{ "id": 1582650, "name": "LaSalle National Insurance Company, Plaintiff-Appellee, v. Executive Auto Leasing Company, and Arthur Malkin, Defendants-Appellants", "name_abbreviation": "LaSalle National Insurance v. Executive Auto Leasing Co.", "decision_date": "1970-03-19", "docket_number": "Gen. No. 53,916", "first_page": "430", "last_page": "439", "citations": [ { "type": "official", "cite": "121 Ill. App. 2d 430" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "154 NE2d 683", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1958, "opinion_index": 0 }, { "cite": "15 Ill2d 272", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2766109 ], "year": 1958, "opinion_index": 0, "case_paths": [ "/ill-2d/15/0272-01" ] }, { "cite": "235 NE2d 857", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1968, "opinion_index": 0 }, { "cite": "92 Ill App2d 163", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 5322399 ], "year": 1968, "opinion_index": 0, "case_paths": [ "/ill-app-2d/92/0163-01" ] }, { "cite": "214 NE2d 1", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1966, "opinion_index": 0 }, { "cite": "67 Ill App2d 395", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 5290328 ], "year": 1966, "opinion_index": 0, "case_paths": [ "/ill-app-2d/67/0395-01" ] }, { "cite": "92 NE 814", "category": "reporters:state_regional", "reporter": "N.E.", "year": 1910, "opinion_index": 0 }, { "cite": "246 Ill 188", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 3400656 ], "year": 1910, "opinion_index": 0, "case_paths": [ "/ill/246/0188-01" ] }, { "cite": "125 SE2d 729", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1962, "opinion_index": 0 }, { "cite": "105 Ga App 833", "category": "reporters:state", "reporter": "Ga. App.", "case_ids": [ 1597950 ], "year": 1962, "opinion_index": 0, "case_paths": [ "/ga-app/105/0833-01" ] }, { "cite": "216 NE2d 252", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1966, "opinion_index": 0 }, { "cite": "69 Ill App2d 224", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 2592354 ], "year": 1966, "opinion_index": 0, "case_paths": [ "/ill-app-2d/69/0224-01" ] } ], "analysis": { "cardinality": 679, "char_count": 15070, "ocr_confidence": 0.614, "pagerank": { "raw": 1.972323753444503e-07, "percentile": 0.7394658916407868 }, "sha256": "e126c6ac3d132c52dcd1b3b93836f2488de3a048324efd903767563d34841d41", "simhash": "1:6ac3a47b6bffa99f", "word_count": 2420 }, "last_updated": "2023-07-14T21:12:45.000190+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "LaSalle National Insurance Company, Plaintiff-Appellee, v. Executive Auto Leasing Company, and Arthur Malkin, Defendants-Appellants." ], "opinions": [ { "text": "MR. PRESIDING JUSTICE DEMPSEY\ndelivered the opinion of the court.\nThe defendant, Executive Auto Leasing Co., appeals from a summary judgment entered for the plaintiff, La Salle National Insurance Company, in a declaratory judgment action for the interpretation of a fleet automobile insurance policy. The trial court entered judgment in favor of the plaintiff for $121,104.39, the amount alleged due under the retrospective premium endorsement of the policy. Executive contends that the pleadings, admissions and affidavits raised genuine issues of material fact which required determination by a jury.\nIn September 1962, Executive and LaSalle entered into a three-year contract whereby LaSalle insured against liability for bodily injury, property damage and medical payments those lessees of Executive who chose to receive its coverage. The policy was retrospective, i. e., one in which the premium was to be based upon the insurer\u2019s loss experience during the entire term of the policy. The retrospective premium due to LaSalle was to be determined by multiplying the amount of the incurred losses by the factor of 1.4556. The contract incorporated maximum and minimum amounts of annual earned premiums which were to be based on Executive\u2019s gross receipts. In the event that LaSalle\u2019s loss experience was higher than estimated, a maximum of 6.844% was to be paid; conversely, there was to be a minimum annual premium equal to 4.526% of gross receipts. Since the actual amount of the earned premium was not to be determined until the expiration of the policy period, the policy made provision for Executive to make annual payments to LaSalle, again based on a percentage of gross receipts. These payments were to be applied against the final amount of the earned premium which would be calculated after the expiration of the policy.