurance Guaranty Fund assumed Edison's obligations under the Illinois Insurance Guaranty Fund Act (215 ILCS 5/532 et seq. (West 1992)).

With Edison insolvent, S&S Transportation and Hileman tendered their defense to Farmland, but Farmland refused. The Fund then sought a declaration in the circuit court that Farmland must defend and indemnify S&S Transportation and Hileman under the non-duplication of recovery provision of the Act. (215 ILCS 5/546 (West 1992).) That section reads in part:

"Non-duplication of recovery. (a) Any insured or claimant having a covered claim against the Fund shall be required first to exhaust his rights under any provision in any other insurance policy which may be applicable to the claim." (215 ILCS 5/546 (West 1992).)

Farmland's counterclaim sought a declaration that the Fund must defend and indemnify under the "other insurance" clause in Farmland's policy. That clause reads:

"Other insurance

(1) For any covered auto you own, this coverage section provides primary insurance. For any covered auto you don't own, the insurance provided by this coverage section is ...


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