Martin v. Milwaukee Mut. Ins. Co.

Decision Date14 December 1988
Docket NumberNo. 87-0590,87-0590
Citation433 N.W.2d 1,146 Wis.2d 759
PartiesArnold MARTIN, as an individual and as Special Administrator of the Estates of Julia Martin, and Collin Martin, deceased, and Derrick Martin, a minor, by his guardian ad litem, Diane Loftus, Petitioners-Appellants, v. MILWAUKEE MUTUAL INSURANCE COMPANY, a Wisconsin Corporation, Respondent.
CourtWisconsin Supreme Court

Michael F. Hupy, argued, Hausmann, McNally & Hupy, S.C., on briefs, Milwaukee, for petitioners-appellants.

Thomas N. Harrington, argued, Mark D. Richards, and Cook & Franke, S.C., on brief, Milwaukee, for respondent.

James T. Murray, Jr., Randy S. Parlee, and Peterson, Johnson & Murray, S.C., Milwaukee, amicus curiae, for the Wisconsin Ins. Alliance.

DAY, Justice.

This is an appeal from two orders of the circuit court of Racine county, Honorable Stephen Simanek, judge. This case was accepted on certification from the court of appeals pursuant to sec. 809.61, Stats. (1985-86).

The question as certified is: "Whether a passenger who is not a named insured may 'stack' 1 the uninsured motorist policies of the driver."

Under the uninsured motorist provisions of the policies in force in this case another way of phrasing the question is: May a "person occupying an insured automobile" (occupancy insured) but who is not a "named insured [or] ... relative" recover under both the policy covering the car in which he is a passenger and also under the provisions of an identical policy covering a second car owned by the same "named insured"? We conclude under the terms of this policy such occupancy insured is not protected by the uninsured motorist coverage of the unoccupied non-involved vehicle.

A second question arising out of the particular facts of this case is: When the combined uninsured motorist damages of the named insured and the occupancy insured are greater than the coverage of the policy on the involved vehicle, must the insurer first exhaust the coverage provided in a policy on an uninvolved vehicle covering the same named insured for the named insured's damages before paying any damages out of the coverage provided for the vehicle involved in the accident? We conclude the answer to this second question is "yes."

We therefore reverse the rulings of the circuit court and remand the cause for further proceedings.

The facts which give rise to this litigation are as follows:

On or about March 27, 1981, Milwaukee Mutual Insurance Company (Milwaukee Mutual) issued an automobile insurance policy to Colvin and Emma Nunn. Colvin and Emma Nunn were named insureds under the terms of the policy. Two automobiles owned by the Nunns were covered by the policy: a 1975 American Motors Corporation Matador and a 1981 American Motors Corporation Concord. The policy contained an uninsured motorist provision with limits of $100,000 per person and $100,000 per accident for each auto. Although both autos are included in the same issued policy, each auto is considered to have separate and independent coverage. See Burns v. Milwaukee Mut. Ins. Co., 121 Wis.2d 574, 578, 360 N.W.2d 61 (Ct.App.1984).

Coverage under the uninsured motorist provision provided that Milwaukee Mutual would pay the insured or his legal representative all sums which they were "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 ... sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile;...." "Insured" is defined in the uninsured motorist provision of the policy as "(a) the named insured and any relative; (b) any other person while occupying an insured automobile;...." "Insured automobile" is defined under the same provision as "(a) an owned automobile for which a premium charge indicates that uninsured motorists coverage is afforded provided the use thereof is by or with the permission of the named insured...." "Owned Automobile" is defined as "(a) a private passenger, farm or utility automobile owned by the named insured and described in the declarations...."

On May 2, 1981, a two car accident occurred between the insured 1981 Concord (the involved auto) driven by Emma Nunn and a vehicle operated by Beverly Carlson. Beverly Carlson was uninsured at the time of the accident. Julia Martin, Collin Martin, and Derrick Martin were passengers in the Nunn automobile at the time of the accident. As a result of the accident, Emma Nunn, Julia Martin, and Collin Martin were killed. Derrick Martin was injured. The Martins were not relatives of the Nunns.

After the accident, Colvin Nunn made an uninsured motorist claim under this policy for damages resulting from the death of his wife, Emma Nunn. In February 1982, Milwaukee Mutual paid Mr. Nunn $93,000 as settlement of his uninsured motorist claim.

