St. Paul Mercury Ins. Co. v. Zastrow

• Decision Date: 30 October 1991
• Docket Number: Nos. 90-2370,90-2371,s. 90-2370
• Citation: 480 N.W.2d 8,166 Wis.2d 423
• Parties: ST. PAUL MERCURY INSURANCE CO., Plaintiff-Respondent, v. Louis C. ZASTROW, Defendant-Appellant. Louis C. ZASTROW, Plaintiff-Appellant, v. ST. PAUL MERCURY INSURANCE CO., Defendant-Respondent. . Oral Argument
• Court: Wisconsin Supreme Court

Page 8

480 N.W.2d 8

166 Wis.2d 423

ST. PAUL MERCURY INSURANCE CO., Plaintiff-Respondent, v. Louis C. ZASTROW, Defendant-Appellant.

Louis C. ZASTROW, Plaintiff-Appellant, v. ST. PAUL MERCURY INSURANCE CO., Defendant-Respondent.

Nos. 90-2370, 90-2371.

Supreme Court of Wisconsin.

Oral Argument Oct. 30, 1991.

Decided Feb. 13, 1992.

For the defendant-plaintiff-appellant, Louis C. Zastrow, there were briefs (in the court of appeals) by William D. Mansell and Jerome A. Maeder, S.C., Wausau, and oral argument by Mr. Mansell.

For the plaintiff-defendant-respondent, St. Paul Mercury Ins. Co., there was a brief (in the court of appeals) by Douglas J. Klingberg, Steven M. Anderson and Ruder, Ware & Michler, S.C., Wausau and oral argument by Mr. Anderson.

SHIRLEY S. ABRAHAMSON, Justice.

This is an appeal from a judgment of the circuit court for Marathon County, Vincent K. Howard, Circuit Judge, declaring that Louis Zastrow is not entitled to uninsured motorist protection under an Antique Automobile Insurance Policy that St. Paul Mercury Insurance Company issued to cover Zastrow's antique and collector automobiles. The circuit court dismissed the actions with prejudice. ¹ This court granted the St. Paul Mercury Insurance company's petition to bypass the court of appeals. Section 808.05 and sec. (Rule) 809.60, Stats. 1989-90.

The issue this court must address is whether the St. Paul Antique Automobile Insurance Policy, covering specified antique and collector vehicles and limiting its liability coverage to users of the specified vehicles, can limit uninsured motorist coverage only to persons who occupy an insured antique or collector vehicle at the time of their injury. We conclude that the limitation of uninsured motorist coverage in this policy violates the uninsured motorist protection coverage mandated by the legislature under sec. 632.32(4)(a), Stats. 1989-90. We reverse the judgments of the circuit court declaring that Louis Zastrow is not entitled to uninsured motorist insurance coverage pursuant to the policy issued by St. Paul Mercury Insurance Company and remand the cause to the circuit court.

The relevant facts are not in dispute. On April 2, 1989, an uninsured motorist struck and killed Louis Zastrow's wife and son as the two walked along a road near the Zastrow home. The walk did not relate to the use of any motor vehicle owned by Louis Zastrow or the decedents.

Zastrow had purchased two automobile insurance policies. One policy, from MSI Insurance Co., is a standard comprehensive automobile insurance policy covering motor vehicles that Zastrow regularly used for highway transportation. The second policy, from St. Paul Mercury Insurance Co., is entitled Antique Automobile Insurance Policy, is specifically tailored for antique and collector vehicles, and insured Louis Zastrow's 29 antique and collector vehicles.

Both policies contain uninsured motorist coverage. Louis Zastrow received payment under the uninsured motorist coverage from the MSI Insurance Co. for the deaths of his wife and son. The disagreement between the parties concerns Zastrow's claim for payment under the uninsured motorist coverage of the St. Paul policy.

St. Paul asserts it was able to offer its policy to Louis Zastrow at a premium substantially lower than that charged for the standard comprehensive automobile insurance policy because antique and collector vehicles are not driven on the highways with the frequency of regular automobiles and because the St. Paul policy affords different coverage for antique and collector vehicles than a standard comprehensive automobile insurance policy. ² To take advantage of these reduced premiums, the policyholder of the Antique Automobile Insurance Policy had to meet several requirements. First, Zastrow needed to have insurance covering the vehicle he used for ordinary highway transportation. Second, the St. Paul policy does not cover loss or damage if the annual mileage exceeds 2,500 miles per year. Third, the antique or collector vehicles could not be used for regular transportation, such as to or from work, school or shopping, for advertising or commercial enterprise, or for racing events, rallies, or other timed events. Finally the vehicles could not be altered in any way, such as to look like hot rod or customized show cars. ³

