Krause by Krause v. Mutual Service Cas. Co.

• Decision Date: 20 January 1987
• Docket Number: No. C8-86-1166,C8-86-1166
• Citation: 399 N.W.2d 597
• Parties: William B. KRAUSE, a minor, by Beverly Lynette KRAUSE, his natural parent and guardian, Appellant, v. MUTUAL SERVICE CASUALTY COMPANY, Respondent.
• Court: Minnesota Court of Appeals

Page 597

399 N.W.2d 597

55 USLW 2439

William B. KRAUSE, a minor, by Beverly Lynette KRAUSE, his natural parent and guardian, Appellant, v. MUTUAL SERVICE CASUALTY COMPANY, Respondent.

No. C8-86-1166.

Court of Appeals of Minnesota.

Jan. 20, 1987.

Syllabus by the Court

Trial court erred in granting summary judgment in favor of insurance company in an action brought by a minor child for no-fault and uninsured motorist benefits through his father's insurance policy when the child was temporarily living with his mother pending a dissolution decree awarding legal custody.

Daniel D. Reisman, Minneapolis, for appellant.

Richard J. Kruger, St. Paul, for respondent.

Heard, considered, and decided by FOLEY, P.J., and SEDGWICK and FORSBERG, JJ.

OPINION

FORSBERG, Judge.

Appellant, William Krause, was injured in an automobile accident and claimed no-fault benefits and uninsured motorist coverage through the no-fault policy of his father, Kenneth Krause. At the time of the accident, William was living in St. Paul with his mother, Beverly Krause. His parents were separated, and no order had been issued granting either spouse temporary custody of their two children. The trial court granted summary judgment in favor of the insurer, holding that as a matter of law the child was not a "resident" of his father's household, and that his father did not have "custody" of his son at the time of the accident.

FACTS

Kenneth and Beverly Krause lived with their two children, William and Nicolas, in Zim, Minnesota. In April of 1980, Kenneth filed an action for dissolution of marriage. Upon commencement of the action, Beverly moved to the Twin Cities, taking the children with her. She obtained temporary custody of the children pursuant to a court order of June 2, 1980. Shortly thereafter, the dissolution proceeding was dismissed, and Beverly and the children moved back to the family home in Zim. In November 1980, Beverly and Kenneth again separated. Beverly moved back to the Twin Cities, but left the children with Kenneth. Beverly then initiated new dissolution proceedings in Hennepin County. Kenneth served a counter-petition. Both parents sought sole custody of the children.

The children lived with their father from November of 1980 until July of 1981, when they moved to the Twin Cities to stay with their mother for the remainder of the summer. The parents then agreed that the children would begin school in the Twin Cities pending the final judgment and decree in the dissolution proceeding and the court's award of custody. Much of the children's clothing and toys remained at the father's home in Zim. The children also spent Thanksgiving and Christmas with their father.

On January 30, 1982, William was struck by an uninsured vehicle while crossing the street in front of his mother's home. A claim for no-fault benefits and uninsured motorist coverage was submitted by Beverly on William's behalf to Mutual Service under a policy of insurance issued to his father. Mutual Service denied the claim, stating that William was not an "insured" under the terms of the policy. The trial court granted the insurer's motion for summary judgment, denying William both no-fault benefits and uninsured motorist coverage under the policy.

ISSUES

1. Did the trial court err in determining that as a matter of law William Krause was not a resident of his father's household?

2. Did the trial court err in determining that as a matter of law Kenneth Krause did not have custody of William?

ANALYSIS

A. No-Fault Benefits

Mutual Service denied no-fault benefits to William stating that Kenneth did not have custody of William at the time of the accident and, therefore, William was not an insured under the terms of the policy. The Mutual Service policy provided:

Part B. NO FAULT COVERAGES

We will pay in accordance with the Minnesota No Fault Act for bodily injury to an insured, caused by accident resulting from the maintenance or use of a motor vehicle as a vehicle. * * * Insured means:

1. You, your spouse or your relatives,

2. A minor in the custody of you or a relative * * *

Mutual Service did not define the term "custody" in its policy. It argued, however, that the term meant physical custody. In the memorandum accompanying its order, the trial court agreed, stating:

At [the time of the accident], neither party had custody of William pursuant to a court order. If the word is given its practical meaning, that of physical custody, it is clear that William was in the custody of his mother.

