author:
Mr. Presiding Justice Gridley
      Scanlan, J.

text:
    W. Hinchcliff, Trading as Hinchcliff Motor Service for Use of Transformer Corporation of America, Appellee, v. Insurance Company of North America, Appellant.
    Gen. No. 37,101.
    Opinion filed October 16, 1934.
    Hicks & Folonie, for appellant.

      Hamer & Campbell, for appellee; Chester D. Kern, of counsel.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

On June- 9, 1933, a garnishment proceeding on a judgment was commenced in the circuit court under the statute (Cahill’s St. 1931, ch. 62, ¶¶1-29, p. 1542) against the Insurance Company of North America (hereinafter called the Insurance Co.). In the affidavit it is alleged in substance that at the April, 1933, term of the court the Transformer Corporation of America (hereinafter called the Transformer Co.) recovered a judgment against W. Hincheliff, doing business as Hincheliff Motor Service (hereinafter called Hincheliff) for the sum of $3,399.10 and $29.80 costs of suit; that an execution on the judgment has been duly issued and returned by the sheriff “no property found”; that within the knowledge of affiant Hincheliff has no property in his possession, liable to execution; and that affiant has just reason to believe that the Insurance Co. is indebted to Hincheliff or has effects or estate of his in its hands. On the same day a garnishee summons was issued and the usual interrogatories to be answered by the garnishee were filed, including special interrogatories, Nos. 7 and 8, as follows :

“7. Did you on or before July 19, 1929, issue a ‘Motor Truck Merchandise Floater Owners’ Form’ of policy, No. l-M-7737, to Hincheliff (as Hincheliff Motor Service) wherein you agreed to insure Hincheliff Motor Service continuously from noon, Standard Time, July 19, 1929, against damage to general merchandise in the course of delivery to the extent of $5,000 on the contents of any one automobile truck and/or trailer, and $25,000 on any one casualty?

“8. Was the aforesaid policy of insurance in full force and effect on February 21, 1931?”

On June 17, 1933, the Insurance Co., by attorneys, entered a special appearance as garnishee, filed its verified petition, and presented a good and sufficient bond, etc., for the removal of the cause to the U. S. District Court for the northern district of Illinois, eastern division. In the petition it is alleged inter alia that the cause “is a suit of a civil nature”; that the matter in controversy “exceeds, exclusive of interest and costs, the sum of $3,000,” is “between citizens of different states,” and “is an action of which the U. S. District Courts have original jurisdiction”; that petitioner is a Pennsylvania corporation, having its principal office and place of business in the City of Philadelphia, and is a citizen of Pennsylvania; and that Hinchcliff and the Transformer Co. are each citizens of Illinois. After a hearing upon the petition, due notice thereof having been given, the court, on June 21, 1933, entered an order denying the prayer of the petition upon the sole ground that “said garnishment proceeding is not a removable cause. ’ ’

On June 24, 1933, the Insurance Co. filed its answer to the eight interrogatories, and also filed its written demand for a jury trial. The answers to the first six interrogatories are to the effect that at the date of the service of the writ (June 9th), it did not have, nor has it now, any moneys, rights, credits, etc., in its hands belonging to, nor is it in any manner indebted to, said Hinchcliff, etc. Its answers to said 7th and 8th interrogatories are in substance as follows:

(a) That on July 19, 1929, it delivered the policy to Hinchcliff, whereby it insured him, under the name of Hinchcliff Motor Service, in consideration of stipulations therein named, from said date and until canceled, “against loss or damage by certain hazards in the policy mentioned, in an amount not exceeding $25,000, and limited to an amount not exceeding $5,000 on the contents of any one automobile truck and/or trailer, and which was thereafter (by endorsement effective January 6, 1931) increased to a limit of liability of $10,000 on the contents of any one automobile truck and/or trailer, owned or operated by said insured”; that the policy “was in full force and effect on February 21, 1931, but subject, however, to all its terms, conditions, limitations, etc.”; but that “no loss or damage from any hazards insured against, or within the terms, conditions, limitations, etc., of the policy, occurred on or about February 21, 1931, or at any time. ’ ’

(b) That there is a provision of the policy that the “purpose of the insurance is to indemnify the insured (Hinchcliff) for his liability, as a carrier, only to the amount he is obliged to pay and does pay on the merchandise described in the policy by reason of the losses caused as in the policy defined”; that by reason of this provision “no claim for damage could accrue, or has accrued or become payable, from this garnishee to said insured”; and that “said supposed judgment creditor (Transformer Co.) cannot maintain this action or recover against this garnishee any sum or amount, if any, which might become payable under said policy. ’ ’

(c) That there is another provision of the policy that “as to losses occurring under it of merchandise belonging to the Transformer Co.,” such losses “shall be payable to the insured and said Transformer Co. as their respective interests may appear”; that the judgment mentioned in the affidavit of garnishment “is for supposed loss of or damage to merchandise supposed to belong to said Transformer Co., and not otherwise”; that because of the last mentioned provision of the policy, “the supposed loss, if any, did not and never will become payable to the insured”; and that, therefore, this garnishee “is not indebted to Hinchcliff in any sum or amount, if any, which otherwise has or may become payable under the terms of the policy by reason of said loss claimed to have occurred.”

(d) That it is also provided in the policy that any loss under it, if any, shall be immediately reported in writing, with full particulars, to the Insurance Co. at Philadelphia, Pa., or to the agent issuing the policy, and also that the failure of the insured to file a sworn proof of loss within three months of the date of loss invalidates any claim under the policy, and also that no suit or action on the policy for the recovery of any claim shall be sustainable in any court unless the insured shall have fully complied with all of the requirements of the policy; that no written report was at any time given to the garnishee, or its agent; that no sworn proof of loss was at any time filed with or furnished to the garnishee; that said conditions have not been complied with; and that, hence, no claim has ever accrued or become payable by reason of said supposed loss on February 21, 1931.

(e) That it is also provided in the policy that no suit or action upon the policy shall be sustainable in any court unless commenced within 12 months next after the happening of the loss; that the claimed loss on February 21, 1931, happened more than 12 months before the commencement of this suit on July 9, 1933; that by reason thereof no recovery of the supposed loss can be had; or any garnishment be sustained; and that Hinchcliif’s claim under the policy is “contingent and unliquidated,” and also the question of this garnishee’s liability under the policy is “undetermined and contingent. ’ ’ And this garnishee prays that it be discharged upon its answer.

Thereafter the Transformer Co. filed a traverse to the answer, and during July, 1933, the cause came on for trial before a jury, resulting in a verdict finding the issues for plaintiff and also finding that at the time of the service of the writ of garnishment there was due and owing from the Insurance Co. to Hinchcliff, doing business as Hinehcliff Motor Service, the sum of $3,425.90. On July 15, 1933, after the garnishee’s motions for a new trial and in arrest of judgment had been overruled, judgment was entered against it in said sum in favor of Hinehcliff for the use of the Transformer Co. From the judgment the garnishee prosecutes the present appeal.

On the trial plaintiff introduced in evidence the policy and other writings. Hinehcliff testified in his own behalf, as did five witnesses for him. One witness testified for the garnishee and it introduced a letter, dated September 16, 1931, written by its attorneys and addressed to Hinehcliff, in care of his personal attorney in Chicago, and also two photographs. Some of the provisions of the policy are in substance as follows:

The Insurance Co., in consideration of the stipulations herein named and of $100, premium, does insure Hincholiff Motob Sebvioe for the continuous term from July 19,1929, at noon, Standard Time, at place of issuance until canceled, to an amount not exceeding $25,000.

Pbopebty Insubed

1. On lawful goods and merchandise consisting of “General Merchandise” in course of. delivery.

CoVEBAGE

2. Covering the merchandise insured only while in the custody of the Assured and actually in transit, and “only while contained in or on the following described motor truck and/or trucks owned and operated by the Assured; however, privilege is hereby granted the Assured to substitute at any time . . . other truck or trucks than described herein, provided such substituted truck or trucks are owned and operated by the Assured.” . . .

Description op Motor Trucks

(3) This policy covers on lawful goods and merchandise “held in the custody of the Assured for transportation only as warehousemen, carriers or forwarders, covering only in transit- while contained in or on automobile trucks and/or trailers, owned and/or operated by the Assured.”

(4) This Company shall not be liable for more than $5,000 on the contents of any one automobile truck and/or trailer.