\nExecutive paid the standard premium each year for the life of the policy; LaSalle audited the accounts each year. In September 1967, LaSalle filed an adjusted premium statement indicating that $121,104.39 was due from Executive. This computation showed a retrospective premium which exceeded the maximum earned premium, as based on the percentage of Executive\u2019s gross receipts! Based on the maximum allowable percentage, the earned premium was determined to be $407,479.71. After giving credit for payments previously made by Executive during the policy term, LaSalle determined that the premium balance was $121,104.39.\nLaSalle\u2019s complaint alleged the above facts and also claimed that the amount of gross receipts should be equal to the aggregate rentals received by Executive under the lease agreements for which LaSalle provided insurance. The complaint averred that Executive had wrongly excluded from the gross receipts a certain portion of these rentals, thereby depriving LaSalle of the full premium due. LaSalle sought a construction of the policy and a determination that Executive was liable for the unpaid premium balance.\nIn its answer, Executive denied that LaSalle\u2019s incurred losses were as high as LaSalle asserted and it asked that the trial court determine the actual incurred losses for each calendar year of the policy. The answer alleged that the term \u201cgross receipts,\u201d as defined in the policy, did not include those sums received by Executive for such items as the maintenance of the leased autos, their license fees and insurance premiums. Executive also claimed that the premium was to be based on a calendar-year basis rather than on a three-year term as urged by the plaintiff. LaSalle\u2019s reply denied the affirmative allegations set forth in the answer.\nIn answer to LaSalle\u2019s interrogatories, Executive confirmed that its gross receipts from insured lessees was $5,953,823.90 and that from this income it deducted an arbitrary sum for reimbursable expenses. These expenses were various items that its lessees had the option of either providing for themselves or obtaining through Executive on a cost basis. In order to arrive at the net receipts reportable to LaSalle, Executive deducted from the annual amount of gross income received from its insured lessees the sum of $360,000 per year for the first two years of the policy and the sum of $240,000 for the third year.\nExecutive filed a motion for the production of documents relating to LaSalle\u2019s incurred losses, and LaSalle filed one for summary judgment supported by an affidavit from its treasurer. Executive filed objections to LaSalle\u2019s motion and an affidavit from one of its partners. The affidavit and the objections described the negotiations surrounding the issuance of the policy and the interpretation placed on the term \u201cgross receipts\u201d by the parties. Executive presented a motion for leave to amend its answer on the day the summary judgment was entered. The amendment contended that LaSalle was estopped from raising the issue of gross receipts since Executive had acted in reliance on LaSalle\u2019s assurances that the premium was to be based on funds received for the leasing of automobiles and not on funds received for reimbursable expenses. The record is not clear whether the motion to amend was granted.\nThe purpose of the summary judgment procedure is to determine whether there exists a genuine issue of material fact. If there is no such issue the moving party is entitled to summary judgment as a matter of law. If there is such an issue, summary judgment must be denied. The right to summary judgment must be free from doubt. Ill Rev Stats 1967, c 110, sec 57; Anderson v. Prab Conveyers, Inc., 69 Ill App2d 224, 216 NE2d 252 (1966). Executive contends that genuine issues of material fact exist regarding the amount of incurred losses and the definition of the term \u201cgross receipts,\u201d both of which require that the summary judgment granted by the trial court be reversed.\nThe insurance policy defined \u201cincurred losses\u201d to include losses paid by the plaintiff LaSalle, reserves for losses not yet paid, and certain administrative expenses. LaSalle\u2019s premium statement and complaint stated that it had incurred losses of $320,818.81; this figure when multiplied by the factor of 1.4556 resulted in an earned premium of $466,056.64. Executive denied that the incurred loss figure was correct. It requested the production of documents relating to the claimed loss and the reserves therefor. LaSalle had no objection to producing these documents, but the court never ruled upon Executive\u2019s motion.