Nelson v. Zeimetz

• Decision Date: 10 May 1989
• Citation: 442 N.W.2d 530,150 Wis.2d 785
• Parties: Peggy A. NELSON, and Liberty Mutual Insurance Company, Plaintiffs-Respondents, v. Dale S. ZEIMETZ, Defendant, Dairyland Insurance Company, Defendant-Appellant, Kenosha Auto Transport Corporation, Defendant, Protective Insurance Company, Defendant-Appellant. 88-0737.
• Court: Wisconsin Court of Appeals

Page 530

442 N.W.2d 530

150 Wis.2d 785

Peggy A. NELSON, and Liberty Mutual Insurance Company Plaintiffs-Respondents, v. Dale S. ZEIMETZ, Defendant Dairyland Insurance Company, Defendant-Appellant Kenosha Auto Transport Corporation, Defendant Protective Insurance Company, Defendant-Appellant.

88-0737.

Court of Appeals of Wisconsin.

Argued April 13, 1989.

Opinion Released May 10, 1989.

Opinion Filed May 10, 1989.

Robert F. Johnson, on brief and Philip C. Reid, argued of Cook & Franke, S.C., Milwaukee, for defendant-appellant Dairyland Ins. Co.

Douglas J. Carroll of Arnold, Murray, O'Neill & Schimmel, Milwaukee, for defendant-appellant Protective Ins. Co.

James J. Kriva, argued and E. Patrick Cranley, on brief of Kasdorf, Lewis & Swietlik, S.C., Milwaukee, for plaintiff-respondent Liberty Mut. Ins. Co.

Edward J. Plagemann, Milwaukee, for plaintiff-respondent Peggy A. Nelson.

Donald J. Hanaway, Atty. Gen., on brief and Donald W. Smith, Asst. Atty. Gen., argued, for Dept. of Transp., amicus curiae.

Before SCOTT, C.J., and BROWN, P.J., and NETTESHEIM, J.

SCOTT, Chief Judge.

Dairyland Insurance Company (Dairyland) and Protective Insurance Company (Protective) appeal from an order which granted the plaintiffs' motion to strike the insurance companies' defense of non-permissive use of a vehicle. ¹ Dairyland and Protective raise a number of issues regarding part of Wisconsin's safety responsibility law, sec. 344.15, Stats. We conclude that Dairyland, as insurer of the operator of the vehicle, is not subject to estoppel under sec. 344.15(5), and therefore we reverse the order as to it. We also reverse the order as to Protective for evidentiary reasons.

FACTS

A vehicle owned by Kenosha Auto Transport Corporation (KAT) and driven by Dale Zeimetz, its employee, struck Peggy Nelson's husband on December 20, 1985, fatally injuring him. Zeimetz was insured by Dairyland; KAT is insured by Protective.

On January 7, 1986, Zeimetz filed an accident report known as an SR-21 with the Department of Transportation (the department) as required by sec. 346.70, Stats. On January 9, the department mailed a copy of the SR-21 to Dairyland. On January 14, Dairyland notified the department that its policy was inapplicable due to a violation of the purposes of use specified in the policy.

According to a document from the department, a copy of the SR-21 was mailed to Protective on April 1, but no response was received. Later that month, Nelson brought a wrongful death action against Zeimetz, KAT, and their insurers. ² The complaint alleged that Zeimetz was operating the vehicle with permission of the owner, KAT. Dairyland and Protective denied this and raised the affirmative defense of lack of permission.

Nelson filed motions to strike these defenses on the ground that neither Dairyland nor Protective properly corrected the SR-21 as required by sec. 344.15, Stats. The trial court characterized the motions to strike as motions for judgment on the pleadings and concluded that, because matters outside the pleadings were to be considered, the court would treat them as summary judgment motions. See sec. 802.06(3), Stats. The trial court gave Dairyland and Protective two months to present evidentiary material.

Nelson's proof in support of summary judgment against Dairyland consisted of the SR-21 form which Dairyland had returned to the department after checking the box related to "purposes of use." As against Protective, Nelson provided a document from the department which "certified" that an SR-21 had been sent to Protective and that no response was received. Protective filed a counteraffidavit prepared by its assistant vice president of claims. This counteraffidavit averred that Protective had no record of receiving the SR-21, and that those employees who would reasonably be expected to know of its receipt had no recollection thereof.

The trial court ruled that both Dairyland and Protective were estopped from raising the defense of non-permissive use. The trial court concluded that Dairyland's "purposes of use" response was inadequate because sec. 344.15(4), Stats., requires the filing of an affidavit if non-permissive use is to be raised.