(5) “It is the purpose of this insurance to indemnify the Assured for their liability as a carrier only to the amount which they are obliged to pay and do pay on such merchandise by reason of losses caused as herein defined. ’ ’

(6) “The Assured whenever requested shall aid in securing information and evidence and the attendance of witnesses and shall defend any action at law or in equity through such counsel as this Company may direct, but at this Company’s expense. The Assured shall malee no settlement of any claim arising hereunder, nor incur any expense without the written consent of this Company. The Company shall have the right to settle any claim or suit at its own expense at any time. ’ ’

There is a so-called “Collision Endorsement” on the policy, dated the day of its issuance (July 19, 1929), wherein the policy is extended to cover “against loss or damage directly caused by collision, i. e., accidental collision of the vehicle during the period insured with any other automobile, vehicle or object.” And under date of February 1, 1930, another indorsement wrns made on the policy whereby it was agreed that “on all losses occurring hereunder of merchandise” belonging to the Transformer Co., such losses “shall be payable to the Assured and the Transformer Co., Chicago, as their respective interests may op- pear.” On the face of the policy is the usual provision that “This policy is made and accepted subject to the foregoing stipulations and conditions and to the conditions printed on the back hereof, which are hereby specially referred to and made a part of this policy.” Among the conditions on the back are the following:

“11. The loss if any under this policy shall be immediately reported in writing with full particulars to the Insurance Company, Philadelphia, Pa., or to the agent of the company issuing this policy. Failure to file a sworn proof of loss within three months of date of loss invalidates claim.

“18. No suit or action on this policy for the recovery of any claim, shall be sustainable in any court" of law or equity unless . . . commenced within twelve (12) months next after the happening of the loss. . .

From plaintiff’s evidence on the trial of the present garnishment suit the following facts in substance appear :

The original suit of the Transformer Co. against Hinchcliff, and in which the judgment against him for $3,399.10 was rendered, grew out of an accident on February 21, 1931, whereby certain radio sets owned by the Transformer Co. and loaded on an automobile truck were damaged. Hinchcliff, doing business as the Hinchcliff Motor Service, was engaged in cartage contracting. He agreed for a certain price to transport the radios for the Transformer Co. from Chicago to St. Louis. The truck was not owned by him but by two other men and he requested them to transport the radios, agreeing to pay them a certain percentage of the price he was to receive from the Transformer Co. While the journey was being made the top of the load (being about five feet higher than the top of the cab of the truck) collided with an overhead railroad viaduct, crossing the highway, resulting in considerable damage to some of the radios. On the trial Hineheliff was represented by the attorneys for the Insurance Co., and they were paid for their services by the Insurance Co. After the original suit was commenced Hineheliff retained a Chicago attorney, named Leitzell, who thereafter had conferences relative to the suit with the attorneys for the Insurance Co. The letter of September 16, 1931, written by the attorneys of the Insurance Co. to Hineheliff in care of Leitzell (introduced in evidence in the present suit by the Insurance Co.), reads in part as follows:

“Referring to your request to the Insurance Co. to defend in your behalf suit brought against you by the Transformer Co., ... we beg to advise the matter has been submitted to us as attorneys for the Insurance Co.; and replying to your request, and confirming telephone conversations with your attorney, Leitzell, we have to advise that the Insurance Co. will appear and defend said suit in your behalf at the expense of the Insurance Co., upon condition that by so assuming the defense of said suit the Insurance Co. does not admit any liability under its policy for the loss, or any part thereof, . . . and that it will assume said defense only upon condition that such action on the part of the Insurance Co. shall not be a waiver of any of the terms and conditions of the policy or of any legal defenses which it may have under said policy.” Leitzell, a witness called by the Insurance Co., testified in substance that after the letter was received, there was a conference in his office at which he, Hinchcliff and one of the attorneys (Carlson) of the Insurance Co. were present; that as a result of the conference one of the attorneys of the Insurance Co., at its expense, represented Hineheliff upon the trial of the original suit; and that while he (Leitzell) had further conferences with Carlson as to the preparation for the trial he did not attend the trial or take any part in it.

One of the grounds urged by counsel for the garnishee (the Insurance Co.) for a reversal of the judgment in question is in substance that the court erred in refusing to remove the garnishment cause to the U. S. District Court, that it was properly removable, and that, hence, all proceedings thereafter had in the circuit court of Cook county, including the entry of said judgment, are coram non judice and void. (See National Steamship Co. v. Tugman, 106 U. S. 118, 122; Madisonville Traction Co. v. Saint Bernard Mining Co., 196 U. S. 239, 244, 245; Western Union Telegraph Co. v. Horack, 9 Ill. App. 309, 311.) It sufficiently appears that the petition for removal should have been granted if a garnishment proceeding upon a judgment is such a cause as is properly removable under the federal statute. The trial court denied the motion upon the sole ground that such a proceeding “is not a removable cause.” After reviewing numerous authorities, including some decisions of the courts of review of Illinois, we are of the opinion that the court’s ruling was correct and that the present cause was not a removable one. In 20 Cyc. p. 979, it is said: ‘1 Garnishment is in no sense a new suit, but is a special auxiliary remedy for more effectually reaching defendant’s credits, and is always ancillary to the main action under which it is brought.” In 14 Am. & Eng. Encyc. Law, 2nd Ed., p. 741, it is said: “Garnishment, proceedings, whether instituted in aid of an execution for the enforcement of a judgment recovered or in the nature of or in aid of an attachment, . . . are considered a proceeding auxiliary to such main action, and not an independent proceeding. . Thus it has been held that the proceeding against the garnishee was merely auxiliary to the principal action, and could not be removed to the federal court on account of the diverse citizenship of the plaintiff and the garnishee.” In 23 R. C. L., p. 622, sec. 19, it is said: “A suit or proceeding ancillary or incidental to the main suit cannot be removed.” In Levinson v. Home Bank & Trust Co., 337 Ill. 241, 243, it is said: “It has been uniformly held by this court that the garnishment process is purely a creature of statute. (Citing Siegel, Cooper & Co. v. Schueck, 167 Ill. 522.) ” On the question as to whether under the Illinois statute the. proceeding is auxiliary our Supreme Court said in Free-port Motor Casualty Co. v. Madden, 354 Ill. 486, 489: “It is not an independent proceeding but is ancillary or auxiliary. It depends upon another-proceeding in law or equity. It is entirely remedial, and is resorted to either in aid of a pending action or in aid of an execution issued on a judgment already recovered.” In Chanute v. Martin, 25 Ill. 63, 65, it is said: “This whole proceeding is in the nature of process to .obtain satisfaction of a judgment.” (See, also, Dennison v. Taylor, 142 Ill. 45, 56; Hankel v. East & West Publishing Co., 239 Ill. App. 236, 238; First Nat. Bank of Alexandria v. Turnbull & Co., 16 Wall. (U. S.) 190, 195; Pratt v. Albright, 9 Fed. 634, 635; Poole v. Thatcherdeft, 19 Fed. 49, 50; Brucker v. Georgia Casualty Co., 14 F. (2d) 688, 689; Lahman v. Indemnity Ins. Co., 47 F. (2d) 610.)

In urging a reversal of the judgment upon the merits, the main point relied upon by counsel for the garnishee is based upon the following provision of the policy (No. 5 as above set forth): “It is the purpose of this insurance to indemnify the Assured for their liability as a carrier only to the amount which they are obliged to pay and do pay on such merchandise by reason of losses caused as herein defined.” Counsel contend that neither the answer of the garnishee nor the evidence discloses that there is any debt owing from the garnishee to Hinehcliff or, by virtue of our garnishment statute, to the Transformer Co., his judgment creditor. And counsel argue in substance that the policy does not provide for indemnity against liability but only for indemnity against actual loss which Hinchcliff as carrier is obliged to pay and does pay, and that, hence, he cannot recover upon the policy unless and until he has paid .the loss for which indemnity is claimed, and that the Transformer Co., as a judgment creditor of Hinchcliff, has no greater rights in the proceeding. We are of the opinion that there is substantial merit in the contention and argument.

