Sprangers v. Greatway Ins. Co.
| Decision Date | 18 April 1994 |
| Docket Number | No. 92-1617,92-1617 |
| Citation | 514 N.W.2d 1,182 Wis.2d 521 |
| Parties | Jeffrey F. SPRANGERS, Plaintiff-Respondent-Petitioner, v. GREATWAY INSURANCE COMPANY, Todd J. Zielke, Defendants, Threshermen's Mutual Insurance Company, Defendant-Petitioner, Learman-Schaller Post 2732, V.F.W. Clubhouse, Defendant and Third Party Plaintiff-Respondent-Petitioner, v. The DIEDRICH AGENCY, INC., Third Party Defendant-Petitioner, ABC Insurance Company, Curt McSweyn, Vikki McSweyn, and DEF Insurance Company, Third Party Defendants. Susan A. YOUNG, Individually and as Personal Representative for the Estate of Martin J. Young, Plaintiff-Respondent-Petitioner, v. GREATWAY INSURANCE COMPANY and Todd J. Zielke, Defendants, Threshermen's Mutual Insurance Company, Defendant-Appellant, Learman-Schaller Post 2732, V.F.W. Clubhouse, Defendant-Third Party Plaintiff-Respondent-Petitioner, v. The DIEDRICH AGENCY, INC., ABC Insurance Company, Curt McSweyn, Vikki McSweyn and DEF Insurance Company, Third Party Defendants. |
| Court | Wisconsin Supreme Court |
For the defendant-appellant there was a brief by James W. Mohr, Jr., Gregory L. Knapp and Mohr, Anderson & McClurg Amicus curiae brief was filed by Randy S. Parlee, Frederick J. Smith and Peterson, Johnson & Murray, S.C., Milwaukee, for The Civ. Trial Counsel of Wisconsin.
S.C., Hartford and oral argument by James W. Mohr, Jr.
This is a review of a published decision of the court of appeals, Sprangers v. Greatway Ins. Co., 175 Wis.2d 60, 498 N.W.2d 858 (Ct.App.1993), reversing an order of the circuit court for Waupaca County, Philip M. Kirk, Circuit Judge. The circuit court refused to grant summary judgment in favor of the defendant Threshermen's Mutual Insurance Company against Learman-Schaller Post 2732, VFW Clubhouse, and the plaintiffs Jeffrey Sprangers and Estate of Martin J. Young. The court of appeals gave Threshermen's leave to appeal the non-final order and reversed the order of the circuit court. We affirm the decision of the court of appeals.
Two issues are presented. The first is whether, under the terms of its liability insurance policy, the VFW is in the business of selling or serving alcoholic beverages and therefore excluded from coverage for liability resulting from its sale of alcoholic beverages to an underaged drinker. The second issue is whether the policy exclusion for insureds "in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages" is unenforceable either on the grounds of public policy or equitable estoppel, or because Threshermen's failed to point out the exclusion to the VFW.
We conclude that a reasonable insured in the position of the VFW would have understood that the VFW was "in the business of selling ... [and] ... serving ... alcoholic beverages," as that phrase is used in the policy. Therefore we conclude that the VFW was excluded from coverage under the insurance policy for liability arising from the sale of alcoholic beverages to an underaged person. We also conclude, contrary to the arguments of the VFW, that the exclusion is enforceable. It is not against public policy; Threshermen's is not equitably estopped. Finally we conclude that, under the circumstances the VFW sets forth, Threshermen's has no duty to anticipate which liabilities the VFW may expect a policy to cover or to identify which exclusions in a policy the VFW may deem important. Accordingly we affirm the decision of the court of appeals in favor of Threshermen's and against the VFW and the injured plaintiffs.
For the purposes of this review, the facts are undisputed. Jeffrey F. Sprangers and Martin J. Young were riding their motorcycles eastbound on State Highway 54 in the Town of New London, Waupaca County. A westbound pickup truck operated by the defendant, 20 year old Todd Zielke, crossed the centerline and struck both motorcycles. Sprangers was severely injured and Young was killed.
Zielke had been drinking that night at the VFW and was under the influence of intoxicants at the time of the accident. The accident victims, plaintiffs Jeffrey F. Sprangers and Martin Young (through Susan A. Young, individually and on behalf of the Estate of Martin Young), commenced separate actions against Zielke, the VFW, and Threshermen's, alleging that the VFW had negligently served alcohol to Zielke, an underaged drinker, and that this negligence was a substantial factor in causing the plaintiffs' injuries. The two actions were later consolidated.
