American Mut. Liability Ins. Co. v. St. Paul Fire & Marine Ins. Co.

• Citation: 48 Wis.2d 305,179 N.W.2d 864
• Decision Date: 09 October 1970
• Docket Number: No. 185,185
• Parties: AMERICAN MUTUAL LIABILITY INS. CO., Appellant, v. ST. PAUL FIRE AND MARINE INS. CO., Respondent.
• Court: United States State Supreme Court of Wisconsin

Page 864

179 N.W.2d 864

48 Wis.2d 305

AMERICAN MUTUAL LIABILITY INS. CO., Appellant, v. ST. PAUL FIRE AND MARINE INS. CO., Respondent.

No. 185.

Supreme Court of Wisconsin.

Oct. 9, 1970.

This is an appeal from an order granting a summary judgment and from a judgment thereon in the circuit court for Milwaukee county. The action was brought by the American Mutual Liability Insurance Company, a compensation insurer, as a third party liability action following the plaintiff's payment of workman's compensation.

The underlying facts are these. On May 15, 1965, an employee of the Menominee Enterprises, Inc., at Neopit, Wisconsin, was fatally injured by steam which escaped from a ruptured fitting on one of the boilers operated and owned by Menominee Enterprises. American Mutual Liability Insurance Company, the plaintiff, paid workman's compensation and commenced a tort action against St. Paul Fire and Marine Insurance Company, a boiler insurer, on the theory that St. Paul had negligently performed inspections on the boiler and failed to note and report a cast-iron fitting on the boiler. It is conceded that the cast-iron fitting was in violation of the boiler code and that it was the rupture of this fitting that occasioned the accident.

A reading of the complaint reveals that the cause of action sounds in both contract and tort--contract, in that plaintiff alleges that defendant agreed to undertake periodic inspections of the boiler and to make recommendations in regard to any needed corrections; and tort, in that on numerous occasions prior to the date of the accident the defendant had made inspections but had negligently failed to advise Menominee Enterprises of the defect.

Defendant's answer denies that it obligated itself to undertake periodic inspections and denies that any of its agents had inspected the boiler. The defendant, however, alleged that it reserved the right to make the inspections.

After issue was joined, St. Paul moved for summary judgment, alleging that the plaintiff's action has no merit.

Attached to the affidavit was a copy of the insurance contract. In addition, as a part of the defendant's affidavit in support of the motion is a notarized letter of R. A. Nelson, Assistant Secretary, Engineering-Audit Department of St. Paul, wherein he recites certain terms of the policy, particularly those sections which permit the inspection, but alleges that no other service contract exists and that the insurance contract does not obligate the boiler insurer to make any inspections.

The plaintiff filed affidavits in opposition to the motion. One affidavit was that of Thomas E. Hanson, Supervisor of the Boiler Section of the Industrial Safety and Building Division, of the Department of Industry, Labor and Human Relations. His affidavit stated that two employees of the defendant St. Paul were issued certificates authorizing them to inspect boilers, that the regulations of the Industrial Commission required boiler inspections by qualified inspectors at least every twelve months, and that when inspections are made by certified insurance company inspectors and reports are submitted to the Wisconsin Industrial Commission, such reports are accepted and the Commission does not generally conduct a separate investigation. The affidavit further states:

'That during the period September 23, 1963 to May 15, 1965, because of the inspections made by the inspectors of St. Paul Fire and Marine Insurance Company, namely, R. L. Scanlon and M. J. Michienzi, no inspections of the boilers at Menominee Enterprises, Inc., * * * were made * * *.'

We are satisfied that a fair reading of this affidavit leads inexorably to the conclusion that inspections were made by St. Paul by its certified inspectors and that the Commission, in reliance on such inspections, exercised its option under ch. 41 to refrain from conducting a separate inspection.

The affidavit of Arnold R. Corn, foreman of the boiler department of Menominee Enterprises, stated that the boilers were inspected by representatives of St. Paul. He specifically stated that in September 1964 R. L. Scanlon inspected the boiler and made a report to Menominee Enterprises making recommendations. In January 1965 M. J. Michienzi inspected the boiler and made recommendations. Neither of these reports mentioned the improper fitting, although both made other recommendations.

Corn also deposed that on June 3, 1965 (after the accident of May 15) Menominee received an inspection report recommending the removal of all cast-iron fittings.

Corn further deposed that the Menominee Enterprises relied upon the inspection services and the report made by St. Paul in correcting defective or dangerous conditions and that Menominee complied with all recommendations of the boiler insurance company as soon as it was practicable to do so.

