Drake v. Milwaukee Mut. Ins. Co.
| Decision Date | 19 December 1975 |
| Docket Number | No. 771,771 |
| Parties | Mona DRAKE, Appellant, v. MILWAUKEE MUTUAL INSURANCE COMPANY, a Domestic Insurance Corporation, Respondent. (1974). |
| Court | Wisconsin Supreme Court |
Korf, Pfeil & Graves, Elkhorn, for appellant.
Peickert, Anderson, Fisher, Shannon & O'Brien, Stevens Point, for respondent.
This is an appeal from the sustaining of a demurrer of the defendant-respondent, Milwaukee Mutual Insurance Co., to the complaint of plaintiff-appellant who has alleged two causes of action against the defendant, one for breach of her insurance contract with defendant and one for tortious conduct in its bad faith refusal to honor the claim of its insured.
We affirm the sustaining of the defendant's demurrer as to both causes of action.
On or about July 9, 1971, Milwaukee Mutual Insurance Company issued to Mona Drake an automobile insurance policy which included uninsured motorist coverage. Under this coverage the company agreed as follows:
'To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sickness or disease, including death resulting therefrom, hereinafter called 'bodily injury,' sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile; provided for the purposes of this coverage, determination as to whether the insured or such representative is legally entitled to recover such damages, and if so the amount thereof, shall be made by agreement between the insured or such representative and the company or, if they fail to agree, by arbitration.'
The standard reduction clause was also present:
'(b) Any amount payable under the terms of this Part because of bodily injury sustained in an accident by a person who is an insured under this Part shall be reduced by:
'(1) all sums paid on account of such bodily injury by or on behalf of (i) the owner or operator of the uninsured automobile and (ii) any other person or organization jointly or severally liable together with such owner or operator for such bodily injury . . ..'
On August 15, 1971, Mona Drake was injured in an automobile accident at the intersection of Highway 10 and County Trunk A in Portage County. She was a passenger in a car owned and operated by Olaf Nelson. The Nelson car collided with a car owned and operated by Maria Both. Nelson had no insurance, nor was there any liability bond or insurance policy in effect for any person legally responsible for the use of the Nelson automobile. Nelson died as the result of injuries sustained in the accident. The Both car was insured by a policy from the Classified Insurance Corporation, with policy limits of $50,000.
In March of 1974, Drake began the process of suing in a single action the estate of Nelson, Both, and Both's insurer, Classified Insurance. Suit was commenced against Classified Insurance by service of a summons and complaint on March 4, 1974. Attempts were made to serve Both in Milwaukee County on March 1, 1974, and then in Dodge County on March 16, 1974. The personal representative of Nelson's estate was served on April 25, 1974. This suit alleged Nelson and the driver of the Both vehicle to be joint tort-feasors and claimed $100,000 in damages from the defendants, including Classified Insurance.
On April 24, 1974, Mona Drake commenced suit against her insurer, Milwaukee Mutual, under the uninsured motorist coverage. The summons and complaint served on this date alleged, in addition to the facts recited earlier relative to the accident and to the issuance of the policy, that the insurance company had breached its contract to pay Drake the sum of $15,000 which Drake was legally entitled to recover as damges from Nelson, the uninsured motorist. The complaint alleged that Drake was legally entitled to such damages because Nelson was negligent in specific respects in operating his car and that such negligence proximately caused the collision and the personal injuries of Drake. The complaint further alleged that on April 28, 1972, and again on March 4, 1974, Drake had made claims under this coverage, but these claims were denied by Milwaukee Mutual. Also, the complaint asserted that on or about June 12, 1972, the insurance company 'reputiated' (sic) the policy and 'knowingly misrepresented' to the plaintiff that Both's insurance policy would cover Nelson's liability.
In addition to the claim of $15,000 in damages, which was the limit of the uninsured motorist coverage, the complaint sought $10,000 in damages for emotional distress suffered by Drake and $100,000 in punitive damages. The basis for these additional damage claims was the following allegation:
Milwaukee Mutual demurred to this complaint on the ground that it did not state sufficient facts to constitute a cause of action. The trial court sustained this demurrer, and a judgment of dismissal was entered.
After the demurrer in this action was sustained, a settlement was achieved between Drake and the defendants in the other action (Nelson's personal representative, Both, and Classified Insurance). According to this settlement, Nelson's estate was to pay Drake the sum of $22,500, and Classified Insurance was to pay Drake the sum of $5,500. A stipulation and order dismissing the complaint was entered in this other action. Another order approving the compromise settlement of this contingent claim against Nelson's estate was subsequently entered. Despite the fact that this settlement may have mooted this matter by the Portage County Probate Court, we proceed to the merits.
The first issue on this appeal concerns the first cause of action in which the plaintiff seeks recovery for the alleged breach of the insurance contract by Milwaukee Mutual. It is whether this claim is demurrable where, prior to the action against her own insurer, she has begun a negligence action against the insured other driver, this driver's insurance company, and the estate of the uninsured motorist.
This factual situation fits midway between two different Wisconsin rules of law. On the one hand, the Leatherman, Scherr, and Nelson cases 1 posited the rule that, once other liable sources have yielded up a recovery in excess of the policy limit under the uninsured...
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