Case Title: Roger B. Mullenberg v. Kilgust Mechanical, Inc.

Citation: 2000 WI 66

Docket Number: 1999AP002118-CQ

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2000-06-23T00:00:00Z

Document:
2000 WI 66 
 
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
99-2118 
 
 
Complete Title 
of Case: 
 
Roger B. Mullenberg,  
 
Plaintiff, 
 
v. 
Kilgust Mechanical, Inc.,  
 
Defendant-Third-Party Plaintiff-Appellant, 
Frankenmuth Mutual Insurance Company,  
 
Defendant-Appellant, 
 
v. 
Great West Casualty Company,  
 
Third-Party Defendant-Appellee.  
 
 
CERTIFIED QUESTION FROM 7TH CIRCUIT 
 
 
Opinion Filed: 
June 23, 2000 
Submitted on Briefs: 
      
Oral Argument: 
February 22, 2000 
 
 
Source of APPEAL 
 
COURT: 
 
 
COUNTY: 
 
 
JUDGE: 
 
 
 
JUSTICES: 
 
Concurred: 
BRADLEY, J. concurs (opinion filed). 
 
 
ABRAHAMSON, C.J., joins concurrence. 
 
Dissented: 
      
 
Not Participating:       
 
 
ATTORNEYS: 
For the defendant-third party plaintiff-appellant 
and the defendant-appellant there were briefs by Susan R. 
Tyndall, Ned J. Czajkowski and Hinshaw & Culbertson, Milwaukee, 
and oral argument by Susan R. Tyndall. 
 
 
For the third party defendant-appellee there was 
a brief by Peter F. Mullaney and Peterson, Johnson & Murray, 
S.C., and oral argument by Peter F. Mullaney. 
 
 
2000 WI 66 
 
NOTICE 
This opinion is subject to further editing and 
modification.  The final version will appear 
in the bound volume of the official reports. 
 
 
No. 99-2118-CQ 
 
STATE OF WISCONSIN                    :  
  IN SUPREME COURT 
 
 
Roger B. Mullenberg, 
 
 
Plaintiff, 
 
 
v. 
 
Kilgust Mechanical, Inc., 
 
Defendant-Third-Party Plaintiff-
Appellant, 
 
and 
 
Frankenmuth Mutual Insurance Company, 
 
 
Defendant-Appellant, 
 
v. 
 
Great West Casualty Company, 
 
 
Third-Party Defendant-Appellee. 
 
 
CERTIFICATION of a question of law from the United States 
Court of Appeals for the Seventh Circuit.  Certified question 
answered and cause remanded. 
 
¶1 
WILLIAM A. BABLITCH, J.   This is a certification of a 
question of law from the United States Court of Appeals for the 
FILED 
 
JUN 23, 2000 
 
Cornelia G. Clark 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
No. 
99-2118-CQ 
 
 
2 
Seventh Circuit, pursuant to Wis. Stat. § 821.01 (1995-96).1  The 
question certified for determination is: 
 
Whether Wis. Stat. § 194.41 because of its use of the 
term "negligent operation" requires insurers to cover 
the loading activities of third-parties and, if not, 
whether Wis. Stat. § 194.41 incorporates the Omnibus 
Statute, Wis. Stat. § 632.32, so that an insurer who 
issues and delivers a policy outside of Wisconsin must 
comply with the requirements of the Omnibus Statute. 
¶2 
Third-party defendant-appellee Great West Casualty 
Company (Great West) issued a motor carrier insurance policy 
that excluded from coverage "[a]nyone other than your employees, 
partners, a lessee or borrower or any of their employees, while 
moving property to or from a covered 'auto.'"  Great West argues 
that Wis. Stat. § 194.41, the financial responsibility law for 
motor carriers, does not require a motor carrier insurance 
policy to cover the loading activities of third parties.   
¶3 
We disagree.  The exclusion in Great West's policy is 
contrary to express legislative intent set forth in Wis. Stat. 
ch. 194.  We conclude that the word "operation" in Wis. Stat. 
§ 194.41(1) includes loading and unloading and an individual 
permissively unloading the vehicle is covered by the motor 
carrier's policy.  As a result, we conclude that the exclusion 
in Great West's policy is invalid. 
 
