Segall v. Ohio Cas. Co.

• Decision Date: 06 April 1937
• Citation: 272 N.W. 665,224 Wis. 379
• Parties: SEGALL et al. v. OHIO CASUALTY CO. et al.
• Court: Wisconsin Supreme Court

224 Wis. 379

272 N.W. 665

SEGALL et al.

v.OHIO CASUALTY CO. et al.

Supreme Court of Wisconsin.

April 6, 1937.

Appeal from an order of the Circuit Court for Milwaukee County; Gustave G. Gehrz, Judge.

Action by Dorothy Segall, by Myra Loose, and others against the Ohio Casualty Company and others. From an order sustaining the named defendant's demurrer, the plaintiffs appeal.-[By Editorial Staff.]

Affirmed, and cause remanded for further proceedings.

Plaintiffs, minors and unemancipated, bring this action against the insurer of the father to recover damages for injuries sustained because of the negligence of the father and Everett La Fond, which resulted in a collision of two cars. The Ohio Casualty Company demurred to the complaint and the demurrer was sustained.

The plaintiffs, on the 18th of September, 1934, were occupants of their father's automobile and it is alleged that due to his negligence and the negligence of another, the plaintiffs were injured. Charles Segall, the father of the plaintiffs, carried liability insurance. The policy was issued by the defendant and was in force at the time the children were hurt. The policy provided among other things that it insured the said Charles Segall against direct loss or expense by reason of the liability imposed upon the assured by law for damages by reason of the ownership, maintenance, or use of the automobile described, to an amount not exceeding the limits thereinafter stated, if such claim for damages is made on account of bodily injuries or death accidentally suffered by any person or persons as the result of an accident occurring while the policy is in force. The action is by the children directly against the Ohio Casualty Company. From the order sustaining the demurrer plaintiffs appeal.

Joseph A. Padway, of Milwaukee, for appellants.

Bitker, Tierney & Puchner, of Milwaukee, for respondents.

FAIRCHILD, Justice.

It is plaintiffs' first contention that by the terms of sections 204.33(2) and 204.34(2) they are entitled to recover upon the policy issued by the defendant to Charles Segall regardless of the rule recognized in Wick v. Wick, 192 Wis. 260, 212 N.W. 787, 788, 52 A.L.R. 1113, that a child may not recover from a parent for personal injuries caused by the parent's negligence. The statutory provision identical in each subsection is as follows: “No policy of insurance [or] agreement of indemnity *** shall exclude from the coverage afforded or the provisions as to the benefits therein provided persons related by blood or marriage to the assured.” Plaintiffs contend that the prohibition against exclusion from the benefits of a policy of persons related to the assured evidences a legislative intent to expand this type of policy beyond that of mere liability or indemnity and to make it in this situation, at least to a limited degree, an accident policy. Thus, if this position be sound, the fact that a child is precluded from recovering damages against its parent for negligence because of relationship cannot be relied upon as a defense upon the policy because expressly made immaterial by the above provision. The words of the statute are not susceptible of the broad interpretation given to them by the plaintiff and it is clear that the contract of insurance is in terms an indemnity or liability policy predicated upon the assumption that either the assured or such person as may be covered by an omnibus clause has sustained a liability to the person seeking to recover for injuries. Since there is no question concerning the scope of the policy, it is not necessary to labor this point. The only question is whether the statute has amplified the policy. On this point, we think the plaintiffs' contentions to be without merit. The differences between liability or indemnity insurance and mere accident insurance are fundamental and marked. This distinction existed in the insurance world long before statutes assumed to regulate the subject of liability insurance. An examination into the history of our statutes dealing with liability insurance compels the conclusion that however much the contract has been modified or the liability broadened, the statutes have consistently dealt with such contracts as liability policies, and there is no point in that history at which there can be said to have been a departure from this general statutory attitude. The difference being so marked between liability and indemnity insurance on the one hand and various types of accident insurance on the other, one would normally expect a transition from one form to the other by statutory mandate to be clothed with unmistakable language. A brief review of the statutory history indicates no such legislative purpose. The first statutory regulation of any importance followed the case of Glatz v. General Acc., F. & L. Assur. Corp., 175 Wis. 42, 183 N.W. 683. In that case plaintiff had judgment against the tort-feasor, but before the judgment could be perfected, assured had been adjudicated a bankrupt. The policy contained a no-action clause which conditioned the liability of the insurance company upon actual loss by the insured arising out of payment of a judgment in money. Plaintiff sought by garnishment in aid of execution to recover the amount of the judgment from the insurer and it was held in this court that, the policy being one of liability against actual loss, the insurer sustained no obligation to the tort-feasor until the latter had discharged the judgment. To prevent a recurrence of this situation, sections 204.30 and 85.25, Stats., 1925, were enacted. In substance, liability insurance policies were required to contain (1) a clause to the effect that the insolvency or bankruptcy of the assured would not release the insurer from liability; (2) an omnibus coverage clause to the effect that every policy shall contain provisions extending the coverage applicable to the named assured to any person riding in or operating the automobile of the assured described in the policy with the consent of the latter; (3) provisions to the effect that the insurer shall be liable to the persons entitled to a recovery of damages arising out of the negligent operation of the described vehicle. All of these statutory enactments indicate a purpose to eliminate certain types of defenses theretofore available to the insurance company and in effect to create a direct liability by permitting the insurance company to be made a party defendant. As in all new statutory provisions, some questions were raised concerning the precise effect of these statutes, and various amendments further to evidence the legislative intent were enacted. Thus, in 1929, the Legislature amended section 85.25 and renumbered it section 85.93 (chapters 454, 467, Laws of 1929). It read: “Any bond or policy of insurance covering liability to others by reason of the operation of a motor vehicle shall be deemed and construed to contain the following conditions: That the insurer shall be liable to the persons entitled to recover for the death of any person, or for injury to person or property, irrespective of whether such liability be in praesenti or contingent and to become fixed or certain by final judgment against the insured, when caused by the negligent operation, maintenance, use or defective construction of the vehicle described therein, such liability not to exceed the amount named in said bond or policy.”

This amendment was for the purpose of putting to rest a previous question whether there was any distinction under the statutes between liability and indemnity policies. In all of these statutory provisions it will be noticed that nothing was done that in any way sought to change the character of this insurance. All of the provisions had for their purpose making the insurance available conveniently to one who had a tort claim against the assured, but all the changes proceed upon the assumption that such a claim is essential to the operation of the policy. It appears to us that this conclusion survives the subsequent statutory changes as well. For example, it had been held that insurers were not proper parties defendant to an action by an injured party where the contract provided that no action...