Haines v. Mid-Century Ins. Co.
| Decision Date | 05 June 1970 |
| Docket Number | MID-CENTURY,No. 267,267 |
| Citation | 177 N.W.2d 328,47 Wis.2d 442 |
| Parties | Sara Sue HAINES, Appellant, v.INSURANCE CO., a foreign insurance corp., Respondent, Gary Haines et al., Defendants. |
| Court | Wisconsin Supreme Court |
This is a conflict-of-laws case, growing out of litigation arising from a two-car automobile accident occurring on August 1, 1965, in La Crosse county, Wisconsin. The plaintiff-appellant was a passenger in the car driven by the defendant, Gary Haines, her husband, which collided with a car driven by the other defendant, Thomas Eaker. Plaintiff and her husband were at the time of the accident residents of La Crescent, Minnesota. Their car was licensed and garaged in Minnesota. Mr. Haines was employed in La Crosse.
The defendant-respondent, Mid-Century Insurance Company, had issued its policy of insurance to plaintiff's husband, Gary, on June 17, 1964. At that time Mr. and Mrs. Haines were residents of La Crescent. The policy contained a family-exclusion clause which in pertinent part provided:
'This Policy does not apply * * *
'* * *
'(11) to the liability of any insured for bodily injury to (a) any member of the same household of such insured * * *.'
Mrs. Haines commenced this personal injury action in Wisconsin against her husband and his insurer, Mid-Century, and the other driver, Thomas Eaker, and his insurer, United Services Automobile Association. In her complaint, the plaintiff alleged that at the time of the commencement of the suit she was a resident of La Crosse, Wisconsin.
Mid-Century moved for summary judgment which was granted by the trial court. The plaintiff appeals.
Johns, Flaherty, Harman & Gillette, La Crosse, for appellant.
Steele, Smyth, Klos & Flynn, La Crosse, for respondent.
There is only one issue on this appeal: Does Wisconsin or Minnesota law govern the effect of the policy of insurance covering plaintiff's husband's automobile?
The parties concede that Wisconsin law governs the tort aspects of this case. 1 The issue involved here relates solely to the contract aspects of the insurance policy issued by the respondent Mid-Century Insurance Company.
If the policy is governed by Minnesota law, the family-exclusion clause is effective to foreclose the plaintiff from recovering her damages from her husband's insurer. 2 If, on the other hand, the law to be looked to in deciding the efficacy of the family-exclusion clause of the policy is Wisconsin, then it is clear this exclusion can have no effect. 3
Recently, this court, in Urhammer v. Olson, 4 involving a factual situation very similar to the instant one, specifically adopted the grouping-of-contacts approach for the resolution of conflicts questions pertaining to the validity and rights created by the provisions of a disputed contract. This approach had previously been suggested and discussed in several earlier cases. 5
Sec. 188 of the Second Restatement of Conflicts 6 is the embodiment of this approach. That section provides:
'188. Law Governing in Absence of Effective Choice by the Parties.
'(1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, as to that issue, has the most significant relationship to the transaction and the parties under the principles stated in sec. 6.
'(2) In the absence of an effective choice of law by the parties (see sec. 187), the contacts to be taken into account in applying the principles of sec. 6 to determine the law applicable to an issue include:
'(d) the location of the subject matter of the contract, and
'(e) the domicil, residence, nationality, place of incorporation and place of business of the parties.
'These contacts are to be evaluated according to their relative importance with respect to the particular issue.
'(3) If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided in secs. 189--199 and 203.'
This section, in the absence (as here) of an agreement between the parties of their choice of law, permits a functional conflicts analysis under which the method is not to count contacts but rather to consider which contacts are the most significant and to determine where those contacts are found. It must be recognized that a contact can be considered to be significant only in terms of its relevance to a specific domestic law and the policy underlying that law.
Thus, the discussion must focus on the purpose of the Wisconsin statute, sec. 204.34(2), declaring family-exclusion clauses to be invalid as compared to the Minnesota judge-made law giving effect to this type of clause.
In Klatt v. Zera, 7 this court said that the purpose of sec. 204.34(2), Stats., is to prohibit exclusion clauses that would withdraw any coverage or protection required to be given under sec. 204.30(3), the so-called omnibus coverage statute. In essence, the purpose of both these sections read together is to provide protection to innocent third persons injured by the negligent operation of motor vehicles by others regardless of the relationship between the victim and the driver.
On the other hand, the purpose of the Minnesota policy of giving effect to the family-exclusion clause was stated in Tomlyanovich v. Tomlyanovich, 8 as follows:
'* * * The obvious purpose of the clause here involved is to exempt the insurer from liability to those persons to whom the insured, on account of close family ties, would be apt to be partial in case of injury.'
Thus, in essence the reason why Minnesota gives effect to a family-exclusion clause is to protect insurance companies from false claims. It should be noted that, by legislative action, Minnesota has recently invalidated family-exclusion clauses. 9 However, this invalidation came about after the policy was issued and the accident occurred in this case.
With these opposing purposes in mind, we must analyze the facts of this case in detail in light of the particular contacts listed in sec. 188 of the Restatement.
Before making that analysis, it is necessary to consider the application here of the special provisions of sec. 193 of the Restatement, which concerns the validity of insurance contracts. That section provides:
'193. Contracts of Fire, Surety or Casualty Insurance.
'The validity of a contract of fire, surety or casualty insurance and the rights created thereby are determined by the local law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy, unless, with respect to the particular issue, some other state has a more significant relationship to the transaction and the parties, in which event the local law of the other state will be applied.' 10
Respondent contends that the principal location of the insured risk is Minnesota. But as the Restatement comment to sec. 193 indicates, there may be no principal location of the insured risk in the case of moving vehicles.
11
It is obvious that although the Haineses' automobile was to be garaged in La Crescent, Minnesota, it was to be used a great deal in La Crosse, Wisconsin, where Mr. Haines was employed. While in Peterson v. Warren 12 we cited the forerunner of this section when we held that Minnesota law should apply to the determination of legal-validity questions pertaining to an insurance contract covering vehicles used in a construction business, the vehicles there involved were admittedly located principally in Minnesota and we also held that whether the grouping-of-contacts test or the intention test was used, Minnesota law applied. 13 We are not faced with such a factual situation here. The particular issue here is as to the validity of the family-exclusion provision and we are governed in the selection of the law to apply to that issue by the method of analysis embodied in the grouping-of contacts approach of sec. 188, Restatement.
The affidavits filed in support of and in opposition to the motion for summary judgment establish the following additional facts: The insurance policy in question was obtained by the defendant who was then a resident of La Crescent, Minnesota, in Mid-Century's office in La Crosse, Wisconsin. The policy was delivered in La Crosse, premiums were paid in La Crosse, and accident reports were made in La Crosse.
La Crescent, Minnesota, is a bedroom suburb almost totally dependent upon La Crosse for its existence. It is unclear from the affidavits and the record in this case whether the policy was issued by an agent licensed to do business in Minnesota. The trial court asserted that this was the case; however, the affidavits filed by plaintiff indicate otherwise. At oral argument it was asserted by the plaintiff's counsel that the policy was signed by one James Hall as issuing agent and the deposition of James Hall clearly shows that he was not licensed to issue policies of insurance in Minnesota. Unfortunately, the original policy is not found in this record. In any event, the dispute as to who issued the policy is not of overriding importance in this case because it is undisputed...
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