 
I 
                     
1 All subsequent references to the Wisconsin statutes are to 
the 1995-96 version, unless noted otherwise.  
No. 
99-2118-CQ 
 
 
3 
¶4 
The 
facts 
are 
undisputed. 
 
Roger 
Mullenberg 
(Mullenberg) owned and operated a truck that he leased pursuant 
to an agreement with E.W. Wylie, a common carrier.  E.W. Wylie 
purchased 
liability 
insurance 
covering 
Mullenberg and his 
vehicle from Great West.  Great West issued this policy in 
Nebraska and delivered it to E.W. Wylie in North Dakota.   
¶5 
Great West certified the policy as proof of financial 
responsibility in numerous states, including Wisconsin.  This 
endorsement provided in part that the insurance "will comply 
with the provisions of the law or regulation to the extent of 
the coverage and limits of insurance required by that law or 
regulation." 
¶6 
In March 1996 Mullenberg stopped at Kilgust Mechanical 
to deliver industrial-sized pipe.  While a Kilgust Mechanical 
employee was unloading the truck, pipes rolled off the trailer, 
striking and injuring Mullenberg.   
¶7 
Subsequently, Mullenberg brought a claim for damages 
in federal district court against Kilgust and its insurer, 
Frankenmuth Mutual Insurance Company (Frankenmuth).  Frankenmuth 
provided a business auto and commercial general liability 
insurance to Kilgust.  Kilgust impleaded Great West, asserting 
that Great West provides primary coverage to the Kilgust 
employee because at the time of the accident he was operating 
the vehicle insured by Great West.  
¶8 
Great West's policy excluded from its definition of 
"Who Is An Insured"  "[a]nyone other than your employees, 
partners, a lessee or borrower or any of their employees, while 
No. 
99-2118-CQ 
 
 
4 
moving property to or from a covered 'auto.'"  The federal 
district court concluded that the primary issue was whether 
Wisconsin law and Great West's motor carrier laws endorsement 
operate to void this exclusion. 
¶9 
The district court first concluded that Wis. Stat. 
§ 194.41 did not require Great West to provide coverage for 
unloading.  Second, the district court concluded that, if it 
applies, Wis. Stat. § 632.32(3),2 the omnibus statute, would void 
the exclusion in Great West's policy.  However, the district 
court concluded that the omnibus statute did not apply in this 
case because the Great West policy was not issued or delivered 
in Wisconsin, as required by Wis. Stat. § 632.32(1), and 
§ 194.41 does not implicitly incorporate § 632.32.  On appeal, 
the Seventh Circuit certified the issue to this court.  
II 
¶10 The issue is whether Wis. Stat. § 194.413 and the motor 
carrier laws auto liability insurance endorsement in Great 
                     
2 Wisconsin Stat. § 632.32(3) provides in part:   
[E]very policy subject to this section issued to an 
owner shall provide that: (a) Coverage provided to the 
named insured applies in the same manner and under the 
same provisions to any person using the motor vehicle 
described in the policy when the use is for the 
purposes and in the manner prescribed in the policy.  
 
3 Wisconsin Stat. § 194.41(1) provides in part that approved 
insurance coverage: 
 
shall be directly liable for and shall pay all damages 
for injuries to or for the death of persons or for 
injuries to or destruction of property that may be 
recovered against the owner or operator of any such 
No. 
99-2118-CQ 
 
 
5 
West's policy combine to invalidate the exclusion.  We conclude 
they do.4   
¶11 It is undisputed that the endorsement provision in 
Great West's policy incorporates Wis. Stat. § 194.41.  Section 
194.41 requires a motor carrier to be covered by an insurance 
policy that will pay for damages recoverable "against the owner 
or operator" because of "negligent operation."  Kilgust and 
Frankenmuth contend that by unloading the truck, Kilgust's 
employee was engaged in "operation" of the truck, and that 
§ 194.41 therefore mandates coverage.   
¶12 Wisconsin Stat. ch. 194 does not define "operation" or 
"operator."  These words must be read in the context in which 
they are used in order to promote the legislature's objective in 
enacting the statute.  Lukaszewicz v. Concrete Research, Inc., 
43 Wis. 2d 335, 342, 168 N.W.2d 581 (1969) (interpreting the 
word "operate" in the omnibus statute).  As our cases have 
noted, "[o]perate has varying meanings according to context 
which primarily determines its meaning."  Id.  In construing ch. 
194 we must follow the legislative intent set forth in Wis. 
Stat. § 194.02.  This section requires that ch. 194 be given 
                                                                  
motor vehicles by reason of the negligent operation 
thereof in such amount as the department may require 
(emphasis supplied).  
 