Regarding Protective, the trial court ruled, over objection, that the letter from the department was admissible, being self-authenticating under sec. 909.02(4), Stats., and excepted from the hearsay rule by sec. 908.03(10), Stats. The trial court then sua sponte excluded Protective's counteraffidavit on the basis that it was "a compilation of hearsay information provided by unnamed informants."

Dairyland and Protective petitioned this court for leave to appeal. We granted the petitions.

MOTION REGARDING DAIRYLAND'S DEFENSE

Dairyland raises numerous issues, including the constitutionality of sec. 344.15, Stats. We need not address the constitutional issue because we find persuasive Dairyland's argument that insurers of operators are not subject to the "non-permissive use" portions of the statute.

The meaning of a statute is a question of law, and we owe no deference to the trial court's decision. Suburban State Bank v. Squires, 145 Wis.2d 445, 448, 427 N.W.2d 393, 394 (Ct.App.1988). Section 344.15, Stats., reads in pertinent part as follows:

(4) After receipt of the report of an accident of the type specified in s. 344.12, the secretary may forward to the insurer named therein, that portion of the report or other notice which pertains to an automobile liability policy or bond. The secretary shall assume that an automobile liability policy or bond as described in this section was in effect and applied to both the owner and operator with respect to the accident unless the insurer notifies the secretary otherwise within 30 days from the mailing to the insurer of that portion of the report or other notice pertaining to the automobile liability policy or bond.... As respects permission to operate the vehicle, the insurer may correct the report or other notice only if it files with the secretary within the 30-day period specified in this subsection an affidavit signed by the owner stating that the operator did not have the owner's permission to operate the vehicle....

(5) Nothing in this chapter shall be construed to impose any obligation not otherwise assumed by the insurer in its automobile liability policy or bond except that if no correction is made in the report or other notice within 30 days after it is mailed to the insurer, the insurer ... is estopped from using as a defense to its liability the insured's failure to give permission to the operator....

Dairyland emphasizes the portion of sec. 344.15(5), Stats., which states that "the insurer ... is estopped from using as a defense to its liability the insured's failure to give permission to the operator." (Emphasis added.) Here, Dairyland points out, its allegation is that its insured failed to obtain permission from the owner. We agree with Dairyland that the plain meaning of the statute does not provide for estoppel in the latter situation.

Nelson responds by pointing out the language of subsec. (4), which is admittedly somewhat broader. However, this subsection is related only to the ministerial function of the insurance commissioner. Hain v. Biron, 26 Wis.2d 377, 379, 132 N.W.2d 593, 594 (1965). The only subsection which places liability on the insurance company for failure to respond is subsec. (5). Id. at 380, 132 N.W.2d at 594-95.

The plain meaning of the statute is also in accord with commonsense and with the department's own interpretation of the statute as evidenced by the SR-21. From a common sense standpoint, we note that if the insured of the operator (here, Dairyland) were required to file an affidavit of non-permission, it would have to obtain such an affidavit from the owner (here, KAT). The owner in such a situation would not be bound by any duty to cooperate with an insurance company with which the owner has no legal relationship. Even if the operator's insurer made a reasonable attempt to obtain an affidavit of non-permission from the owner, a serious question arises as to whether such "substantial compliance" would be sufficient. See Midwest Mut. Ins. Co. v. Nicolazzi, 138 Wis.2d 192, 196-202, 405 N.W.2d 732, 734-37 (Ct.App.1987).

From the standpoint of the department, it has prepared an SR-21 which allows insurers to check off any of a number of policy rejections listed on the form prior to returning it to the department. The only rejection on the SR-21 dealing with non-permissive use reads as follows: "Our policy applies to the owner of the vehicle involved in the accident, but not to the operator who was driving without permission (Affidavit of Owner attached ...)." This rejection does not anticipate use by the insurer of the operator.

Finally, both parties dispute the meaning of Duveneck v. Western Casualty & Surety Co., 56 Wis.2d 479, 202 N.W.2d 1 (1972). Duveneck involved an insurer of an operator who was in a similar position to Dairyland. Id. at 481-82, 202 N.W.2d at 2. The very brief opinion decides only that the insurer was not an excess carrier, with a caveat that discussion of any other issues would be advisory. Id. at 485-86, 202 N.W.2d at 4. The opinion does not address the issue here raised by Dairyland, nor does Duveneck state that such an issue was raised therein. We therefore conclude that Duveneck does not represent binding authority on the issue before us.

We conclude that sec. 344.15(5), Stats., does not estop Dairyland, as insurer of the operator, from raising the defense of non-permissive use. The order granting Nelson's motion as to Dairyland is reversed.

MOTION REGARDING PROTECTIVE'S DEFENSE

Protective also raises numerous issues, including constitutional arguments and an extensive argument that excess carriers are exempted from sec. 344.15, Stats. We conclude that Nelson's proof, consisting of a letter from the department, was insufficient to establish a prima facie case...