Keane v. Auto-Owners Ins. Co., AUTO-OWNERS

Citation159 Wis.2d 539,464 N.W.2d 830
Decision Date28 January 1991
Docket NumberAUTO-OWNERS,No. 88-2404,88-2404
PartiesGene KEANE and Darlene Keane, Plaintiffs-Appellants-Petitioners, v.INSURANCE CO., A foreign insurance corporation, and Walter Raymond Moore, Jr., Defendants, General Casualty Company of Wisconsin, A domestic insurance corporation, Defendant-Respondent.
CourtUnited States State Supreme Court of Wisconsin

Kirk Reese, argued, and Eckert Law Office, on brief, Rhinelander, for plaintiffs-appellants-petitioners.

Thomas N. Harrington, Paul J. Hinkfuss, argued, and Cook & Franke, S.C., on brief, Milwaukee (John O'Melia, Jr. and O'Melia & McEldowney, S.C., Rhinelander, of counsel), for defendant-respondent.

DAY, Justice.

This is a review of a court of appeals' decision 1 which affirmed the judgment of the circuit court for Oneida County, the Honorable Robert E. Kinney, presiding. The circuit court granted General Casualty Company of Wisconsin's motion for summary judgment and declaratory relief, dismissing the Keanes' complaint with prejudice. The circuit court found that General Casualty, Keane's insurer, was not liable to the Keanes for uninsured motorist benefits for damages resulting from Patrick J. Keane's death, caused by a collision in Wisconsin with a vehicle owned and operated by Walter R. Moore, Jr., a Michigan resident who was insured by Auto-Owners Insurance Company at the time of the accident. The issue is whether Moore's automobile liability policy provided $25,000 of coverage, per person, for bodily injury at the time of the accident, so that Moore was not "uninsured" as that term is defined in General Casualty's policy. We conclude that Moore was not "uninsured" and that General Casualty is not liable to the Keanes for uninsured motorist benefits.

At the time of the accident, Keane had two policies issued by General Casualty Company of Wisconsin. One policy covered the car in the accident. The other policy covered another vehicle Keane owned. Both vehicles were garaged in Wisconsin. Both policies contained $60,000 of uninsured motorist coverage.

The Keane policy provided for uninsured motorist coverage if damage caused by another vehicle having coverage for bodily injury was less than the amount required by the Wisconsin statutes. Keane's policy defined an uninsured vehicle as:

a land motor vehicle or trailer of any type:

1. To which no bodily injury liability bond or policy applies at the time of the accident.

2. To which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is less than the minimum limit for bodily injury liability specified by the financial responsibility law of the state in which your covered auto is principally garaged.

There is no claim that Keane's auto was not principally garaged in Wisconsin. It is also agreed that the minimum limit for bodily injury liability under sec. 344.15(1), Stats. 1987-88, 2 of Wisconsin's financial responsibility law is $25,000 for one person.

Moore's policy, written in Michigan, had only a $20,000 bodily injury limit for one person. However, the Moore policy with Auto-Owners also had an extraterritorial clause which provided:

20. FINANCIAL RESPONSIBILITY LAWS; COMPULSORY INSURANCE LAWS. Such insurance as is afforded by this policy under Coverages A and B [A is bodily injury, B is property damage liability] shall comply with the provisions of the motor vehicle financial responsibility law of any state or province to the extent of the coverage and limits of liability required by such law. Where a motor vehicle compulsory insurance law or any similar law requires a non-resident to maintain insurance with respect to the operation or use of a motor vehicle in such state or province and such insurance requirements are greater than the insurance provided by this policy, the limits of the Company's liability and the kinds of coverage afforded shall be as set forth in such law (Emphasis added).

We conclude that the extraterritorial clause increased Moore's liability limit to $25,000. Therefore, Moore was not uninsured, and General Casualty is not liable to the Keanes for uninsured motorist benefits.

The facts of the case are undisputed. On February 4, 1988, Keane was driving north on Highway 17 in Oneida County, Wisconsin. Moore was driving south on Highway 17 at the same time. The Keane vehicle and the Moore vehicle collided in Keane's lane, resulting in Keane's death. Gene and Darlene Keane, Patrick Keane's parents, brought a wrongful death action against Moore, pursuant to section 895.04(1), Stats. 1987-88 3 for $2,555,000 in damages. Moore does not dispute the claim that the Keanes sustained damages substantially greater than $20,000. Auto-Owners determined that sections 344.33(2), 4 and 344.14(2)(A) STATS5. 1987-88 of Wisconsin's financial responsibility law requires $25,000 of liability coverage for bodily injury to one person. Auto-Owners concluded their extraterritorial clause increased Moore's policy limit to $25,000 for the accident with Keane and tendered this amount to the Keanes.