There are general rules of law that “where the contract is strictly one of indemnity, that is, one against loss or damages, the indemnitee cannot recover until he has made payment, or otherwise suffered an actual loss or damage, against which the covenant runs,” and that “where the loss or damages indemnified involves a payment, it is not sufficient that the indemnitee is under a liability to pay, to entitle him to recover, but he must make an actual payment of the loss or damage.” (31 Corpus Juris, pp. 439, 440, sec. 35.) These rules have been applied in contracts of insurance. Provisions in policies similar to the present one are referred to as “no action” clauses, in an annotation in 37 A. L. R., p. 647, where the writer states that “a provision that ‘no action shall lie under this policy unless for loss actually sustained and paid in satisfaction of a final judgment, ’ ” or a similar provision, “has been held in numerous cases to create indemnity, as distinguished from liability, insurance. ’ ’ And the writer (pp. 648-650), cites many cases decided in various States of the Union (including Illinois Tunnel Co. v. General Acc. Fire & Life Ins. Co., 219 Ill. App. 251), in substantiation of his statement. In a supplemental annotation, contained in 83 A. L. R., pp. 688-693, under the heading “Where the policy contains a ‘no action’ clause,” the writer states (p. 689): “By the great weight of authority it is held that a policy containing such a clause is one of strict indemnity only, — the view, whether expressed or not, being that the insertion in the policy of such a clause removes all doubt or uncertainty, if any there be, regarding the kind of insurance meant to be granted by the insuring clause, usually susceptible to either of two different constructions.” And the writer cites numerous adjudicated cases in support of the statement, among which are United States Fidelity & Guaranty Co. v. Maryland Casualty Co., 182 Ill. App. 438, and Kinnan v. Globe Indemnity Co., 233 Ill. App. 451 (reversed on another point in Kinnan v. Hurst Co., 317 Ill. 251). In the Illinois Tunnel Co. case (219 Ill. App. 251) it is said (pp. 260, 261): “Insurance contracts similar to the one involved here, being contracts of indemnity, have been repeatedly construed and treated as contracts under which the assured could have no claim against the insurance company unless and until it had paid and satisfied the judgment recovered by the claimant, although the insurance company had conducted the defense of the action brought by the claimant against the assured, in accordance with the terms of the policy” (citing the Maryland Casualty Co. case, 182 Ill. App. 438, and numerous decisions in other jurisdictions). In the Globe Indemnity Co. case (233 Ill. App. 451) it appears that one Kinnan had obtained a decree on a creditor’s bill adjudging that he recover from the Indemnity Co. the sum of $5,966.59 on its policy of insurance issued to the Hurst Company. The decree was reversed and the cause remanded with directions to dismiss the bill for want of equity. The policy contained a provision similar to the one in the present policy. In its opinion the Appellate Court, after referring to the holdings and decisions in said Illinois Tunnel Co. and Maryland Casualty Co. cases, supra, and citing other cases, concluded (p. 457) that “operation must be given to the provision in the instant policy that the loss must be actually sustained, and paid by the assured before any action on the policy will lie against the defendant.” On certiorari granted the case was reviewed by our Supreme Court and the judgment of the Appellate Court was reversed and the decree of the trial court affirmed (317 Ill. 251, 261), but on the ground, as we read the opinion, that the insurance company had refused to defend the original suit brought by Kinnan against the Hurst Company (assured), and thereby had breached its insurance contract. The policy issued by the Indemnity Co. contained provisions (somewhat similar to provision No. 6 in the present policy as above set forth) that “in the event that suit is brought against the assured,” the Indemnity Co. will “defend such suit even if groundless, in the name and on behalf - of the assured, unless and until the Company shall elect to effect settlement thereof,” and will “pay all expense of the Company’s investigation and adjustment of claim,” etc. 'In paragraph 1 of the policy the Indemnity Co. agreed “to indemnify the assured (Hurst Co.) against loss from the liability imposed by law upon the assured for damages on account of bodily injuries. . . . accidentally suffered . . . during the policy period, ... by any employe or employes of the assured,” etc. And in another paragraph of the policy there was the following provision (similar to provision No. 5 in the present policy): “No action for the indemnity against loss provided for in insuring agreement 1 of this policy shall lie against the Company, except for reimbursement of the amount of loss actually sustained and paid in-money by the assured in full satisfaction of a judgment duly recovered against the assured after trial of the issue, nor unless brought within two years after such judgment shall have been paid.” In discussing the two paragraphs of the policy our Supreme Court said in its opinion (317 Ill. 255, italics ours) that the agreement in paragraph 1, “together with the condition,” as contained in said other paragraph, “clearly provides only for the reimbursement of money actually paid in satisfaction of a judgment recovered against the assured after the trial of the issue in an action for bodily injuries alleged to have been accidentally suffered within the terms of the policy. (Citing cases.) The Hurst Company, the assured in the policy, could not maintain an action on this agreement until it had sustained a loss for which a judgment had been recovered and which it had paid. The plaintiff in error (Kinnan) had no connection with the policy, which was not issued for his benefit, and could under no circumstances maintain an action on it. . . . If, however, the Hurst Company had a cause of action which it could enforce against the defendant in error (Globe Indemnity Co.), whether upon this policy or for some other cause, the plaintiff in error had a right, in equity, to compel the application of the proceeds of such cause of action to the payment of his judgment against the Hurst Company.” (See, also, the subsequent Appellate Court decision in Daugherty v. Alliance Casualty Co., 271 Ill. App. 71, 80, 81.)

But counsel for plaintiff here contend in substance that the conduct of the Insurance Co., in assuming and carrying on the defense by its attorneys of the original suit brought against Hinchcliff (the assured) waived any benefit it had in the particular provision of the policy. In support of the contention they cite several cases in other jurisdictions, among them the case of Malley v. American Indemnity Corp., 297 Pa. St. 216, wherein the court says (pp. 222, 223, italics ours):

“Where the policy, indemnifying insured against loss arising out of legal liability, provides that the insured shall immediately notify the company in case of injury, and the company will defend all suits growing out of injuries, in the name of insured, and insured will not settle any claim without consent of the company, it is usually held to be a policy of indemnity against liability for damages or an indemnity against liability, and is not a mere contract of indemnity against damages (citing authorities). Where the policy contains a clause requiring an actual payment of money by the insured, then, of course, no liability attaches unless a monetary loss has actually been sustained, under the plain words of the contract. (Citing authorities.) But, even in the latter case, an action against the company has been allowed before payment, where the company has actually come in and defended the suit. (Citing Patterson v. Adan, 119 Minn. 308, 313.) The principle is thus adequately expressed in the last named case: ‘By undertaking the defense the company elected to treat plaintiff’s cause of action, if any he had, as covered by the contract; and when it substituted itself and its judgment for that of defendant, both plaintiff and defendant have a right to insist that the final judgment establishes the liability and debt of the company to the assured. The undertaking to defend is of no value, and may be of great danger, to the assured, where he thus abandons all control of the suit to the company, if it does not mean that whatever liability is established shall be discharged. ’ ” The holdings and decisions in these Pennsylvania and Minnesota cases are contrary to the weight of authority on the point, and also contrary to the holdings in a ease in the Appellate Court of Illinois for this district (Illinois Tunnel Co. v. General Acc. Fire & Life Ins. Co., 219 Ill. App. 251, 260, certiorari denied). In an annotation in 37 A. L. R., at p. 637, it is said: “By the weight of authority an accident indemnity insurer, which has under the right reserved to it in the policy assumed and carried on the defense of an action against the insured, does not thereby waive the benefit of the provision of its contract that no action shall lie against it, except for loss actually paid in satisfaction of a final judgment (commonly called the ‘no action clause’), so as to render it subject to the claims of the successful plaintiff in such action, either by way of garnishment, or in a direct proceeding on the policy.” A large number of adjudicated cases are mentioned in the annotation in those jurisdictions where the majority rule is in force, and other cases are mentioned where in other jurisdictions the minority rule is in force. In a supplemental annotation in 81 A. L. R., at page 1383, it is said: “An indemnity insurer will not be estopped to set up the defense that the insured’s loss was not covered by the contract of indemnity, by the fact that the insurer participated in the action against the insured, if, at the same time, it gives notice to the insured that it does not waive the benefit of such defense.” In the present case it sufficiently appears that the Insurance Co., by the letter of September 16, 1931, and otherwise, gave such notice to Hinchcliff.

Considering the present policy, particularly the provision No. 5 therein, and the evidence, and the authorities above outlined, we are of the opinion that no recovery can be had against the garnishee (the Insurance Co.) in the present proceeding and for the reasons stated, and that the judgment of the circuit court of July 15, 1933, against said garnishee is erroneous in law and must be reversed. Other grounds for a reversal of the judgment, because of other conditions of the policy not'having been complied with by Hinchcliff, are argued by counsel for the Insurance Co. They are substantially set forth in the garnishee’s answer above outlined. But in view of our holdings and decision, based upon said provision No. 5 of the policy, we deem it unnecessary to consider them.

The judgment appealed from is reversed.

Reversed.

Sullivan, J., concurs.

Scanlan, J.

