{ "id": 251569, "name": "ILLINOIS INSURANCE GUARANTY FUND, Plaintiff-Appellee, v. EVANSTON PAPER AND PAPER SHREDDING COMPANY, INC., et al., Defendants-Appellants", "name_abbreviation": "Illinois Insurance Guaranty Fund v. Evanston Paper and Paper Shredding Co.", "decision_date": "1995-04-21", "docket_number": "No. 1 \u2014 93\u20144121", "first_page": "405", "last_page": "410", "citations": [ { "type": "official", "cite": "272 Ill. App. 3d 405" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "204 N.E.2d 310", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "55 Ill. App. 2d 277", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 5283509 ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/55/0277-01" ] }, { "cite": "393 N.E.2d 1223", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "75 Ill. App. 3d 298", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3276581 ], "pin_cites": [ { "page": "304-05" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/75/0298-01" ] }, { "cite": "419 So. 2d 57", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 9525857 ], "weight": 2, "pin_cites": [ { "page": "59" } ], "opinion_index": 0, "case_paths": [ "/so2d/419/0057-01" ] }, { "cite": "16 F.3d 1465", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 10536824 ], "weight": 3, "pin_cites": [ { "page": "1468" }, { "page": "1469" } ], "opinion_index": 0, "case_paths": [ "/f3d/16/1465-01" ] }, { "cite": "635 N.E.2d 843", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "262 Ill. App. 3d 933", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2849588 ], "weight": 2, "pin_cites": [ { "page": "937-38" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/262/0933-01" ] } ], "analysis": { "cardinality": 534, "char_count": 11203, "ocr_confidence": 0.77, "pagerank": { "raw": 1.0535543514741648e-07, "percentile": 0.5547253913259036 }, "sha256": "28c7521c729900b38bd3b45302023ce23f330a920e8a63ac8262970647ff36b5", "simhash": "1:264bb1fea3625981", "word_count": 1761 }, "last_updated": "2023-07-14T18:46:33.224419+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "ILLINOIS INSURANCE GUARANTY FUND, Plaintiff-Appellee, v. EVANSTON PAPER AND PAPER SHREDDING COMPANY, INC., et al., Defendants-Appellants." ], "opinions": [ { "text": "JUSTICE McNULTY\ndelivered the opinion of the court:\nThis case concerns the consequences of a premium finance company\u2019s cancellation of insurance allegedly in violation of the finance company\u2019s statutory duties. We hold that if the insured grants the finance company the power to cancel the insurance contract, the insurer may cancel the contract at the finance company\u2019s behest. If the finance company has violated its statutory duties by requesting cancellation of the insurance, the insured must seek reparation from the finance company and not the insurer, who has no continuing duty to insure under the cancelled contract.\nOn December 15, 1983, Mission National Insurance Company (Mission) issued a policy insuring Evanston Paper & Paper Shredding Company (Evanston) for three years against many risks, including the risk of loss of a building Evanston owned. Evanston obtained a loan from Afeo Credit Corporation (Afeo), a premium finance company, to pay the premium for the period from December 15, 1984, until December 15, 1985. The loan agreement states that Evanston \"irrevocably appoints Afeo its Attorney-In-Fact with full authority to cancel the insurance policies.\u201d\nOn September 19, 1985, Afeo mailed to Evanston a \"Notice of Cancellation\u201d which said that because the bank did not honor Evanston\u2019s last loan repayment check, Evanston had defaulted on the loan and, therefore, Afeo would cancel the insurance on September 24, 1985. When he received the notice of cancellation, the president of Evanston immediately called Afeo, and Afeo told him it would not cancel the policy for another 10 days. Within that time Ev-anston mailed payment to Afeo; however, on September 30, 1985, Mission received a notice of cancellation from Afeo.\nWhen Afeo received Evanston\u2019s check, it sent Mission a request for reinstatement of Evanston\u2019s insurance, and it sent a copy to Ev-anston. The request states:\n\"TO THE INSURED:\nThe policies listed above are cancelled and are not in force until the insurance company advises you to the contrary. If you are not advised promptly, contact your insurance agent. If your insurance coverage is not reinstated, all payments made following cancellation will be credited to your account. The fact that you continue to make payments to Afeo does not mean your insurance is in force. Only the insurance companies or your agent can advise you as to the status of your insurance coverage.