Kisting v. Westchester Fire Insurance Company, 67-C-27.

• Decision Date: 02 October 1968
• Docket Number: No. 67-C-27.,67-C-27.
• Citation: 290 F. Supp. 141
• Parties: Joseph F. KISTING and Anchor Sales Co., Plaintiffs, v. WESTCHESTER FIRE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Western District of Wisconsin

290 F. Supp. 141

Joseph F. KISTING and Anchor Sales Co., Plaintiffs, v. WESTCHESTER FIRE INSURANCE COMPANY, Defendant.

No. 67-C-27.

United States District Court W. D. Wisconsin.

October 2, 1968.

COPYRIGHT MATERIAL OMITTED

William Elden, Chicago, Ill., for plaintiffs.

Samuel Levin and Daniel J. Leahy, Chicago, Ill., for defendant.

OPINION AND ORDER AND JUDGMENT

JAMES E. DOYLE, District Judge.

This is an action to recover on an insurance policy. The second amended complaint herein alleges that plaintiff Kisting is an Iowa citizen; that plaintiff Anchor Sales Co. (hereinafter Anchor) is an Illinois citizen; that defendant Westchester Fire Insurance Company (hereinafter Westchester) is a New York citizen; and that the amount in controversy, exclusive of interest and costs, exceeds $10,000.

Plaintiffs allege that on March 7, 1966, defendant insured plaintiffs against loss or damage by fire and lightning to the amount of $37,600 on a farm house and farm buildings near Dickeyville, Wisconsin; that the insured property was destroyed and damaged by fire on May 30, 1966, to the extent of $16,067.50; that plaintiffs were the owners of the damaged property at the time of the fire; that plaintiffs have complied with all of the policy provisions; and that defendant refuses to pay.

The defendant's answer admits that the policy was in force on May 30, 1966; denies that the damage was as plaintiffs allege; denies that plaintiffs were owners of the property at the time of the fire and alleges that plaintiff Anchor was "the contract purchaser of the property"; denies that plaintiffs have complied with the policy; and admits that it has not paid out on the policy.

In addition, defendant's answer alleges a number of affirmative defenses:

(1) that plaintiffs neglected to use all reasonable means to save and preserve the property at and after said fire, as required by the policy (paragraph 10);

(2) that plaintiffs failed to give defendant the required proof of loss within the required time (paragraph 11);

(3) "that the hazard was at and prior to the time of the fire increased by reason of the increase in the amount of the insurance on a certain barn, which was the subject of the fire, as ordered by plaintiff Kisting, from $9,500 as it was on a previous policy to $15,000", and that a provision in the policy renders defendant not liable "for loss occurring (a) while the hazard is increased by any means within the control or knowledge of the insured * * *" (paragraph 12);

(4) that on September 7, 1966, plaintiff Kisting was examined under oath, in the presence of his attorney, and refused to answer a series of questions concerning a document which apparently contained figures relating to the damage claimed to have been caused by the fire and that this refusal was contrary to a provision in the policy (paragraph 13);

(5) that during the September 7, 1966, examination under oath, plaintiff Kisting refused to answer a series of questions concerning his income tax return for 1965, whether he had drawn salary from Anchor Box Company, the amount of his bank deposits on May 30, 1966, the amount of his payments under an agreement with the government compromising an earlier tax dispute, and whether he had ever had other income tax problems with the government, and that these refusals were contrary to a provision in the policy (paragraph 14);

(6) that during the September 7, 1966, examination under oath, plaintiff Kisting refused to answer whether he considered himself or Anchor Sales, Incorporated to be the party to a certain purchase agreement and that this refusal was contrary to a provision in the policy (paragraph 15).

Plaintiffs allege that defendant denied liability by a letter to plaintiff Kisting dated September 28, 1966, and that, therefore, the affirmative defenses alleged by defendant are not applicable.

Defendant now moves for summary judgment on the basis of the refusals to answer the questions summarized in (4) and (5) above.

