State Farm Mut. Auto. Ins. Co. v. Kelly

Decision Date23 May 1986
Docket NumberNo. 85-2171,85-2171
PartiesSTATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a foreign insurance corporation, and John A. Milanowski, Plaintiffs-Appellants, d v. Joseph M. KELLY and Home Mutual Insurance Company, a domestic insurance corporation, Defendants-Respondents.
CourtWisconsin Court of Appeals

Kasdorf, Lewis & Swietlik, S.C. (William J. Katt and Mark D. Koss, of counsel), Milwaukee, for plaintiffs-appellants.

Alan Shafrin, Milwaukee, for defendants-respondents.



This case of first impression concerns the denial of liability insurance coverage to an unlicensed minor who drove his stepfather's automobile without permission. John A. Milanowski's car was struck by a car driven by Joseph M. Kelly, age fifteen. When Milanowski brought suit, the trial court determined that Kelly was not covered under his stepfather's insurance policy and granted summary judgment to the stepfather's insurer. Because the policy in question contained a provision requiring permission to drive, and because such a provision is authorized by sec. 632.32(5), Stats., we affirm.

The material facts are not in dispute. Home Mutual Insurance Company (Home Mutual) insured a car owned by Frank Guskey, Kelly's stepfather. Kelly purloined the keys to this car, took off for a drive, and collided with Milanowski's car. When Milanowski and his insurer, State Farm Mutual Automobile Insurance Company (State Farm), filed this claim to recover damages, Home Mutual asserted that Kelly was operating the Guskey car without permission and denied coverage. The trial court granted Home Mutual's motion for summary judgment and this appeal followed.

State Farm contends that Home Mutual's policy was contrary to the statute prohibiting "family exclusion" clauses, sec. 632.32(6)(b)1, Stats. This statute provides that no automobile insurance policy may exclude from coverage or benefits "[p]ersons related by blood or marriage to the insured." Home Mutual concedes that blanket exclusions of relatives are prohibited, but argues that sec. 632.32(5)(a) permits limitation of coverage "to use that is with the permission of the named insured." The trial court agreed with Home Mutual and held that sec. 632.32(5)(e) allows the incidental exclusion of a family member who operates an insured vehicle without permission.

A motion for summary judgment can be used to address issues of insurance policy coverage. Germanotta v. National Indemnity Co., 119 Wis.2d 293, 296, 349 N.W.2d 733, 735 (Ct.App.1984). Section 802.08(2), Stats., provides that summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Because the facts in this case are uncontroverted, the sole question before us involves statutory interpretation. The application of statutory standards to a set of undisputed facts is a question of law which this court reviews without deference to the trial court. Manor v. Hanson, 123 Wis.2d 524, 533, 368 N.W.2d 41, 45 (1985).

When there is a conflict or inconsistency between statutes on the same subject matter, we must construe the statutes in a manner that harmonizes them in order to give each full force and effect. State Central Credit Union v. Bigus, 101 Wis.2d 237, 242, 304 N.W.2d 148, 151 (Ct.App.1981). When determining the meaning and effect of statutory sections in pari materia,

[i]t is assumed that whenever the legislature enacts a provision it has in mind previous statutes relating to the same subject matter. In the absence of any express repeal or amendment, the new provision is presumed in accord with the legislative policy embodied in those prior statutes. Thus, they all should be construed together.

N. Singer, 2A Sutherland on Statutes and Statutory Construction § 51.02 at 453 (Sands rev. 4th ed. 1984) (footnotes omitted). With these principles in mind, we will examine the apparently disparate impact of subsecs. 632.32(3), (5) and (6), Stats., 1 on the insurance policy at bar.

The Home Mutual family car policy provides in relevant part:


We will pay damages for which any insured person is legally liable because of bodily injury and property damage arising out of the ownership, maintenance or use of a car or utility trailer.



As used only in this Part "insured person" or "insured persons" mean:

(1) You or a relative.

(2) Any person using your insured car with your permission or that of an adult member of your household other than a chauffeur or domestic servant. But, the actual operation, or, if the person is not operating, the actual use of the car must be within the scope of the permission.


But, no person shall be considered an insured person if the person uses a vehicle without having sufficient reason to believe that the use is with permission. [Emphasis deleted.]

From a reading of the Home Mutual policy, it is obvious that the definition of an "insured person" includes relatives. Thus, Kelly is presumably covered. It is equally obvious, however, that coverage is denied if a presumably insured person "uses a vehicle without having sufficient reason to believe that the use is with permission." Kelly, who stole the car keys from a locked bedroom, is therefore excluded under this provision. State Farm argues that this exclusion runs counter to the legislative policy incorporated in both the omnibus coverage statute, sec. 632.32(3), Stats., and the prohibition against family exclusion clauses, sec. 632.32(6)(b)1. Certainly, the intent of the omnibus coverage requirement is to increase the number of injured persons who may recover under insurance policies. Pavelski v. Roginski, 1 Wis.2d 345, 349, 84 N.W.2d 84, 86 (1957). This does not mean, however, that a permission to drive clause authorized by sec. 632.32(5) is thereby nullified. Indeed, our review of legislative history leads us to the opposite conclusion.

The requirement of omnibus insurance coverage was first enacted by ch. 372, Laws of 1925, and incorporated in sec. 204.30(3), Stats. (1925). This subsection provided, in part, that the "coverage hereby afforded shall not apply unless the ... use [of the motor vehicle] ... be with the permission of the assured named in this policy." Id. Although many legislative changes have occurred and the statute itself has been renumbered, the permissive use limitation has remained constant. See sec. 632.32(5)(a), Stats. As our supreme court stated nearly fifty years ago:

While it is true that ch. 372, Laws of 1925, was intended to promote the interests of the public as well as the additional parties to the contract ... the statute definitely limits extension of the benefits of the policy to those driving with the permission of the named assured, or if the named assured is an individual, with the permission of an adult member of the assured's household other than a chauffeur or domestic servant.

Locke v. General Accident Fire & Life Assurance Corp., 227 Wis. 489, 494-95, 279 N.W. 55, 58 (1938) (citation omitted). Thus, our statutory omnibus coverage clause and our statutory permission to drive clause must be construed together. R. Anderson, 12 Couch on Insurance 2d § 45:312 at 648 (Rhodes rev. ed. 1981) (citing Locke).

The prohibition against family exclusion clauses was enacted by ch. 477, Laws of 1931. See sec. 204.34(2), Stats. (1933). This new provision was enacted to prohibit exclusion clauses that would withdraw any coverage or protection required to be given under the omnibus coverage statute. Haines v. Mid-Century Insurance Co., 47 Wis.2d 442, 447, 177 N.W.2d 328, 331 (1970). "In essence, the purpose of both these sections read together is to provide protection to innocent third persons injured by the negligent operation of motor vehicles by others regardless of the relationship between the victim and the driver." Id. (emphasis added).

In Haines, a passenger-wife commenced a personal injury action against her driver-husband, and our supreme court was confronted with the then-existing conflict between Minnesota and Wisconsin law on the issue of family exclusion clauses. As the Haines court explained, the primary purpose of a family exclusion clause is to exempt insurers from liability to those persons to whom the insured, on account of close family ties,...

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