The plaintiffs sought damages for personal injury and wrongful death against Zielke and the VFW and joined Threshermen's to the action. In its cross-claims against Threshermen's, VFW sought a declaratory judgment concerning whether the liquor liability exclusion applied to the plaintiffs' claims.
The VFW is incorporated under sec. 188.11, Stats.1991-92. It is a non-profit entity under sec. 501(c)(19) of the Internal Revenue Code for federal tax purposes. The VFW engages in a number of social, civic, and charitable activities in the community. It also operates a "canteen" or bar open to the public on Thursdays, Fridays, and most Saturdays from 2:00 or 3:00 p.m. to 2:00 a.m. At the time of the accident, the VFW employed eight people in the bar including six bartenders. The bar generated $72,301 in The policy Threshermen's issued to the VFW has two types of coverages. One, entitled "Business Special Property Coverage Form," comprises 16 printed pages; the other, entitled "Businessowners Liability Coverage Form," is 10 pages. 1 The Diedrich Agency, Inc., was the independent insurance agency involved in the sale of the policy.
revenues in 1990; its revenues exceeded expenses in some years but not in others. Excess revenues from the bar are used to support the activities of the VFW. A more extensive description of the activities of the VFW relating to the sale of alcoholic beverages is set forth later in the opinion.
The policy's Businessowners Liability Coverage Form is of concern in the instant case. It contains an exclusion relating to liability arising from alcoholic beverages which reads as follows:
EXCLUSIONS
... This insurance does not apply to:
. . . . .
c. "Bodily injury" or "property damage" for which any insured may be held liable by reason of:
(1) Causing or contributing to the intoxication of any person;
(2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or
(3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.
This exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. (Emphasis added
Threshermen's moved for summary judgment, asserting that the VFW's liability policy expressly excluded coverage for an insured like the VFW who was in the business of selling or serving alcoholic beverages and sold or served alcoholic beverages to an underaged person. The circuit court denied the motion stating that a better record was needed regarding the VFW's operation of the bar to determine whether the policy exclusion applied.
When reviewing the grant of a summary judgment motion, this court applies the standards set forth in sec. 802.08., Stats.1991-92, in the same way as the circuit court applies them. Voss v. Middleton, 162 Wis.2d 737, 470 N.W.2d 625 (1991).
The first question on summary judgment is whether as a matter of law Threshermen's has stated a valid defense that the policy excludes coverage for the VFW under the undisputed facts of the case. The policy excludes coverage for an insured "in the business ... of manufacturing, distributing, selling, serving or furnishing alcoholic beverages." According to one state court, this exception is " 'more or less standard language in tavern and saloon general liability policies' " 2
We must determine whether the VFW, a non-profit fraternal society, is "in the business of ... selling [and] serving ... alcoholic beverages" within the meaning of the policy exclusion.
In the absence of extrinsic evidence, interpretation of an insurance policy is a matter of law which this court decides independently of other courts that may have examined the policy. Shorewood School District v. Wausau Ins., 168 Wis.2d 390, 407-08, 484 N.W.2d 314 (1992); Employers Health Insurance v. General Casualty Co., 161 Wis.2d 937, 945-46, 469 N.W.2d 172 (1991).
The plaintiffs assert that the exclusion is unambiguous and does not apply because the VFW is a non-profit organization or that alternatively the exclusion is ambiguous and should be construed strictly against Threshermen's and in favor the VFW. The VFW argues that the exclusion is ambiguous.
While the interpretation of the policy exclusion regarding its application to a non-profit fraternal organization is a question of first impression in Wisconsin, a number of courts in other jurisdictions have interpreted nearly identical exclusions in liability policies in fact situations substantially similar to the instant case. To support their position, the plaintiffs and the VFW rely on two New Hampshire cases, Laconia Rod & Gun Club v. Hartford Acc. & Indem. Co., 123 N.H. 179, 459 A.2d 249 (1984), and American Legion Post # 49 v. Jefferson Ins. Co., 125 N.H. 758, 485 A.2d 293 (1984), and a Massachusetts decision, Newell-Blais Post No. 443 v. Shelby Mut. Ins. Co., 396 Mass. 633, 487 N.E.2d 1371 (1986). 3
In Laconia, the New Hampshire Supreme Court ruled that the plaintiff, a non-profit sportsmen's club, was not engaged "in the business of selling or serving alcohol" and therefore was not within the policy exclusion. The court, relying on Corpus Juris Secundum, recognized that the word "business" could be interpreted either as any regular activity that occupies one's time and attention or as an activity with a direct profit motive, and therefore concluded that the...
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