(specially concurring): The plaintiff, in the trial court and here, has taken the position that the defendant assumed charge of the defense to the original action, and we are, therefore, not called upon to decide what effect, if any, the defendant’s letter of September 16, 1931, and the conversations following it had upon the contract of insurance. In other words, plaintiff’s attitude makes it entirely unnecessary for us to decide whether or not said conduct of the defendant amounted to a breach of the insurance contract.


source: Caselaw Access Project

author: Mr. Presiding Justice Gridley

license: Public Domain

text:
    Victor A. Dorsey and Company et al., Appellees, v. Central Republic Trust Company, Garnishee, Appellant.
    Gen. Nos. 37,342, 37,343.
    Opinion filed October 16, 1934.
    Arthur J. Hughes, for appellant; R A. Bullinger and Joseph A. Greaves, of counsel.
    Nat M. Kahn and Townley, Wild, Campbell & Clark, for certain appellees; Nat M. Kahn, Glenn G. Paxton and Richard C. Bleloch, of counsel.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

On April 20, 1933, a garnishment suit was commenced in the municipal court by Joseph Harris (upon a judgment rendered in his favor for $9,718.11, against Victor A. Dorsey Co., hereinafter called the Dorsey Co., Victory A. Dorsey individually, and H. Walker) against the Central Republic Trust Co. (by its then name) and the National Bank of the Republic of Chicago (afterward dismissed as a garnishee by stipulation). On November 10, 1932, another garnishment suit' had been commenced in the same court by Eli H. Brown, Jr. (upon a judgment rendered in his favor for $1,595.79, against said Dorsey Co. and Victor A. Dorsey) against the Central Republic Trust Co. and the National Bank of the Republic (afterward dismissed as a garnishee). After interrogatories and answers thereto had been filed in the respective cases (said answers being contested) it was ordered, by stipulation of the parties, that the two cases be consolidated for hearing. Thereafter there was a somewhat protracted trial on one record before the court without a jury, at which considerable oral and written evidence was introduced, and on December 4,1933, the court entered its findings and judgments. In the Harris case it found the issues against the garnishee, Central Republic Trust Co. (hereinafter called the Bank) and entered judgment against it in favor of Harris in the sum of $7,388.74. In the Brown case the court found the issues against the garnishee and entered a separate judgment against it in favor of Brown in the sum of $1,695.95. From these judgments separate appeals were perfected by the garnishee bank.

Thereafter in this court stipulations of the parties were filed to the effect that the two appeal causes be consolidated for hearing; that the complete record filed, and the abstracts and briefs to be filed, in cause No. 37,343, be taken and considered as such, in No. 37,342; and that the opinion to be rendered by this court in cause No. 37,343, stand as its opinion in No. 37,342, etc.

In the Harris case the bank filed its answer to the interrogatories in the municipal court on May 18, 1933. This answer is somewhat similar to the answer, filed December 5, 1932, in the Brown case, and is in substance as follows:

1. That at the time of the service of the garnishment writ upon it, April 21, 1933, it was not indebted to the Dorsey Co., or to Victor A. Dorsey, individually, ‘ ‘ except, as hereinafter set forth. ’ ’

2. That at that time it had, and since has had, in its possession as holder and owner a note executed by the Dorsey Co., on which a balance of $190.99 is past due; that the note is secured by certain collateral securities (describing the same); that this garnishee is not informed whether or not Dorsey & Co. has any title, interest or equity in said securities, but it believes that such title, etc., belongs to Dorsey, individually; that the securities are also held by it as collateral to a personal note of Dorsey, also held by this garnishee; and that there is no equity in the securities over and above the amount of the loans.

3. That at said time it did not have in its possession or control any lands, goods or chattels of the Dorsey Co. or of Dorsey individually, except as stated.

4. That at said time it did not have in its possession or control any rights, credits or effects (not before specified) from it due and owing to the Dorsey Co. or Dorsey.

5. That at said time it did not have, nor has it now, in its possession or control any property, goods, chattels, rights, credits or effects, belonging* to the Dorsey Co. or Dorsey, except as stated.

6. That as to said Dorsey, individually, this garnishee states as follows:

(a) That at the time of the service of said writ this garnishee was not indebted to Dorsey, “except as hereinafter set forth.”

(b) That at said time it had, and since has had, in its possession, as the legal holder and owner, two notes, executed by Dorsey (alias V. A. Dorszeski)- — one being dated March 26, 1931, payable 30 days after date to the order of National Bank of the Republic of Chicago, in the amount of $5,689.71, and the other being dated March 26,1931, payable 30 days after date to the order of the last mentioned bank, in the amount of $85,694.45, upon which there still remains a balance due of $49,488.65; and that both of the notes are secured by certain stocks, etc., deposited as collateral security (here is set forth a list of the securities).

(c, d and e) That at said time this garnishee did not have in its possession, control or custody, any lands, goods or chattels, or any rights, credits or effects due to Dorsey, individually, or to said Dorsey Co. except as above set forth, etc.

Upon the trial the following facts, inter alia, were disclosed in substance:

The Dorsey Co. was incorporated in September, 1928, and thereafter engaged in business as engineers. Dorsey was the owner of a majority of its capital stock and was its president and treasurer and its active head. His wife was the secretary of the company. During the years 1930 and 1931, it did considerable engineering work for the Arkansas Natural Gas Corporation.(hereafter called the Arkansas Co.). As the work progressed payments aggregating $20,000 were made by it to the Dorsey Co. The work was substantially completed during the spring of 1931. The Dorsey Co. about that time claimed that there was a balance due to it of more than $40,000, but the Arkansas Co. claimed that the balance due was much less and the dispute resulted in litigation. On December 2, 1931, the Dorsey Co. brought an attachment suit in the superior court of Cook county to recover the claimed balance. The suit was settled on December 14, 1931, by the Arkansas Co. delivering its draft for $32,000, payable to the order of the Dorsey Co. This draft was indorsed by Dorsey, as president of the Dorsey Co., but, because of certain transactions had at the time and prior thereto as hereinafter mentioned, no part of the proceeds of the draft ever came into the hands of the Dorsey Co.

In the meantime Dorsey, individually, and the Dorsey Co. had borrowed money from the National Bank of the Republic (predecessor of the garnishee bank). These loans were evidenced by three collateral notes, each dated October 11, 1930. One was executed by the Dorsey Co., with Dorsey’s personal indorsement thereon, for $1,492.68. Two, being respectively for-$11,000 and $87,136.90, were executed by Dorsey, individually. Each was payable to the National Bank of the Republic and was secured by collateral deposited with that bank. On November 22, 1930, after the notes had matured and were not paid, that bank sent notices of a proposed foreclosure sale, on November 25th, of the collateral securing Dorsey’s two notes and of the collateral securing the note of the Dorsey Co. Each notice was signed by the bank “by Richard A. Griffin, duly authorized agent and attorney.” Immediately after the notices had been received Dorsey conferred with his confidential secretary, Violet Padgitt, who also was the bookkeeper of the Dorsey Co., stated that he needed a considerable amount of money immediately, and asked if she could ascertain what was the amount then due to the Dorsey Co. from the Arkansas Co. on its account. She replied that she could not determine the amount without much checking over of accounts on the books of the Dorsey Co., but she said that the Dorsey Co. owed Dorsey, individually, the sum of approximately $55,000, for moneys previously advanced by Dorsey to the company and for uncollected back salaries due to him as president, etc. And she “suggested to him that he withdraw the needed money from the company in payment of what the company was indebted to him.” Dorsey thereafter had several interviews with Griffin in order to prevent, if possible, the proposed sale of the collateral. Dorsey testified: “I was told by Griffin that if I could put up additional collateral that my loan or notes would be renewed for a period of time. It was then that I arranged to submit this collateral of the account receivable of the Arkansas Co. I told Griffin that I had an account, amounting to some $42,000 or $45,000 that was due from the Arkansas Co., and that I would submit that account as additional collateral. Griffin asked me what authority I had to assign the account. I told him I had taken the matter up with my bookkeeper, and that the Dorsey Co. was indebted to me to the extent of $55,000, or more, and that I could submit the account as collateral. As a result the foreclosure sale did not take place. The notes were renewed. After the assignment of the account was made I wasn’t bothered for some time until the renewal notes became due and the bank was anxious to get the cash on the assignment.” This assignment of said account was not produced upon the trial. The garnishee bank claims that apparently it was lost or mislaid. Dorsey further testified: “I put my signature on this assignment on behalf of the Dorsey Co. I signed it in my office (1st National Bank Building, Chicago). The secretary of the company (Dorsey’s wife) also signed it, and the corporate seal was put upon it. The last time I saw the assignment was when I turned it over to Mr. Griffin on or about November 24th or 26th, 1930. It ran to the National Bank of the Republic. ... I received nothing at the time it was delivered, as it was collateral.” Griffin testified that he, as the agent and attorney for the bank, drafted the assignment by the Dorsey Co. of the Arkansas Co.’s account; that the National Bank of the Republic wás the named assignee; that he did not see the assignment executed, but that after its execution it “was handed to me by Dorsey and I kept it in my file for over a year”; and that in the latter part of 1931, after its purpose had been served, he returned it to Dorsey, personally.

