Seider v. Musser

• Decision Date: 17 September 1998
• Docket Number: No. 98-1223,98-1223
• Citation: 585 N.W.2d 885,222 Wis.2d 80
• Parties: Richard SEIDER and Jean Seider, Plaintiffs-Appellants, v. Josephine W. MUSSER, Commissioner of Insurance, Defendant-Respondent. d
• Court: Wisconsin Court of Appeals

Page 885

585 N.W.2d 885

222 Wis.2d 80

Richard SEIDER and Jean Seider, Plaintiffs-Appellants, v. Josephine W. MUSSER, Commissioner of Insurance Defendant-Respondent. ^d

No. 98-1223.

Court of Appeals of Wisconsin.

Submitted on Briefs July 13, 1998.

Opinion Released Sept. 17, 1998.

Opinion Filed Sept. 17, 1998.

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Andrew

J. King of Lutz, Burnett, McDermott, Jahn & King, LLP of Chilton.

On behalf of the defendant-respondent, the cause was submitted on the brief of James E. Doyle, Attorney General, and Paul L. Barnett, Asst. Attorney General.

Before DYKMAN, P.J., and VERGERONT and ROGGENSACK, JJ.

VERGERONT, Judge.

Richard and Jean Seider appeal from a judgment dismissing their complaint for a declaratory judgment that WIS. ADM.CODE § INS 4.01(2)(e) is invalid because it conflicts with § 632.05(2), STATS., the "valued policy law." That statute establishes the policy limits as the amount of loss whenever insured real property "owned and occupied by the insured as a dwelling" is wholly destroyed. Section 632.05(2). ¹ The administrative regulation makes this statute inapplicable when there is a "policy insuring real property any part of which is used for commercial (non-dwelling) purposes other than on an incidental basis." WIS. ADM.CODE § INS 4.01(2)(e). ² The trial court concluded that, while the rule did limit and restrict the applicability of the statute, the rule did not conflict with the statute and was valid because it was within the rule-making authority of the Office of the Commissioner of Insurance (OCI).

We conclude that the rule does conflict with the statute because the statute plainly applies to real property that is owned and occupied by the insured as a dwelling, regardless of whether the real property is also used by the insured for commercial purposes. The Office of the Commissioner of Insurance therefore exceeded its authority when it made the statute inapplicable simply because the real property was used for commercial purposes in addition to being occupied as a dwelling. Accordingly, we reverse and remand.

BACKGROUND

The parties have stipulated to the pertinent facts. The Seiders are husband and wife. On April 10, 1995, they acquired ownership of a building and real estate located in Manitowoc County. In November of that year, the building was wholly destroyed by fire through no criminal fault of their own or their assigns. From the time they acquired the building until it was destroyed, the Seiders used the building to conduct their restaurant business, known as the Steinthal Valley Lodge. During that same time period, they occupied the building as their dwelling, residing there continuously and exclusively. They did not own or occupy any other building as their dwelling during that period.

At the time of the fire, the Seiders were the insureds under a policy of insurance issued by Wilson Mutual Insurance Company, which had a limit of liability, subject to all the terms of the policy, of $150,000. The policy insured the building and real estate against loss by fire. After the fire, the Seiders filed a proof of loss in the amount of the liability limits, which was rejected by Wilson Mutual. Instead Wilson Mutual paid them $129,053.39, which represents the actual cash value of the building after application of the deductible. The policy provided that valuation of the property shall be the actual cash value at the time of loss.

The trial court dismissed the Seiders' claim that they were entitled to $150,000 under § 632.05(2), STATS., and that WIS. ADM.CODE § INS 4.01(2)(e) was invalid. The court reasoned that OCI was charged with administering and enforcing the valued policy law and, therefore, had the authority to interpret it if necessary to achieve the legislative intent. The court concluded that WIS. ADM.CODE § INS 4.01(2)(e) was consistent with the legislative intent as revealed in the legislative history of the statute. The court agreed with the Seiders that the statute as a whole was clear and unambiguous and that "dwelling" should be given its plain meaning; however, it decided that even when the term "dwelling" is given its plain meaning it is subject to different interpretations that require clarification. The court acknowledged that the rule did "limit and restrict the applicability of the statute," but concluded that it did so without conflict with the statute and was, therefore, valid.