\nLaSalle placed the amount of incurred losses in dispute in its pleadings. Though the amount of paid-out claims is a matter of accounting, an item such as reserves for unliquidated losses involves an exercise of discretion. Supreme Court Rule 201, provides that \u201ca party may obtain by discovery full disclosure regarding any matter relevant to the subject matter involved in the pending litigation.\u201d Ill Rev Stats 1967, c 110A, \u00a7 201. LaSalle has the exclusive control over information regarding the claims made and the amounts sought, as well as a superior opportunity to ascertain their value and the reserves required for them. Premiums due under the policy are initially measured by the amount of incurred losses; thus, the determination of these losses established Executive\u2019s threshold liability to LaSalle. Good cause existed for the production of the documents before summary judgment was granted in order that Executive could determine the factual basis for LaSalle\u2019s assertion that its incurred losses were $320,818.81. The factual issue over the size of the losses might have disappeared if the pertinent documents had been produced; but they were not and the issue was unresolved when the judgment was entered.\nAn issue of even greater materiality concerned Executive\u2019s gross receipts. The alternative method of determining the premium\u2014which came into play because of the size of the incurred losses\u2014was founded on a percentage of the gross receipts. Under the circumstances, the receipts were subject to 6.844%, the maximum percentage permitted by the policy. Gross receipts was defined in the policy as:\n\u201c. . . the total amount the named insured is entitled to receive for the leasing of automobiles under lease agreements requiring the named insured to provide the insurance coverage afforded by this policy.\u201d\nExecutive points to the phrase \u201cfor the leasing of automobiles\u201d and contends that it modifies the words which precede it: \u201cthe total amount the named insured is entitled to receive.\u201d It submits that when this is done it becomes clear that only income received from leasing automobiles was intended to be included in gross receipts, and that additional sums received from the lessees for such items as state and municipal auto licenses, automobile insurance and the maintenance of the leased autos are not embraced within the term \u201cgross receipts.\u201d La Salle contends that the phrase \u201cfor the leasing of automobiles\u201d must be read in conjunction with the words which follow it: \u201cunder lease agreements requiring the named insured to provide the insurance coverage afforded by this policy.\u201d It submits that when this is done it becomes clear that the phrase was intended to differentiate between leasing agreements which provided insurance coverage and those which did not, and thus \u201cgross receipts\u201d includes the aggregate sums received from the insured lessees before any deductions are taken. The trial court gave additional reasons for agreeing with LaSalle\u2019s position. The court stated that the premiums were based on gross receipts, and that gross receipts\u2014 as defined in Webster\u2019s Dictionary, Black\u2019s Law Dictionary, 4th Edition, and in certain cases\u2014meant total receipts before any expenditures were made. The court said that if the parties had intended to give the term a different meaning they should have spelled it out in their policy.\nIn support of its position LaSalle quotes from Sheriff v. Moore, 105 Ga App 833,125 SE2d 729 (1962):\n\u201c \u2018Gross receipts\u2019 as used in an insurance policy in providing a method of determining the premium to be paid, is not an ambiguous term. The words mean the whole, entire, total receipts, as opposed to \u2018net receipts.\u2019 . . . and under ordinary basis method of handling accounts the term must be taken to include the whole total gross receipts without any deductions.\u201d\nThere is no indication in Sheriff that the insurance policy in that case defined the term \u201cgross receipts\u201d as it was defined in the present policy. Nor is State v. Illinois Central R. Co., 246 Ill 188, 92 NE 814 (1910), a tax case which LaSalle cites, apposite here. When a tax is levied on gross receipts it applies to every penny a person, firm or corporation takes in regardless of the source whence it comes. In the present case the parties attempted to give their own definition to gross receipts. The policy must be construed, therefore, in accordance with their understanding of the term.