Leatherman v. American Family Mut. Ins. Co., 202

• Decision Date: 05 November 1971
• Docket Number: No. 202,202
• Citation: 190 N.W.2d 904,52 Wis.2d 644
• Parties: Kenneth H. LEATHERMAN, Appellant, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin Corporation, Respondent.
• Court: Wisconsin Supreme Court

Page 904

190 N.W.2d 904

52 Wis.2d 644

Kenneth H. LEATHERMAN, Appellant, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin Corporation, Respondent.

No. 202.

Supreme Court of Wisconsin.

Nov. 5, 1971.

The plaintiff-appellant, Kenneth Leatherman, was injured in an accident involving automobiles owned and driven by Elmer Boileau and Isauro Garza. Boileau was insured by State Farm Mutual Automobile Insurance Company. Garza had no liability insurance. Plaintiff sued both drivers, and recovered judgment in the amount of $12,801.26. Boileau, the insured driver, was found to be 75% causally negligent. Garza, the uninsured driver, was found to be 25% causally negligent. After trial and appeal (See: Leatherman v. Garza (1968), 39 Wis.2d 378, 159 N.W.2d 18), Boileau's insurer, State Farm, paid the plaintiff the limit of its policy, $10,000, plus interest and costs.

The defendant-respondent, American Family Mutual Insurance Company, had issued a policy of liability insurance to plaintiff on an automobile, owned by the plaintiff, that was not involved in the injury-causing accident. This policy included an 'uninsured motorist' coverage provision with a $10,000 limit. The policy required the defendant insurer to pay all sums which the insured was legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injuries, but also provided that any amount payable would be reduced by any recovery from anyone.

This action was brought, following demand for payment, by plaintiff against defendant for payment of the part of the $12,801.26 judgment which was not satisfied by the $10,000 payment by State Farm. The defendant moved for summary judgment. The trial court granted the motion, holding that the amount payable under the defendant's policy was $10,000 by terms of the policy, and that this amount payable was reduced to zero by the payment of $10,000 by State Farm. From this order and judgment, plaintiff appeals.

Stewart, Peyton & Crawford, Racine, Harold R. Sheets, Racine, of counsel, for appellant.

Heft, Coates, Heft, Henzl & Bichler, Racine, Robert H. Bichler, Racine, for respondent.

ROBERT W. HANSEN, Justice.

The sole issue on this appeal is whether the uninsured motorist coverage provision guaranteed payment, as the trial court found, only to the extent all other sources did not yield the recovery, up to $10,000, to which plaintiff was legally entitled, or whether it went further, as plaintiff contends, to guarantee recovery equivalent to that which would have been received if the uninsured motorist had been insured. As the trial court stated, the case is controlled wholly by the provisions of the insurance contract between plaintiff and defendant.

PROVISIONS OF POLICY.

The policy of defendant insurer states:

'Limits of Liability: $10,000 each person; * * *.'

The policy then states that the agreement is subject to the limits of liability and conditions in the policy:

'In consideration of the payment of the premium for this endorsement, the Company agrees with the Named Insured, subject to the limits of liability, exclusions, conditions, and other terms of this endorsement. * * *'

The policy promises to pay for injuries caused by an uninsured motorist if the insured is legally entitled to payment:

'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; * * *.'

The policy contains a 'reducing clause,' condition 4(b)(1), providing that the amount payable is to be reduced if someone else pays:

'Limits of Liability * * *

'(b) Any amount payable under the terms of this endorsement because of bodily injury sustained in an accident by a person who is an insured under this Endorsement shall be reduced by '(1) all sums paid on account of such bodily injury by or on behalf of * * * any other person or organization jointly or severally liable together with such owner or operator for such bodily injury including all sums paid under Bodily Injury Liability Coverage, * * *.'

Condition 7 of the policy, entitled 'Trust Agreement,' provides:

'In the event of payment to any person under this endorsement:

'(a) the company shall be entitled to the extent of such payment to the proceeds of any settlement or judgment that may result from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury because of which such payment is made;

'(b) such person shall hold in trust for the benefit of the company all rights of recovery which he shall have against such other person or organization because of the damages which are the subject of the claim made under this endorsement; * * *.'

As the trial court pointed out, under condition 7, if the defendant insurer had made full payment of the $10,000 policy limit to the plaintiff, it would have been entitled to the exact extent of such payment to the proceeds of the judgment that resulted from the exercise of plaintiff's rights of recovery against drivers Boileau and Garza. We agree it is clear that, under the trust...