U.S. Fire Ins. Co. v. E. D. Wesley Co.

• Decision Date: 05 January 1982
• Docket Number: No. 80-017,80-017
• Parties: UNITED STATES FIRE INSURANCE COMPANY, a foreign corporation, and United States Oil Company, Inc., a Wisconsin corporation, Plaintiffs-Appellants-Petitioners, v. E. D. WESLEY COMPANY, a Wisconsin corporation, and Brey, Stuewe & Braun, Inc.,a Wisconsin corporation, Defendants-Respondents.
• Court: Wisconsin Supreme Court

Page 833

313 N.W.2d 833

105 Wis.2d 305

UNITED STATES FIRE INSURANCE COMPANY, a foreign corporation and United States Oil Company, Inc., a Wisconsin corporation, Plaintiffs-Appellants-Petitioners, v. E. D. WESLEY COMPANY, a Wisconsin corporation, and Brey Stuewe & Braun, Inc.,a Wisconsin corporation Defendants-Respondents.

No. 80-017.

Supreme Court of Wisconsin.

Argued Dec. 1, 1981.

Decided Jan. 5, 1982.

Michael A. Mesirow, Milwaukee (argued), for plaintiffs-appellants-petitioners; Kasdorf, Dall, Lewis & Swietlik, S. C., Milwaukee, on brief.

Douglas H. Starck, Milwaukee (argued), for defendants-respondents; George W Greene and Prosser, Wiedabach & Quale, S. C., Milwaukee, on brief.

Harry F. Franke, Jr., Anthony H. Driessen and Cook & Franke, S. C., Milwaukee, for amicus curiae Associated Gen. Contractors of Greater Milwaukee, Wisconsin Society of Architects, Associated Gen. Contractors of Wisconsin, Allied Construction Employers Association, Wisconsin Society of Professional Engineers, Professional Engineers in Private Practice, Consulting Engineers Council of Wisconsin, Wisconsin Society of Land Surveyors, and Mechanical Contractors Association of Wisconsin.

STEINMETZ, Justice.

Three issues are raised in this case: whether sec. 893.155, Stats.1977, ¹ (renumbered sec. 893.89, Stats., effective July 1, 1980) effective on June 13, 1976, applies to an action commenced in 1979 involving damages sustained in 1978 resulting from construction of an underground pipeline in 1953. The court of appeals ruled it did apply. We reverse.

(2) Whether an underground oil pipeline is an improvement to real estate within the meaning of sec. 893.155, Stats.1977. The court of appeals ruled it is an improvement. We affirm.

(3) Petitioner raises the additional issue of whether the application of sec. 893.155, Stats.1977, to this action is constitutional. We decline to answer this issue since we find sec. 893.155, as applied by this court, does not bar petitioners' cause of action.

The present action was commenced by the filing of a summons and complaint on September 5, 1979, naming as defendants, Dravo Corporation (Dravo), E. D. Wesley Company (Wesley) and Brey, Stuewe & Braun, Inc. (Brey).

The action is one for recovery of damages sustained by the plaintiffs, and particularly by the plaintiff, U. S. Fire Insurance Company (U.S. Fire), when an underground pipeline split in 1978 resulting in an oil spill in Two Rivers, Wisconsin. The plaintiff, U.S. Fire, paid for certain losses sustained by its insured, United States Oil Company, Inc. (U.S. Oil), and also paid for certain claims presented by third persons following the oil spill.

As alleged in the complaint, the pipeline was negligently designed, constructed and installed by the defendants in 1953; at all times material, U.S. Oil was the owner of the pipeline and U.S. Fire provided insurance coverage for U.S. Oil with respect to the operation of its oil storage business at Two Rivers, Wisconsin. The pipeline ran in part through the property of third persons, for which U.S. Oil had an easement.

Brey filed its answer denying negligence on its part without raising any affirmative defenses. Wesley filed a motion to dismiss based on the statute of limitations. Dravo filed its answer raising the statute of limitations as an affirmative defense and then moved to sustain the affirmative defense.

The trial court, Honorable Leander J. Foley, Jr., found sec. 893.155, Stats.1977, was applicable to this action, was also constitutional and dismissed the action as to Dravo and Wesley on December 19, 1979.

Defendant Brey subsequently served a motion to amend its original answer to include the statute of limitations and also moved for summary judgment. Judge Foley ordered that Brey be permitted to amend its original answer to include the statute of limitations and dismissed the action as to Brey.

The plaintiffs appealed and the court of appeals, on December 26, 1980, rendered its decision published at 100 Wis.2d 59, 301 N.W.2d 271. In its decision, the court of appeals found the record did not contain the basis for the trial court permitting Brey to amend its answer and ordered a remand for a de novo consideration by the trial court of that decision. While the matter was pending before the court of appeals, the plaintiffs and Dravo settled and Dravo is, therefore, no longer a party to this appeal.