\nIt indeed would have been well, as the trial court said, if the parties had spelled out precisely what they meant by gross receipts. As it is, their contractual definition is susceptible of either LaSalle\u2019s or Executive\u2019s construction. A contract is ambiguous if the words used by the parties are fairly susceptible of being understood in more than one sense. Coney v. Rockford Life Ins. Co., 67 Ill App2d 395, 214 NE2d 1 (1966). In the construction of a contract the determining factor is the intention of the parties. If possible, the intention must be ascertained from the language employed in the contract (Industrial Commodity Corp. v. E. J. Brach & Sons, 92 Ill App2d 163, 235 NE2d 857 (1968)) but if this is impossible, the language may be explained by extrinsic evidence so that the true intention of the parties may be learned. Martindell v. Lake Shore Nat. Bank, 15 Ill2d 272, 154 NE2d 683 (1958).\nThe present policy requires extrinsic evidence to ascertain the intent of the parties at the time they entered into it. Admissible facts and circumstances surrounding the making of the contract, the interpretation placed upon it by the parties contemporaneously with its making or by their performance under its terms, acts by one party which may have indicated acceptance of the other\u2019s interpretation, may aid the court or jury in reaching the correct construction. The ambiguity of the policy created a genuine issue of material fact.\nTwo additional points are raised by Executive: (1) that the premium should have been computed for each year of the policy rather than at its expiration, and (2) that LaSalle is estopped from computing the premium\u2014two years after the policy ended\u2014on the basis of its own interpretation of gross receipts. As to the first, Executive says it is entitled to judgment as a matter of law and as to the second, that it is entitled to a trial.\nAs this opinion has pointed out, the three-year policy provided for a retrospective premium upon the policy\u2019s expiration. This was for the purpose of enabling the insurer to determine its incurred losses with finality and to adjust the final premium in relation to the fixed monthly and minimum annual premiums paid during the life of the policy. The trial court correctly ruled that a computation based on the whole period of the policy was proper.\nExecutive\u2019s amended answer raised the defense of estoppel. The defense must be considered in connection with an affidavit submitted by Executive which stated that under a prior policy with another insurance company it had paid a premium based on leasing income only; that LaSalle was informed of this and copied the prior policy\u2019s definition of gross receipts into its policy, and that during the life of the LaSalle policy Executive operated just as it had under the prior policy without objection by LaSalle. On appeal, LaSalle responds that such extrinsic evidence would violate the paroi evidence rule and is not admissible where a contract is complete and unambiguous. We have found, however, that the policy is ambiguous and that appropriate extrinsic evidence may be received to clarify the ambiguity. The amended answer raised a material factual issue which also entitled Executive to a trial. However, as we mentioned earlier, it is not clear whether the motion to amend was allowed. This question can be resolved on remand.\nThe insurance policy, the pleadings of the parties and their affidavits raised the factual issues of incurred losses, the meaning of gross receipts, and estoppel. Summary judgment should not have been granted. The judgment is reversed and the cause remanded.\nReversed and remanded.\nSCHWARTZ and McNAMARA, JX, concur.", "type": "majority", "author": "MR. PRESIDING JUSTICE DEMPSEY" } ], "attorneys": [ "Mayer, Friedlich, Spiess, Tierney, Brown & Platt, of Chicago (George W. Hamman and Neil G. Bluhm, of counsel) , for appellants.", "Charles N. Salzman, Sheldon Karon, and Laurance P. Nathan, of Chicago (Friedman, Koven, Shapiro, Salzman, Koenigsberg, Specks & Homer, of counsel), for appellee." ], "corrections": "", "head_matter": "LaSalle National Insurance Company, Plaintiff-Appellee, v. Executive Auto Leasing Company, and Arthur Malkin, Defendants-Appellants.\nGen. No. 53,916.\nFirst District, Third Division.\nMarch 19, 1970.\nRehearing denied April 23, 1970.\nMayer, Friedlich, Spiess, Tierney, Brown & Platt, of Chicago (George W. Hamman and Neil G. Bluhm, of counsel) , for appellants.\nCharles N. Salzman, Sheldon Karon, and Laurance P. Nathan, of Chicago (Friedman, Koven, Shapiro, Salzman, Koenigsberg, Specks & Homer, of counsel), for appellee." }, "file_name": "0430-01", "first_page_order": 436, "last_page_order": 445 }