NO. 5-95-0255
IN THE
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
_________________________________________________________________
ROBERT J. HATHAWAY, Administrator of ) Appeal from the
the Estate of Rody Ray Hathaway, ) Circuit Court of
deceased, and ERIC W. VAN ZANT, ) Saline County.
)
Plaintiffs-Appellants, )
and )
JASON M. BARTON, )
Plaintiff, )
v. ) No. 91-L-36
STANDARD MUTUAL INSURANCE COMPANY, )
a corporation, and COUNTRY )
COMPANIES INSURANCE COMPANY, a )
corporation, )
Defendants-Appellees, )
BLAKE E. VAUGHN, LODEWYK C. BORST, )
PAIGE E. BORST, SOLANGE A . BORST, )
KAREN S. KNUIST, ROBERT B. KNUIST, )
and STATE FARM INSURANCE COMPANY, )
a corporation, ) Honorable
) Arlie O. Boswell,
Defendants. ) Judge, presiding.
_________________________________________________________________
JUSTICE CHAPMAN delivered the opinion of the court:
Several times in recent years this court has ruled on the
recoverability of underinsured motorist benefits when multiple
claimants exhaust the coverage of the underinsured vehicle. See
Golladay v. Allied American Insurance Co., 271 Ill. App. 3d 465,
648 N.E.2d 157 (1st Dist. 1995); Illinois Farmers Insurance Co. v.
Tabor, 267 Ill. App. 3d 245, 642 N.E.2d 159 (2d Dist. 1994);
Moriconi v. Sentry Insurance of Illinois, 193 Ill. App. 3d 904, 550
N.E.2d 637 (4th Dist. 1990); Purlee v. Liberty Mutual Fire
Insurance Co., 260 Ill. App. 3d 11, 631 N.E.2d 433 (5th Dist.
1994); Cummins v. Country Mutual Insurance Co., 281 Ill. App. 3d 5,
666 N.E.2d 909 (5th Dist. 1996), appeal allowed, 168 Ill. 2d 586,
___ N.E.2d ___ (1996). The rulings have been mixed, not only among
the districts, but also within the same district. See Purlee v.
Liberty Mutual Fire Insurance Co., 260 Ill. App. 3d 11, 631 N.E.2d
433 (5th Dist. 1994); Cummins v. Country Mutual Insurance Co., 281
Ill. App. 3d 5, 666 N.E.2d 909 (5th Dist. 1996). We conclude that
beneficiaries of underinsured motorist coverage whose injuries are
not fully compensated for by the coverage on the underinsured
vehicle are entitled to recover under their underinsured motorist
coverage even though the bodily injury liability limits of the
underinsured vehicle are equal to or greater than the underinsured
motorist limits.
Before we begin the analysis of this problem, a brief general
history of underinsured motorist coverage is in order. Historical-
ly, underinsured coverage is a complement to uninsured coverage.
What is uninsured coverage? Uninsured coverage is insurance that
provides limited benefits to responsible insureds who are injured
in accidents with people who do not carry liability insurance.
Uninsured coverage enables prudent drivers, who are willing to pay
the appropriate premium, to protect themselves against the
likelihood that they will be involved in an accident with a person
who has no insurance. Uninsured motorist coverage became generally
available in Illinois in approximately 1963, and it obviously
filled a perceived void in insurance coverage. The uninsured
motorist coverage in essence said:
"For an appropriate premium, if you are injured in an
auto accident, you will be compensated for your injuries
up to $XXX, even though the other person has no insur-
ance."
In 1980, only 17 years after the advent of uninsured motorist
coverage, it became apparent that uninsured motorist coverage alone
was not enough to protect responsible drivers who were willing to
pay appropriate premiums. The gap in protection for responsible
drivers occurred when the other driver in an occurrence was not
completely uninsured. If, for example, the driver at fault had
bodily injury liability limits of $20,000 and the injured person
had uninsured motorist limits of $100,000, the injured person could
recover nothing from an uninsured motorist policy. He or she would
have been better off if the driver at fault had been completely
uninsured instead of only underinsured. The legislative response
to this problem was to provide for insurance, in fact, to require
insurance companies to offer underinsured motorist coverage. Ill.