In selecting the applicable local law governing the determination of rights under this insurance contract I am bound in this diversity action to apply Wisconsin's choice of law rule. Klaxon Co. v. Stentor Electric Mfg. Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). In Estate of Knippel, 7 Wis.2d 335, 342, 96 N.W.2d 514, 517 (1959), it was stated:

"* * * The choice of law governing validity and interpretation is basically a question of the intention of the parties except where their intention is to commit a fraud on the law. In the absence of evidence to the contrary the law of the place of making the contract is presumed to be intended unless the place of performance be different. In the latter instance there is a rebuttable presumption that the law of the place of performance controls."

The Supreme Court of Wisconsin has observed that these traditional rules dependent on place of making, place of performance and presumed intention of the parties, have fallen into disfavor, yielding to the "grouping of contacts" or "center of gravity" theory. Estate of Knippel, supra at 563. See also Chemtec Midwest Services, Inc. v. Insurance Company of North America, 279 F.Supp. 539, 544 (W.D.Wis.1968). The Supreme Court of Wisconsin has not yet found it necessary to declare whether it will adopt the "grouping of contacts" theory in the field of contract law, although it has recently adopted that rule in the area of tort law. Wilcox v. Wilcox, 26 Wis.2d 617, 133 N.W.2d 408 (1965). However, for the reasons to be stated immediately hereafter, I conclude that both the traditional rules and the "grouping of contacts" theory require the application of Wisconsin law in the present case.

The record discloses no indication of any conscious intention of the parties as to what state's local law should govern the determination of rights under the insurance policy herein. Under the traditional rules, presumptions must be resorted to. The contract was to be performed in Wisconsin. Under the traditional rules, therefore, there is a rebuttable presumption that the law of Wisconsin applies. § 203.07(1), Wis. Stats., provides: "All insurance against loss or damage to property * * * in this state shall be held to be made within this state." Under this provision the place of making is also Wisconsin. I conclude that under the traditional rules, Wisconsin law applies.

Restatement, Conflict of Laws 2d, Proposed Official Draft § 193, sets out the "grouping of contacts" rule with regard to insurance contracts:

"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."

The location of the insured risk during the term of the policy was clearly Wisconsin. The fact that the parties to the contract were citizens of Illinois, Iowa and New York respectively does not provide contact sufficient to establish a more significant relationship between the contract and any of these states. Accordingly, I conclude that under the "grouping of contacts" theory the local law of Wisconsin governs the determination of rights under the insurance contract in question.

The policy of insurance in the present case contains the following provisions which are also found in the Standard Fire Policy as prescribed by the Wisconsin state legislature, § 203.01, Wis. Stats.:

"The insured, as often as may be reasonably required, shall exhibit to any person designated by this Company all that remains of any property herein described, and shall submit to examination under oath by any person named by this Company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices and other vouchers, or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by this Company or its representative and shall permit extracts and copies thereof to be made.

"* * *

"No suit or action on this policy for recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with * *."

During an examination under oath conducted on September 7, 1966, plaintiff Kisting refused to answer several questions propounded to him by defendant's counsel. These questions and answers were as follows:

"Q. All right, I will show you what has now been marked Exhibit 15 for identification and ask you what that document is?

"A. That is a document I filed on advice of my counsel to get the representative of the company to meet with me in some manner.

"* * *

"Q. How did you compile the figures on the document?

"A. I refuse to answer that question.

"Q. Who compiled the figures put on this document?

"A. I refuse to answer.

"* * *

"Q. Did you, when you delivered this document to Mr. Stuart, make a claim on the insurance company for the barn of $15,000?

"A. Yes, I refuse to answer that question.

"* * *

"Q. Did you submit the original of Exhibit 15 to Mr. Stuart as your claim against the insurance company for fifteen hundred dollars damage to the pole shed?

"A. I refuse to answer on advice of counsel.

"Q. Did you deliver the original of Exhibit 15 to Mr. Stuart as your claim against the insurance company for $200.00 damage to the milkhouse?

"A. I refuse to answer on advice of counsel.

"Q. And did you dictate to the stenographer what to put down on the document?

"A. I refuse to answer on advice of counsel.

"* * *

"Q. What was your purpose in delivering the original of Exhibit 15 to Mr. Stuart?

"A. On advice of counsel I refuse to answer.

"Q. Did you intend to submit this document, Exhibit 15, or the

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