DISCUSSION

On appeal, the Seiders renew their argument that the rule is invalid because it conflicts with the plain language of the statute and thus exceeds the authority of OCI. Section 227.40(4)(a), STATS., provides that in a proceeding for judicial review of an administrative rule, "the court shall declare the rule invalid if it finds that it exceeds the statutory authority of the agency." Whether a rule exceeds the statutory authority of an agency presents a question of statutory construction, which we review de novo. DeBeck v. DNR, 172 Wis.2d 382, 386, 493 N.W.2d 234, 236 (Ct.App.1992).

The OCI is authorized by statute to administer and enforce chapters 600 to 655 of the Wisconsin Statutes and to promulgate rules as provided in § 227.11(2), STATS. See § 601.41(1) and (3), STATS. Section 227.11(2)(a) provides:

(2) Rule-making authority is expressly conferred as follows:

(a) Each agency may promulgate rules interpreting the provisions of any statute enforced or administered by it, if the agency considers it necessary to effectuate the purpose of the statute, but a rule is not valid if it exceeds the bounds of correct interpretation.

An administrative rule that conflicts with an unambiguous statute exceeds the rule-making authority of the administrative agency. Basic Products Corp. v. Wis. Dep't of Taxation, 19 Wis.2d 183, 186, 120 N.W.2d 161, 162 (1963). Therefore we first consider whether § 632.05(2), STATS., is ambiguous. This, too, is a question of law, which we review de novo. See Awve v. Physicians Ins. Co., 181 Wis.2d 815, 822, 512 N.W.2d 216, 218 (Ct.App.1994).

We agree with OCI that we determine whether a statute is ambiguous in the context of the issues and facts before us. See Drangstviet v. Auto-Owners Ins. Co., 195 Wis.2d 592, 599, 536 N.W.2d 189, 191 (Ct.App.1995). We have held that § 632.05(2), STATS., is unambiguous in the context of the question whether an estate occupies a dwelling under § 632.05(2). See id. at 600, 536 N.W.2d at 191 (holding that the statute plainly applies to insureds who are persons actually using a place as a residence and does not apply to the inanimate entity of an estate). However, that does not answer the issue on this appeal. Similarly, our conclusion in Kohnen v. Wis. Mut. Ins. Co., 111 Wis.2d 584, 586, 331 N.W.2d 598, 599 (Ct.App.1983)--that the term "occupied" is ambiguous in the context of the question whether an insured who periodically leases a dwelling "occupies" it ³--does not resolve the issue on this appeal. The issue before us is whether the term "dwelling" in § 632.05(2) is ambiguous when applied to insureds who reside in a building that is destroyed by fire, have no other residence, and also use the building for a business. We conclude there is no ambiguity and the plain language of the statute includes this situation.

There is no dispute that the Seiders occupied the building as a dwelling. Ambiguities which might exist had they owned another residence, or were temporarily staying elsewhere, for example, do not exist in this case. The OCI contends one could reasonably interpret a "dwelling" as not including real property that is "predominantly commercial" and "only used incidentally as a residence." However, OCI does not elaborate on this assertion. We see nothing in the plain language of the statute suggesting that additional uses of the building might affect whether it is a dwelling. The dictionary definition of "dwelling" is "a building or construction used for residence." WEBSTER'S THIRD NEW INT'L DICTIONARY 706 (1993). ⁴ This definition does not suggest that use of a building for a purpose in addition to that of a residence affects whether the building is a dwelling. Of course the legislature could have stated that the use as a dwelling must be...