Tahtinen v. MSI Ins. Co., 83-954

Decision Date31 January 1985
Docket NumberNo. 83-954,83-954
PartiesRudolph TAHTINEN, Plaintiff-Appellant, v. MSI INSURANCE COMPANY, a corporation, Defendant-Respondent-Petitioner.
CourtWisconsin Supreme Court

Steven J. Ledin (argued), Superior, for defendant-respondent-petitioner; David M. Weiby and Davis, Witkin, Weiby, Maki & Durst, S.C., Superior, on briefs.

Daniel D. Hannula (argued), Superior, for plaintiff-appellant; Daniel D. Hannula and Ashley & Hannula, Superior, on brief.

Steven J. Caulum, Thomas A. Lockyear and Bell, Metzner & Gierhart, S.C., Madison, for the Wisconsin Insurance Alliance.

William C. Gleisner III, David L. Nichols and Weiss, Steuer, Berzowski, Brady & Donahue, Milwaukee, for the Wisconsin Academy of Trial Lawyers.

WILLIAM A. BABLITCH, Justice.

MSI Insurance Company seeks review of a decision of the court of appeals which held that an insurer is required to stack 1 coverage from each policy of uninsured motorist coverage it issues to the same insured even though each of the policies contains a reducing clause 2 prohibiting stacking of coverage. We hold that the court of appeals, 118 Wis.2d 389, 347 N.W.2d 617, correctly determined that the Wisconsin stacking statute is unambiguous. This statute voids reducing clauses which prohibit stacking of multiple policy coverages issued by the same insurer to the same insured. We therefore affirm the decision of the court of appeals.

This action arises out of an automobile-pedestrian accident which occurred on March 21, 1981. Rudolph Tahtinen was struck by an uninsured motorist while assisting the driver of a disabled car, parked on the shoulder of the road. At the time of the accident, Tahtinen was insured under three separate automobile insurance policies issued by MSI Insurance Company. Each of the policies provided uninsured motorist benefits of $15,000 per person and medical pay benefits of $3,000 per person. Each required payment of separate additional premiums for these benefits.

Tahtinen alleged that his damages exceeded the uninsured motorist limit of all three policies combined. He made a claim for benefits under all three policies in order to receive the fullest compensation for his injuries. MSI Insurance Company paid Tahtinen a total of $16,500, which represented compensation for uninsured motorist benefits and medical pay benefits from the policy which had insured the automobile Tahtinen had been driving immediately prior to the accident. MSI Insurance Company refused to pay benefits under either of the two remaining policies. It maintained that its liability was limited to the policy limit of one policy because stacking of coverage was prohibited by the following policy provision contained in each of the insurance policies:

"3. Other Automobile Insurance in the Company: With respect to any occurrence, accident, or loss to which this and any other automobile insurance policy issued to the named insured by the Company also applies, the total limit of the Company's liability under all such policies shall not exceed the highest applicable limit of liability under any one such policy."

Tahtinen brought suit alleging that MSI Insurance Company's refusal to pay benefits under the other two policies constituted both bad faith and breach of contract. In its answer, MSI Insurance company asserted that the "other automobile insurance in the company" reducing clause contained in each of the policies constituted an affirmative defense against Tahtinen's allegations. MSI Insurance Company subsequently moved the circuit court for summary judgment on the stacking issue. Judge Douglas S. Moodie granted the summary judgment and dismissed Tahtinen's complaint. Judge Moodie held that Wisconsin's stacking statute, sec. 631.43(1), Stats., only applies where the insured holds several insurance policies issued by different companies, but does not apply where the insured holds several insurance policies issued by the same insurance company.

Tahtinen appealed this decision to the court of appeals which reversed. The court of appeals held that sec. 631.43(1), Stats., voids reducing clauses included to prevent stacking of uninsured motorist benefits regardless of how many insurers are involved and does not exclude situations involving two or more policies issued by a single insurer. Tahtinen v. MSI Ins. Co., 118 Wis.2d 389, 392, 347 N.W.2d 617 (Ct.App.1984). MSI Insurance Company subsequently filed a petition for review which was granted by this court.

The sole issue for review is whether an insurance company which issues two or more insurance policies to the same insured may include a policy provision prohibiting stacking of uninsured motorist benefits against the same insurer? We hold that an insurance policy provision which prohibits stacking of uninsured motorist benefits against the same insurer is prohibited by sec. 631.43(1), Stats. This statute is unambiguous and voids reducing clauses which attempt to prevent stacking of uninsured motorist benefits.

