Case Title: Karen C. Martin v. American Family Mutual Insurance Company

Citation: 2002 WI 40

Docket Number: 2000AP002344

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2002-04-30T00:00:00Z

Document:
2002 WI 40 
 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
00-2344 
 
 
COMPLETE TITLE: 
 
 
Karen C. Martin, and Allen H. Martin,  
 
Plaintiffs-Appellants-Petitioners, 
City of Franklin,  
 
Involuntary-Plaintiff, 
 
v. 
American Family Mutual Insurance Company,  
a Wisconsin insurance corporation,  
 
Defendant-Respondent, 
Eric H. Johnsen, Henry Johnsen d/b/a Johnsen 
Construction, and ABC Insurance Company, the 
fictitious name for an unknown insurance 
company,  
 
Defendants. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2001 WI App 178 
Reported at:  247 Wis. 2d 386, 634 N.W.2d 127 
(Published) 
 
 
OPINION FILED: 
April 30, 2002   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
March 7, 2002   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Milwaukee   
 
JUDGE: 
Victor Manian   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the plaintiffs-appellants-petitioners there were briefs 
by William M. Cannon, Edward E. Robinson and Cannon & Dunphy, 
S.C., Brookfield, and oral argument by Edward E. Robinson. 
 
For the defendant-respondent there was a brief by Timothy 
J. Pike, Michael J. Wirth and Peterson, Johnson & Murray, S.C., 
Milwaukee, and oral argument by Michael J. Wirth. 
 
 
 
2
 
2002 WI 40 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  00-2344  
(L.C. No. 
99 CV 5408) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Karen C. Martin, and Allen H. Martin,  
 
          Plaintiffs-Appellants- 
          Petitioners, 
 
City of Franklin,  
 
          Involuntary-Plaintiff, 
 
     v. 
 
American Family Mutual Insurance Company,  
a Wisconsin insurance corporation,  
 
          Defendant-Respondent, 
 
Eric H. Johnsen, Henry Johnsen d/b/a  
Johnsen Construction, and ABC Insurance  
Company, the fictitious name for an  
unknown insurance company,  
 
          Defendants. 
 
FILED 
 
APR 30, 2002 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed. 
 
¶1 
SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE.   This is a 
review of a published decision of the court of appeals, Martin 
v. American Family Mutual Insurance Co., 2001 WI App 178, 247 
Wis. 2d 386, 634 N.W.2d 127.  The court of appeals affirmed the 
00-2344 
 
 
2
order of the circuit court for Milwaukee County, Victor Manian, 
Judge, dismissing the claims of Karen C. Martin and Allen H. 
Martin against Eric Johnsen's insurance company, American Family 
Mutual Insurance Company for injuries sustained in an automobile 
accident.   
¶2 
At the time of the accident Eric Johnsen was driving 
his father's pickup truck, which was available for Eric 
Johnsen's regular use.  Under his father's liability policy with 
American Family Mutual Insurance Company, Eric Johnsen was 
insured as a permitted user of the pickup truck.  The present 
case does not involve coverage under the father's policy but 
raises the question whether Eric Johnsen is insured under his 
own insurance policy with American Family while driving his 
father's vehicle.  More specifically, the question of law 
presented for review is whether the "regular use" exclusion in 
Eric Johnsen's insurance policy with American Family1 is invalid 
under Wis. Stat. § 631.43(1) (1999-2000).2 
                                                 
1 The "regular use" exclusion in Eric Johnsen's policy 
provides that the insurance company is not liable for bodily 
injuries "arising out of the use of any vehicle . . . furnished 
or available for regular use by [the insured] or any resident of 
[his] household." 
2 Wisconsin Stat. § 631.43(1) provides:   
(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. 
00-2344 
 
 
3
¶3 
For the reasons set forth below, we conclude that the 
two insurance policies do not promise to indemnify an insured 
against the same loss and therefore § 631.43(1) does not apply 
to the present case.  Accordingly, the decision of the court of 
appeals is affirmed.   
I 
¶4 
The material facts of the present case are undisputed 
for purposes of this review.  On August 10, 1996, Karen Martin 
was a passenger in an automobile that was struck from behind by 
a pickup truck driven by Eric Johnsen.  Karen Martin suffered 
serious and permanent injuries.  The pickup truck was owned by 
Eric Johnsen's father, Henry Johnsen, and was available for Eric 
Johnsen's 
regular 
use 
in 
connection 
with 
Eric 
Johnsen's 
employment by Johnsen Construction.  At no time relevant to this 
case did the father and son reside in the same household.   
¶5 
Henry Johnsen maintained a liability insurance policy 
on 
the 
pickup 
truck 
with 
American 
Family. 
This 
policy 
indemnified Eric Johnsen for liability incurred as a result of 
his permitted use of the pickup truck.  American Family settled 
the Martins' claim against Eric Johnsen for the full $150,000 
liability limit of Henry Johnsen's policy.   
¶6 
The Martins' damages were in excess of the $150,000 
limit of Henry Johnsen's policy, and the Martins seek additional 
recovery under Eric Johnsen's liability policy with American 
                                                                                                                                                             
