Mercado v. Mitchell
| Decision Date | 05 April 1978 |
| Docket Number | No. 75-713,75-713 |
| Citation | 83 Wis.2d 17,264 N.W.2d 532 |
| Parties | Maria MERCADO, a minor, by Harold A. Laufer, her guardian ad litem, and Maria Cerda, Appellants, v. James M. MITCHELL, Donald R. Rust, E. Clark Bowerman, American X/S Underwriters, and Western World Insurance Company, Inc., Respondents, Jerome J. Lemke, d/b/a Sunshine Amusements, Inc., Defendant. |
| Court | Wisconsin Supreme Court |
The action arises from an accident on a carnival roller coaster ride which resulted in personal injuries to the minor plaintiff. The judgment appealed from granted a motion for summary judgment in favor of the defendant, Western World Insurance Company, dismissing the complaint as to it. Western World was the insurer of Jerome J. Lemke, the owner of the roller coaster ride. Lemke answered the complaint but does not appear in this appellate review. The defendants James M. Mitchell, Donald R. Rust, E. Clark Bowerman, and American X/S Underwriters are all insurance agents and participated in obtaining the insurance for Lemke from Western World. Each of them demurred to the complaint upon the ground it did not state a cause of action. The demurrers were sustained. The plaintiffs appeal from the judgment and the three orders sustaining the demurrers.
Alexander N. Rubin, and Harold A. Laufer, Milwaukee, submitted brief for appellants.
Walther & Halling, and Riordan, Crivello, Sullivan & Carlson, Milwaukee, filed joint brief for defendants-respondents, Donald R. Rust, E. Clark Bowerman, James N. Mitchell and American X/S Underwriters.
deVries, Vlasak & Schallert, S. C., Milwaukee, submitted brief for defendant-respondent, Western World Ins. Co., Inc.
On September 8, 1974, Maria Mercado, a minor, was injured while riding on a roller coaster on the grounds of St. Matthew's Congregation in Milwaukee. The roller coaster and other amusement devices were owned and operated by Jerome J. Lemke, d/b/a Sunshine Amusements, Inc. Maria Mercado, by her guardian ad litem, and her mother alleged in their complaint that Lemke was negligent in several respects in the operation of the roller coaster. The action also named Western World, Lemke's insurer, and the insurance agents who assisted in obtaining the insurance for Lemke as defendants.
We are not here concerned with the negligence and damage aspects of the case. The issues before us deal with the insurance coverage.
The complaint alleges that Lemke went to Mitchell, a general agent, to obtain the insurance required by the city license ordinance, that Mitchell then contacted Rust and Bowerman, agents and officers of American X/S Underwriters, to obtain the insurance, and that American X/S Underwriters obtained the policy for Lemke from Western World. The complaint further alleges that the policy procured from Western World was fraudulently obtained through a conspiracy of Lemke, Mitchell, Rust, Bowerman and American X/S so as to provide incomplete coverage. The complaint, in one cause of action, alleges a conspiracy not to insure the roller coaster which caused Maria Mercado's injuries and, in another, negligence in not acquiring the necessary insurance coverage.
In furtherance of this conspiracy, Mercado alleges that E. Clark Bowerman filed a certificate with the City of Milwaukee which set forth that Lemke had procured insurance but did not specially indicate what was or was not covered, and that as such Lemke held himself out to the city as possessing a liability policy covering all injuries and damages which might arise or result from the operation of her carnival rides.
A license is required to operate a carnival in the City of Milwaukee. City of Milwaukee Ordinance No. 84.14(4) states:
"No license shall be granted unless the applicant therefor shall have filed with the city clerk a public liability insurance policy . . . with the condition that the applicant will indemnify and save harmless the city of Milwaukee and its officers and agents and citizens against any and all injuries and damages resulting or arising from the conducting of any carnival for which the license is issued or from the performance by the applicant or his agents of any negligence incident to or connected with the conduct of such carnival. . . . "
In this case the policy was not filed. A certificate was filed which only generally indicated the existence of the policy. The certificate was approved as to form by the Milwaukee City Attorney's office. The certificate provided:
"This certificate of insurance neither affirmatively nor negatively amends, extends or alters the coverage afforded by any policy described herein." 1
The policy of insurance, dated June 28, 1974, stated that it applied only to the named hazards; no coverage was provided for any hazard or operation not specifically described. Nine amusement devices were listed in the description of hazards. The roller coaster was not among those listed.
Mitchell, Rust, Bowerman and American X/S Underwriters demurred. Western World filed an answer which set forth the affirmative defense that the roller coaster was not covered in the policy. Western World also alleged that it had never agreed to provide coverage for a roller coaster, was not asked to provide coverage for a roller coaster, and had no knowledge that Lemke was even operating a roller coaster. Western World then filed notice of motion and a motion for summary judgment.
A hearing was held on November 24, 1975 on Mitchell's demurrer. Even though Lemke was the principal named insured under the policy, Mercado argued that she had standing to sue Mitchell for failure to procure an all-inclusive insurance policy because the Milwaukee ordinance made her a beneficiary. Therefore, Mercado, as an intended third-party beneficiary, had privity of contract to sue the agent for failure to procure insurance which comported with the ordinance. The trial court held that the ordinance did not give Mercado privity and that the agent owed her no duty. Mitchell's demurrer was sustained.
On December 1, 1975, a hearing was held on Western World's motion for summary judgment and on Rust's, Bowerman's and American X/S Underwriter's demurrer. The court sustained the demurrer for the same reasons noted supra in Mitchell's demurrer.
Mercado argued that Western World should be estopped from denying coverage because the certificate filed did not describe the items covered and thus led the city to believe that, as per the ordinance, all of Lemke's amusement devices were covered. The trial court granted Western World's motion for summary judgment and dismissed the complaint. The trial judge stated that the certificate was not fraudulent and if the city took it to mean that all of Lemke's rides were covered that was its fault, not Western World's.
We will first consider whether the trial court was in error in granting the motion for summary judgment in behalf of Western World.
The plaintiffs-appellants state the issue as follows:
It is not entirely clear from the appellants' arguments whether they contend that the policy and the certificate filed should be construed together, and as such are ambiguous, or whether they rely upon a theory of estoppel.
In support of its motion for summary judgment, Western World filed affidavits as required by the summary judgment statute and the multitude of cases construing the statute.
These affidavits set forth the policy provision:
They then identified and listed nine amusement rides that were covered by the policy. The roller coaster was not included. They further state that at no time was it ever asked to provide coverage for the roller coaster nor did it have any knowledge that Lemke in fact operated a roller coaster.
Significantly the plaintiffs-appellants filed no counter affidavits.
The certificate of insurance filed by Bowerman on behalf of Lemke, and accepted by the city, provided:
The plaintiffs-appellants argue that by virtue of the requirements of the ordinance, the policy and the certificate must be construed together and such an ambiguity exists which must be construed against the insurer.
In examining the policy and the certificate we find no ambiguity. The policy states in substance that it covers only the hazards described in the policy. The amusement ride that caused the injuries to plaintiff is not specifically described nor does the policy contain any general language that could conceivably include it. The caveat or disclaimer in the certificate creates no ambiguity. It clearly states in substance that there is no insurance coverage other than that described in the policy.
The law, often repeated, is that when an ambiguity exists in terms of the policy it is to be construed against the insurer who prepared the instrument and in favor of the insured. However, when no ambiguity exists it is equally clear the court cannot construe the policy, and in this case the policy and the certificate, to include insurance coverage not agreed to by the parties and for which no...
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