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02/06/97 MARKETVIEW MOTORS v. COLONIAL INSURANCE

February 6, 1997

MARKETVIEW MOTORS, INC., APPELLEE,
v.
COLONIAL INSURANCE COMPANY OF CALIFORNIA, APPELLANT.



The Honorable Justice Miller delivered the opinion of the court. Justice Harrison, dissenting.

The opinion of the court was delivered by: Miller

The Honorable Justice MILLER delivered the opinion of the court:

Plaintiff, Marketview Motors, Inc., filed a declaratory judgment action in the circuit court of Champaign County against defendant, Colonial Insurance Company of California. Marketview alleged Colonial failed to provide proper notice of cancellation of an automobile insurance policy for nonpayment of a premium as required by section 143.15 of the Illinois Insurance Code (215 ILCS 5/143.15 (West 1994)). The trial judge found that proper notice of cancellation had been given and granted summary judgment in favor of Colonial Insurance.

The appellate court reversed. 277 Ill. App. 3d 627. The appellate court held that section 143.15 of the Insurance Code requires an insurance company to provide at least 10 days' actual notice before a cancellation for nonpayment of a premium becomes effective.

Colonial Insurance filed a petition for leave to appeal to this court. 155 Ill. 2d R. 315(a). We allowed Colonial's petition. For the reasons that follow, we reverse the appellate court and affirm the circuit court.

BACKGROUND

In February 1994, Lawrence Miller purchased a 1987 Chevrolet Monte Carlo from Marketview Motors. Marketview retained a lien on the vehicle. Miller purchased an automobile insurance policy from Colonial Insurance to cover the vehicle. Miller later failed to pay his insurance premium.

On March 17, 1994, Colonial mailed a notice of cancellation of Miller's insurance coverage to Miller and Marketview. As a lien holder, Marketview was entitled by statute to notice of this cancellation. 215 ILCS 5/143.14(a) (West 1994). In addition, section 143.15 of the Insurance Code provides:

"All notices of cancellation of insurance as defined in subsections (a), (b) and (c) of Section 143.13 must be mailed at least 30 days prior to the effective date of cancellation to the named insured and mortgagee or lien holder, if known, at the last mailing address known to the company. All notices of cancellation shall include a specific explanation of the reason or reasons for cancellation. However, where cancellation is for nonpayment of premium, at least 10 days notice of cancellation shall be given." 215 ILCS 5/143.15 (West 1994).

Miller's Monte Carlo was involved in an accident. The accident occurred at approximately 5:15 a.m. on either March 28, 1994, as claimed by Marketview, or March 29, 1994, as claimed by Colonial. As a loss payee under the insurance policy, Marketview demanded payment from Colonial. Colonial denied coverage claiming that the insurance policy was canceled at 12:01 a.m. on March 28, 1994, the 11th day after Colonial had mailed notice of cancellation to Miller and Marketview.

Marketview filed a declaratory judgment action against Colonial. In its complaint, Marketview alleged in the alternative that: (1) it did not receive notice of the cancellation; or (2) it "did not receive ten (10) days actual notice prior to cancellation since letters from California to Illinois take several days to deliver." Under either allegation, Marketview claimed Colonial failed to satisfy the requirements of section 143.15. Therefore, Marketview claimed the Monte Carlo was still insured when the accident occurred.

Colonial filed a motion for summary judgment. Colonial stated it mailed notice of cancellation to Miller and Marketview 11 days prior to canceling Miller's policy for nonpayment of the premium. Colonial stated it was immaterial whether the accident occurred on March 28 or 29, 1994, because either date was subsequent to the cancellation of the policy. Colonial argued that mailing is the operative act under section 143.15 and that neither actual notice nor additional time for mail delivery is required under the language of the statute.

The trial judge agreed with Colonial and granted Colonial's motion for summary judgment. The appellate court reversed the judgment of the circuit court and remanded for factual findings as to when the accident occurred and when notice was received by Marketview. 277 Ill. App. 3d at 632.

The appellate court held that section 143.15 of the Insurance Code requires an insurer to provide at least 10 days' actual notice to an insured and any mortgagee or lien holder of the insured property before a cancellation for nonpayment of a premium becomes effective. In support of its holding, the appellate court found that section 143.15 contains in one section two distinct provisions ...


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