Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Jewelers Mutual Insurance Co. v. Firstar Bank Illinois

November 18, 2004

JEWELERS MUTUAL INSURANCE COMPANY ET AL., APPELLEES,
v.
FIRSTAR BANK ILLINOIS, APPELLANT.



The opinion of the court was delivered by: Justice Thomas

Docket No. 96805-Agenda 22-September 2004.

At issue is whether the exculpatory clause in defendant Firstar Bank's safety deposit box rental agreement is enforceable under the facts of this case. We hold that it is not.

BACKGROUND

More than $1 million worth of loose diamonds and jewelry was stolen from three safety deposit boxes that defendant leased to jewel dealers at one of its Chicago branches. The safety deposit box lease agreements provided that the relationship of the parties was that of landlord and tenant, not bailor and bailee. Additionally, the agreement contained the following paragraph:

"1. It is understood that said bank has no possession or custody of, nor control over, the contents of said safe and that the lessee assumes all risks in connection with the depositing of such contents, that the sum mentioned is for the rental of said safe alone, and that there shall be no liability on the part of said bank, for loss of, or injury to, the contents of said box from any cause whatever unless lessee and said bank enter into a special agreement in writing to that effect, in which case such additional charges shall be made by said bank as the value of contents of said safe, and the liability assumed on account thereof may justify. The liability of said bank is limited to the exercise of ordinary care to prevent the opening of said safe by any person not authorized and such opening by any person not authorized shall not be inferable from loss of any of its contents."

None of the dealers had entered into the "special agreement" referenced in the first sentence of this paragraph (hereinafter, the exculpatory clause). Two of the dealers, Annaco Corporation and Irving M. Ringel, Inc., had the contents of their boxes insured by plaintiff Jewelers Mutual Insurance Company. The third dealer, Bachu Vaidya, did not have the contents insured. Jewelers Mutual paid losses totaling $887,400.37 to its two insureds, and then brought a subrogation action against defendant. The complaint alleged breach of contract and negligence. Vaidya sued defendant directly in a separate action and sought recovery under the same theories. In its answer in both cases, defendant admitted that it had been negligent in one or more of the respects alleged by plaintiffs and that it had breached the agreement in one or more of the respects alleged by plaintiffs.

Relying on the exculpatory clause, defendant moved for and was granted summary judgment in both cases. In Vaidya's case, the court dismissed the negligence count based on Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69, 88-89 (1982). Although that issue was also raised by defendant in the other case, the trial court made no specific findings on that issue. Plaintiffs appealed, and the two cases were consolidated.

The appellate court affirmed the dismissal of the negligence count in Vaidya's case, holding that the negligence count was barred by Moorman. 341 Ill. App. 3d 14, 22. However, the court reversed the summary judgment in favor of defendant in both cases on the breach of contract counts, holding that the exculpatory clause was unenforceable. The court gave two reasons for finding the clause unenforceable. First, that the contract was ambiguous because the first sentence of paragraph one provided that "there shall be no liability," while the second sentence said that the "liability of said bank is limited to the exercise of ordinary care." 341 Ill. App. 3d at 18. The court held that the ambiguity had to be resolved against defendant because it drafted the contract. 341 Ill. App. 3d at 18. Next, the court held that, because the parties had defined their relationship as landlord and tenant, they subjected their relationship to the Landlord and Tenant Act (765 ILCS 705/.01 et seq. (West 2002)). The Act provides that exculpatory clauses that excuse a landlord from liability for his own negligence are void as against public policy. 765 ILCS 705/1 (West 2002). The court rejected defendant's argument that the Act did not apply because a lease of a safety deposit box is not a lease of "real property." The court held that the boxes were fixtures to real property, and that therefore the Act applied. 341 Ill. App. 3d at 20. The court stated that defendant had admitted that it allowed unauthorized access to the safety deposit boxes in both cases, and therefore the court granted in part Jewelers Mutual's motion for summary judgment and directed the entry of partial summary judgment for Vaidya. The court remanded for proof of damages. 341 Ill. App. 3d at 23.