An attorney for the plaintiff, John R. Hoaglund, Jr., also filed an affidavit in which he stated that he had reviewed the inspection reports which St. Paul had furnished Menominee Enterprises on September 6, 1964, and January 8, 1965, and that those reports failed to disclose the presence of the proscribed cast-iron fitting, and that on information and belief Menominee had relied on such reports.

The plaintiff made no separate motion for summary judgment.

The circuit court granted summary judgment to the defendant and dismissed the action on the ground that no duty in tort existed since the inspections were conducted by the insurer merely to protect its own interests, that a service contract did not exist, and that there was no showing that the inspection reports were submitted to the Industrial Commission, thereby justifying reliance on the inspections by the Industrial Commission and the employer.

From this determination the plaintiff, compensation carrier, appeals.

Gibbs, Roper & Fifield, Milwaukee, for appellant.

Wickham, Borgelt, Skogstad & Powell, Milwaukee, for respondent, Robert C. Watson, Milwaukee, of counsel.

HEFFERNAN, Justice.

We conclude that the circuit judge erred in granting judgment to the defendant. For summary judgment to be granted to a defendant, the affidavits offered in support of the defendant's motion must contain facts which, if uncontested, are sufficient to show that the plaintiff's claim has no merit. It is therefore incumbent upon the trial court to address itself to the question of whether the evidentiary facts set forth in the movant's affidavits are sufficient to vitiate the plaintiff's cause of action.

In the instant case, the defendant's affidavit did not purport to meet the cause of action for negligence alleged in the complaint. It was addressed solely to the issue of whether the insurance company had contractually obligated itself to make inspections. The affidavit alleged, correctly as it would appear from the record, that it had not contracted to make inspections. Moreover, we must accept as the truth the statement that no separate service contract for the inspection of the boilers existed. The affidavit totally ignored the explicit allegation that its agents had made an inspection of the boiler and had negligently failed to advise Menominee of the existing defect. No attempt was made to assert that its agents had made no inspection of the boiler or that inspections had been made with the exercise of reasonable care.

Even though the facts in the defendant's affidavit are correct and uncontested, the affidavit is based upon a legal theory which it insufficient to show that the plaintiff's cause is meritless. While the answer itself denied that an agent or inspector of the defendant had inspected the insured's equipment, the allegation of the answer is immaterial in the motion for summary judgment.

We have frequently stated that the motion papers in summary judgment must contain in themselves facts which entitle either party to judgment. We said in Artmar, Inc. v. United Fire and Casualty Co. (1967), 34 Wis.2d 181, 188, 151 N.W.2d 289, 148 N.W.2d 641, 644:

'When the motion is made by a defendant, it must be accompanied by an affidavit which sets forth sufficient evidentiary facts to show that the defense is sufficient to defeat the plaintiff. The moving party must make out a prima facie case in his motion and affidavits.'

We have also pointed out in Leszczynski v. Surges (1966), 30 Wis.2d 534, 539, 141 N.W.2d 261, 265:

'This showing of a defense must be by affidavit or other proof and a defendant cannot stand on a verified answer to perform that function. Pleadings are ineffectual as proof because facts stated in an affidavit take precedence over inconsistent allegations in a pleading.'

In Laughnan v. Griffiths (1955), 271 Wis. 247, 73 N.W.2d 587, we held that, for summary judgment, proof other than allegations of the pleadings is required.

Thus, as we view the evidence presented by the defendant's affidavit, it was insufficient to support the contention that the plaintiff's cause of action was without merit. It simply failed to reach crucial elements of the plaintiff's cause of action. Only if we were to conclude that defendant's duty arose solely from contract would the defendant be even arguably in a posture to claim the right of summary judgment dismissing plaintiff's complaint.

A motion for summary judgment is not intended to substitute for a demurrer. It does not test whether or not the plaintiff has alleged facts sufficient to constitute a cause of action. It is used on the assumption, at least when invoked by the defendant, that even though a cause of action is stated the cause is factually unsupportable.

In Leszczynski v. Surges, supra, we reviewed the principles controlling the disposition of motions for summary judgment. We stated that:

'* * * we look first to the affidavits in support of the motion to see if a prima facie case has been made within the meaning of sec. 270.635, Stats., and if such a case has not been made we need go no farther.' (30 Wis.2d p. 539, 141 N.W.2d p. 265)

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