No. 2--00--1476	

_________________________________________________________________

	IN THE

	APPELLATE COURT OF ILLINOIS

	SECOND DISTRICT

_________________________________________________________________

AMERICAN STANDARD INSURANCE     ) Appeal from the Circuit Court

COMPANY, a member of American   ) of Lake County.

Family Insurance Group,         )

						  ) 

	Plaintiff-Appellant,       ) 

	)

				            )

v.						  )  No. 99--MR--381                                                 )

                                )      

PAUL BASBAGILL and PETER BENCAK,	)

as Independent Co-Adm'rs of the ) 

Estate of Peter G. Sawczuk, De- )

ceased; PAUL BASBAGILL and      )

PETER BENCAK, as Independent Co-) 

Adm'rs of the Estate of Sharon  )

A. Sawczuk, Deceased; PAUL BAS- ) 

BAGILL and PETER BENCAK, as     )

special Co-Adm'rs of the Estate ) 

of Elizabeth M. Sawczuk, De-    )

ceased; PAUL BASBAGILL and PETER)

BENCAK, as Special Co-Adm'rs of ) 

of the Estate of Katharine A.   )

Sawczuk, Deceased; RANDY E.     ) 

BRESNAHAN; and ANTHONY P. PEASE,)

Indiv. and as Agent of RANDY E. )

BRESNAHAN,                      )  Honorable 

	                           )  Stephen E. Walter,

	Defendants-Appellees.      )  Judge, Presiding. 

_________________________________________________________________

	JUSTICE KAPALA delivered the opinion of the court:

	Plaintiff, American Standard Insurance Company, appeals from 

an order entered pursuant to a complaint for a declaratory

judgment. The order determined that plaintiff had a duty to defend

a tort suit (the Sawczuk suit) brought by Paul Basbagill and Peter

Bencak, as administrators of the estates of Peter Sawczuk and his

family, against plaintiff's insureds, Randy E. Bresnahan and Anthony P. Pease.  Bresnahan and Pease were named  also  as

defendants in plaintiff's complaint for declaratory judgment. 

Plaintiff asserts that, by offering to settle for the policy limit

and by tendering that amount to the court via interpleader (see 735

ILCS 5/2--409 (West 2000)), it has discharged its contractual duty

to defend even though the Sawczuk suit was still pending.  We

disagree and affirm. 

	Plaintiff issued an automobile liability insurance policy to

Bresnahan, covering his 1990 Ford Bronco for up to $40,000 per

incident.  On April 19, 1997, with the policy in force, the Bronco

collided with Peter Sawczuk's car, killing Sawczuk, his wife, and

their two daughters.  On January 27, 1999,  Basbagill and  Bencak,

the administrators of the Sawczuk estates, sued Bresnahan and Pease

in the circuit court of Lake County, alleging that, although the

identity or the driver was in question, either Bresnahan or Pease

was driving the Bronco and was at fault when the Bronco collided

with the Sawczuk car. 

	On March 30, 1999, American Standard filed the two-count

complaint in the case now before this court.  Count I, for

interpleader, states that, although plaintiff does not admit any

liability in the Sawczuk suit, the total claims there could equal or exceed the Bresnahan policy's $40,000 limit. In count I

plaintiff asks for leave to deposit $40,000 with the clerk of the

circuit court so that, when the Sawczuk suit is resolved, the money

can be distributed according to an appropriate court order.  Count

II seeks a declaration that granting plaintiff judgment on count I

relieves it of any further duty to defend Bresnahan or Pease in the Sawczuk suit.  Plaintiff relies on the following language in part

I of the policy:

			"We will pay compensatory damages an insured person is legally  liable for because of bodily injury and property damage ***.

	We will defend any suit or settle any claim for damages payable under this policy as we think proper.

	If a suit involves both compensatory and punitive or exemplary

damages, we will defend the compensatory damages.  We will not defend the punitive or exemplary damage portion of the suit.

	HOWEVER, WE WILL NOT DEFEND ANY SUIT AFTER OUR LIMIT OF LIABILITY HAS BEEN OFFERED OR PAID."  (Emphasis in original.)