4 Because we resolve the question certified in this case on 
the basis of Wis. Stat. § 194.41(1), we need not consider 
whether § 194.41 incorporates the omnibus statute, Wis. Stat. 
§ 632.32. 
No. 
99-2118-CQ 
 
 
6 
"the most liberal construction to achieve the aim of a safe, 
competitive transportation industry."  Wis. Stat. § 194.02.5 
¶13 The meaning of the word "operation" was considered by 
this court in Kroske v. Anaconda American Brass Co., 70 Wis. 2d 
632, 637, 639-40, 235 N.W.2d 283 (1975).  We concluded in Kroske 
that the phrase "use or operation" in Wis. Stat. § 194.41(1) 
(1973) did not encompass loading and unloading.  In Kroske we 
first noted that "[w]here a statute concerning motor vehicles 
has an established purpose that requires broad and flexible 
interpretation, courts have included 'loading and unloading' as 
an aspect of vehicle operation."  Id. at 639.  However, at that 
time, Wis. Stat. § 194.02 (1973) set forth the legislature's 
intent as "to 'regulate the transportation of persons and 
property by motor vehicles upon or over the public highways of 
this state . . . so as to protect the safety and welfare of the 
traveling and shipping public in their use of the highways.'"  
Id. at 639 (quoting Wis. Stat. § 194.02 (1973)).  Based upon 
this language, we determined that loading and unloading was not 
covered by the statute because "the concern of the law, and thus 
                     
5 Wis. Stat. § 194.02 Legislative intent.   
It is the intent of the legislature to remove the 
economic 
regulations 
which 
limit 
motor 
carrier 
operations in the state.  The legislature intends to 
let the market promote competitive and efficient 
transportation services, while maintaining the safety 
regulations necessary to protect the welfare of the 
traveling and shipping public.  It is the intent of 
the legislature that this chapter be interpreted in a 
manner which gives the most liberal construction to 
achieve the aim of a safe, competitive transportation 
industry.  
No. 
99-2118-CQ 
 
 
7 
the scope of its required insurance, is with highway use by 
vehicles."  Id. at 639. 
¶14 Wisconsin Stat. ch. 194 was subsequently amended by 
ch. 374, Laws of 1981.  The phrase "use of the highways" was 
deleted from Wis. Stat. § 194.02.  As a result, and as the 
Seventh Circuit pointed out in its certification, the basis for 
the decision in Kroske no longer exists.  Therefore, Kroske is 
not controlling precedent on this issue. 
¶15 In Wiedenhaupt v. Van Der Loop, 5 Wis. 2d 311, 317, 92 
N.W.2d 815 (1958) we examined the phrase "negligent operation" 
in Wis. Stat. § 260.11 (1957) and held that "[t]he word 
'operation' is not to be restricted to only a moving vehicle".  
In Lukaszewicz, we noted that if the legislature intended the 
statute to cover only riding or driving on the highway, it would 
not have used the broader word "operation."  Lukaszewicz, 43 
Wis. 2d at 341-42.  The reasoning in these cases is applicable 
to Wis. Stat. § 194.41.  A motor carrier by definition 
undertakes to transport passengers and property.  Wis. Stat. 
§ 194.01(1).6  Inherent in this task is that the carrier will be 
loaded and unloaded.  Loading and unloading involves repeated, 
frequent contact with the motor carrier.  Within this framework 
                     
6 Wisconsin Stat. § 941.01 (1) sets forth in part:   
"Common motor carrier" means any person who holds 
himself or herself out to the public as willing to 
undertake for hire to transport passengers by motor 
vehicle between fixed end points or over a regular 
route upon the public highways or property over 
regular or irregular routes upon the public highways.  
No. 
99-2118-CQ 
 