Rev. Stat. ch. 73, par. 755a-1 (West Supp. 1980) (now see 215 ILCS
5/143a-2 (West 1994)).
The underinsured coverage was intended to offer responsible
drivers a way to protect themselves not only from uninsured
motorists but also from underinsured motorists. By paying the
appropriate premium, responsible drivers could be assured that, if
they were injured in an auto accident, they would be able to
recover up to the limits they purchased from their own insurance
companies, regardless of the insurance status of the driver at
fault. The driver at fault could be completely without insurance,
in which case they could recover the entire amount of their
uninsured motorist coverage limits, assuming of course that their
injuries were severe enough to entitle them to the full amount.
If, on the other hand, the driver at fault had insurance, and their
injuries were severe enough, they would be able to recover the
entire amount of their underinsured limits, less the amount
recovered from the driver at fault. In both situations, the
responsible driver was protected up to the limits of the coverage,
whether uninsured motorist coverage or underinsured motorist
coverage. In both situations, the insurance companies' maximum
exposure was limited to the amount of the coverage selected by
their insureds, and in the case of underinsured coverage, that
exposure would be reduced by the amount their insureds received
from the underinsured driver. The insurance companies' exposure
was also limited by the limits they imposed of so much per person,
so much per occurrence. At this point everything seems covered.
Insureds can purchase the appropriate protection, and insurance
companies will pay the appropriate amounts.
What happened next? There was an accident in which several
insureds were injured. If the driver at fault had been uninsured,
each of the injured insureds would have been able to recover up to
the uninsured limits, assuming that their injuries were that
serious. What if the driver at fault was underinsured, that is,
what if the limits of the driver at fault were not enough to
compensate all the insureds for the full extent of their injuries?
Well, most people would say, "Since underinsured motorist insurance
was extended to fill the gap created by underinsured versus
uninsured motorist coverage, obviously the insureds are entitled to
recover up to the limits of their underinsured coverage, less
whatever amounts they can recover from the underinsured driver."
Most, if not all, people might see it that way, but the courts
have not. Beginning with Moriconi v. Sentry Insurance of Illinois,
Inc., 193 Ill. App. 3d 904, 550 N.E.2d 637 (1990), and extending
through Golladay v. Allied American Insurance Co., 271 Ill. App. 3d
465, 648 N.E.2d 157 (1995), most courts have applied the definition
of underinsured vehicle found in the first sentence of section
143a-2(4) of the Illinois Insurance Code (215 ILCS 5/143a-2(4)
(West 1994)) to deprive insureds of the protection they had pur-
chased. See also Purlee v. Liberty Mutual Fire Insurance Co., 260
Ill. App. 3d 11, 631 N.E.2d 433 (1994); Illinois Farmers Insurance
Co. v. Tabor, 267 Ill. App. 3d 245, 642 N.E.2d 159 (1994). But see
Cummins v. Country Mutual Insurance Co., 281 Ill. App. 3d 5, 666
N.E.2d 909 (1996).
We conclude that Moriconi and the other cases relying solely
on the first sentence of section 143a-2(4) have misconstrued the
statute as applied to the multiple-claimant anomaly.
Section 143a-2 of the Illinois Insurance Code that was in
effect at the time of plaintiffs' accident read:
"For the purpose of this Act the term `underinsured motor
vehicle' means a motor vehicle whose ownership, mainte-
nance or use has resulted in bodily injury or death of
the insured, as defined in the policy, and for which the
sum of the limits of liability under all bodily injury
liability insurance policies or under bonds or other
security required to be maintained under Illinois law
applicable to the driver or to the person or organization
legally responsible for such vehicle and applicable to
the vehicle, is less than the limits for underinsured
coverage provided the insured as defined in the policy at
the time of the accident. The limits of liability for an
insurer providing underinsured motorist coverage shall be
the limits of such coverage, less those amounts actually
recovered under the applicable bodily injury insurance
policies, bonds or other security maintained on the
underinsured motor vehicle." (Emphasis added.) Ill.
Rev. Stat. 1989, ch. 73, par. 755a-2.
