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April 9, 1997


Appeal from the Circuit Court of Madison County. No. 93-L-1336. Honorable A. A. Matoesian, Judge, presiding.

Honorable Gordon E. Maag, J., Honorable Charles W. Chapman, J., and Honorable Richard P. Goldenhersh, J., Concur. Justice Maag delivered the opinion of the court.

The opinion of the court was delivered by: Maag

The Honorable Justice MAAG delivered the opinion of the court:

On July 27, 1993, John Halloran was involved in an automobile accident with another vehicle operated by James Dickerson. The owner of the vehicle being operated by Dickerson was Debra Roberson. John Halloran died the following day of injuries suffered in the accident. June Halloran was appointed executrix of the estate of John Halloran, and she commenced an action against Dickerson premised on alleged negligence and wilful and wanton conduct. In a separate count, Roberson was sued on a negligent entrustment theory.

The defendants were insured under a policy of insurance issued by Union Automobile Insurance Company (Union). The bodily injury limits applicable to each person injured or killed was $25,000. Union assumed the defense of Dickerson and Roberson pursuant to the defense provisions of its policy. On June 22, 1995, a jury returned a verdict in favor of Halloran in the amount of $2.5 million. Judgment was entered on the verdict the same day.

In addition to the $25,000-per-person bodily injury limits, the policy provided:

"Supplementary Payments

In addition to our limit of liability, we will pay on behalf of an "insured":

3. Interest accruing after a judgment is entered in any suit we defend. Our duty to pay interest ends when we offer to pay that part of the judgment which does not exceed our limit of liability for this coverage."

On July 31, 1995, Union mailed a check for $49,041.16 to the Madison County circuit clerk's office to be placed in an escrow account and held by the clerk "until such time as there is a final resolution" of the case. Receipt by the clerk was logged as occurring at 11:57 a.m., August 1, 1995. The check represented what Union believed to be the accrued interest to July 31, 1995, ($24,041.16) along with the $25,000 policy limits. In August 1995, counsel for plaintiff requested the circuit clerk to release the funds from the account to plaintiff. However, when the court approved disbursement of the funds to plaintiff, Union objected. Union faxed a letter to the clerk stating that post-trial motions were pending and that the money was not to be released until a final resolution of the case had occurred. The court then vacated its order to disburse the funds. On September 13, 1995, plaintiff mailed to Union's vice president of claims a list of claimed taxable costs. The total costs claimed amounted to $1,991.60. On April 30, 1996, Union paid the plaintiff $1,991.60, which it designated as payment of court costs.

On September 15, 1995, plaintiffs filed a "Motion to Disburse Funds". The motion recited that a request had been made to release the funds deposited with the clerk, and it asserted that due to Union's objection no disbursement was ordered. It further asserted that the tender to the clerk was improper and invalid, and that in any event the interest amount as computed by Union was deficient. The prayer for relief requested the "court to disburse the funds deposited by Union Insurance Group in this case and to compel payment of all further accrued interest up to the date of valid tender."

On October 6, 1995, following discussions between the parties, it was agreed to suspend the accrual of interest as of that date. The precise terms of the agreement are discussed later in this decision. However, as part of this agreement, Union agreed that no hearing would be necessary on that part of plaintiff's September 15, 1995, motion which sought disbursal of the funds.

Plaintiff finally gained control of the $49,041.16, less a $1,226.03 handling fee (2.5% of the funds held) assessed by the clerk's office, on December 6, 1995. The fee was charged by the clerk pursuant to section 27.1a(bb)(1) of the Clerk of Courts Act (705 ILCS 105/27.1a(bb)(1) (West 1992)).

On April 10, 1996, plaintiff informed Union that its October agreement to stop the accrual of interest was terminated.

On April 26, 1996, a hearing was held on that part of plaintiff's September 15, 1995, motion which sought a court determination as to the amount of interest owed. The court in an order dated May 9, 1996, ruled as follows:


Cause comes on for hearing on Plaintiff's Motion to Disburse Funds. After hearing argument of counsel, the Court finds:

1. Judgment was rendered in the amount of $2,500,000.00 on June 22, 1995;

2. Interest runs at a rate of 9% per annum on said judgment, or $616.44 per diem;

3. On July 31, 1995, Union Automobile Insurance Company sent a check pursuant to its contract with its insured for $49,041.16 to the office of the Circuit Clerk of Madison County, which sum represented the policy limit of $25,000.00 plus $24,041.16 in accrued interest to that date.

4. The court ordered disbursement of the Clerk's fund on August 16, 1995, but Union Insurance objected to this disbursal. The Court then vacated the order to disburse until Union Insurance agreed to disbursement.

5. The Plaintiff was not given access to or control over these funds and, therefore, the Court finds that no valid tender was effected to plaintiff.

6. The Circuit Clerk's office deducted $1,226.03, or 2%, as a handling fee.

7. The defendant failed to pay costs of $1,991.60 until Tuesday, April 30, 1996.

8. On October 6, 1995, plaintiff's counsel agreed with defense counsel, Robert Schultz, to suspend the further accrual of interest as settlement negotiations were beginning.

9. Accrued interest to that date totalled $65,959.08.

10. On December 6, 1995, plaintiff was first given access to and control over the $49,041.16 deposited by defendant with the Madison County Circuit Clerk.

11. At that point, the judgment was reduced by $25,000.00, to $2,475,000.00,; the accrued interest reduced to $41,917.92; with taxable costs of $1,991.60 ...

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