(Emphasis supplied). Appellant claims that the trial court erred in holding that as a matter of law "custody" meant physical custody. Appellant argues that the word is ambiguous because it can mean both physical or legal custody, as evidenced by the trial court's own memorandum. In looking to the No-Fault Act, the word custody is apparently used to indicate legal custody. The Act defines the term "insured" to include a minor in the custody of the named insured who resides in the same household with the named insured. Minn.Stat. § 65B.43, subd. 5 (1984). We agree that "custody" can mean either physical or legal custody and is therefore ambiguous. An ambiguous term must be construed against the drafter of the policy, and in favor of the insured. Taulelle v. Allstate Insurance Co., 296 Minn. 247, 251, 207 N.W.2d 736, 738 (1973).

Respondent argues that even if "custody" is ambiguous, Kenneth did not have joint legal, or joint physical custody of William. Respondent claims that, regarding legal custody of William, evidence offered at the hearing established that it was Beverly who made such decisions as where William would receive his education and medical care. Respondent further argues that the Krauses did not have joint physical custody of William, claiming that there was no evidence that routine daily care and control was structured between the parents.

We disagree that Kenneth had neither joint legal, nor joint physical custody of William pending the dissolution decree. With regard to legal custody, Kenneth had the right to participate in any decision affecting the children in the absence of a court order granting Beverly temporary custody. Merely because the parents agreed that the children would live for extended periods of time with each parent, does not indicate that while the children were living with Beverly, Kenneth abandoned his right to participate in decisions regarding their welfare.

Moreover, there was evidence that Kenneth had joint physical custody of William, since the children stayed with him from November of 1980 until July of 1981 and spent the holidays with him. In fact, from the time of his parents' second separation until the accident, William spent nine months with his father and seven months with his mother. Although the arrangement was for extended periods of time, rather than having the children move from one parent to the other on a weekly basis, this does not show that the parents failed to structure the care and control of the children between themselves. Since both parents sought sole custody of the children there was never any intent that the children would permanently reside with either parent--their fate was ultimately in the hands of family court. Therefore, we hold that William was in the custody of his father at the time of the accident, and is entitled to no-fault benefits as an insured under the Mutual Service policy.

B. Uninsured Motorist Coverage

The trial court held that William Krause was not a resident of his father's household as a matter of law, thereby denying him uninsured motorist benefits under the Mutual Service policy. The Mutual Service policy provided:

Part C. UNINSURED MOTORIST--UNDERINSURED MOTORIST COVERAGES

We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. The bodily injury must be caused by accident arising out of the operation, maintenance or use of an uninsured motor vehicle. * * * Insured means:

1. You or any relative

* * *

* * *

Relative means a person related to you by blood, marriage or adoption who is a resident of your household * * *

The Minnesota No-Fault Act defines resident as:

A person resides in the same household with the named insured if that person usually makes his home in the same family unit, even though he temporarily lives elsewhere.

Minn.Stat. § 65B.43, subd. 5 (1984). In its memorandum, the trial court stated Residence is an act, Keller v. Carr, 40 Minn. 428, 42 N.W. 292 (1889) (Justice Mitchell), and the act is simply bodily presence in a place, In re Quale, 213 Minn. 421, 7 N.W.2d 153 (1942), although, as [Minnesota Statute § 65B.43, subd. 5] indicates, temporary absence from a place does not result in a change of residence. Turning to the facts of this case, it is clear that William resided with his mother at the time of the accident.

The determination of whether individuals are residents of the same household rests on the facts of each case, Pederson v. All Nation Insurance Co., 294 N.W.2d 693, 695 (Minn.1980). The most recent cases addressing this issue by this court are Skarsten v. Dairyland Insurance Co., 381 N.W.2d 16 (Minn.Ct.App.1986), and French v. State Farm Mutual Automobile Insurance Co., 372 N.W.2d 839 (Minn.Ct.App.1985). The French court reviewed numerous Minnesota cases dealing with this issue. Generally, in cases in which a child was denied recovery under his parents' policy, the child was emancipated and had been living independently except for times of extreme hardship, or...