The policy does not define "offered" or "paid." 

	Pease filed an answer to the complaint.  Bresnahan did not

file an answer.  Plaintiff moved for summary judgment on both

counts of the complaint.  In seeking summary judgment on count II,

plaintiff argued that, under Zurich Insurance Co. v. Raymark Industries, Inc., 118 Ill. 2d 23 (1987), and Novak v. American Family Insurance Co., 183 Wis. 2d 133, 515 N.W.2d 504 (1994), part I of the policy implies that its duty to defend the Sawczuk suit

would end when it tendered the $40,000 policy limit to the court

via interpleader.  Pease did not oppose summary judgment for plaintiff on count I, but he argued that plaintiff could not

discharge its contractual duty merely by tendering its policy limit

to the court before the Sawczuk suit had been resolved.

	The trial court initially granted plaintiff summary judgment

on both counts of its complaint.  Pease moved to reconsider the

judgment on count II, arguing that, under Douglas v. Allied American Insurance, 312 Ill. App. 3d 535 (2000), plaintiff had not discharged its contractual duty to defend and that to allow

plaintiff to withdraw from the defense of its insured while the

tort suit awaited resolution would violate public policy.

	Plaintiff responded that Douglas was both distinguishable and wrongly decided.  Plaintiff also filed the affidavit of Charles Swearingen, its casualty claims specialist.  Swearingen stated that

in 1998 he wrote to Pease and the representatives of the Sawczuk

estates.  Pease, who may have been the passenger in Bresnahan's

Bronco, and the Sawczuk estates had potential claims under

Bresnahan's policy.  Swearingen proposed to discharge plaintiff's

liability as insurer by paying each party $8,000, thus exhausting

the $40,000 liability limit.  The offer was rejected. 

	The trial court vacated the summary judgment on count II and

held a bench trial on that count.  The sole witness, Charles

Swearingen, testified consistently with his affidavit.  The trial

court ruled in favor of Pease on count II.  (Plaintiff received a 

default judgment against Bresnahan on this count.)  

	The court gave two reasons for its holding.  First, plaintiff

had not satisfied its contractual duty to defend.  Finding the term

"offered or paid" ambiguous and construing it against plaintiff,

the court reasoned that the $40,000 policy limit would not be

"paid" until a claimant received it via a settlement or judgment

establishing plaintiff's legal liability.  Thus, the money had been

tendered to the court, but it had not been "paid."  Also, because

the equal distribution that Swearingen had proposed lacked any proven relation to the relative merits of the parties' claims,

there had been no valid "offer."  

	Second, the court held that under Douglas, public policy would not allow plaintiff to withdraw from the defense of the Sawczuk

suit in mid-course.  Thus, regardless of the proper construction of

the policy, plaintiff could not use an interpleader judgment to

free itself of the duty to defend.

	Plaintiff timely appealed.  Pease has not filed an appellee's

brief.  However, the record is short and we choose to decide the

merits of the appeal.  See First Capitol Mortgage Corp. v. Talandis Construction Corp., 63 Ill. 2d 128, 133 (1976).

	  On appeal, plaintiff argues that the trial court erred in

entering judgment for Pease on count II of the complaint. 

Plaintiff reasons that its duty to defend arises solely from the

Bresnahan policy and that it met its duty (a) when it "offered" to

divide the $40,000 limit equally among the four Sawczuk estates and

Pease; and (b) when it "paid" the limit by tendering $40,000 to the

court under the interpleader judgment.  Plaintiff also argues that Douglas is unsound and that nothing in public policy prevents plaintiff from limiting its duty to defend.

	The judgment on count I of the complaint, for interpleader, is

not on appeal.  Only the judgment on count II is at issue.  We

agree with the trial court that plaintiff has not fulfilled its

contractual duty to defend.  We affirm the judgment without

deciding whether the duty to defend clause violates public policy. 