Thereafter, Arnold Martin, as an individual and as Special Administrator of the Estate of Julia Martin and Collin Martin, deceased, and Derrick Martin, a minor by his guardian ad litem, (Martins) commenced a liability action alleging Emma Nunn was negligent in causing the accident. The suit was tried and Emma Nunn was found to be free of negligence. Therefore, the Martins were unable to recover damages from the Nunn's automobile liability insurance.

The Martins then sought to recover under the uninsured motorist coverage of the Nunns' policies based on the negligence of the other driver, Ms. Carlson, who was uninsured.

The Martins and Milwaukee Mutual sought declaratory judgment as to their respective rights and obligations under the policies.

The Martins requested the circuit court declare: The Martins were insured under the Nunn's uninsured motorist provision, each covered in the amount of $100,000; in the alternative, they were covered for a minimum of $25,000 each based on sec. 632.32(4), Stats. 2 ; the Martins had the right to proceed to arbitration with respect to the recovery under the uninsured motorist insurance; and that Milwaukee Mutual pay a punitive damage amount of $50,000 for its assertion, in bad faith, that the Martins were only entitled to $7,000 under the uninsured motorist portion of its insurance contract.

Milwaukee Mutual responded by also asking for a declaratory judgment stating that Milwaukee Mutual had a maximum exposure of $100,000 for the accident and that only $7,000 ($100,000 exposure minus the $93,000 paid to Mr. Nunn on his claim) was available for the Martins to recover less $1,258.15 for court costs in the liability action.

In a summary judgment order, the circuit court ruled the total uninsured motorist liability of Milwaukee Mutual for the May 2, 1981, accident was $100,000. It also found that Milwaukee Mutual had paid $93,000 of this $100,000 to Colvin Nunn for his claim under the policy. Therefore, the circuit court concluded, only $7,000 of uninsured motorist coverage remained from which the Martins might recover.

The Martins then moved the circuit court to vacate any finding as to which of the two uninsured motorist coverages (one from the Concord, one from the Matador) served as the fund from which the $93,000 payment to Colvin Nunn was made and to reconsider the summary judgment order. They also moved to allow them to amend their complaint. Their amended complaint requested that $100,000 be made available to them for damages and once again asked for damages against Milwaukee Mutual because of bad faith. The circuit court denied these motions.

This case raises questions of first impression in this state. We conclude the terms of this insurance policy control because of the lack of any legislation that would require a different result.

In reviewing a circuit court's grant of summary judgment, this court will reverse the order only if the circuit court incorrectly decided a legal issue or if material facts are in dispute. Forsythe v. Family Court Com'r., 131 Wis.2d 322, 326, 388 N.W.2d 580 (1986). In this case there are no material facts in question. The construction of a statute and insurance contract provisions are questions of law. Rural Mut. Ins. Co. v. Peterson, 134 Wis.2d 165, 170, 395 N.W.2d 776 (1986). This court need not give special deference to the determination of the circuit court when reviewing questions of law. Tahtinen v. MSI Ins. Co., 122 Wis.2d 158, 166, 361 N.W.2d 673 (1985).

The first question is whether an occupancy insured of the involved vehicle who is not a named insured can benefit from uninsured motorist insurance carried by the named insured on another vehicle not involved in the accident.

The "named insured" in both policies was Colvin Nunn, Emma Nunn, and relatives. The Martins (Plaintiffs/Passengers) were not named insureds or relatives in the policies on either the Concord or the Matador. The Martins were "occupying" the Concord and so covered by its policy. They clearly were not occupying the Matador which was not involved in the accident and cannot benefit from the uninsured motorist coverage on that vehicle.

The Martins argue that a passenger should be able to stack the driver's uninsured motorist policies for two reasons. First, they argue the circuit court's decision creates a hierarchy of insureds which is prohibited by the Wisconsin statutes. Sections 632.32(3)(a), and 632.32(6)(b)(2)(a), Stats. Second, they argue Wisconsin has an established public policy to maximize insurance coverage. Alternatively, the Martins argue it is against public policy to allow Milwaukee Mutual to almost exhaust its policy limits to one person when there are several claimants covered by the policy. 3

The Martins also cite six cases in support of their contention that allowing the occupants to stack the named insured's coverages is a position held by a large number of jurisdictions. Jasmin v. Dumas, 769 F.2d 1047 (5th Cir.1985); Werley v. United Services Auto Ass'n., 498 P.2d 112 (Alaska 19...

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