\u201d (Emphasis omitted.)\nMission did not respond to the request for reinstatement.\nOn October 16, 1985, a fire destroyed Evanston\u2019s building. Evans-ton filed a proof of loss with Mission, and Mission sued for a judgment declaring that it had no liability because it cancelled the policy before the fire. While the suit was pending, California courts ordered Mission liquidated, and the trial court here permitted the Illinois Insurance Guaranty Fund (the Fund) to substitute for the defunct Mission as plaintiff in this suit. The trial court granted the Fund\u2019s motion for summary judgment and Evanston appeals.\nEvanston contends that Mission could not effectively cancel the policy because Afeo failed to give Evanston the notice required by the statutes then in effect. Section 521 of the Illinois Insurance Code provided:\n\"When a premium finance agreement contains a power of attorney enabling the premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled by the premium finance company unless such cancellation is effectuated in accordance with this Section.\n(1) Not less than 10 days written notice shall be mailed to the insured of the intent of the premium finance company to cancel the insurance contract unless the default is cured within such 10 day period.\u201d (Ill. Rev. Stat. 1985, ch. 73, par. 1065.68 (now 215 ILCS 5/513all (West 1992)).)\nThe notice of cancellation mailed on September 19, 1985, cannot qualify as the notice of intent to cancel required by statute, in part because Afeo sent the notice of cancellation only five days before the stated cancellation date. Evanston contends that under the statute the insurance must remain in effect because in the absence of required notice the policy \"shall not be cancelled.\u201d Ill. Rev. Stat. 1985, ch. 73, par. 1065.68.\nIn Haft v. Charter Oak Fire Insurance Co. (1994), 262 Ill. App. 3d 933, 635 N.E.2d 843, the appellate court rejected the statutory interpretation Evanston proposes here. Unigard, a premium finance company, failed to send the required notice of intent to cancel before sending a notice of cancellation to the insurance company. Haft, the insured, sued Unigard and the trial court entered judgment against Unigard for the coverage stated in the insurance policy less the amount Haft received in settlement with other defendants. In affirming the judgment, the appellate court said:\n\"Unigard reasons that if section 521 was violated then the policy was never cancelled and Haft must seek recovery from the insurer.\nWith this interpretation Unigard attempts to impose a duty on the insurer the legislature did not intend. The statute states that the insurance policy 'shall not be cancelled\u2019 by the premium finance company unless it follows certain requirements. (Ill. Rev. Stat. 1983, ch. 73, par. 1065.68.) Had the legislature intended a violation of section 521 to block cancellation of the policy, then it could have so stated. It could have used the same language of section 143.14, which requires the insurer to send notice of cancellation to the named insured. If an insurer violates this section the result is that '[n]o notice of cancellation of any policy of insurance *** shall be effective.\u2019 (Emphasis added.) Ill. Rev. Stat. 1983, ch. 73, par. 755.14.\nUnigard caused the policy to be cancelled when it sent the request to cancel to the insurer. The insurer cancelled the policy, according to statutory provisions. Section 521 imposes duties on premium finance companies.\u201d (Haft, 262 Ill. App. 3d at 937-38.) Because Unigard violated those duties, the court held that it was liable for the loss of insurance.\nA Federal court interpreting section 521 of the Insurance Code reached the same conclusion. In Universal Fire & Casualty Insurance Co. v. Jabin (7th Cir. 1994), 16 F.3d 1465, the court concluded that section 521 \"confers upon the insured a cause of action against the premium finance company for any cancellation it effectuates in breach of the Act\u2019s notice requirements.\u201d (Jabin, 16 F.3d at 1468.) Section 521 cannot help an insured state a cause of action against an insurer, since the section addresses the duties of only premium finance companies. The court reasoned:\n\"If we were to hold that insurers *** could not effectively cancel their policies due to the finance company\u2019s violation of the Act, then we would charge insurers with bearing the burden of the finance company\u2019s duty to notify. *** We refuse to read the premium financing statute as making insurers responsible for the wrongdoing of premium finance companies.\u201d Jabin, 16 F.3d at 1469.