	In arguing that it is relieved of its contractual duty to

defend, plaintiff relies on the policy's statement that plaintiff will not defend any suit against an insured after the policy's

liability limit has been "offered or paid."  The policy does not

define "offered or paid."  However, plaintiff asserts that this

language is unambiguous and that the undisputed facts prove that

plaintiff has "offered" and "paid" the policy limit.  We disagree.

	We hold first that plaintiff has waived any assertion that it

discharged its duty to defend by "offering" to divide the policy

limit among the four Sawczuk estates and Pease.  Although plaintiff

raised this argument at the trial, its complaint nowhere alleges

this theory or any facts to support it.  A party must recover, if

at all, according to the case he has made for himself by his

pleadings.  Lempa v. Finkel, 278 Ill. App. 3d 417, 424 (1996).  Proof without pleadings is as defective as pleadings without proof. 

Colonial Inn Motor Lodge, Inc. v. Gay, 288 Ill. App. 3d 32, 40 (1997).  Thus, plaintiff may not now rely on the unpleaded

assertion that it "offered" the policy limit and thus discharged

its duty to defend.

	Two days after we heard oral argument, plaintiff moved to

amend count II to allege that plaintiff "offered" the $40,000

policy limit when Swearingen proposed distributing the money among

the five remaining parties in the Sawczuk suit.  We denied this

motion.  On appeal, a party may move to amend its pleadings.  155

Ill. 2d R. 362(a).  However, no such motion will be considered "if

made after the cause has been submitted for decision."  155 Ill. 2d

R. 362(e).  By the time plaintiff filed its motion to amend, the

cause had been submitted for decision.  See Geise v. Phoenix Co. of Chicago, Inc., 159 Ill. 2d 507, 515 (1994); Lee Shell Co. v. Model Food Center, Inc., 111 Ill. App. 2d 235, 247-48 (1969).  Therefore, the proposed amendment is not before us.

	We now consider the issue that is properly before us, that is,

whether the trial court erred in holding that, under the language

in part I of the Bresnahan policy, an insurer has not "paid" a

policy limit by tendering it to the circuit court through an

interpleader action to distribute after the suit against its

insured is resolved.  Apparently, no Illinois court has considered

this precise issue.  Plaintiff asserts that courts elsewhere have

held that language similar to the disclaimer in part I allows an

insurer to discharge its duty to defend even before the suit

against the insured has been concluded by a judgment or a

settlement.  Plaintiff urges us to rule similarly.  For the reasons

that follow, we decline to do so.  	

	An insurer's duty to defend its insured arises from the

contract of insurance.  Zurich, 118 Ill. 2d at 48.  Because the duty to defend is a creature of contract, determining the scope of

the duty requires us to construe the policy.  The construction of

an insurance policy is a question of law that we decide de novo.  Roth v. Illinois Farmers Insurance Co., 324 Ill. App. 3d 293, 295 (2001).  As with any contract, we must ascertain the parties'

intentions.  Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 108 (1992).  In doing so, we give unambiguous words

their ordinary meanings (Outboard Marine, 154 Ill. 2d at 108) but construe ambiguous language in favor of the insured (Grzeszczak v. Illinois Farmers Insurance Co., 168 Ill. 2d 216, 223 (1995)).  Policy language is ambiguous if it is susceptible to more than one reasonable interpretation.  Travelers Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill. 2d 278, 293 (2001). 

	Under part I of the Bresnahan policy, plaintiff "will defend"

a suit against the insured, but only until the limit of liability

has been paid.  As noted, the policy does not define "paid." 

Plaintiff asserts that, once it tendered the $40,000 policy limit

to the circuit court, the money had been "paid."  However, we

believe that an insurer has not "paid" money under a policy until

the insurer has surrendered any claim to the money and in the

process has fulfilled an obligation to the recipient. 

