Loy v. Bunderson, 79-1657

CourtUnited States State Supreme Court of Wisconsin
Citation107 Wis.2d 400,320 N.W.2d 175
Docket NumberNo. 79-1657,79-1657
PartiesRichard G. LOY, Plaintiff-Respondent-Petitioner, v. Donna BUNDERSON, State Farm Mutual Automobile Insurance Company, Ralph Truesdill and General Casualty Company of Wisconsin, Defendants-Respondents, Travelers Insurance Company, Defendant-Appellant.
Decision Date02 June 1982

Page 175

320 N.W.2d 175
107 Wis.2d 400
Richard G. LOY, Plaintiff-Respondent-Petitioner,
Donna BUNDERSON, State Farm Mutual Automobile Insurance
Company, Ralph Truesdill and General Casualty
Company of Wisconsin, Defendants-Respondents,
Travelers Insurance Company, Defendant-Appellant.
No. 79-1657.
Supreme Court of Wisconsin.
Argued Feb. 3, 1982.
Decided June 2, 1982.

Page 178

[107 Wis.2d 401] Richard E. Rosenberg, Janesville (argued), for plaintiff-petitioner; Nowlan & Mouat, Janesville, on brief.

James E. Brennan, Janesville (argued), for defendant-appellant; Margaret B. Grabowski, and Brennan, Steil, Ryan, Basting & MacDougall, S. C., Janesville, on brief.


This is a review of a decision of the court of appeals 1 which reversed orders of the circuit court for Rock county, MARK J. FARNUM, Circuit Judge, which, pursuant to a declaratory judgment, approved a "special release" that had the effect of releasing General Casualty Company, the insurer of the automobile of Ralph Truesdill, one of the defendants in the action, and Truesdill personally, while leaving in the action [107 Wis.2d 402] Travelers Insurance Company, which, under its policy with Chambers & Owen, Truesdill's employer, purported to afford liability coverage in the amount of $500,000 for non-owned (non-owned by Chambers & Owen) automobiles. Such coverage was to be afforded, under the terms of the policy, as "excess insurance over any other valid and collectible insurance available to the Insured." General Casualty Company, Truesdill's insurer, afforded a maximum liability coverage of $50,000.

The court of appeals, relying upon Heller v. Shapiro, 208 Wis. 310, 242 N.W. 174 (1932), concluded that the circuit court's declaratory order approving the release constituted an abuse of discretion, because the controversy was not ripe for determination and, hence, not "justiciable" under the provisions of the Declaratory Judgments Act. On this basis alone, the court of appeals reversed. It did not address the merits of the controversy.

We reverse the court of appeals, because we conclude the controversy was justiciable, and we affirm the order of the circuit court confirming the provisions of the "special release."

The first question posed is whether it is within the discretion of a circuit court to issue a declaration approving a proposed release of the named insured, Truesdill, and his insurance company, General Casualty, where, upon payment of $20,000, a release was given for the policy limits of $50,000, leaving intact the plaintiff's cause of action against the "excess" insurer, Travelers, for any sums above $50,000 and within the $500,000 limits of the Travelers policy.

Additionally, if the proceeding to construe and approve the release constitutes a justiciable controversy, then the correctness of the court's declaration on the merits is before us, particularly the court's declaration embodied in its order that, under the release, upon release of Ralph Truesdill and General Casualty, the plaintiff could, nevertheless, pursue his cause of action against Travelers [107 Wis.2d 403] and that Travelers had a duty to defend Truesdill and, if liability were found, to pay any judgment based on Truesdill's negligence in excess of $50,000. The release also provided that Travelers was to have no cause of action against General Casualty either by virtue of its dismissal from the lawsuit or by reason of any payments Travelers has made or may make in the future, either in the defense of the lawsuit or pursuant to any judgment.

Travelers contends that the provisions of the release, approved by the circuit court and included in its declaratory order, are erroneous as a matter of law.

We disagree with each of Travelers' contentions.

This review has its origin in an automobile accident which occurred on January 23, 1978. Doris Loy was fatally injured when a vehicle driven by Donna Bunderson invaded her lane of traffic and collided head-on. At approximately the same time, a vehicle driven and owned by Ralph Truesdill rear-ended the Loy vehicle.

Page 179

Action was commenced by Ralph Loy, the deceased's husband, against Bunderson and her insurer, State Farm Mutual Insurance Co., which carried liability limits of $25,000 2 and against Truesdill and General Casualty, the insurer on Truesdill's personal vehicle. General Casualty afforded maximum liability coverage of $50,000. Because Truesdill was in the course of his employment with Chambers & Owen, the employer's liability insurer, Travelers Insurance Company, with policy limits of $500,000, was joined as a defendant. Chambers & Owen was not made a party. The demand of the complaint was for $400,000. Issue was joined.

Although Travelers, in response to interrogatories, denied that Truesdill was an insured under its policy, it [107 Wis.2d 404] admitted in its answer that the automobile driven by Truesdill at the time of the accident was covered by its policy. While these statements, at least in the present stage of the proceedings, are not completely consistent, Travelers does not deny that Truesdill is covered by Travelers' policy, as an employee of Chambers & Owen, driving an automobile not owned by Chambers & Owen.

General Casualty's policy limits liability coverage to $50,000. Travelers' policy extends coverage to limits of $500,000, but one of the conditions of the Travelers' policy is:

"With respect to a hired automobile or a non-owned automobile, this insurance shall be excess insurance over any other valid and collectible insurance available to the Insured."

