Heritage Mut. Ins. Co. v. St. Paul Mercury Ins. Co.

• Decision Date: 26 August 1987
• Docket Number: No. 87-0287,87-0287
• Citation: 413 N.W.2d 664,141 Wis.2d 141
• Parties: HERITAGE MUTUAL INSURANCE COMPANY, Plaintiff-Respondent, v. ST. PAUL MERCURY INSURANCE COMPANY, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

Page 664

413 N.W.2d 664

141 Wis.2d 141

HERITAGE MUTUAL INSURANCE COMPANY, Plaintiff-Respondent, v. ST. PAUL MERCURY INSURANCE COMPANY, Defendant-Appellant.

No. 87-0287.

Court of Appeals of Wisconsin.

Argued July 30, 1987.

Opinion Released Aug. 26, 1987.

Opinion Filed Aug. 26, 1987.

Review Denied.

Richard E. Schmidt, argued, on behalf of defendant-appellant; Fellows, Piper & Schmidt, Milwaukee, on brief.

James W. Mohr, Jr., Hartford, on behalf of plaintiff-respondent.

Before SCOTT, C.J., BROWN, P.J., and NETTESHEIM, J.

SCOTT, Chief Judge.

This case involves the interpretation of "other insurance" clauses which require multiple insurers to bear proportionate liability for insured losses. Because we conclude that the pro rata share between insurers is based on the stated policy limits rather than the coverage available to the insured through "stacking," we affirm.

Heritage Mutual Insurance Company (Heritage) and St. Paul Mercury Insurance Company (St. Paul) had issued automobile liability policies to Darryl Zernia. Heritage insured four of Zernia's vehicles under one policy, with uninsured motorist coverage of $25,000 per person. St. Paul insured one antique vehicle with uninsured motorist coverage of $50,000.

Both policies were in effect at the time Zernia's minor son, Scott, was killed by a hit-and-run driver. Settlement in the amount of $55,201.05 was reached between Zernia and both insurers. Heritage paid two-thirds of this amount and brought a contribution action against St. Paul which had paid one-third. The basis for contribution is the "other insurance" provision, present in both policies, calling for a pro rata share of damages based on total applicable limits. ¹

The trial court determined that Heritage's fair share of the settlement was one-third and ordered contribution from St. Paul in the amount of $18,400.35. The trial court reached this figure by comparing the stated $25,000 policy limit of Heritage to the stated $50,000 limit of St. Paul. St. Paul appeals.

St. Paul's position is that because Heritage insured four vehicles with a $25,000 limit, the insured would be able to "stack" those limits, if necessary, to $100,000. ² Heritage agrees this far. However, St. Paul then contends that this "stacked" amount should also be the applicable limit in a contribution action between insurers. Therefore, St. Paul calculates the ratio between Heritage and itself as $100,000 to $50,000 ( 2/3 to 1/3) and concludes that Heritage should not have been awarded contribution.

We disagree with St. Paul's argument that this is a stacking case. Stacking is a legal creation designed to protect insureds. Section 631.43(1), Stats., refers to the "protection of the insured" and the "loss suffered by the insured." ³ The supreme court has determined that the legislature intended "to invalidate attempts by insurers to avoid their statutory obligations to compensate the insured up to the aggregated policy limits of the insured's coverage by enacting the stacking doctrine." Welch v. State Farm Mut. Auto. Ins. Co., 122 Wis.2d 172, 178, 361 N.W.2d 680, 683 (1985) (emphasis added). St. Paul has failed to cite any Wisconsin authority or public policy reasons which would require stacking as between insurers.

Because we conclude that this is not an appropriate case for stacking, we turn to the insurance contracts themselves to calculate each company's pro rata share. The construction of insurance policies is a question of law, reviewable without deference to the trial court. Cunningham v. Metropolitan Life Ins. Co., 121 Wis.2d 437, 450, 360 N.W.2d 33, 39 (1985).

The policies have very similar language regarding "other insurance." Heritage's policy states, "[W]e will pay our proportionate share as our limits of liability bear to the total limits of all applicable similar insurance." St. Paul's policy reads, "Our share is the proportion that our limit of liability bears to the total of all applicable limits." The question is: What is the limit of Heritage's policy--$25,000 or $100,000?

St. Paul contends that Heritage's coverage should be construed as four separate policies of $25,000 under Burns v. Milwaukee Mutual Insurance Co., 121 Wis.2d 574, 360 N.W.2d 61 (Ct.App.1984). We note that the language adopted in Burns states:

From the insured's point of view, this relationship [of one policy with two cars and premiums] is the same as having two policies....

Id. at 578, 360 N.W.2d at 64 (emphasis added).

Even if we did construe the coverage as four separate policies, the language of Heritage's policy maintains the $25,000 limit. The policy reads:

The limits of liability shown in the Declarations apply, subject to the following:

1. The limit for "each person" is the maximum we will pay as damages for bodily injury, including damages for care and loss of services, to one person in one accident.

2. Subject to the limit for "each person", the limit for "each accident" is the maximum we will pay as damages for bodily injury, including damages for care and loss of services, to two or more persons in one accident.

We will pay no more than these maximums regardless of the number of vehicles described in the Declarations, insured persons, claims, claimants, policies or vehicles involved in the accident.

(Emphasis added.) ⁴ We recognize that this language may be unenforceableas against the insured, sec. 631.43, Stats., but no Wisconsin case has held it unenforceable against another insurer.

We conclude that Heritage's limit of liability is as stated in the policy--$25,000. This limit does not change even if stacking is necessary to compensate the insured. Welch did not change the definition of policy limits; it merely allows the insured to stack "up to the aggregated policy limits." Welch, 122 Wis.2d at 178, 361 N.W.2d at 683 (emphasis added). ⁵

Heritage's policy limits are $25,000; therefore, its pro rata share of liability is one-third ($25,000 to $75,000). Because Heritage paid two-thirds, which was more than its fair share, it was entitled to contribution from St. Paul in the amount of $18,400.35.

Judgment affirmed.

1 The Heritage policy provides:

If there is other similar insurance on a loss covered by this Part, we will pay our proportionate share as...