Schoenecker v. Haines, BAUER-ZOR

Decision Date01 May 1979
Docket NumberINC,BAUER-ZOR,No. 76-603,76-603
Citation88 Wis.2d 665,277 N.W.2d 782
PartiesCarl L. SCHOENECKER and Marlene Powers, Plaintiffs, v. Darlene E. HAINES and State Farm Mutual Automobile Insurance Company, a Foreign Insurance Corporation, Defendants and Third-Party Plaintiffs-Appellants, v., and General Casualty Company of Wisconsin, Third-Party Defendants-Respondents.
CourtWisconsin Supreme Court

Thomas E. Greenwald, Rockford, Ill. (argued), for appellants; Graves, Greenwald, Maier & Miner, Rockford, Ill., on brief.

John D. Winner, Madison (argued), for respondents; Susanna D. Herro and Winner, McCallum & Hendee, Madison, on brief.

HEFFERNAN, Justice.

The only question presented on appeal is which of two automobile liability insurers is liable for $654 damages incurred as the result of an automobile accident.

Darlene E. Haines insured her personal automobile with the State Farm Mutual Automobile Insurance Company. On April 21, 1972, her own car was being repaired by Bauer-Zorn, Inc., a corporation engaged in selling, repairing, and servicing of motor vehicles. Haines was given a loaner to use while her car was in the custody of Bauer-Zorn for repairs. She was driving the loaner when the accident occurred.

Bauer-Zorn had a garage liability insurance policy in effect with the General Casualty Company of Wisconsin on the date of the accident.

An action was commenced by Carl L. Schoenecker and Marlene Powers against Darlene E. Haines and State Farm for injuries the plaintiffs sustained in the accident. Haines and State Farm, in turn, brought a third-party action against Bauer-Zorn and General Casualty, asserting that General Casualty was the primary insurer of the loss alleged in the plaintiffs' complaint and that State Farm Mutual Automobile Insurance Company was liable only for any possible excess not covered by the General Casualty policy. The underlying action of the plaintiffs Schoenecker and Powers has been settled, and only the liability of the two insurance companies was at issue in the trial court.

The trial court concluded that Haines's insurer, State Farm, was primarily liable and, accordingly, dismissed the third-party complaint against Bauer-Zorn and its insurer, General Casualty. Judgment was entered, and the appeal by State Farm is from that judgment.

Although we reach the same conclusion that the third-party complaint must be dismissed and we therefore affirm, we reach that conclusion from the expressed intent of the provisions in both insurance policies by which each insurance company sought to preclude its own liability in the event of "other insurance."

Each of the companies prepared policies which sought to avoid liability in the event that other concurrent coverage was afforded. These "escape" clauses become relevant only after it is established that each insurer would be liable in the absence of the other policy. State Farm concedes its liability in the absence of the other policy and also asserts that General Casualty would be liable under its policy in the absence of the State Farm policy. Although General Casualty argues that its policy issued to Bauer-Zorn did not cover the loss and the underlying cause of action, that position is incorrect. It argues that its insured, Bauer-Zorn, was not legally responsible for the negligence of Haines and, therefore, the policy issued to Bauer-Zorn did not apply. That argument, is however, clearly contrary to the express language of General Casualty's policy issued to Bauer-Zorn.

The General Casualty policy covered customers of the Bauer-Zorn garage using a loaner vehicle with permission. The definition of "persons insured" under the General Casualty policy included not only the named insured, Bauer-Zorn, but also persons driving any insured vehicle with the permission of the named insured. General Casualty's policy included as insured vehicles any vehicle owned "for the purpose of garage operations" and any vehicle so owned "while furnished for the use of any person." It cannot be disputed that the loaner vehicle given to Haines served the purpose of Bauer-Zorn's garage operations and also was furnished for the customer's use. Haines was an additional insured under General Casualty's policy.

The case of Maziasz v. Anderson, 45 Wis.2d 664, 173 N.W.2d 585 (1970), on which General Casualty relies to disclaim any liability, is inapplicable to the policy provisions and to the present law. The statute applicable at the time of Maziasz imposed no statutory requirement of coverage on garagemen for loaner vehicles and the contract of insurance in that case did not provide for such coverage.

In the instant case, however, we conclude that the plain language of General Casualty's contract expressly made Haines an additional insured while she was using the vehicle owned by Bauer-Zorn.

Because both policies provided concurrent coverage absent contract provisions relating to "other insurance," it is necessary to analyze the "other insurance" provision of each policy. Both policies seek to exonerate the insurer from liability under specified circumstances where concurrent insurance is afforded by another carrier. The State Farm policy issued to Haines, after reciting the coverages afforded, provided:

"All of the foregoing provisions and all coverages are subject to the following:

"(a) . . . .

"(b) The insurance with respect to

(i) a Temporary substitute automobile,

(ii) a Trailer, or

(iii) a Non-owned automobile,

owned by any person or organization engaged in the Automobile business, SHALL NOT APPLY TO ANY LIABILITY OR LOSS AGAINST WHICH THE INSURED OR THE OWNER OF SUCH VEHICLE HAS OTHER COLLECTIBLE INSURANCE APPLICABLE THERETO, IN WHOLE OR IN PART."

The General Casualty policy which was issued to Bauer-Zorn contained the following provisions with respect to "other insurance":

"In consideration of the reduced rate of premium made applicable to the Garage Liability Insurance, it is agreed that garage customers are not insureds with respect to the automobile hazard except in accordance with the following additional provisions:

"1. If there is other valid and collectible insurance, whether primary, excess or contingent, available to the garage customer and the limits of such insurance are sufficient to pay damages up to the amount of the applicable financial responsibility limit, no damages are collectible under this policy.

"2. If there is other valid and collectible insurance available to the garage customer, whether primary, excess or contingent, and the limits of such insurance are insufficient to pay damages up to the amount of the applicable financial responsibility limit, then this insurance shall apply to the excess of damages up to such limit.

"3. If there is no other valid and collectible insurance, whether primary, excess or contingent, available to the garage customer, this insurance shall apply but the amount of damages payable under this policy shall not exceed the applicable financial responsibility limit."

It is apparent that each of these "other insurance" clauses was designed to prevent double recovery when there was concurrent coverage as there was in this case. They were also designed to exonerate each insurance company from liability in whole or in part in light of other insurance afforded by another company's liability policy.

Because of the increasing use of automobile liability insurance, it is not unusual for more than one insurance policy to cover the loss in a particular automobile accident. To avoid double coverage and, if possible, to avoid coverage being afforded by their own policy, insurers have resorted to three general categories of "other insurance" provisions.

These categories of provisions are discussed in Concurrent Coverage In Automobile Liability Insurance, 65 Col.L.Rev. 319 (1965), and Billings, The "Other Insurance" Provision of the Automobile Policy, 1949 Insurance Law Journal 498. The writers have stated that one category of "other insurance" provisions is the "excess clause," in which the insurer's liability extends only to the amount by which the loss exceeds the coverage of all other valid and collectible insurance up to the limits of the...

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