\nCases from other jurisdictions which Evanston cites to the contrary show that the statutory interpretation Evanston proposes would, in fact, leave the insurer solely liable. In Carroll v. State Farm Mutual Automobile Insurance Co. (La. Ct. App. 1982), 419 So. 2d 57, the trial court allowed the insured to recover from the insurer because the premium finance company failed to mail the requisite notice of intent to cancel. The trial court also granted the insurer full indemnity from the premium finance company. On appeal the court affirmed the insured\u2019s recovery but limited the insurer\u2019s recovery to premiums it had refunded, because that was the total of its detrimental reliance. (Carroll, 419 So. 2d at 59.) Thus, because the premium finance company failed to comply with its statutory duties, the insurer was fully liable on an insurance contract it cancelled at the premium finance company\u2019s request.\nWe agree with Haft and Jabin. Afco\u2019s alleged violation of its statutory duties did not negate its contractual power of attorney or render Mission\u2019s cancellation of the policy ineffective.\nEvanston argues that the cancellation must be ineffective because Evanston cured the default within 10 days. When an insured cures a default on a premium finance agreement, the insurance \"shall not be cancelled by the premium finance company.\u201d (Ill. Rev. Stat. 1985, ch. 73, par. 1065.68.) The Insurance Code imposes no such duty on the insurance company. Again, Evanston has alleged only that Afeo breached a statutory duty by exercising its power to cancel the insurance even though Evanston cured the default. This argument does not present grounds for finding Mission liable.\nFinally, Evanston claims that because Mission failed to respond when Afeo requested reinstatement of Evanston\u2019s insurance, Mission should be estopped from denying coverage.\n\"Estoppel implies the prejudicial reliance of the insured upon some act, conduct or nonaction of the insure[r]. *** [T]o establish an estoppel the insured must show that it was in some manner misled by the acts or statements of the insurer or its agents [citations]; that the insured relied on this conduct or representation [citations]; that such reliance was reasonable [citations]; and that the insured was prejudiced thereby.\u201d Florsheim v. Travelers Indemnity Co. (1979), 75 Ill. App. 3d 298, 304-05, 393 N.E.2d 1223.\nHere the request for reinstatement specifically reminded Evans-ton that only the insurer could reinstate the policy, and until the insurer specifically told Evanston it reinstated the policy, it was not in force. Therefore, Evanston could not reasonably rely on Mission\u2019s inaction as indicating reinstatement of the policies. Since Afeo was not Mission\u2019s agent (see Budget Premium Co. v. Inter-Insurance Exchange of Lake States (1965), 55 Ill. App. 2d 277, 204 N.E.2d 310), any statements its employees made to Evanston concerning reinstatement cannot be attributed to Mission, and reliance on Afco\u2019s acts, no matter how reasonable, cannot be grounds for estopping Mission.\nAfeo, exercising its authority as Evanston\u2019s attorney-in-fact, cancelled Evanston\u2019s insurance. Even if Afeo acted wrongfully, in violation of its statutory duties, Mission properly relied on Afco\u2019s authority and cancelled the contract. Mission had not reinstated the coverage by the time of the fire. Since no policy covered the loss, and Evanston presents no basis for estopping Mission from denying coverage, the trial court correctly granted summary judgment declaring that Mission\u2019s successor in interest, the Fund, had no liability to Ev-anston for the loss.\nAffirmed.\nCOUSINS, P.J., and GORDON, J., concur.", "type": "majority", "author": "JUSTICE McNULTY" } ], "attorneys": [ "Abraham Brustein and Thomas J. Cunningham, both of Smith, Williams & Lodge, Chartered, of Chicago, for appellants.", "Clausen, Miller, Gorman, Caffrey & Witous, P.C., of Chicago (James T. Ferrini, Richard A. Buchanan, and Susan Condon, of counsel), for appellee." ], "corrections": "", "head_matter": "ILLINOIS INSURANCE GUARANTY FUND, Plaintiff-Appellee, v. EVANSTON PAPER AND PAPER SHREDDING COMPANY, INC., et al., Defendants-Appellants.\nFirst District (5th Division)\nNo. 1 \u2014 93\u20144121\nOpinion filed April 21, 1995.\nAbraham Brustein and Thomas J. Cunningham, both of Smith, Williams & Lodge, Chartered, of Chicago, for appellants.\nClausen, Miller, Gorman, Caffrey & Witous, P.C., of Chicago (James T. Ferrini, Richard A. Buchanan, and Susan Condon, of counsel), for appellee." }, "file_name": "0405-01", "first_page_order": 423, "last_page_order": 428 }