The Keanes rejected the $25,000. They claim that Wisconsin's financial responsibility law does not require $25,000 of coverage. In fact, they argue, Wisconsin does not require liability insurance of any limit. The Keanes contend that Section 344.33(2), Stats., which Auto-Owners relied on in increasing its liability limit, only requires $25,000 of coverage for proof of financial responsibility for the future.

The Keanes claim that the $25,000 limit is only required if Moore had already been in an accident and had a judgment in excess of $500 against him or as a condition precedent to reinstatement of an operating privilege revoked under ch. 343. Sections 344.24 6 and 344.29, Stats.1987-88. 7 In order to drive in Wisconsin again, Moore would have to pay the judgment and show proof of financial responsibility for the future. Section 344.26(1), Stats. 8 If his motor vehicle liability policy were to be used as proof of financial responsibility for the future, it would have to provide $25,000 of coverage, per person, for bodily injury or death. Section 344.33(2), Stats. The Keanes contend that only then does the Auto-Owners' extraterritorial clause apply.

Additionally, the Keanes argue that sec. 344.14(2)(a), Stats., which Auto-Owners also relied on, applies only after an accident and after a motorist is required to post a bond or show proof of $25,000 of coverage. The Keane's claim that since the Department of Transportation has not required Moore to show proof of financial responsibility for the future, the extraterritorial clause in his policy has not gone into effect. They contend Moore still had only $20,000 of coverage at the time of the accident.

The Keanes claim that the minimum liability limit for bodily injury "specified" by Wisconsin's financial responsibility law is $25,000. They direct the court to Chapter 344 of the Wisconsin Statutes, but do not cite a specific section. The Keanes argue that since Wisconsin's financial responsibility law does not require ownership of liability insurance with a $25,000 limit, Moore had only $20,000 of coverage at the time of the accident. But since Wisconsin's financial responsibility law "specifies" the $25,000 limit for a bond or policy which applies at the time of the accident, and Moore does not have this limit in his policy, he is "uninsured."

On this basis, the Keanes argue that they should collect $120,000 of uninsured motorist benefits from General Casualty; $60,000 from each of Keane's insured automobiles. Welch v. State Farm Mut. Auto Ins. Co., 122 Wis.2d 172, 178, 361 N.W.2d 680 (1985). General Casualty argues that if Moore is held to be uninsured, its liability should be limited to the difference between the tortfeasor's limit and the statutory minimum of $25,000 prescribed by section 632.32(4)(a), Stats.1987-88. 9 Therefore, General Casualty should only have to pay $5,000 (i.e., the difference between $20,000 and $25,000). Because we hold that Moore was not uninsured, we do not reach either of these questions.

Auto-Owners liability limit depends on the meaning of its extraterritorial clause. The interpretation of an insurance policy is a question of law. Blackhawk Prod. v. Chicago Title Ins., 144 Wis.2d 68, 77, 423 N.W.2d 521 (1988); Kraemer Bros. v. United States Fire Ins. Co., 89 Wis.2d 555, 562, 278 N.W.2d 857, 869 (1979). This court owes no deference to the circuit court's interpretation of the policy. Blackhawk, 144 Wis.2d at 77, 423 N.W.2d 521.

Specifically, "the extent of coverage and limits of liability required" by Wisconsin's financial responsibility law controls Auto-Owners limit of liability to the Keanes. Wisconsin's financial responsibility law is found in Chapter 344 of the Wisconsin Statutes. The law is divided into two parts. The first part is Security for Past Accidents. 10 See secs. 344.12 to 344.22, Stats.1987-88. Its purpose is to provide security for the payment of damages for past accidents. Pinkerton v. United Services Automobile Asso., 5 Wis.2d 54, 56, 92 N.W.2d 256 (1958). If security is not provided, the state may revoke the motorist's driving privileges. Section 344.13(3). 11 The second part of the law is Proof of Financial Responsibility for the Future. 12 See secs. 344.24 to 344.41. Its purpose is to provide proof of financial responsibility for future driving privileges in Wisconsin as a condition precedent to reinstatement of a revoked operating privilege. Section 344.24, Stats.

The Keanes argue that Wisconsin's Financial Responsibility Act only applies in a prospective manner. That is, Moore's limit of liability will only increase after an accident because the law does not apply at the time of the accident. They cite several Wisconsin cases in support of this proposition.

In Havlik, 272 Wis. 71, 74 N.W.2d 798 (1956), this court upheld an exclusion clause in an automobile liability policy stating the...

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