Most of the courts that have construed the statute have
focused on the first sentence and found it unambiguous. Conse-
quently, they have ignored the legislative history and ruled in the
insurance companies' favor. Although ambiguity in a statute is one
reason for a court to examine the legislative history, it is not
the only reason. An examination of the legislative history is also
appropriate if the examination helps to prevent an absurd result.
See W. Eskridge, Legislative History Values, 66 Chi.-Kent L. Rev.
365 (1990).
Although most of the cases construing the underinsured
motorist statute have either refused or neglected to examine its
legislative history because they found no ambiguity in it or
because they concluded that it would be inappropriate to look
behind its words, we do not share that view for several reasons.
First, as Professor Eskridge points out, although Justice
Holmes' statement, "We do not inquire what the legislature meant;
we ask only what the statute means" (Holmes, Collected Legal
Papers, 207), is often quoted by those reluctant to examine
legislative history, that was not his final word on the subject.
Holmes also said:
"It is said that when the meaning of language is plain we are
not to resort to [extrinsic] evidence in order to raise
doubts. That is rather an axiom of experience than a rule of
law, and does not preclude consideration of persuasive
evidence if it exists." Boston Sand & Gravel Co. v. United
States, 278 U.S. 41, 48, 73 L. Ed. 170, 49 S. Ct. 52, 54
(1928).
As Professor Eskridge concludes:
"The pragmatic lesson for my historical exegesis is that
dogmatic positions on the use of legislative history are
not productive in our representative democracy." W.
Eskridge, Legislative History Values, 66 Chi.-Kent L.
Rev. 365, 440 (1990).
Second, our supreme court examined the legislative history of
this very statute in Sulser v. Country Mutual Insurance Co., 147
Ill. 2d 548, 591 N.E.2d 427 (1992).
Finally, it seems to us that legislative history is like a
tool; its use may be appropriate in some instances and not in
others. In some cases it may not be the best tool, and in others
it will. In some cases it may offer only a form of crude assis-
tance that offends some purists, but that crude assistance may be
necessary. The last example brings to mind a story of two hunters
in southern Illinois who had lost their way in the depths of the
Shawnee National Forest. Not only had they lost their way, they
had also lost their guns, their canteens, and everything but a hand
axe. These two unfortunates had been stumbling through the woods
for two days when they were able to catch a snapping turtle. After
chopping off the turtle's head, the first hunter raised the axe to
smash the shell. The second hunter, a purist, protested, "Wait,
you're going to ruin that beautiful shell." "Damn the shell,
man!", the first hunter replied, "I'm after the meat!"
After beginning with and progressing through Holmes, and after
reviewing and referring to the modern symposium on statutory
interpretations, Symposium On Statutory Interpretation, 66 Chi.-
Kent L. Rev. 301 (1990), and after emerging from the darkness of
the depths of the forest, we turn at last to the legislative
history, and what do we find?
First, in response to the courts' conclusions about the lack
of ambiguity in statutes dealing with underinsured motorist
coverage, we note that Mr. Bernstein, associate counsel for State
Farm Insurance Companies, stated:
"Underinsured motorist coverage is not an easy concept to
grasp. We doubt if many insurance people or many
legislators can explain it. It is doubly difficult,
therefore, for the public to understand it." J.
Bernstein, March 21, 1980, A statement presented at the
hearing before the Illinois Insurance Laws Study Commis-
sion regarding Public Act 81-2101, House Bill 961, 1979
New Laws, at 3.
Second, Mr. Bernstein explains how to look at underinsured
motorists:
"We suggest that the proper way to look at underinsured
motorists is in terms of what this new coverage is
designed to do. An insured with high[-]limit uninsured
motorist coverage is in a better position if injured by
an uninsured motorist than if injured by an at-fault
driver carrying minimum bodily injury liability limits.
The purpose of underinsured motorist insurance is to put
an injured insured in the same position after an accident
with a financially responsible individual (but one who is
carrying relatively low limits) as he or she would be
with a financially responsible motorist." J. Bernstein,
March 21, 1980, A statement presented at the hearing
before the Illinois Insurance Laws Study Commission
regarding Public Act 81-2101, House Bill 961, 1979 New
Laws, at 3.