Presiding Justice McBride dissented from the reversal of summary judgment for defendant. She disagreed with the majority's conclusion that the contract was ambiguous. She believed that the two sentences in paragraph one could be reconciled by reading the second sentence as referring to the "special agreement" mentioned in the first sentence. 341 Ill. App. 3d at 27 (McBride, P.J., concurring in part and dissenting in part). In other words, the paragraph means that defendant has no liability for any loss whatsoever, unless the parties enter into the special agreement referenced in the first sentence. If they do, then defendant's liability is limited to the exercise of ordinary care to prevent unauthorized access to the box. 341 Ill. App. 3d at 27 (McBride, P.J., concurring in part and dissenting in part). Additionally, Presiding Justice McBride disagreed with the majority's conclusion about the Landlord and Tenant Act. She argued that the lease was for personal property rather than real property, and that the parties had not subjected themselves to the Act merely by defining their relationship as landlord and tenant. 341 Ill. App. 3d at 24 (McBride, P.J., concurring in part and dissenting in part). Finally, she did not believe that the exculpatory clause was void as against public policy because safety deposit companies are not generally insurers of the safety of the box contents. 341 Ill. App. 3d at 27 (McBride, P.J., concurring in part and dissenting in part). We allowed defendant's petition for leave to appeal. 177 Ill. 2d R. 315.

ANALYSIS

Summary judgment is proper where the pleadings, affidavits, depositions, admissions, and exhibits on file, when viewed in the light most favorable to the non-movant, reveal that there is no issue as to any material fact and that the movant is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2002). We review summary judgment orders de novo. Roth v. Opiela, 211 Ill. 2d 536, 542 (2004).

Defendant first argues that the court erred in finding paragraph one ambiguous. According to defendant, although this provision could have been drafted better, its meaning is clear. Defendant contends that the word "liability" is used two different ways in the first and second sentences. In the first sentence, it refers to the amount of damages for which defendant can be held responsible. In the second sentence, the word "liability" addresses the standard of care. Thus, the second sentence means that defendant has a duty to exercise ordinary care to prevent the unauthorized opening of the box, but the first sentence limits the amount of damages that can be collected for a breach of that duty. At oral argument, defendant clarified that its position was that the only damages that a customer could recover if defendant breaches its duty of care would be a return of the rental fee. Defendant argues that this interpretation takes into account the commercial setting in which the parties contracted and also fairly allocates the liability to the party who elected to bear the risk of loss. Here, none of the parties entered into the special agreement referenced in the first sentence to insure the contents of the box. Defendant argues that Annaco Corporation and Irving M. Ringel, Inc., insured the contents of the boxes with Jewelers Mutual and thus elected that Jewelers Mutual would bear the risk of loss. Vaidya did not purchase insurance and thus chose to bear the risk of loss himself.

We disagree with defendant's argument. First, the first sentence of paragraph one is simply not a limitation of damages clause. That sentence provides that the customer assumes all risks of depositing the contents of the box with defendant and that there "shall be no liability on the part of said bank, for loss of, or injury to, the contents of said box from any cause whatever." The clause does not say that, in the event of a breach, the plaintiff's damages are limited to a return of the rental fee. Rather, it is a general exculpatory clause purporting to exculpate defendant from all liability for loss of or damage to the contents of the box. In the very next sentence, however, defendant assumes one particular liability: it must exercise ordinary care to prevent the unauthorized opening of the box. We do not believe that the clauses can be reconciled in the manner suggested by defendant.

Further, defendant's invocation of insurance law "risk of loss" concepts is a red herring. The issue in this case is not a dispute between insurance companies over who bore the risk of loss. The issues are whether defendant breached the contract it entered into with plaintiffs and whether defendant can exculpate ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.