	Plaintiff's contention that it has "paid" its $40,000

liability limit to the circuit court via interpleader is not

without merit.  Plaintiff delivered the money with no guarantee

that it would get any of it back.  One court has held (with little

analysis) that, by making such a conditional tender, an insurer has

"paid" its liability limit.  See Viking Insurance Co. of Wisconsin v. Hill, 57 Wash. App. 341, 348, 787 P.2d 1385, 1389 (1990).  Another court appears to have reached a similar conclusion,

although it is unclear to us whether the insurer admitted liability

or relinquished any claim to the interpleaded funds. See United States Fire Insurance Co. v. Barker Car Rental, 944 F. Supp. 739, 744 (S.D. Ind. 1996), rev'd on other grounds, 132 F.3d 1153 (7th Cir. 1997).  However, assuming such a construction is reasonable,

we think that an opposing one is also reasonable.

	Dictionaries regularly define "payment" as the delivery of

money or its equivalent to the person to whom it is due in satisfaction of an obligation.  See, e.g., Black's Law Dictionary 1150 (7th ed. 1999); Webster's Third New International Dictionary

1659 (1993).  So do many courts.  In Zimmerman v. Illinois Farmers Insurance Co., 317 Ill. App. 3d 360 (2000), in a different context, we observed that a "payment" under an insurance policy is "the

fulfillment of a promise or the performance of an agreement." 

Zimmerman, 317 Ill. App. 3d at 366-67.  The word "payment" or "paid" did not appear in the policy itself, and thus Zimmerman does not apply directly.  However, our opinion illustrates that the term

"payment" is routinely taken to connote the satisfaction of an

obligation. 

	Courts elsewhere have ascribed similar meaning to the term "payment."  See, e.g., Rosenman v. United States, 323 U.S. 658, 89 L. Ed. 535, 65 S. Ct. 536 (1945); Sizemore v. E.T. Barwick Industries, Inc., 225 Tenn. 226, 231, 465 S.W.2d 873, 875 (1971); Votzmeyer v. Votzmeyer, 964 S.W.2d 315, 321 (Tex. Ct. App. 1998).  Under this definition, a conditional remittance, especially one to

an intermediary or bailee, is not a "payment."

	Rosenman well illustrates this reasoning.  There, the petitioners sought a refund of federal estate taxes that were due

in 1934.  (The return was not due until 1935.)  In 1934, they

delivered a check to the government along with a letter contending

that the petitioners did not owe the full sum; that they were

paying the money under protest; and that they delivered the check

solely to avoid penalties and interest.  Rosenman, 323 U.S. at 659- 60, 89 L. Ed. at 538-39, 65 S. Ct. at 537.  The government put the

money into a "suspense account" until the petitioners filed their

return in 1935.  In 1938, the government applied money in the suspense account to satisfy the assessment, and the petitioners

submitted more money to cover the deficiency that the government

had determined. 

	The petitioners filed a refund claim in 1938 and another claim

in 1940.  The law required a claim to be filed " 'within three

years next after the payment of such tax.' "  Rosenman, 323 U.S. at 659, 89 L. Ed. at 538, 65 S. Ct. at 537, quoting 26 U.S.C. §910

(1940).  The statute did not then define "payment."  In arguing

that the claim was untimely, the government asserted that the

petitioners paid the tax in 1934, when they delivered the check.  

	Disagreeing, the Court held that all "payments" were made in

1938, when the government applied the balance in the suspense

account to the taxes assessed and the petitioners paid the

deficiency.  The delivery of the check in 1934 was not a "payment"

under the statute: 

	"[T]he taxpayer did not discharge what he deemed a liability

nor pay one that was asserted.  There was merely an interim arrangement to cover whatever contingencies the future might

define.  The tax obligation did not become defined until *** 1938.  And this is the practical construction which the

Government has placed upon such arrangements. *** [The funds

in the suspense account] are held but as a deposit made in the nature of a cash bond for the payment of taxes thereafter found to be due."  (Emphasis added.)  Rosenman, 323 U.S. at 662, 89 L. Ed. at 540, 65 S. Ct. at 538.

See also Malachinski v. Commissioner of Internal Revenue, 268 F.3d 497, 506-08 (7th Cir. 2001) (tax court properly held that money taxpayer submitted in 1984 to cover possible deficiency in 1980

taxes was a "deposit," not a "payment" that would give tax court

jurisdiction over taxpayer's claim for a credit, where money was

delivered before any deficiency had been determined, amount was

unrelated to deficiency eventually calculated, and taxpayer did not

indicate that he intended remittance to be a payment).