The St. Paul policy, unlike a standard comprehensive automobile insurance policy, limits the liability coverage of the policyholder or any family member to injuries resulting from the ownership, maintenance, or use of a covered vehicle and limits uninsured motorist coverage to occupants of an insured vehicle. In other words, the St. Paul policy does not insure the policyholder or his or her relatives against liability and does not indemnify the policyholder or his

or her relatives against loss inflicted by an uninsured motorist unless the policyholder or the relatives are somehow involved with an automobile covered by this antique automobile insurance policy. The St. Paul uninsured motorist coverage reads as follows:

INSURING AGREEMENT

A. We will pay damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of "bodily injury":

1. Sustained by an "insured"; and

2. Caused by an accident.

* * * * * *

B. "Insured" as used in this part means:

1. Any person "occupying" "your covered auto."

2. Any person for damages that person is entitled to recover because of "bodily injury" to which this coverage applies sustained by a person described in 1. above.

(pp. 3-4 of 7 of policy) ⁴

The St. Paul policy should be contrasted with a standard comprehensive automobile insurance policy, which covers three classes of insureds for both liability and uninsured motorist purposes: (1) the named insured, designated insureds, and specified relatives of named insureds (not limited to ownership, maintenance, use, or occupancy of the insured vehicle); (2) occupancy insureds, that is, persons occupying an insured vehicle; and (3) derivative insureds, that is, persons legally entitled to recover damages because of the bodily injury suffered by one of the other two classes of insureds. ⁵ The St. Paul Antique Automobile Insurance Policy does not provide either liability or uninsured motorist coverage to the first class of insureds. The St. Paul policy provides uninsured motorist coverage only to the second class of insureds.

Because the injured persons in this case were pedestrians and were not occupying one of the covered antique or collector vehicles at the time of the injury, St. Paul asserts that it is not liable under the uninsured motorist coverage of the policy. Zastrow argues, however, that St. Paul cannot restrict its uninsured motorist coverage for the policyholder or his relatives to those circumstances in which they occupy the covered antique or collector vehicles. Zastrow asserts that St. Paul's limitations on uninsured motorist protection for the policyholder and his relatives are void because they violate the uninsured motorist coverage mandated by the legislature under sec. 632.32(4)(a), Stats. 1989-90, and contravene the "stacking" provisions of sec. 631.43(1), Stats. 1989-90. ⁶

Section 632.32(4)(a), Stats. 1989-90, requires every automobile insurance policy issued in this state to include uninsured motorist coverage. Section 632.32(4)(a), Stats. 1989-90, provides:

(4) REQUIRED UNINSURED MOTORIST AND MEDICAL PAYMENTS COVERAGES. Every policy of insurance subject to this section that insures with respect to any motor vehicle registered or principally garaged in this state against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall contain therein or supplemental thereto provisions approved by the commissioner.

(a) Uninsured motorist. 1. For the protection of persons injured who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom....

Although this statute establishes minimal requirements, like many state uninsured motorist statutes its language is very general. It does not, for example, state what class of persons the mandatory uninsured motorist coverage must protect. Section 632.32(4) does not expressly prohibit an insurance company from limiting uninsured motorist coverage to occupants of the motor vehicle for which the insurance policy was written. The courts have had to interpret the statute to determine the extent of coverage mandated by the uninsured motorist statute. In many cases across the country injured persons have, in a variety of fact situations, protested policy limitations on uninsured motorist coverage as contravening the public policy of the state established by the uninsured motorist statute.

Zastrow argues that the St. Paul policy linking uninsured motorist coverage to the occupancy of an insured vehicle contravenes this court's interpretation of the uninsured motorist statute as granting the insured and relatives of the insured personal and portable coverage. Zastrow further asserts that the coverage limitations in the St. Paul policy serve to prevent stacking of uninsured motorist benefits contrary to the intent and purpose of sec. 631.43(1), Stats. 1989-90. Section 631.43(1) allows stacking as follows:

(1) GENERAL. When 2 or more policies promise to indemnify an insured against the same loss, no "other insurance" provisions of the policy may reduce the aggregate protection of the insured below the lesser of the actual insured loss suffered by the insured or the total indemnification promised by the policies if there were no "other insurance" provisions....

Zastrow correctly asserts that this court has characterized uninsured motorist coverage in the standard comprehensive automobile insurance policy as "personal and portable coverage...