Third, Mr. Bernstein addressed a question that is very close
to the question raised in this case, and he concluded:
"The liability of the insurer should, therefore, be the
difference in recoverable limits between the insurance,
bonds, and other securities available to the tort[]feasor
to pay for the injury and the uninsured [sic] motorist
limits carried by the insured. In other words[,] if an
insured carries $100,000/300,000 uninsured [sic] motorist
coverage, he or she knows that in the event of an
accident caused by the fault of another, protection of at
least $100,000/300,000 is available at all times regard-
less of the resources of the tort[]feasor." (Emphasis
added.) J. Bernstein, March 21, 1980, A statement
presented at the hearing before the Illinois Insurance
Laws Study Commission regarding Public Act 81-2101, House
Bill 961, 1979 New Laws, at 2-3.
"The reason you have underinsured motorists coverage
is once you agree that there ought to be high[-]limit
uninsured, you or I are better off being injured by an
uninsured driver than we are by an insured driver. And
so we have to make up this gap so that in the event of an
injury by an at-fault driver we are in the same position
regardless of whether he carries any insurance or minimum
limits.
*** And what we are talking about *** is the
difference in recovery, the difference, if you will, in
recoverable limits between what is available and what is
purchased by our insured.
We are not talking about an excess coverage, we are
talking about putting our policy[]holder in the same
position if he is struck by an insured low-limit driver
as he is by an uninsured motorist. That is the purpose
of underinsured motorist coverage." (Emphasis added.)
J. Bernstein, March 21, 1980, Hearing before the Illinois
Insurance Laws Study Commission, House Bill 961, 1979 New
Laws, at 39-40.
The quoted legislative history makes it quite clear that the
statute was intended to provide insureds with protection for the
difference between the recoverable limits from the bodily injury
liability policy and the underinsured motorist policy. We,
therefore, conclude that the definition of underinsured motor
vehicle in the first sentence of section 143a-2 should not be
allowed to subvert this clear legislative purpose of placing the
injured insured in the same position regardless of whether the
driver of the culpable vehicle is uninsured or underinsured. The
first sentence cannot be read in isolation. This situation is
similar to the one described by Justice Heiple in Hoglund v. State
Farm Mutual Automobile Insurance Co., 148 Ill. 2d 272, 592 N.E.2d
1031 (1992):
"We believe that the exculpatory language on which
State Farm relies cannot be read in isolation. Rather,
it must be read in conjunction with the policyholder's
reasonable expectations and it must also be read in
conjunction with the public policy behind the uninsured
motorist statute and the coverage intended by the
insurance policy itself. Moreover, the setoff provision
must be read with reference to the facts of the case at
hand. When viewed in this way, a latent ambiguity in the
policy language is disclosed. ***
***
*** Such a result would violate the public policy
behind the uninsured motorist statute that the injured
party be placed in the same position as if the uninsured
driver had been insured. Additionally, the insurance
polices at issue were intended to provide coverage for
damages caused by uninsured motorists. To allow a
literal interpretation of the policy language would
nullify the coverage intended by the policies. Further,
to endorse State Farm's interpretation of the setoff
provision would deny the policyholder substantial
economic value in return for the payment of premiums.
That is to say, the insured would be denied the very
insurance protection against uninsured motorists for
which he had paid premiums." Hoglund, 148 Ill. 2d at
279-80, 592 N.E.2d at 1034-35.
In summary, we reverse the trial court for two reasons.
First, the statutory definitions, when considered in conjunction
with their legislative history, mandate the coverage. Second, a
reading of both the policies and the statute with the
policyholder's reasonable expectations and the public policy behind
the underinsured motorist coverage in mind requires this court to
reach the same conclusion that the supreme court reached in
Hoglund.