The record shows--although Travelers, in this case, considers itself as an excess insurance carrier--this is not a situation in which a particular named insured purchased basic coverage and then purchased additional coverage in excess of its primary contract. Here, the fact of excess coverage is a mere coincidence. Truesdill contracted for his own insurance with General Casualty with limits to $50,000, while Chambers & Owen separately contracted with Travelers for coverage with limits of $500,000. It is only because of the recital in Travelers' policy that its coverage is claimed to be excess over the limits afforded by the General Casualty policy. In the absence of General Casualty's policy, Travelers' coverage would commence at "dollar-one." It is clear, then, that Travelers is not a true excess carrier, because the policy was not written under circumstances where rates were ascertained after giving due consideration to known existing and underlying basic or primary policies. Nothing in the record shows that Chambers & Owen was in [107 Wis.2d 405] any way benefitted in its premium structure by reason of the existence of Truesdill's General Casualty policy.

After commencement of the lawsuit, settlement negotiations commenced. Originally, plaintiff proposed settlement for $60,000. Later, however, this demand was reduced to $30,000. General Casualty sought a 50 percent contribution from Travelers; but Travelers refused, because the settlement sum was within the limits of General Casualty's policy, and presumably because of Travelers' position that, under its own policy provision denominating it as an excess insurer, it had no responsibility for any exposure not in excess of primary coverage.

It was then that the parties worked out the proposed release that is the subject of the present appeal. This settlement had as its goal the satisfaction of any claim of plaintiff up to $50,000, thus exonerating General Casualty and Truesdill, while permitting the plaintiff, Loy, to continue his action against Travelers for damages in excess of $50,000, but not in excess of Travelers' limits of $500,000. Under this release, Loy agreed, in consideration of the payment of $20,000, to release General Casualty of all liability and also to release General Casualty's named insured, Truesdill, up to, but not exceeding, $50,000. Hence, Truesdill was exonerated of any liability within General Casualty's policy limits. All persons who incurred any liability by reason of Truesdill's negligence were also released up to $50,000. Truesdill, Chambers & Owen,

Page 180

General Casualty, and Travelers were freed of any liability within the limits of Truesdill's personal policy.

The claim of Loy against Travelers in the event of a judgment (because of Truesdill's negligence) between $50,000 and $500,000 was expressly reserved. But Truesdill and Chambers & Owen were released of any liability in excess of Travelers' $500,000 coverage. In addition, [107 Wis.2d 406] Loy agreed to indemnify, defend, and hold Truesdill and General Casualty harmless in the event of any claim by Travelers and to offset any claim of the plaintiff against Travelers to the extent of any collectible claim of Travelers 3 against Truesdill and General Casualty.

The parties to the proposed settlement moved for a declaration of rights permitting the parties to the proposed "special release" to settle and asked that the court declare that, upon compliance with the terms of the release, (1) Truesdill and General Casualty will be dismissed from the action; (2) Travelers is obligated to defend Truesdill because he was employed by Chambers & Owen, Travelers' named insured; (3) Travelers was obligated to pay any judgment based on the negligence of Truesdill in excess of $50,000; and (4) Travelers had no cause of action against Truesdill or General Casualty by reason of their dismissal or by reason of any subsequent payment Travelers might make in settling the claim against Truesdill.

The affidavit accompanying the motion for the declaration recited that there was doubt as to Truesdill's liability, in respect to both negligence and causation. The questionableness of Truesdill's liability is not disputed. The affidavit also makes clear that, by reason of the settlement with General Casualty, any recovery which might be had against Travelers would be credited by the plaintiff...

To continue reading

Request your trial
598 cases
  • Teigen v. Wis. Elections Comm'n
    • United States
    • United States State Supreme Court of Wisconsin
    • July 8, 2022
    ...legal relations thereunder.¶100 In order to obtain declaratory judgment, there must be a justiciable controversy. See Loy v. Bunderson, 107 Wis. 2d 400, 410, 320 N.W.2d 175 (1982). A controversy is justiciable when the following factors are present:(1) A controversy in which a claim of righ......
  • Red Fox v. Hettich, 17509
    • United States
    • Supreme Court of South Dakota
    • January 13, 1993
    ...provides for civil jurisdiction where a member of the Tribe is a party to the action. 5 Red Fox also relies on Loy v. Bunderson, 107 Wis.2d 400, 320 N.W.2d 175 (Wis.1982). That case involved a state statute which permitted a judgment creditor to sue an insurance company directly. SDCL 58-12......
  • Kempfer v. Automated Finishing, Inc., 95-0649
    • United States
    • United States State Supreme Court of Wisconsin
    • June 20, 1997
    ...143-44, 254 N.W.2d 198, 202 (1977). Failure to apply the proper standard of law is an erroneous exercise of discretion. Loy v. Bunderson, 107 Wis.2d 400, 411-15, 320 N.W.2d 175 ¶23 During the course of the trial in this case, the circuit court decided to allow the jury to consider whether K......
  • Perpignani v. Vonasek, 84-2445
    • United States
    • United States State Supreme Court of Wisconsin
    • June 17, 1987
    ...of law, and, using a demonstrated rational process, reached a conclusion that a reasonable judge could reach. Loy v. Bunderson, 107 Wis.2d 400, 414-415, 320 N.W.2d 175 (1982). Though it was reasonable to allow the introduction of Plaintiff's testimony as to the value of his land, reliance s......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT