Olguin v. Allstate Ins. Co.

• Decision Date: 03 February 1976
• Docket Number: No. 143,143
• Citation: 71 Wis.2d 160,237 N.W.2d 694
• Parties: Eudoro A. OLGUIN, Respondent, v. ALLSTATE INSURANCE COMPANY, a Foreign Corporation, Appellant. (1974).
• Court: Wisconsin Supreme Court

Page 694

237 N.W.2d 694

71 Wis.2d 160

Eudoro A. OLGUIN, Respondent, v. ALLSTATE INSURANCE COMPANY, a Foreign Corporation, Appellant.

No. 143 (1974).

Supreme Court of Wisconsin.

Submitted Jan. 7, 1976.

Decided Feb. 3, 1976.

Blazek & Hale, Milwaukee, for appellant.

Donald F. Konle, Milwaukee, for respondent.

WILKIE, Chief Justice.

This appeal concerns a fire loss by Eudoro Olguin, plaintiff-respondent, and the extent of coverage under a renter's insurance policy issued to him by Allstate Insurance Company, the defendant-appellant.

The plaintiff was employed as a mechanical engineer at Grafton, Wisconsin, and resided at 2535 North Prospect avenue in Milwaukee. In March of 1971 he purchased a renter's policy from Allstate. This policy provided, in part, as follows:

'UNSCHEDULED PERSONAL PROPERTY

'Coverage C

'1. On Premises: This policy covers unscheduled personal property usual or incidental to the occupancy of the premises as a dwelling, owned, worn or used by an Insured, while on the premises, . . .

'2. Away From Premises: This policy also covers unscheduled personal property as described and limited, while elsewhere than on the premises, anywhere in the world, owned, worn or used by an Insured, . . .

'The limit of Allstate's liability for such property while away from premises shall be an additional amount of insurance equal to 10% of the amount specified for Coverage C, but in no event less than $1,000.'

The limit of liability under Coverage C, Unscheduled Personal Property, was $10,000.

In a separate section entitled 'Extensions of Coverage,' the policy read as follows:

'5. Automatic Removal Permit: When, during the policy period, the Named Insured removes unscheduled personal property covered under Coverage C from the described premises to another location within the limits of that part of Continental North America included within the United States of America, and the state of Hawaii, occupied as his principal residence, so much of the limit of insurance provided for Coverage C shall apply at the new location, in transit, and at the described location as the value at the new location, in transit, or at the described location, bears to the total value of such property at all locations. In no event, however, shall recovery under this extension be less than would have been available under the limit of insurance for Coverage C2 (Away From Premises).

'When the removal is completed, the new location shall be considered the described premises as to Coverages C and D, and the former location shall cease to be the described premises.'

On or about April 10th Olguin resigned his Wisconsin employment. He packed four boxes of personal property and crated a motorcycle. These were all taken to the Lifschultz Fast Freight company and arrangements were made there to have them shipped to the Andesco Export Corporation in New York City. Olguin knew one Schweitzer there. On April 15th Olguin and his wife left their Milwaukee apartment. Olguin's wife went to live with a sister in the city, and Olguin left for New York City. When he arrived in New York City he made certain business contacts, as he had done in the past during his business trips there. He also telephoned a few places in New York City to inquire about renting an apartment, but did not visit any place in person. After a day or two in New York, Olguin received a call from a European business associate, left New York for Madrid, and remained in Europe for the next two months.

On April 19th Olguin's four boxes and motorcycle were destroyed in transit to New York City, apparently due to a fire at a railroad siding in New Jersey. When Olguin returned to the United States, he went to Milwaukee and established another residence there. He never established a residence in New York City.

The loss amounted to a total of $15,596.75, not including the value of the motorcycle which was not covered by the policy. The high value of the property was attributable to the presence of a small library of specialized engineering books, a gun collection an extensive wardrobe of clothes, and a number of valuable decorative pieces which Olguin had bought during his travels in various parts of the world.

The central dispute here is whether there is Schedule C coverage under the Allstate policy to the limit of the policy ($10,000) under the automatic removal permit provision of the policy. We hold differently than the trial court which ruled, after a full trial, that the automatic removal permit provision in the policy (which provided for pro rata coverage when the insured removed personal property from the described premises 'to another location (within the continental United States and Hawaii) occupied as his principal residence') gave coverage here because Olguin intended to establish a new residence in New York City but was prevented from doing so by the fire loss to his property. We think that the policy clearly provided coverage only if property had been or was in the process of being moved from one location to another occupied as a residence, and that the facts here clearly show that Olguin was not in the process of moving his property to a New York City location occupied as his residence.

I. Construction of the Automatic Removal Permit Provision of the Allstate Policy.

The provisions of an insurance contract are to be construed according to wellsettled principles set forth in the recent case of Garriguenc v. Love, ¹ as follows:

'Contracts of insurance are controlled by the same principles of law that are applicable to other contracts. A policy of insurance like any other contract is to be construed so as to give effect to the intention of the parties. In the case of an insurance contract, the words are to be construed in accordance with the principle that the test is not what the insurer intended the words to mean but what a reasonable person in the position of an insured would have understood the words to mean. Whatever ambiguity exists in a contract of insurance is resolved in favor of the insured. This is a restatement of the general rule that ambiguous contracts are to be construed most strongly against the maker or drafter. Words or phrases in a contract are ambiguous when they are reasonably or fairly susceptible to more than one construction. However, when the terms of a policy are plain on their face, the policy should not be rewritten by construction to bind the insurer to a risk it was unwilling to cover, and for which it was not paid. Litigants should not be able to resort to rules of construction for the purpose of modifying the contract or creating a new contract; and a court need not resort to either construction or case law to bolster its recognition of that plain meaning.'

Also relevant to the case at bar is the further principle that insurance policies should be given a reasonable interpretation and not one which leads to an absurd result. ²

By its 'Automatic Removal Permit' Allstate granted to the insured an extension of its regular 'On Premises' coverage. But this was a limited extension. It did not extend to every removal of the insured's personal property away from the described premises since this type of...