We agree with Justice Maag that "the law ought to make sense"
and feel that his recent illustration bears repeating:
"Assume that an automobile accident occurs. Assume
further that the driver of vehicle `A' is negligent and
is the cause of the accident. The driver of vehicle `A'
carries $25,000 in liability coverage. The driver of
vehicle `B' carries $25,000 in underinsured motorist
coverage. Finally, assume that in vehicle `B' there is
one passenger along with the driver of vehicle `B.' If
the passenger in vehicle `B' immediately files suit and
is awarded $25,000, and if the judgment is paid in full
by driver `A''s liability policy, then there would be no
coverage left under driver `A''s policy to pay a judgment
later rendered in favor of the driver of vehicle `B.'
The driver of vehicle `B,' despite having paid his
insurance premium dutifully, would not be entitled to
recover anything under his own underinsured motorist
coverage if the position of Country Mutual in the instant
case was adopted." Cummins v. Country Mutual Insurance
Co., 281 Ill. App. 3d 5, 15, 666 N.E.2d 909, 915 (1996)
(Maag, J., specially concurring).
We now turn from our review of the underinsured motorist
statute and its legislative history to the facts of this case.
Robert Hathaway, on behalf of Rody Hathaway, and Eric Van Zant
and Jason Barton filed a five-count complaint for damages arising
out of a motor vehicle accident in which Rody Hathaway was killed
and Jason Barton and Eric Van Zant were injured. Only counts III
and IV are the subject of this appeal. The other counts have
either been settled or dismissed. As a result of settlements, the
plaintiffs received the following sums: Karen Knuist $36,523.77,
Jason Barton $20,870.73, Eric Van Zant $15,653.04, Paige Borst
$10,435.36, Robert Knuist $10,435.36, Lodewyk Borst $5,217.68, and
the Rody Hathaway estate $5,217.69.
In count III, Van Zant sought underinsured motorist benefits
from his Country Mutual insurance policy which had underinsured
motorist benefits of $50,000 per person. In count IV plaintiff
Hathaway sought underinsured benefits from his Standard Mutual
policy which had underinsured benefits of $25,000 per person. Each
of the plaintiffs claimed the difference between the underinsured
motorist limits on their own policies and what they had actually
received from the bodily injury/death limits of the other vehicles.
The trial court granted Country Mutual's motion to dismiss count
III on the pleadings and Standard Mutual's motion for summary
judgment as to count IV. Robert Hathaway, on behalf of Rody
Hathaway's estate, and Eric Van Zant appeal from the dismissal of
counts III and IV.
The definitions of underinsured motorist vehicle contained in
the Hathaway and Van Zant policies mirror the statutory language of
section 143a-2. We conclude that those policy definitions, like
that in the statute, cannot be used to deprive the insureds of the
coverage they clearly intended to purchase.
Therefore, the judgment of the circuit court is reversed, and
this case is remanded for further proceedings consistent with this
opinion.
Reversed and remanded.
JUSTICE KUEHN, specially concurring:
Our opinion today differs from views taken by other members of
this court. Their views flowed inexorably from a paramount rule of
statutory construction that prevents a search for meaning beyond
unambiguous statutory language. While I concur with Justice
Chapman's opinion, I wish to underscore that the origins of our
approach can be found in the words of our supreme court, first
noted in Cummins v. Country Mutual Insurance Co., 281 Ill. App. 3d
51, 666 N.E.2d 909 (1996). Our approach does not pioneer an
uncharted course by looking beyond the language contained in the
underinsured motorist statute.
In Sulser v. Country Mutual Insurance Co., 147 Ill. 2d 548,
591 N.E.2d 427 (1992), the supreme court stated:
"The court must assume that, in enacting a statute,
the legislature did not intend an absurd result. [Cita-
tions.] In enacting [the underinsured motorist provi-
sion] the legislature avoided the absurdity of a situa-
tion where a policyholder would receive fewer benefits in
the fortuitous event of being injured by an underinsured
rather than an uninsured motorist." Sulser, 147 Ill. 2d
at 557, 591 N.E.2d at 430.
The court instructed consideration of legislative intent based upon
the words of the House bill's sponsor, Representative Telcser, who
said, "we wanted to be sure that *** the difference between the
claim and the underinsured would be taken care of by your own
insurance policy to fill the gap between the claim and the amount
available from the underinsured ***." (Emphasis added.) Sulser,
147 Ill. 2d at 556, 591 N.E.2d at 430 (citing 81st Ill. Gen.
Assem., House Proceedings, June 20, 1980, at 44-45).
