Title: Richard Seider v. Connie O'Connell
Citation: N/A
Docket Number: 1998AP001223
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: June 30, 2000

2000 WI 76 
 
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
98-1223 
 
 
Complete Title 
of Case: 
 
Richard Seider and Jean Seider,  
 
Plaintiffs-Appellants, 
 
v. 
Connie O'Connell, Commissioner of Insurance,  
 
Defendant-Respondent-Petitioner.  
 
 
ON REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at:  222 Wis. 2d 80, 585 N.W.2d 885 
 
 
(Ct. App. 1998-Published) 
 
 
Opinion Filed: 
June 30, 2000 
Submitted on Briefs: 
 
Oral Argument: 
September 8, 1999 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Dane 
 
JUDGE: 
P. Charles Jones 
 
 
JUSTICES: 
 
Concurred: 
 
 
Dissented: 
WILCOX, J., dissents (opinion filed). 
 
 
CROOKS, J., joins dissent. 
 
Not Participating:  
 
 
ATTORNEYS: 
For the defendant-respondent-petitioner the cause 
was argued by Paul L. Barnett, assistant attorney general, with 
whom on the briefs was James E. Doyle, attorney general. 
 
 
For the plaintiffs-appellants there were briefs 
by Andrew J. King and Lutz, Burnett, McDermott, Jahn & King, LLP, 
Chilton and oral argument by Andrew J. King. 
 
 
 
 
 
 
Amicus curiae was filed by Noreen J. Parrett, 
Kristen E. Crisp and LaFollette Sinykin, LLP, Madison for the 
Wisconsin Insurance Alliance and Wisconsin Association of Mutual 
Insurance Companies. 
 
2000 WI 76 
 
NOTICE 
This opinion is subject to further editing 
and modification.  The final version will 
appear in the bound volume of the official 
reports. 
 
 
No. 98-1223  
 
STATE OF WISCONSIN               :  
IN SUPREME COURT 
 
 
Richard Seider and Jean Seider,  
 
          Plaintiffs-Appellants, 
 
     v. 
 
Connie O'Connell, Commissioner of  
Insurance,  
 
          Defendant-Respondent-Petitioner. 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed. 
 
¶1 
DAVID T. PROSSER, J.  The Office of the Commissioner 
of Insurance (OCI) seeks review of a published decision of the 
court of appeals, Seider v. Musser, 222 Wis. 2d 80, 585 N.W.2d 
885 (Ct. App. 1998), reversing a decision of the Circuit Court 
for Dane County, P. Charles Jones, Judge.  The circuit court 
dismissed the declaratory judgment action of the plaintiffs, 
Richard and Jean Seider (Seiders), who sought a declaration 
invalidating Wis. Admin. Code § INS 4.01(2)(e). 
¶2 
The issue presented is whether Wis. Admin. Code § INS 
4.01(2)(e) (June, 1999), promulgated by the OCI to clarify 
FILED 
 
JUN 30, 2000 
 
Cornelia G. Clark 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
No. 98-1223   
 
 
2 
Wisconsin's "valued policy law," Wis. Stat. § 632.05(2),1 is 
invalid because it exceeds the rule-making authority of the OCI. 
 The OCI also asks the court to address the threshold standard 
for analyzing statutory ambiguity. 
¶3 
In 1997, the Seiders sued their insurer, Wilson Mutual 
Insurance Company (Wilson Mutual), seeking recovery of the 
balance of their policy limits under the valued policy law.  
After a fire destroyed a building the Seiders used as both a 
restaurant and residence, Wilson Mutual paid the Seiders the 
actual cash value of the property.  The valued policy law 
requires insurers to set the amount of loss at the full policy 
limits when real property "which is owned and occupied by the 
insured as a dwelling" is wholly destroyed.  Wis. Stat. 
§ 632.05(2).  Wilson Mutual did not pay the full limits of the 
policy.  Instead, it relied on Wis. Admin. Code § INS 4.01(2)(e) 
to 
reject 
the 
Seiders' 
claim 
for 
full 
payment. 
 