 
8 
and considering the subject matter of Wis. Stat. ch. 194, as 
well as the legislature directive to construe ch. 194 liberally 
to protect the shipping public as well as the traveling public, 
we conclude that "negligent operation" encompasses loading and 
unloading.   
¶16 We next consider whether the "operator" in Wis. Stat. 
§ 194.41(1) includes a third party who permissively operates a 
motor carrier, or if the insurer can validly exclude such third 
party operators.  "Parties are at liberty to enter insurance 
contracts which specify the coverage afforded by the contract as 
long as the contract terms do not contravene state law or public 
policy."  Rural Mut. Ins. Co. v. Peterson, 134 Wis. 2d 165, 170, 
395 N.W.2d 776 (1986).   
¶17 We have previously held that a broad interpretation is 
to be given the word "operator" as it is used in Wis. Stat. 
§ 194.41(1) in order to keep the statute in harmony with the 
public purpose set forth in Wis. Stat. § 194.02.  Continental 
Cas. Co. v. Transport Indem. Co., 16 Wis. 2d 189, 194, 114 
N.W.2d 137 (1962) ("operator" includes driver as well as common 
carrier).  The legislature has directed that Wis. Stat. ch. 194 
is to be liberally interpreted to achieve a safe transportation 
industry and to "maintain the safety regulations necessary to 
protect the welfare of the traveling and shipping public."  Wis. 
Stat. § 194.02.  Where the operation at issue is loading and 
unloading, we conclude that "operator" includes a third party 
permissively unloading the vehicle.  This conclusion is in 
harmony 
with 
the 
omnibus 
provisions 
of 
Wis. 
Stat. 
No. 
99-2118-CQ 
 
 
9 
§ 632.32(3)(a).  As a result, it is in keeping with the 
legislature's directive to liberally interpret Wis. Stat. ch. 
194 to promote a "competitive transportation industry."  Wis. 
Stat. § 194.02. 
¶18 In sum, we hold that Wis. Stat. § 194.41(1) and the 
motor carrier laws auto liability insurance endorsement in Great 
West's policy requires that coverage extend to Kilgust and its 
employee who was unloading the truck.  The exclusion is, 
therefore, void. 
By the Court.—Question answered, and cause remanded to the 
United States Court of Appeals for the Seventh Circuit for 
further proceedings consistent with this opinion. 
 
 
 
 
99-2118-CQ.awb 
 
1 
¶19 ANN WALSH BRADLEY, J. (Concurring).   Wisconsin Stat. 
§ 194.02 declares the legislative intent that ch. 194 should be 
liberally interpreted to achieve the twin goals of a safe and 
competitive transportation industry.  Yet, in this case of 
statutory interpretation, the majority fails to articulate how 
its construction of "negligent operation" under Wis. Stat. 
§ 194.41 promotes the goal of a competitive transportation 
industry.  By focusing exclusively on the goal of safety while 
ignoring the goal of a competitive industry, the majority fails 
to address the economic concerns expressed by the Seventh 
Circuit Court of Appeals in its certified question and by the 
district court in its memorandum decision. 
¶20 In addition to its failure to address an integral 
legislative purpose, the majority also weakens its analysis by 
citing to Continental Casualty Co. v. Transport Indemnity Co., 
16 Wis. 2d 189, 114 N.W.2d 137 (1962).  Majority Op. at ¶ 17.  
The Continental court construed the term "operator" in light of 
the expression of legislative intent under the former Wis. Stat. 
§ 194.02, the same statute addressed in Kroske v. Anaconda 
American Brass Co., 70 Wis. 2d 632, 235 N.W.2d 283 (1975).  
Here, the majority dismisses Kroske yet maintains its reliance 
on Continental, using the former statute both as a sword and a 
shield.  This reference to Continental undercuts the majority's 
dismissal of Kroske's precedential value.  
¶21 Because the majority neglects to address an essential 
concern expressed by the Seventh Circuit Court of Appeals in its 
99-2118-CQ.awb 
 
2 
certified question and also relies upon precedent that is of 
limited usefulness to the present analysis, I concur. 
¶22 I am authorized to state that Chief Justice SHIRLEY S. 
ABRAHAMSON joins this concurring opinion. 
 
99-2118-CQ.awb 
 
1