The court of appeals further found that the pipeline was an improvement to real estate as contemplated under the statute. The court then held that the statute was constitutional, and applied sec. 893.155, Stats.1977, as barring plaintiffs' action against Wesley and, therefore, affirmed the trial court dismissal as to Wesley.

This court first considered the term "an improvement to real property," as used in the predecessor statute, in Kallas Millwork Corp. v. Square D Co., 66 Wis.2d 382, 225 N.W.2d 454 (1975) when we held: "We conclude that a high-pressure water system designed for fire protection constituted, as a matter of law, 'an improvement to real property' as that phrase is used in sec. 893.155." Kallas, supra, at 383, 225 N.W.2d 454. In Kallas the court held that the question, where the facts are undisputed, is simply whether those facts fit the legislatively prescribed condition. The issue was a legal question to be resolved on the basis of the common usage of language. The court then stated:

"Webster's, Third International Dictionary (1965), includes the following definition of 'improvement':

" '(A) permanent addition to or betterment of real property that enhances its capital value and that involves the expenditure of labor or money and is designed to make the property more useful or valuable as distinguished from ordinary repairs.'

"Similar definitions are found in 1 Bouvier's, Law Dictionary (Rawles 3d rev., 1914), page 1517, and Black's, Law Dictionary (West, rev. 4th ed., 1968), page 890." Id. at 386, 225 N.W.2d 454.

In the instant action, the complaint alleges the work and services of the defendants were done in regards to a pipeline to be used by the U.S. Oil Co. in connection with the oil storage and transport business of said U.S. Oil in Two Rivers, Wisconsin. We hold as a matter of law that when the pipeline was connected to the equipment located on the U.S. Oil Company's real property, that pipeline became an improvement to the oil company's real property.

Prior to the enactment of Wisconsin's first completion statute, injuries to property were governed by a six-year limitation period which ran from the accrual of an action. ^{2 2} Under that section, the court held a cause of action accrues when there "exists a claim capable of present enforcement, a suable party against whom it may be enforced, and a party who has a present right to enforce it." Holifield v. Setco Industries, Inc., 42 Wis.2d 750, 754, 168 N.W.2d 177 (1969).

Wisconsin's original special legislation limiting the time for bringing an action against persons effecting an improvement to real property became effective in 1971, sec. 893.155, Stats. That statute presented two distinct times from which the bringing of an action was to be measured. For persons involved in the design, planning or supervision of construction, the period commenced from the time of performing or furnishing of services and construction. For the persons in control of the premises, such as owners, the time period ran from the time the cause of action accrued, not from the performance or furnishing date. ³

That forerunner of the present statute, was discussed in Rosenthal v. Kurtz, 62 Wis.2d 1, 213 N.W.2d 741, 216 N.W.2d 252 (1974). Sec. 893.14, Stats., at the time was a prefatory and explanatory section of all the various periods of limitation set forth in the subsequent statutes, including sec. 893.155. We held at 6-7, 213 N.W.2d 741:

"Sec. 893.14, Stats., provides that the period of limitations 'respectively hereinafter prescribed' shall commence 'after the cause of action has accrued.' In an action for tort, the cause of action ordinarily does not accrue, 'until some damage has occurred.' Prosser, Torts (hornbook series, 4th ed.), p. 144, sec. 30. This court has uniformly so held in respect to tort cases. Even if the negligence that caused the injury occurred substantially in the past, as in products liability cases, the period of limitations commences to run from the time of injury, and not from the time of the negligent act or omission....

"Under the situation contemplated by the statutes, secs. 893.14 and 893.155, Stats., and under the law of torts of this state, a defect of design or construction does not ripen into an accrued cause of action until the injury is inflicted or the damage incurred. Hence, under the language of secs. 893.14 and 893.155, read together as they must be, the six-year period of limitations begins neither at the time of the last performance of service nor upon the completion of construction, but on the date the cause of action accrues, and runs for six years thereafter."

The court commented in Rosenthal that the required interpretation of the statutes and application of the common law rule that in a tort the cause of action did not accrue until some damage occurred did not represent legislative intent. The court stated at 7, 213 N.W.2d 741:

"It seems clear, however, that such was not the legislative intent, despite the plain meaning of secs. 893.14 and 893.155, Stats. The legislative intent rather appears to be of even greater dubiety, particularly in a constitutional sense. It would deprive a putative plaintiff of a remedy before he has a cause of action. The legislative intent appears to be to deprive an injured party of any remedy whatsoever. When sec. 893.155, Stats., is read alone, the period of limitations commences at the time of last performance of service by the defendant and the date of completion of the improvement to the property. Under this reading of the statute, the...