All subsequent references to the Wisconsin Statutes are to the 
1999-2000 version, unless otherwise indicated. 
00-2344 
 
 
4
Family that insured a van that Eric Johnsen owned. Eric 
Johnsen's van was not involved in the accident.  But the Martins 
want to stack the two policies, that is, they want to aggregate 
the face amount of the policies.  The liability limits under 
Eric Johnsen's policy are $100,000 per person.     
¶7 
Eric 
Johnsen's 
American 
Family 
liability 
policy 
promises to "pay compensatory damages an insured person is 
legally liable for because of bodily injury . . . due to the use 
of a car . . . ."  The policy has, however, exclusions from 
coverage that limit this broad promise to pay damages for the 
use of a car.  Among the exclusions from coverage is the 
"regular use" exclusion, which provides that American Family is 
not liable for bodily injuries "arising out of the use of any 
vehicle  . . . furnished or available for regular use by [Eric 
Johnsen] or any resident of [his] household."  
¶8 
The Martins assert that the "regular use" exclusion in 
Eric Johnsen's policy with American Family is invalid under 
Wis. Stat. § 631.43(1) as an "other insurance" provision because 
both the father's and Eric Johnsen's American Family liability 
policies promise to indemnify Eric Johnsen against the same 
loss.  The Martins contend that the "regular use" exclusion is, 
therefore, an invalid provision in the present case under 
Wis. Stat. § 631.43(1). 
 
II 
¶9 
This 
appeal 
involves 
the 
interpretation 
of 
the 
insurance policy and the statute.  
00-2344 
 
 
5
¶10 The interpretation of an insurance policy ordinarily 
presents 
a 
question 
of 
law 
that 
this 
court 
determines 
independent of the circuit court and court of appeals, but 
benefiting from their analyses.3 
¶11 Statutory interpretation and the application of a 
statute to undisputed facts present questions of law that this 
court determines independent of the circuit court and court of 
appeals, but benefiting from their analyses.  
 
III 
¶12 Our analysis of this case begins, as it must, with the 
language of Wis. Stat.  § 631.43(1).  Section 631.43(1) is not 
triggered unless and until two or more insurance policies 
promise to indemnify an insured against the same loss.  In 
pertinent part the statute provides as follows: 
Sec. 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. 
 
¶13 Stacking two or more policies is logical when the 
insured has two or more policies protecting against the same 
loss and expects to receive the proceeds of each policy.  
                                                 
3 State Farm Mut. Auto. Ins. Co. v. Gillette, 2002 WI 31, 
¶24, ___ Wis. 2d ___, ___ N.W.2d ___. 
00-2344 
 
 
6
Therefore, the determinative question is whether both American 
Family liability policies promise to indemnify Eric Johnsen 
against the same loss.  To answer this question we must examine 
the insurance policies and their application to the facts 
presented.  We have repeatedly stated that the determination of 
whether policies promise to indemnify an insured against the 
same loss is made on a case-by-case basis.4   
¶14 In the present case, the father's policy with American 
Family promises to indemnify Eric Johnsen, as a permitted user 
of the pickup truck, for liability for the injury to the 
Martins.  The question is whether Eric Johnsen's American Family 
policy promises to indemnify Eric Johnsen for liability for the 
injury to the Martins when he was driving his father's pickup 
truck.   
¶15 Eric Johnsen's policy with American Family explicitly 
states that Eric Johnsen is not indemnified for liability for 
his use of a non-owned vehicle that is available for his regular 
use.  Thus Eric Johnsen and American Family did not contemplate 
American Family insuring Eric Johnsen when he was driving a non-
owned vehicle available for his regular use. 
¶16 The Martins argue that Eric Johnsen's policy promises 
to indemnify Eric Johnsen for his use of the pickup truck, 
because the policy provides that American Family "will pay 
compensatory damages an insured person is legally liable for 
                                                 
4 Wood v. Am. Family Ins., 148 Wis. 2d 639, 651, 436 
N.W.2d 594 (1989). 
00-2344 
 
 
7
because of bodily injury . . . due to the use of a car . . . ."5  
The Martins contend that Wis. Stat. § 631.43(1) does not permit 
American Family to limit this broad coverage by excluding 
coverage for bodily injuries "arising out of the use of any 
vehicle . . . furnished or available for regular use by" Eric 
Johnsen.  The Martins reason that giving the "regular use" 
exclusion effect in deciding the threshold question of whether 
two or more policies promise to indemnify an insured against the 
same loss puts the cart before the horse and is illogical and 
circular. 
¶17 We are not persuaded by the Martins' reasoning.  We 
conclude that our approach in Agnew v. American Family Mutual 
Insurance Co., 150 Wis. 2d 341, 441 N.W.2d 222 (1989), governs 
the present case.6  In Agnew, the plaintiff was injured while a 
passenger in a truck owned by Larry Sailor and driven by the 
owner's son, Scott Sailor.7  The father owned three vehicles, 
each of which was insured by a separate liability policy.8  The 
                                                 