The issue of stacking uninsured motorist coverage was first raised in Leatherman v. American Family Mut. Ins. Co., 52 Wis.2d 644, 190 N.W.2d 904 (1971), at a time when uninsured motorist coverage was not required by statute. Leatherman was a passenger in an automobile which was involved in an accident with an uninsured motorist. The host driver's carrier paid Leatherman up to its policy limit for uninsured motorist coverage. Leatherman's own insurer refused to provide him with additional benefits under his uninsured motorist coverage because the policy contained a reducing clause. We found that the reducing clause was neither ambiguous nor contrary to public policy. Id. at 649-50, 190 N.W.2d 904. We concluded that only the legislature could prohibit the use of reducing clauses, not the court. Id. at 650-51, 190 N.W.2d 904.

Subsequently, uninsured motorist coverage became mandatory, and the same issue raised in Leatherman was again presented in Scherr v. Drobac, 53 Wis.2d 308, 193 N.W.2d 14 (1972). This court determined that the uninsured motorist statute, sec. 204.30(5)(a), Stats. (1973) (predecessor to sec. 632.32), had no effect on the validity of the reducing clause contained in the uninsured motorist coverage. Id. at 310-11, 193 N.W.2d 14.

Similarly, in Nelson v. Employers Mut. Casualty Co., 63 Wis.2d 558, 217 N.W.2d 670 (1974), this court upheld the validity of a reducing clause and denied the plaintiff the right to stack coverages of two uninsured motorist policies. We found the Leatherman and Scherr decisions were controlling, and that the uninsured motorist statute only guaranteed recovery of the minimum amount of coverage afforded for each policy and not the maximum coverage afforded by stacking several policies. Nelson at 568-69, 217 N.W.2d 670.

These cases clearly demonstrated this court's refusal to prohibit reducing clauses and extend the stacking doctrine without a clear legislative mandate: "any prohibition of reducing clauses was to be made by legislative mandate and not judicial fiat." Landvatter v. Globe Security Ins. Co., 100 Wis.2d 21, 23, 300 N.W.2d 875 (Ct.App.1980). Subsequently, the legislature enacted sec. 631.43(1), Stats., which the court of appeals in Landvatter found provided "the legislative mandate which was missing at the time the Leatherman, Scherr and Nelson cases considered the public policy considerations governing reducing clauses." Id. at 26, 300 N.W.2d 875.

The issue before the Landvatter court was whether Sec. 631.43(1), Stats., made invalid the reducing clause contained in the uninsured motorist section of the plaintiff's automobile insurance policy. Landvatter at 22, 300 N.W.2d 875. The clause reduced the amount the plaintiff received under her uninsured motorist coverage by the amount of payments she had received under another insurer's policy of uninsured motorist coverage. The court of appeals held that the reducing clause was invalid: "sec. 631.43(1) must be read together with sec. 632.32(3) to permit the stacking of uninsured motorist insurance coverages." Id. at 26, 300 N.W.2d 875. Section 632.32(3) is cited in full below. 3

These cases clearly demonstrate that the validity of reducing clauses in uninsured motorist coverage is controlled by legislative mandate, not by public policy considerations. Therefore, the issue before this court involves the proper construction of sec. 631.43(1), Stats., which provides:

"631.43 Other insurance provisions. (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. The policies may by their terms define the extent to which each is primary and each excess, but if the policies contain inconsistent terms on that point, the insurers shall be jointly and severally liable to the insured on any coverage where the terms are inconsistent, each to the full amount of coverage it provided. Settlement among the insurers shall not alter any rights of the insured."

Specifically we must decide whether sec. 631.43(1) prohibits insurance companies that issue multiple policies of uninsured motorist coverage to a single insured from including "other insurance in the company" reducing clauses in order to prohibit stacking of coverages.

Petitioner MSI Insurance Company argues that sec. 631.43(1), Stats., only applies to situations involving more than one insurer and does not apply to a single insurer's "other insurance in the company" policy provision. The petitioner points to the second and third sentences of sec. 631.43(1) which deal exclusively with multiple insurer situations to support its position. The second sentence provides that if separate insurance policies are...

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