After the attachment suit, brought by the Dorsey Co. against the Arkansas Co. in December, 1931, had been settled, resulting in the delivery to Dorsey of its draft for $32,000, payable to the order of the Dorsey Co., and after the judgment in Harris’ favor had been entered against the Dorsey Co., Dorsey, on July 21,. 1931, in the presence of Griffin and in the lobby of the First National Bank, indorsed said draft in the name of the Dorsey Co., and personally purchased by it a check of said First National Bank, payable to the order of the garnishee bank, for $32,000, which shortly afterward" came into its hands and was applied as follows: $30,000, in reduction of the personal notes of Dorsey then in the bank’s possession, and $2,000 was credited to his individual checking account in the bank. Dorsey testified: “I used the Arkansas Co.’s draft to purchase the check. I did not cash it at a paying window and get currency. The check which I purchased I turned over to the Central Republic Bank. It was payable to that bank, and I handed it over, not to Mr. Griffin, but to an official of the Central Republic Bank the same day, about an hour afterwards. . . . The Central Republic Bank never gave . . . any part of said check to the Dorsey Co. As far as I know the Central Republic Bank still has the proceeds of that check. . . . Out of the $32,000 check (or draft) received from the Arkansas Co., my account at the Central Republic Bank was credited with $30,000. Out of the other $2,000, I received a loan of $2,000 from the bank and I put up additional collateral. . . . This $2,000 . . . was given to me as a deposit, a credit to my account.”

When the claimed assignment of the Arkansas Co.’s account with the Dorsey Co. was made by Dorsey to the bank, the Dorsey Co. was indebted to the bank only in the sum of approximately $1,500, as evidenced by its note secured by separate collateral. And it appears from the garnishee’s answer that this indebtedness subsequently was reduced to the sum of $191. It was not claimed by the bank on the trial that the assignment was received as additional collateral to secure said indebtedness of the Dorsey Co., nor was it contended that any part of the $32,000, ultimately received by the bank from the Arkansas Co., was credited to said note given by the Dorsey Co.

The main contention of the beneficial plaintiff, Harris, in the trial court was in substance, as it is here, that Dorsey, president of the Dorsey Co., fraudulently diverted, without its authority and without any consideration paid to it, $32,000 of its corporate assets to the garnishee bank, which sum was applied by the bank, with knowledge of the facts, to a then existing individual indebtedness of Dorsey to the bank, at a time after Harris’ judgment against the Dorsey Co. and Dorsey had been rendered, and that because of such fraudulent diversion Harris is entitled to recover of the bank in this garnishment proceeding and out of said $32,000, so diverted, a sufficient sum to satisfy his judgment, costs of suit, etc. The main contention of the garnishee bank in the trial court, as it is here, was in substance that when the assignment of the Arkansas Co.’s account was made by Dorsey, acting for the Dorsey Co., to the bank in November, 1930, as further collateral security to Dorsey’s individual indebtedness to the bank, the Dorsey Co. was indebted to Dorsey in an amount of about $55,000, for moneys previously loaned by him to it and for uncollected back salaries as its president, etc.; that this indebtedness to Dorsey was then disclosed on the books of the Dorsey Co., introduced in evidence, and by the testimony of its bookkeeper; that because of this existing indebtedness to Dorsey he had a legal right, as president and active head of the Dorsey Co., and, without any authority so to do obtained from the Dorsey Co., to assign in the name of the Dorsey Co. said account receivable of the Arkansas Co. (then considered to be in the amount of over $40,000) to the bank as further collateral security to Dorsey’s individual indebtedness to the bank; that when the settlement of the litigation over the amount of the indebtedness due to the Dorsey Co. from the Arkansas Co. was made in December, 1931, Dorsey also had the legal right to indorse the $32,000 check or draft (which was payable to the order of the Dorsey Co.) and cause the proceeds to be delivered to the garnishee bank and to then be applied pro tanto upon his then existing individual indebtedness to the bank, as evidenced by his collateral notes held by the bank; that there was no fraud practiced in the consummation of the deal; and that the finding and judgments of the trial court are manifestly against the weight of the evidence and against the law.

After carefully considering the evidence and numerous adjudicated cases we are of the opinion that the contention of the bank, both in the trial court and here, is without substantial merit; and that the findings and judgments of the trial court are sufficiently sustained by the evidence and the law. We think that certain holdings and decisions of our Supreme Court in the following cases are here applicable. In Emporium Real Estate & Manufacturing Co. v. Emrie, 54 Ill. 345, it appears that Emrie, president of the complainant corporation, claiming that it was indebted to him for salary as president and for certain services rendered to it as an attorney at law, caused its secretary to assign to him certain certificates of purchase issued by the sheriff to the company on a sale of real estate under a judgment in the company’s favor. The company filed a bill to compel a surrender of the certificates, and to enjoin the sheriff from making a deed to Emrie. The circuit court decreed a surrender of the certificates, upon payment by the company to Emrie within a certain time of $1,457; that he retain the certificates as security; and that if the money be not paid to him within the time, his title to the certificates should become absolute and the sheriff should make him a deed. In reversing the decree and remanding the cause the court said in part (p. 346):

“This decree cannot be sustained. Emrie and the secretary of the company held these certificates merely as the servants of the company. Their possession was the possession of the corporation, and they had no more right to appropriate those certificates, for the individual benefit of one of them, than they had to seize and carry away the furniture of the company’s office. The claim of the president had not been allowed by the board of directors or by a committee appointed by them. In effect, the president audited his own demand, and then seized upon property for its payment. This can never be permitted to the officers of corporations. The toleration of such practice would be destructive of the rights of creditors and of stockholders. The assets would be at the mercy of the officers, who have no legal or equitable right to control them, except for the benefit of the company.”

In Wheeler v. Home Savings & State Bank, 188 Ill. 34, the plaintiff, as assignee for the benefit of the creditors of Singer & Wheeler, an Illinois corporation. commenced an action in replevin in the circuit court against the defendant bank to recover certain warehouse receipts for certain barrels of whisky and also to recover the whisky. The property not having been obtained under the writ a recovery subsequently was had for its value under a count in trover. On appeal the Appellate Court reversed the judgment and remanded the cause. On the second trial the court, a jury having been waived, found the bank not guilty and entered a judgment in its favor. On appeal the Appellate Court for the second district affirmed the judgment (85 Ill. App. 28), but our Supreme Court reversed the judgments of the circuit and Appellate Courts and remanded the cause for further proceedings. As appears from the opinion of the Supreme Court, the corporation, in April, 1893, was indebted to the bank for borrowed money, and to secure the same had pledged warehouse receipts issued to and owned by it' for the barrels of whisky. In September, 1893, all of its debt to the bank had been paid except $1,000. Before the latter date Peter Singer, who was a director and the treasurer and general manager of the company, owed the bank on his individual account $10,000, and his two notes evidencing the debt were past due and the bank was pressing for payment. He wanted more time and told agents of the bank that the company owed him more than the amount of Ms debt to the bank, and that if it would pay him he could pay the bank, but that its financial condition was such that it could not then do so. It was then suggested to Mm by the bank’s agents that if the company owed Mm he should take from it the whisky or other of its merchandise for the debt and pledge it to the bank for his own debt. Shortly thereafter he came to the bank and stated that he had made an arrangement and would pledge the whisky as security for his debt. Thereupon he took up the notes, evidencing his debt to the bank, and gave a renewal note for $10,000, with an agreement showing that he had, in addition to certain shares of stock which he owned, pledged the warehouse receipts for the whisky. At this time these receipts were held by the bank as security for the balance of the company’s indebtedness of $1,000 to the bank. They had not been assigned by it but stood in its name. A few days later the company paid to the bank the balance of $1,000 of its indebtedness to the bank, but its agent failed to take up the warehouse receipts. Some time thereafter an officer of the bank observed that said receipts had not been indorsed or assigned by the company, and he took them to the company’s office and stated to its secretary (who was the son of said Peter Singer, its manager) that the bank now held them as security for Singer’s individual note of $10,000, and that they ought to be indorsed by the company. Thereupon said secretary indorsed the receipts in blank in the name of the company, by himself as secretary, and redelivered them to the officer of the bank. Said secretary testified on the trial that he indorsed them in order that the bank might hold them as security for Ms father’s individual $10,000 note. It was not claimed that the company was in any way responsible for or interested in the individual debt of Singer to the bank, or that the pledging of its property to secure said debt was for its benefit or for any corporate purpose. And the evidence disclosed that when the warehouse receipts were indorsed and when they were received by the bank, the bank knew that they were the property of the company. In reversing the judgment in favor of the bank our Supreme Court said in part (p. 39, italics ours):

“Singer was déaling with the bank in Ms own interest, and not as the officer or agent of the company. The bank could not, therefore, treat his representations so made in his own interest and against the interest of the company as the representations of the company. (Citing Moores v. Citizens’ Bank, 111 U. S. 156, 164.) As said by the court of appeals of New1 York: ‘The general rule is, that one who receives from an officer of a corporation the notes or securities of such corporation, in payment of or as security for a personal debt of such officer, does so at his own peril, Prima facie, the act is unlawful, and unless actually authorized, the purchaser will be deemed to have taken them with notice of the rights of the corporation.’ ” (Citing Wilson v. Metropolitan Elevated R. Co., 120 N. Y. 145, 150.)