5 The parties agree that the father's pickup truck is a car 
within the meaning of Eric Johnsen's policy. 
6 As the court of appeals explained in its decision in the 
present 
case, 
other 
cases 
interpreting 
and 
applying 
Wis. Stat. § 631.43(1) do not present the same facts as the 
present case does, and therefore those cases do not affect our 
approach in the present case.  See Martin v. Am. Family Mut. 
Ins. Co., 2001 WI App 178, ¶¶11-14, 247 Wis. 2d 386, 634 
N.W.2d 127.   
7 Agnew v. Am. Family Mut. Ins. Co., 150 Wis. 2d 341, 343, 
441 N.W.2d 222 (1989). 
8 Agnew, 150 Wis. 2d  at 343. 
00-2344 
 
 
8
coverage and exclusion clauses in the three policies in Agnew 
are substantially similar to the coverage and exclusion clauses 
in Eric Johnsen's insurance policy with American Family.  
¶18 In Agnew, each policy covered the father and the son 
(as a relative residing in the policyholder's household) for 
liability for bodily injury due to the use of not only the 
vehicle specified in the policy but all other vehicles except 
vehicles owned or regularly used by the policyholder or a 
relative residing in his household.9  The question presented was 
whether all three policies covered the same loss, so that the 
injured person could stack the three policies. 
¶19 The Agnew decision makes it clear, contrary to the 
Martins' argument, that in determining whether the multiple 
policies promise to indemnify an insured against the same loss, 
a court must examine the policy's coverage, the exclusions, and 
the purpose of the applicable exclusion.10  The purpose of the 
"drive other car provision" in each of the policies in Agnew was 
to enable the insurance company to insure the policyholder 
against liability incurred by the occasional or incidental use 
of a vehicle not specified in the policy and to exclude 
liability incurred by reason of the potential or actual habitual 
use of other vehicles owned by the policyholder.  The use of 
these other owned vehicles by the policyholder would increase 
                                                 
9 Agnew, 150 Wis. 2d  at 343-44. 
10 Agnew, 150 Wis. 2d  at 349-50. 
00-2344 
 
 
9
the insurance company's risk without a corresponding increase in 
the premium.11 
¶20 In the present case, unlike in Agnew, the policyholder 
owns only one vehicle for which he bought insurance and paid 
premiums and was driving a non-owned vehicle for which a 
different policyholder paid premiums.  This difference is not 
meaningful, because the purpose of the "regular use" exclusion 
for a non-owned vehicle in the present case is similar to the 
purpose of the "drive other car" provision in Agnew.  
¶21 The purpose of the "regular use" exclusion for a non-
owned vehicle is to insure the policyholder against liability 
incurred by the occasional or incidental use of a vehicle not 
specified in the policy and to exclude liability by reason of 
the potential or actual habitual use of a non-owned vehicle by 
the policyholder.  The evident intention of the "regular use" 
exclusion is to prevent a policyholder from having two or more 
vehicles actually or potentially used interchangeably but with 
the policyholder insuring only one of the vehicles, while the 
premium is based primarily on risks arising from the operation 
of one vehicle.   
¶22 In other words, the "regular use" exclusion is 
designed to prevent a policyholder from purchasing an insurance 
policy and paying the premium to insure a vehicle while in 
effect having available two vehicles for regular use——one that 
the 
policyholder 
owns 
and 
insures 
and 
another 
that 
the 
                                                 
11 Agnew, 150 Wis. 2d  at 350.  
00-2344 
 
 
10
policyholder does not own but that is available to him for 
regular use.  The potential or actual habitual use of a non-
owned vehicle by the policyholder in the present case, just like 
the potential or actual habitual use of another owned vehicle by 
the policyholder in Agnew, increases the insurance company's 
risk without a corresponding increase in the premium.12 
¶23 Applying our reasoning in Agnew to the present case 
leads to the conclusion that Eric Johnsen's American Family 
policy does not promise to indemnify him for bodily injuries 
arising out of driving the father's pickup truck, which was 
available for his regular use.  Only the father's policy covers 
the loss incurred by Eric Johnsen by reason of his permitted use 
of the father's pickup truck.  Because we conclude that only one 
policy promised to indemnify Eric Johnsen against the loss 
incurred while driving his father's pickup truck, we further 
conclude that Wis. Stat. § 631.43(1) is not applicable to the 
present case.  We therefore affirm the decision of the court of 
appeals.  
By the Court.—The decision of the court of appeals is 
affirmed. 
 
                                                 
12 For discussions of the purpose of the "regular use" 
exclusion, see, for example, 8 Lee R. Russ & Thomas F. Segalla, 
Couch on Insurance §§ 121.64-121.66 at 121-87 to 121-91 (3d Ed. 
1999); David B. Harrison, When Is Automobile Furnished or 
Available for Regular Use Within "Drive Other Car" Coverage of 
Automobile Liability Policy, 8 A.L.R.4th 387 at § 2 (1981); 
Lumbermens Mut. Cas. Co. v. Pulsifer, 41 F.Supp. 249, 251 (D. 
Me. 1941).