Case Name: Joseph Burgo et al., Plaintiffs-Appellants, v. Illinois Farmers Insurance Company, Defendant-Appellee
Court: Illinois Appellate Court
Jurisdiction: Illinois
Decision Date: 1972-10-11
Citations: 8 Ill. App. 3d 259
Docket Number: No. 56250
Parties: Joseph Burgo et al., Plaintiffs-Appellants, v. Illinois Farmers Insurance Company, Defendant-Appellee.
Judges: 
Reporter: Illinois Appellate Court Reports, Third Series
Volume: 8
Pages: 259–266

Head Matter:
Joseph Burgo et al., Plaintiffs-Appellants, v. Illinois Farmers Insurance Company, Defendant-Appellee.
(No. 56250;
First District —
October 11, 1972.
Rehearing denied November 22, 1972.
BURMAN, J., dissenting.
Joseph L. Dombrowski, of Chicago, for appellants.
Hinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago, (D. Kendall Griffith and Thomas M. Crisham, of counsel,) for appellee.

Opinion:
Mr. PRESIDING JUSTICE DIERINGER
delivered the opinion of the court:
This is an appeal from a judgment of the Circuit Court of Cook County, wherein the court denied arbitration on an uninsured motorist clause in an insurance policy. The action was brought by the plaintiffs-insureds, Joseph and Louis Burgo, against the defendant insurance company, Illinois Farmers Insurance Company, to compel the defendant to submit to arbitration pursuant to the Uniform Arbitration Act. Ill. Rev. Stat. 1969, Ch. 10.
The issues on appeal are: (1) whether a provision in the insurance policy shortens the applicable statute of limitations, which allows the insured two years to file a cause of action against another motorist for injury to one year, is void as against public policy; and (2) whether the provision is void as against public policy because it places a limitation upon the plain meaning of the uninsured motorist statute, which provides for protection against uninsured motorists.
The plaintiffs were insured by the defendant insurance company under an automobile policy. In its answer to the complaint the defendant says its correct legal title is Farmers Insurance Exchange, but no further point is made of the name, and the proceedings went to judgment under the title of Illinois Farmers Insurance Company.
The accident which precipitated this litigation occurred on February 1, 1969. The plaintiffs and the defendant could not agree as to the amount due as compensation for injuries, and a demand for arbitration was made upon the defendant by letter on July 10, 1970. A complaint was filed against the defendant on July 29, 1970, when the defendant refused to appoint an arbitrator. On December 7, 1970, plaintiffs filed suit against the uninsured motorist involved in the accident of February 1, 1969. The uninsured motorist provision of the policy issued by the defendant provides:
"To pay all sums which the owner or operator of an uninsured motor vehicle would be legally responsible to pay as damages to the insured because of bodily injury sustained by the insured, caused by accident, and arising out of the ownership, maintenance or use of such uninsured motor vehicle ."
The Illinois Farmers Insurance Company defends on the grounds of failure to comply with the condition precedent as set forth in the insurance agreement and for the failure of the plaintiffs to demand arbitration within one year of the accident as set forth in the insurance agreement. The relevant part of the policy provides:
"(3) no cause of action shall accrue to the insured unless within one year from the date of accident (a) suit for bodily injury has been filed against the uninsured motorist in a court of competent jurisdiction, or (b) agreement as to the amount due under this Part II has been concluded, or (c) the insured has formally instituted arbitration proceedings."
The record shows none of these conditions was met. Each party filed a motion for summary judgment, and after a hearing the court entered judgment in favor of defendant insurance company and dismissed plaintiff' s complaint.
The plaintiffs allege the one-year limitation provision of the insurance agreement is invalid and unenforceable and contrary to Section 755a of Chapter 73, Illinois Revised Statutes, 1969, which provides for mandatory uninsured motorist coverage. Plaintiffs contend the uninsured motorist provision places the insured in the same position as though the offending party had complied with the Financial Responsibility Act of Illinois. Under the statute of limitation for personal injury in Illinois, the plaintiffs would have two years in which to file suit and seek a determination of the amount they are entitled to recover. Section 755a of Chapter 73, relating to uninsured motorist coverage, provides:
"(1) On or after an effective date of this amendatory Act of 1963, no policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be renewed or delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in Section 7 — 203 of the Illinois Motor Vehicle Law,' approved July 11, 1957, as heretofore and hereafter amended, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom, except that the named insured shall have the right to reject such coverage only on policies delivered, renewed or issued for delivery prior to July 1, 1967."