In Leigh v. American Brake-Beam Co., 205 Ill. 147, 150, it is said (italics ours):

“It need scarcely be said that the president and general manager of a corporation has no authority, by virtue of his office, to appropriate the money of the corporation to the use of himself and his partners in his private business. The defendant had full notice, both by the checks and the agreement which he offered to prove, that the money of the plaintiff was being taken by its president, acting in the interest of himself and his associates, to be used for their joint benefit, and not for any purpose or business of the corporation. . . . Although a corporation must act by agents, the general power of an agent does not extend to a case where he is the person interested on the other side. Generally, an officer or agent of a corporation cannot act for the corporation and himself at the same time, . . . Every person dealing with an officer of a corporation who assumes to act for it in matters in which the interests of the corporation and officer are adverse, is put upon inquiry as to the authority and good faith of the officer.”

In view of the facts of the present case as above outlined, and in the light of the above holdings and decisions, we are of the opinion the trial court was fully warranted in entering the findings and judgments that it did, and that said judgments should be affirmed.

It is also here contended by counsel for the garnishee bank in substance (a) that the court erred in holding as a proposition of fact that “the books of account of Dorsey Co. offered in evidence by the garnishee bank, are not competent proof that on or about December 31, 1930, the Dorsey Co. was indebted to Dorsey, individually, in “the sum of $53,680.42, or any other sum”; (b) that the court erred in holding as a proposition of fact that “no valid assignment or transfer was ever made by the Dorsey Co. to Dorsey, individually, of the Arkansas Co. ’s account receivable due to the Dorsey Co.”; and (c) that the trial court erred in refusing to hold as a matter of law that the garnishee bank was the “equitable assignee” of the Arkansas Co.’s account receivable, entitling the bank to its discharge as garnishee. All three of these contentions are much discussed in the printed arguments of opposing counsel. No useful purpose will be served in here commenting upon the discussions. Suffice it to say that after considering the three contentions, we have reached the conclusion that if any errors were committed by the trial court in the particulars named they are not such as warrant a reversal of the judgments, in view of all the facts and circumstances in evidence.

Accordingly, the judgment appealed from in favor of Harris for $7,388.74, as first above mentioned, against the garnishee, Central Republic Trust Co., is affirmed.

Affirmed.

So arlan and Sullivan, JJ., concur.


text:
    Clark M. Jackson for Use of Richard E. Schaer, Appellee, v. Bankers Indemnity Insurance Company, Garnishee, Appellant.
    Gen. No. 37,352.
    Opinion filed October 16, 1934.
    Cassels, Potter & Bentley, for appellant; Ralph P. Potter, Leslie H. Vogel and E; Douglas Schwantes, of counsel.
    Richard E. Keogh, Willard Balhatohett and John D. Pope, for appellee.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

On June 3, 1933, Richard E. Schaer recovered a judgment against Clark M. Jackson for $4,000, following the verdict of a jury, for damages for personal injuries received early in the morning of August 8, 1931, and occasioned by the negligent driving of an automobile by Jackson, which was owned at the time by Vincent C. Fischer. After an execution on the judgment had been returned unsatisfied the present garnishment suit was commenced on August 18, 1933, against the Bankers Indemnity Insurance Co. (hereinafter referred to as the Insurance Co.), based upon an “omnibus” coverage clause, as it is sometimes called, contained in the policy of automobile liability insurance, issued by the Insurance Co. to Fischer and in force at the time of the accident. The issues were made by the interrogatories filed by the beneficial plaintiff, answers thereto by the Insurance Co., and a replication to the answers. In the answers of the Insurance Co. it stated that the nature of its defenses to the suit were in substance (a) that Jackson, as the “additional insured,” was not at the time and place of the accident “legally operating” the automobile ; (b) that he was not then operating it “with the permission of the named assured, Fischer”; (c) that Jackson was guilty of a breach of the insurance contract in mailing false statements to the Insurance Co. respecting the accident, and in failing and refusing to “co-operate” with it in the defense of the suit brought by Schaer against him. During October, 1933, a trial of the issues was had before the court without a jury. On the trial the beneficial plaintiff introduced the policy in evidence, gave certain testimony in his own behalf, and called Jackson and Fischer as witnesses. They were examined and cross-examined at considerable length. The accident occurred about 5 o’clock in the morning at or near the intersection of 51st street and Cottage Grove avenue, Chicago. Jackson testified in detail to certain occurrences leading up to the accident and certain happenings thereafter. For the Insurance Co. four witnesses testified, three of them being police officers. The Insurance Co, also introduced in evidence a written statement as to the accident, etc., signed by Jackson in a Chicago police station on the morning of August 8, 1931, about four or five hours after the accident. The Insurance Co. also introduced in evidence a certain statement, prepared by representatives of the Insurance Co., and signed and sworn to by Jackson on September 30, 1931, about seven weeks after the accident. After one of the police officers, Meehan, had testified to the effect that, when the statement was signed by Jackson in the police station, Jackson “had signs of drink upon him” and “was very nervous,” the court struck from the record the statement on the theory that Jackson was drunk at the time he signed it. The Insurance Co. also introduced in evidence a certain “Defense and Non-Waiver Agreement,” dated December 17, 1931, and signed by Jackson, Fischer and the Insurance Co., wherein the company agreed to defend without expense to Jackson the lawsuit which had been commenced by Schaer against him, and wherein, in consideration thereof, all parties agreed that the Insurance Co. did not, because of such agreement to defend or of any act to be done thereunder, waive any defense that it might have to the making of any payment under the policy. On October 24, 1933, at the conclusion of the trial, the court found the issues for the plaintiff and against the Insurance Co., assessed plaintiff’s damages at $4,-078.30, and entered judgment against the Insurance Co. in that sum. By the present appeal it is sought to reverse the judgment.

The material provisions of the policy, which was issued to Vincent C. Fischer, as the “Assured,” on April 20, 1931, and for a period of one year, are as follows:

“(1) To pay any loss (within the limits as expressed in the Declarations) resulting from the liability imposed by law upon the Assured for damages on account of bodily injuries, and/or death resulting therefrom, accidentally suffered, or alleged to have been suffered, by any person or persons, by reason of the ownership, maintenance and/or use of any of the automobiles described in said Declarations (including carrying of goods thereon and the loading or unloading thereof).

“(6) Additional Assured. This policy shall apply in the same manner and under the same conditions as it applies to the Named Assured, to (a) any person or persons while riding in or legally operating any of the said automobiles and to any person, firm or corporation (except an automobile garage, repair shop, automobile sales agency or service station or the agents or employees thereof) legally responsible for the operation thereof, provided such use or operation is with the permission of the Named Assured, or, if the Named Assured is an individual, with the permission of an adult member of the Named Assured’s household other than a chauffeur or a domestic servant, (b) the immediate next of kin or legal representative of the Named Assured in the event of the Named Assured’s death. ’ ’

Among the “Declarations” of the policy is the following item:

“4. The Company’s liability under insuring agreement (1) for loss on account of an accident resulting in bodily injuries to and/or death of one person whether there be one or more Assured, is limited to $5,000; and, subject to the same limit for each person, the Company’s total liability for loss on account of any one accident or series of accidents arising from one and the same cause resulting in bodily injuries to and/or death of more than one person is limited to $10,000.”

Among the numerous “Conditions” of the policy are the following:

“D. Reporting Accidents, Losses and Claims.- — Report and Defense of Suits.—Co-operation of Assured. The Assured, upon the occurrence of an accident, shall give immediate written notice thereof to the Company with the fullest information obtainable. He shall give like notice with full particulars of any claim made on account of such accident. If suit is brought against the Assured to enforce a claim for damages covered by this Policy, the Assured shall immediately forward to the Company every summons or other process as soon as the same shall have been served on the Assured. Nothing elsewhere contained in this Policy shall relieve the Assured of his obligations to the Company with respect to notice as herein imposed upon him. The Assured shall at all times render to the Company all co-operation and assistance in his power.

“The Assured, whenever requested by the Company, shall aid in effecting settlements, securing information and evidence, the attendance of witnesses and in prosecuting appeals, but the Assured shall not voluntarily assume any liability or interfere in any negotiation for settlement, or in any legal proceeding, or incur any expense, or settle any claim, except at the Assured’s own cost, without the written consent of the Company previously given.”