Had the plaintiffs in our case been injured by an uninsured
motorist, each could have recovered any amount up to the full
limits of their own uninsured motorist coverage. Since the amount
available from the underinsured motorist has been exhausted,
plaintiffs are entitled to "fill the gap" between the available
amount received and their own underinsured motorist coverage. To
otherwise construe the underinsured motorist provision would ignore
its drafters' intent in favor of one which produces absurd results.
I, therefore, specially concur.
JUSTICE GOLDENHERSH, specially concurring:
While agreeing with the result reached by Justice Chapman, I
concur in the special concurrence filed by Justice Kuehn and add
some comments of my own.
One should not conclude that this court has embarked on a new,
uncharted route of statutory interpretation and use of legislative
history. The result reached by the majority opinion is the product
of substantive and statutory interpretation of precedents set forth
by our supreme court.
We noted in Cummins v. Country Mutual Insurance Co., 281 Ill.
App. 3d 5, 666 N.E.2d 909 (1996), that an analysis in statutory
interpretation must include an entire statute and not selectively
concentrate on one sentence or another of a multisentence section.
As Justice Kuehn notes in his special concurrence, the legislative
intent of the statute in question was clearly set forth by the
bill's sponsor in the House of Representatives, Representative
Telcser. When faced with an ambiguity, our supreme court in
Hoglund v. State Farm Mutual Auto Insurance Co., 148 Ill. 2d 272,
592 N.E.2d 1031 (1992), explained the proper method of analysis and
resolution of that ambiguity. Hoglund, 148 Ill. 2d at 278-79, 592
N.E.2d at 1034-35. Applying this method, the Cummins court
concluded that the statute in question was ambiguous.
The result reached by this court in the instant case also
follows the lead of supreme court cases in similar circumstances.
The ambiguity of the statute, the legislative history of the
statute as articulated by its sponsor in the House, and the
practical effect of not filling the gap between purchased insurance
and actual recovery have been noted by our supreme court in Sulser
v. Country Mutual Insurance Co., 147 Ill. 2d 548, 591 N.E.2d 427
(1992), and in Hoglund. The Hoglund court also indicated that the
General Assembly's public policy behind the uninsured motorist
statute applicable to the underinsured motorist statute as well
would be frustrated if the insurance company's position, similar to
defendants' position in this case, were adopted. (For the impor-
tance of public policy considerations, see American Federation of
State, County & Municipal Employees, AFL-CIO v. Department of
Central Management Services, No. 79376 (Ill. September 19, 1996).)
As the uninsured and underinsured motorist provisions embodied the
same public policy considerations and were aimed at achieving
similar results, the authorities noted above more than justify our
conclusion in the instant case.
For the above-stated reasons, I specially concur in the
majority opinion and concur in the special concurrence by Justice
Kuehn.
___________________________________________________________________________
and STATE FARM INSURANCE COMPANY, ) Honorable
a corporation, ) Arlie O. Boswell,
___________________________________________________________________________
Opinion Filed: November 22, 1996
___________________________________________________________________________
Justices: Honorable Charles W. Chapman, J.
Honorable Clyde L. Kuehn, J., and
Specially concurring
Honorable Richard P. Goldenhersh, J.,
___________________________________________________________________________
Attorneys Jon E. Rosenstengel, Bonifield & Rosenstengel, 16 East Main
for Street, Belleville, IL 62220; Edward J. Kionka, 218 Lesar
Appellant Law Building, P.O. Box 10, Carbondale, IL 62903; M. Keith
Smith, 2900 Broadway, P.O. Box 745, Mt. Vernon, IL 62864
___________________________________________________________________________
Attorneys Michal Doerge, Jelliffe, Ferrell & Morris, 108 East Walnut
for Street, Harrisburg, IL 62946 (for Standard Mutual Insurance
Appellee Company)
Robert Michael Drone, Conger & Elliott, Prof. Corp., Farm
Bureau Building, Box 220, Carmi, IL 62821-0220 (for Country
Companies Insurance Company)
___________________________________________________________________________