The purposes of Section 755a have been set forth in several previous cases. In Putnam v. New Amsterdam Casualty Co. (1970), 48 Ill.2d 71, the Supreme Court of Illinois said:
"[W]e believe the reasonable purpose of the statutory uninsured motorist provisions is to assure that compensation will be available to policy holders, in the event of injury by an uninsured motorist, to at least the same extent compensation is available for injury by a motorist who is insured in compliance with the Financial Responsibility Law."
Also, see Tindall v. Farmers Auto. Management Corp. (1967), 83 Ill.App. 2d 165, and Ullman v. Wolverine Insurance Co. (1969), 105 Ill.App.2d 408.
Defendant contends this is a contract, but such contractual restrictions are of no effect where such restriction places a limitation upon the plain meaning of the statute providing for uninsured motorist coverage. In the case of Morelock v. Millers' Mutual Insurance Assn. (1970), 125 Ill.App.2d 283, the court considered the question of the validity of the "other insurance" provision of the policy which the insurance company aUeged relieved them from liability. The plaintiff argued that the clause was violative of Section 755a (1), and the court stated:
"Section 755a commands that no policy shaU be issued unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legaUy entitled to recover damages for personal injury or death from an uninsured motorist. This is plain language without limitation or qualification. Nevertheless, the policy issued by defendant undertakes not to provide effective coverage therein for the protection of the named insured entitled to recover damages from an uninsured motorist but only such coverage in an amount by which the' Emit of its liability for this coverage exceeds the applicable limit of liability of another policy under which plaintiff is a 'paper beneficiary.' Clearly, this places a limitation upon the plain meaning of the statute and is, therefore, void and of no effect, because a policy provision which attempts to dilute or diminish a statutory requirement is contrary to public policy and is superseded by statute."
If the practical effect of the contract provision is to deprive the insured of uninsured motorist coverage required by the statute, then the provision is void and of no effect. The contractual limitation may not place an insured in a substantially different position than he would have been had the tort-feasor carried the required insurance coverage. In Prosk v. Allstate Insurance Co. (1967), 82 Ill.App.2d 457, the court stated:
"We further agree that in the construction of a statute, it is proper for the court to look at the evils to be remedied and the objects and purposes to be obtained, and a statute enacted to meet a need of the people shaU be liberaUy construed in order that the true intent and meaning of the General Assembly may be carried out."
An insured is paying a premium, a portion of which buys the uninsured motorist coverage. It is not fair that the insurance company accept this money and then attempt to limit its liability by the use of such devices as the one-year limitation provision. The parties admittedly negotiated as to compensation for injuries within the one-year period, but could not agree. The defendant Insurance Company therefore had full and complete notice and knowledge of the accident. Courts have held that settlement negotiations toU the running of time limitations, even statutes of limitation, because the plaintiff cannot be lulled into a sense of security and then be barred from proceeding with a lawsuit when the negotiations fail. Dickirson v. Pacific Mutual Life Insurance Co. (1925), 319 Ill. 311; Suing v. Catton (1970), 118 Ill.App.2d 468; Devlin v. Wantroba (1966), 72 Ill.App.2d 383; Kinsey v. Thompson (1963), 44 Ill.App.2d 304.
The insurance company wrote the policy with full knowledge of its intent to shorten the period to less than the time the statute gives the insured to file a lawsuit. The insurance company is well versed and has much experience in the field of uninsured motorists, whereas the policyholder has little or no experience and cannot be expected to understand the impact of such a provision. Furthermore, there is a possibility that the uninsured status of a tort-feasor may not be determined until several years after the accident. In this situation the insured would be defeated by the one-year provision without having the opportunity to invoke the coverage he had been paying for, because the insured plaintiff had no way of knowing the tort-feasor defendant would become an uninsured motorist.
This problem is particularly acute in Cook County because of the thousands of cases pending against defendants whose insurance companies became insolvent years after the cases were filed in court. On oral argument the court inquired of the defendant insurance company's counsel how this problem would be met, and he frankly admitted he had no answer. Obviously the plaintiff insured would be barred from as serting his uninsured motorist claim by the one-year provision, if the provision was valid.
The one-year limitation in the policy is a dilution or diminution of the uninsured motorist statute and is an attempt to defeat the intent and the purpose of the statute; therefore it is against public policy and the statute must prevail. The statute requiring the policy to have an uninsured motorist clause does not mention a time limit in which the insured may exercise his rights; therefore the statute of limitations to file suits on contracts must govern. Hartford Accident & Indemnity Co. v. Holada (1970), 127 Ill.App.2d 472.
We hold that the contact provision limiting the arbitration demand to one year after the accident violates the statute of limitations to bring the injury suit and violates the statute on uninsured motorists and is arbitrary, unreasonable and capricious and against the public policy of this state, and is therefore void.
For the above reasons, the judgment of the Circuit Court of Cook County is reversed.
Judgment reversed.
ADESKO, J., concurs.