Western Cas. and Sur. Co. v. Budrus, 82-1501

• Decision Date: 22 March 1983
• Docket Number: No. 82-1501,82-1501
• Citation: 112 Wis.2d 348,332 N.W.2d 837
• Parties: WESTERN CASUALTY AND SURETY COMPANY, a foreign corporation, Plaintiff-Respondent, v. Edward C. BUDRUS, a/k/a Ed Budrus, Defendant-Appellant, August Richter, Defendant.
• Court: Wisconsin Court of Appeals

Page 837

332 N.W.2d 837

112 Wis.2d 348

WESTERN CASUALTY AND SURETY COMPANY, a foreign corporation Plaintiff-Respondent, v. Edward C. BUDRUS, a/k/a Ed Budrus, Defendant-Appellant August Richter, Defendant.

No. 82-1501.

Court of Appeals of Wisconsin.

Submitted on Briefs Feb. 14, 1983.

Opinion Released March 22, 1983.

Opinion Filed March 22, 1983.

Gay, Collman & Cameron and Richard A. Collman, Thorp, for defendant-appellant.

David E. Richie and Herrick, Hart, Duchemin, Danielson & Guettinger, S.C., Eau Claire, for plaintiff-respondent.

Before FOLEY, P.J., and DEAN and CANE, JJ.

CANE, Judge.

August Richter appeals from a summary judgment dismissing his counterclaim against Edward Budrus' insurer, Western Casualty and Surety Company. The issue on appeal is whether Western, under the terms of its policy, has an obligation to defend Budrus for the sale of mistagged seed to Richter. Because we conclude that Western has an obligation to defend, we reverse.

The facts are undisputed, and the action is therefore appropriate for summary judgment. In June, 1979, Richter purchased 400 pounds of Birdsfoot Trefoil seed, a perennial seed high in protein for cows, from Budrus, who operates a feed mill and is insured by Western. Budrus packaged the seed in fifty-pound bags and labeled each bag "Birdsfoot." Four of these bags in fact contained "Rape" seed, which is an annual seed for pig feed.

In 1979, Richter planted the seed from two of the bags containing Birdsfoot seed. Satisfied with the harvest, Richter planted the remaining seed in 1981 on forty acres. As the crop grew, he discovered that he had planted mostly Rape seed, which was of no value to him. Budrus had previously terminated his liability insurance with Western on June 30, 1980.

Richter claims that as a result of Budrus' negligence, he incurred damages resulting in unnecessary expenses, crop loss, and production losses. The trial court held that the claim for loss of use of a forty-acre field constitutes property damage as that term is defined in the insurance policy. The trial court concluded, however, that the claimed damage did not occur during the period of time the insurance policy period covered and that Western therefore had no duty to defend.

The issue is whether there was an "occurrence" within the meaning of the insurance policy at a time when the policy was in force. The construction of an insurance policy is a question of law, RTE Corp. v. Maryland Casualty Co., 74 Wis.2d 614, 621, 247 N.W.2d 171, 175 (1976), that we review independently on appeal. American Mutual Liability Insurance Co. v. Fisher, 58 Wis.2d 299, 304, 206 N.W.2d 152, 155 (1973). Our objective in interpreting an insurance contract is to ascertain and carry out the intention of the parties. Home Mutual Insurance Co. v. Insurance Co. of North America, 20 Wis.2d 48, 51, 121 N.W.2d 275, 277 (1963).

Where no ambiguity exists in the terms of the policy, we will not engage in construction, but will merely apply the policy terms. See Rabinovitz v. Travelers Insurance Co., 11 Wis.2d 545, 549-50, 105 N.W.2d 807, 810 (1960). Whether ambiguity exists in a contract is a question of law. Capital Investments, Inc. v. Whitehall Packing Co., 91 Wis.2d 178, 189, 280 N.W.2d 254, 259 (1979). Words used in an insurance contract should be given their common everyday meaning, Schmidt v. Luchterhand, 62 Wis.2d 125, 133, 214 N.W.2d 393, 396 (1974), and should be interpreted reasonably to avoid an absurd result. Olguin v. Allstate Insurance Co., 71 Wis.2d 160, 165, 237 N.W.2d 694, 697 (1976). The test of coverage is what a reasonable person in the insured's position would have believed to be covered, id. at 164, 237 N.W.2d at 696, and the reasonable expectations of coverage of the insured should be honored. Handal v. American Farmers Mutual Casualty Co., 79 Wis.2d 67, 78, 255 N.W.2d 903, 908 (1977). Public policy favors finding coverage where the policy terms permit it. Herwig v. Enerson & Eggen, 98 Wis.2d 38, 40, 295 N.W.2d 201, 203 (Ct.App.1980).

Western's insurance policy provides coverage for sums that Richter shall become legally obligated to pay as damages because of bodily injury or property damage caused by an occurrence. We conclude that the term "occurrence" is unambiguous and requires no construction. The term "occurrence" is defined in the insurance policy as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured." Property damage is defined in the policy as "loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period."

Western argues that Richter's claim does not allege damages resulting from loss of use of tangible property. It contends that crop loss and production losses for a crop that was never planted is not a...