The salient facts as to the accident, and the events and happenings before and immediately after, are in substance as follows:

Fischer was a commercial artist, resided at Waukegan, Illinois, but also had an apartment at 636 Addison street, on the north side of Chicago. Jackson also was an artist, having his studio at 43 East Ohio street, Chicago. During the early evening of Friday, August 7, 1931, Fischer and Jackson were in the company of certain of their friends, two men and two women. They drank a number of gin highballs together. Later the party went to Fischer’s apartment, where more drinks were had. About midnight, several of the guests expressed a desire to go to their respective homes on the north side of Chicago, and, with Fischer’s permission, Jackson drove three of the guests to their homes in the automobile. Fischer had frequently before given Jackson permission to drive his car. Siegel, one of Fischer’s guests, remained in the apartment, to which Jackson returned in the car at about 1:30 o’clock on Saturday morning. Upon Siegel’s expressing the desire to be driven to his home in Berwyn, Illinois, Jackson, with Fischer’s permission, agreed to do so. Fischer then stated that he felt “pretty tired,” that he had to be in Lake Bluff, Illinois, the following morning (Saturday), and that it would be all right with him if Jackson returned with the car in time for him to make his contemplated trip in the car to Lake Bluff. Fischer gave no instructions to Jackson as to the route he should take in going to or returning from Berwyn'. Jackson drove Siegel in the car to Berwyn. On his return trip, alone, and after reaching 22nd street, Chicago, Jackson drove the car in that street as far east as Michigan avenue, when he turned to the north and was proceeding north, when at about 17th street he “had a flat tire — a blowout or a puncture,” and he stopped near a lamp post and got out and looked at the tire. As to the happenings thereafter Jackson testified as follows:

“While I was looking at the tire, there were a couple of colored men come along, and as I was ‘rather tired,’ I leaned up against this post, watching one of the men working on the tire. I don’t know where the other one was. When he was through and was giving me back my keys, and I had stepped off of the curb to pay him, there was a sort of a crash, and I don’t recall anything else. This happened as I had put my hand in my pocket to pay the colored man for fixing the tire. . . . The next thing that I recall that morning is that blood was running out of the side window of the car and blood was running down on my forehead; I had heard a crash, of course, and I knew that I was cut; I was stunned and dazed; and that is my first recollection after having offered to pay these men. ... I had the puncture at 17th and Michigan avenue, and I learned later that the accident was at 51st and Cottage Grove avenue.” (This last named location, as testified by a witness called by the Insurance Co., is about four miles southerly from 17th and Michigan avenue.)

Jackson further testified on cross-examination:

“I wouldn’t really know what time it was when I had that puncture. It would depend on how long it took me to drive in from Berwyn to that point. It was possibly 3:30 o’clock. . . . After the' accident (which occurred about 5 o’clock) I was taken to a police station and at 8 o’clock, a. m., I tallied with some police officers there. (His signed statement afterwards delivered to those officers then exhibited.) I really don’t know whether I said the following to those officers, but I would not say that I did not, viz.: ‘I drove Siegel home and returned on Oak Park Blvd., until I hit 22nd st.; then I went east to Michigan avenue; then I had a flat tire and two colored men changed the tire; then I got in the car and started north and I remember nothing further until I hit the milk wagon at 51st street and Cottage Grove avenue; then someone called the police wagon and brought me into the station, and I am not sure where I received first aid. ’ ’ ’

John R. Cretz, one of the witnesses called by the Insurance Co., testified in part as follows:

“On the morning of August 8, 1931, I was a police officer at the station at 48th and Wabash avenue, Chicago, assigned to ‘wagon’ duty. About 5 o’clock that morning I received a call to go to 51st street and Cottage Grove avenue. I went there with two other officers. I saw a milk wagon tipped over and milk bottles on the street. I was told the driver (Schaer) of the milk wagon had been badly injured and had been taken to the Chicago Hospital. I found that the horse had a broken leg and we had to shoot the horse. My attention was called to a man sitting in a nearby automobile. Some one said ‘Don’t let that fellow get away; he pretty near killed the driver.’ So I opened the door and asked the man (Jackson) sitting in the car, ‘What happened?’ He replied: ‘I was to a party last night with a lot of ladies, and we drank a lot of ginger ale highballs, and that’s about all I remember.’ He had a laceration on the top of his head, and he said he wanted to be taken to the hospital. So I took him to the same hospital that the driver had been taken to. After he had been given treatment there, I took him to the police station. At that time I had an opportunity to observe Jackson. I don’t know what was his then condition with reference to sobriety and intoxication.”

On the issue raised in the garnishee’s answer that Jackson, as the “Additional Assured,” had breached the contract of insurance in that he had made “false statements” to the company respecting the accident and in that he had failed and refused to “co-operate” with it in the defense of the suit brought by Schaer against him, the uncontradicted testimony of Jackson is in part as follows:

“Representatives of the Insurance Co. asked me to make statements to them as to how the accident happened. I did so. They were true. They had me down at their office a number of times and I conferred with them from time to time regarding the accident. The law suit against me was tried twice. I was present at the first trial, sitting at the table with Mr. Vogel (one of the attorneys for the Insurance Co.). I was not called as a witness at that trial and gave no testimony. . . . On the morning the case was called for trial the second time, I remember having a ’phone conversation with Vogel. ... I was ill at the time and I told him that I didn’t feel like coming to court. . . . He said it was all right if I was ill, and that I need not attend the trial. ... I don’t recall any other thing that the company asked me to do that I did not do. . . . When the $4,000 verdict was returned by the jury in the case I was not present in court. . . . I know Mr. Williams who is an employee of the company. He asked me to make the written statement of September 30,1931. I read the statement as prepared before signing and swearing to it before a notary. ... . The statement was given to Williams pursuant to his request that I tell how this accident happened. . . . Subsequently there were conferences with reference to the company defending me under the policy. . . . These conferences resulted in the execution of the agreement of December 17,1931. ’ ’

From a comparison of Jackson’s written statement of September 30, 1931, prepared by representatives of the company, with his testimony given on the trial of the present case in October, 1933, it appears that the facts as stated on the two occasions are substantially similar. There are, however, certain matters mentioned in the written statement that do not appear in his testimony on the trial. In the written statement it is stated that shortly after the accident, “a man stuck his head in the window and told me to take it easy until the police arrived”; that when the police arrived “I got out of the car in a dazed condition, and was taken to the hospital where my head was stitched and dressed”; that from there “I was taken to a police station at 48th street and Wabash avenue, and put in a cell and held incommunicado until 4 o’clock, a. m., August 10, 1931”; that “I went to court at 9:30 a. m. that morning, where I was charged with ‘Assault and Battery with a deadly weapon’ and released on a $1,000 bond, and the case continued until September 23rd.” These statements as to his inability to communicate with Fischer, or others, until early Monday morning are corroborated by Fischer’s testimony on the trial that, after Jackson had left his apartment in company with Siegel early on Saturday morning, August 8th, he “next heard from Jackson some time early Monday morning, about 4 o’clock,” and later the same morning “went to the court where Jackson was and then went and reported matters to the agent with whom I had taken the insurance. ’ ’ And there are certain statements at the end of Jackson’s written statement of September 30, 1931, in the nature of conclusions, rather than statements of fact, in part as follows:

“When I left 636 Addison street to take Siegel home, it was expressly understood between myself and Fischer that I was to return with his car directly from Berwyn, . . . and I had no authority to deviate from my course, or to drive his car throughout the city, but was to return directly to his apartment. . . . From the time of the punctured tire up to the happening of the accident there was a deviation and I was not returning to 636 Addison street. I heard a crash and the breaking of glass, but did not see a horse or milk wagon. On the afternoon of August 8,1931, while I was in jail, I felt a large bump on the back of my head about the size of a chicken egg, and the back of my neck has been stiff and sore ever since. ’ ’

Three contentions, urging a reversal of the judgment appealed from, are here made by counsel for the Insurance Co. The first is that the evidence clearly discloses that Jackson “at the time and place of the accident” was not operating the automobile with the “permission” of the named assured in the policy. And counsel argue in substance that the judgment is erroneous under a proper construction to be placed upon paragraph 6 of the policy; that while in the policy delivered to Fischer it agreed to cover any other person using and operating his automobile, it did so with the proviso that such use and operation by such other person was to be “with the permission of the named assured” (Fischer); that it sufficiently appears that at the time and place of the accident Jackson was “no longer” using and operating the car with Fischer’s “permission”; and that, hence, the Insurance Co. is not liable under the policy to the beneficial plaintiff, Schaer, in this garnishment proceeding. In support of their contention and argument counsel cite in their briefs several adjudicated cases in jurisdictions other than Illinois, and they state that the courts of review of Illinois “seem not to have been called upon to decide any case analogous to the one at bar.” Among the cases cited are: Johnson v. American Automobile Ins. Co., 131 Maine 288; Frederiksen v. Employers’ Liability Assur. Corp., 26 F. (2d) 76; Trotter v. Union Indemnity Co., 35 F. (2d) 104; Jones v. Cella, 284 Mass. 154, 187 N. E. 294; Nicholas v. Independence Indemnity Co., 11 N. J. Misc. 344, 165 Atl. 868. In the Johnson case (131 Maine 288) the defendant had executed and delivered to one Becker a policy of liability insurance covering his automobile. The policy had an “omnibus” or “additional coverage” clause' in it similar to the present one. While it was in force one Bix, an employee of Becker, crashed his car into a telephone pole to the injury of the plaintiff, a young woman riding gratuitously in the car. She brought a tort action against the driver, Bix, and- after verdict obtained a judgment against him for $1,800. The judgment remaining unsatisfied she sued in equity, under a Maine statute, to reach and apply the insurance money in the amount of the judgment. The cause was heard on bill, answer, replication and proof, but the trial court decreed that her bill be dismissed. On appeal the decree was affirmed. On the trial the court “found the fact to be” that, on the ride involving the accident, the car “was not being used with the consent, express or implied, of the ‘named assured’ (Becker), but that the employee (Rix) was using it in disregard of, and unrelation to, the specified object for which it had been intrusted to him. ’ ’

In the opinion of the Maine court (p. 290), after stating that the evidence of the case “abundantly sustains the finding” of the trial court, and that the trial court “concluded, as a matter of law, that Bix was not covered by the terms of the policy, as to the accident,” there is a somewhat lengthy discussion of some of the numerous decisions cited by the plaintiff’s counsel, in which a contrary conclusion was reached. And then the court says (p. 292): “Without discussing other cases, thus was it concluded that, initial use of the car having been with the owner’s permission or consent, liability insurance became available.” And the court further said (pp. 292, 293, italics ours):

“Touching the question here presented, the cited decisions are not persuasive. ...