	From these authorities, it follows that money has not been "paid" until an obligation has been established and the obligee has

received what he is due.  That is not the case here.  As of now,

plaintiff's $40,000 check sits in the circuit court.  The circuit

court itself is not owed any of the money; it merely holds the

funds until they are delivered to their rightful recipient. 

Indeed, because the Sawczuk suit is unresolved, we do not yet know

who that recipient is.  In count I of its complaint, plaintiff

expressly refused to admit any liability in the Sawczuk suit.  At

oral argument in this court, plaintiff conceded that a verdict of

"no liability" in the Sawczuk suit would allow the circuit court to

return the money to plaintiff.  

	Thus, although plaintiff has delivered a check to the court,

it has merely deposited the money there; it has not "paid" anything yet.  Like the conditional remittances in Rosenman and Malachinski,  plaintiff's delivery of the $40,000 was merely an interim

arrangement to cover whatever liability plaintiff might incur in the future.  The arrangement here is even further from a "payment"

than those in Rosenman and Malachinski because in each of those cases the would-be obligor actually remitted money to the would-be obligee.  Here, plaintiff did not deliver the check to anyone who

might be owed it but to the circuit court, an intermediary.

	We believe that our holding accords not only with a reasonable

reading of the policy language but also with the reasonable

expectations of policyholders. When an ordinary citizen, likely

unversed in the niceties of insurance law, purchases an insurance

policy, he expects to receive indemnification for damages owed and

also a defense of any suit brought against him.  A typical

policyholder would normally expect to be defended until the claims

against him have been resolved. Continental Insurance Co. v.  Burr, 706 A.2d 499, 500 (Del. 1998).  Under plaintiff's interpretation of

the insurance contract in a situation like the one before this

court, a policyholder, who may have already paid a substantial

amount of money in the form of policy premiums, is placed in the 

position of having to pay more of his own money to defend a tort

claim.  If he wins, he has not only obviated the obligation to pay

the damages he relied on his insurance company to pay when he

purchased the policy, but he has also, over and above his policy

premiums, spent his own money to endow his insurance company with

a right to a refund of its interpleaded funds.  In the absence of

policy language which clearly compels it, policyholders are

entitled to something more than this. 

	Zurich and Novak, on which plaintiff principally relies, are distinguishable.  In Zurich, the policies at issue provided that the insurer's duty to defend ended when the applicable liability

limit had been "exhausted by payment of judgments or settlements." 

The court held that the insurer did not need to defend suits that

were already underway before the policy limit was "exhausted."  However, the Zurich court never suggested that a mere conditional tender of the policy limit to the circuit court would "exhaust" the

policy limit.  The court could hardly have done so because the

policies conditioned the insurer's right to withdraw on the

existence of judgments or settlements.  That is not the case here,

where the issue is whether the insurer "paid" the liability limit

by remitting it conditionally to the circuit court via

interpleader.  The policy language on which this appeal turns was

simply not involved in Zurich, and that case does not dictate how to interpret the language in this case.

	Novak did involve the same policy language that is at issue here.  However, in Novak, unlike here, the insurer that sought to withdraw from defending its insured had already paid the entire policy limit, and a partial settlement in the tort suit had released the insured to the extent of the policy limit only.  See Novak, 183 Wis. 2d at 135, 139, 515 N.W.2d at 505, 507.  Thus, under any reasonable definition of the term, the insurer had "paid"

the policy limit by unconditionally surrendering it to a party with

a rightful claim to it.  

	We hold that plaintiff has not "paid" its policy limit merely

by remitting the sum to the circuit court by interpleader without 

surrendering any claim to the funds or delivering them to a party

who is legally entitled to them.  Therefore, we affirm the denial

of a declaratory judgment for plaintiff on count II of its

complaint.    

	The judgment of the circuit court of Lake County is affirmed.

	Affirmed.

	BOWMAN and CALLUM, JJ., concur.