“In the instant case, the instruction by the employer, that Bix should take the car home and wash it, was simply consent that the car be used, within reasonable and incidental limits, for that purpose. Such use brought the employee within the additional coverage clause in the liability policy. If, while consent continued, civil liability for damages had been incurred, the policy would have afforded security.

“But, as the justice found — and his finding has the weight of a jury verdict — the car was not, when the employee’s guest was injured, ‘being used with the consent of the named assured.’ The plaintiff could not, therefore, avail herself of the insurance.

“The phrase ‘while being used’ has been construed as referring to the time of casualty, and not to the time of granting consent. (Citing a case.) Permission to use an automobile to attend a funeral was not inclusive of a pleasure trip (citing the FrederiJcsen case, supra, 26 F. (2d) 76, decided by the U. S. Court of Appeals for the ninth circuit). Express permission for one purpose did not imply all purposes. (Citing the Trotter case, 35 F. (2d) 104, supra.) . . . The terms of a policy cannot be enlarged or diminished by judicial construction. ' (Citing a case.) The function of the court is not to make a new contract, but to ascertain the meaning and intention of that actually made.”

The facts of said Johnson case are materially different from those in the instant case. And the facts of the other four cases, cited by counsel for the Insurance Co., are also materially different from those in the instant case. It will be noticed that in the Johnson case the trial court found as a fact that the car in question was not being used by the driver at the time of the accident with the consent or permission of the owner thereof, while in the instant case the finding of the trial court was in effect to the contrary. It will also be noticed that in the Johnson case, as well as in said other four cases, there appears to have been a definite and deliberate intention on the part of the driver of the car to perform some other personal errand outside of or beyond the use for which permission had been granted by the owner, while in the instant case we are of the opinion that its peculiar facts are such as to indicate, and to justify the trial court (sitting in place of a jury) in believing, that Jackson at the time and place of the accident and prior thereto had no such intention. And our attention has been directed by plaintiff’s counsel to the cases of Dickinson v. Maryland Casualty Co., 101 Conn. 369, and Stovall v. New York Indemnity Co., 157 Tenn. 301, where the conclusions reached, and the holdings of the Supreme Courts of those States, we regard as contrary to those in the Johnson case. In, the majority opinion in the Dickinson case, it is said (p. 381, italics ours):

“Louis Maisano gave permission to Riccitelli to take the car and operate it on the streets of New Haven, in order to go to his home. It would be an unreasonable curtailment of the permission granted, to hold that any deviation or departure from the purpose indicated by Riccitelli in his request, annulled the permission and put Riccitelli in the position of one unlawfully using the car. Riccitelli undertook to take a friend in the car a mile toward his home in the northern part of the city, and another friend to his home near that of Riccitelli in the southern part of the city. These slight deviations from the route to his home, in a swiftly moving automobile, are too unimportant to have attached to them by construction the import of annulling the protective features of this insurance policy.”

In the Stovall case (157 Tenn. 301), the so-called “omnibus” clause in the policy is almost identically the same as paragraph 6 of the present policy. The complainants were injured in a collision with one of the automobiles owned by the Dry Goods Co., covered by the policy, and they secured judgments for damages against one Thomas, a traveling salesman of the company, who was driving the car when the collision oc-' curred. Thomas’ insolvency having been determined by a nulla tona return of the executions issued against him, complainants commenced a further proceeding in a chancery court, upon the theory that they were entitled to a decree against the Indemnity Co., Thomas being an “additional insured.” The Indemnity Co. interposed the defense that “at the time of the accident and injury,” Thomas was not operating the car with the “permission” of the Dry Goods Co., and that, hence, Thomas was not an “additional assured” within the terms of the policy. Complainants demanded a jury and an issue of fact was submitted to them, calling for a response whether the car, driven by Thomas, was being used or operated at said time with the “permission” of the Dry Goods Co. At the conclusion of complainant’s evidence, consisting of the testimony of the president of the Dry Goods Co. and the deposition of Thomas, the Indemnity Co. moved for a directed verdict in its favor. After argument on the motion, the chancellor discharged the jury,- entertaining the view that the evidence had developed no controverted question of fact and that under the uncontradicted evidence the right of complainants to a recovery depended only upon the proper construction of the contract of insurance, which was a question of law. And the chancellor entered a decree in favor of complainants, which subsequently was affirmed by the court of appeals. On petition for certiorari, granted by the Supreme Court, the decree of the court of appeals was affirmed, the court saying in part (pp. 314, 315, italics ours):

“It is our opinion that the words ‘providing such use or operation is with the permission of the named assured’ were intended to exclude from the protection of the policy a person who should take the automobile and use it without permission or authority in the first instance. If, however, the automobile covered by the policy is delivered to another for use with the permission of the owner or insured, his subsequent use of it is with the permission of the insured, within the meaning- of the policy, regardless of whether the automobile is driven to a place or for a purpose not within the contemplation of the insured when he parted with possession.”

The Stovall case is also reported in 72 A. L. R., p. 1368, and following the opinion, commencing at p. 1375, there is an exhaustive annotation discussing many adjudicated cases in various jurisdictions, where similar “omnibus” coverage clauses were involved. The cases are not harmonious. But on pp. 1388, 1389, of the annotation the author says: “The question of permission is one of fact. (Citing cases.) As regards the fact of permission, the burden of proof rests upon the plaintiff. To the latter proposition no citation of cases is necessary. . . . Where the evidence on the question of permission is conflicting, or reasonably susceptible to opposing inferences, the findings of the trial court — a jury having been waived — with respect thereto, are controlling.” (Citing the Trotter case, supra, 35 F. (2d) 104, 105.)

In view of the evidence in the present case, and considering the authorities above referred to, we are unable to agree with the first contention and argument of counsel for the Insurance Co., above mentioned. Inasmuch as under all the evidence the court, sitting* in place of a jury, determined in plaintiff’s favor the question of fact as to Fischer’s permission, we are not disposed to reverse the judgment against defendant. It seems clear to us that the court’s finding is not manifestly against the evidence. If, however, under the evidence, the particular question can be considered to be one of law, as distinguished from one of fact, we are of the opinion that the judgment of the trial court is sustained by the weight of authority in this country.

The second contention of counsel for the Insurance Co., as a ground for a reversal of the judgment in question, is that the evidence discloses that Jackson “breached the co-operation provision of the policy and the plaintiff claiming through him cannot recover.” In view of the provisions in paragraph “D” of the policy above outlined, and the evidence bearing upon the particular issue, we are of the opinion that the contention is without merit. In an exhaustive annotation in 72 A. L. R., p. 1446, concerning such provisions in policies of liability insurance, it is said' (p. 1454): “What constitutes co-operation (or the lack of it) on the part of the assured, within the meaning and effect of co-operation clauses, is usually a question of fact.” See, also, Harrison v. United Slates Fidelity & Guaranty Co., 255 Ill. App. 263, 279, 287. (Certiorari denied, 256 Ill. App. xliv.) It is apparent that the court by its finding in the present case found against the Insurance Co. on this issue, and clearly the finding is not against the evidence. (See, also, Duffy v. Fort Dearborn Casualty Underwriters, 270 Ill. App. 143, 149; Conroy v. Commercial Casualty Ins. Co., 292 Pa. 219, 224, 225.)

Equally without merit, in our opinion, is counsels’ third and last contention that the trial court committed reversible error in striking from the record the written statement that Jackson made to the police officers, while in their custody a few hours after the happening of the accident. Even if it could be considered that the court erred in the ruling, it would not be such an error as would warrant a reversal of the judgment, in view of all the admitted evidence.

For the reasons indicated the judgment of the superior court of October 24, 1933, against the Insurance Co. for $4,078.30 should be and is affirmed.

Affirmed.

Scanlan and Sullivan, JJ., concur.