The 
administrative rule excludes from the valued policy law "real 
property any part of which is used for commercial (non-dwelling) 
purposes other than on an incidental basis."  Wis. Admin. Code 
§ INS 4.01(2)(e).   
¶4 
The Seiders thereafter pursued a declaratory judgment 
action 
in 
Dane 
County 
Circuit 
Court 
to 
invalidate 
the 
administrative rule.  The court dismissed the action.  It found 
the term "dwelling" subject to different applications and in 
                     
1 All references to the Wisconsin Statutes are to the 1995-
96 volumes unless indicated otherwise. 
No. 98-1223   
 
 
3 
need of clarification.  The court reasoned that because the 
legislature 
charged 
the 
OCI 
with 
the 
administration 
and 
enforcement of the valued policy law, the agency had authority 
to interpret Wis. Stat. § 632.05(2) by promulgating Wis. Admin. 
Code § INS 4.01(2)(e). 
¶5 
The court of appeals reversed.  Like the circuit 
court, the court of appeals found Wis. Stat. § 632.05(2) 
unambiguous.  The court relied on the plain language of the 
valued policy law and rejected the circuit court's conclusion 
that a term within an unambiguous statute might require further 
clarification.  
¶6 
We hold that Wis. Admin. Code § INS 4.01(2)(e) exceeds 
the statutory authority of the OCI because the administrative 
rule contradicts Wis. Stat. § 632.05(2).  Accordingly, we affirm 
the decision of the court of appeals. 
FACTS 
¶7 
For purposes of this review, the facts are not in 
dispute.  In April 1995 the Seiders acquired a building and real 
estate in Kiel, Wisconsin.  They used the property to operate a 
restaurant, 
the 
Steinthal 
Valley 
Lodge. 
 
The 
Seiders 
simultaneously occupied part of the building as their residence. 
 They lived at the property continuously and exclusively.   
¶8 
On November 28, 1995, a fire wholly destroyed the 
building.  The fire did not result from any criminal fault on 
the part of the Seiders or their assigns.  Apparently, a crack 
in the flexible tubing of the building's gas supply caused the 
blaze.  At the time of the loss, the Seiders carried a 
No. 98-1223   
 
 
4 
Commercial Package Policy issued by Wilson Mutual.  The monthly 
payment amount for the policy was $324.35.  The declaration page 
of the policy identified the insureds as "Richard R. Seider & 
Jean M. Seider, d/b/a Steinthal Lodge."  The policy described 
the insured premises as a "restaurant located at 22124 Town Line 
Road, Town of Kiel, Manitowoc County."  The policy did not 
characterize the building as a dwelling, home, or residence.   
¶9 
The Wilson Mutual policy provided a $150,000 limit of 
liability, subject to all terms of the policy.  The policy also 
indicated that valuation at the time of loss would be based on 
the actual cash value of the property.  After the fire, the 
Seiders filed a Proof of Loss for the full $150,000 limit, 
citing Wis. Stat. § 632.05 and describing the building as a 
"residence and restaurant."  Wilson Mutual rejected that claim 
and instead paid the Seiders $129,053.39, a sum equivalent to 
the 
actual 
cash 
value 
of 
the 
destroyed 
property 
after 
application of the Seiders' deductible.  
PROCEDURAL HISTORY 
¶10 Initially, the Seiders filed suit against Wilson 
Mutual in Manitowoc County, seeking recovery of the policy 
limits under the valued policy law.  The Seiders relied on the 
valued policy law because they owned and occupied the real 
property as their dwelling at the time it was wholly destroyed, 
and the destruction occurred without any criminal fault.  Wilson 
Mutual invoked Wis. Admin. Code § INS 4.01(2)(e), asserting that 
the administrative rule made the statute inapplicable to the 
loss because the Seiders used the property for commercial 
No. 98-1223   
 
 
5 
purposes on a regular basis.  The trial court stayed the 
proceedings pending resolution of the Seiders' anticipated 
challenge to the rule.  
¶11 In April 1997, the Seiders filed a declaratory 
judgment action in Dane County Circuit Court against the 
Commissioner of Insurance.  The Seiders relied on Wis. Stat. 
§ 227.40(4)(a) to seek the invalidation of Wis. Admin. Code 
§ INS 4.01(2)(e).2  They asserted that the OCI had exceeded its 
statutory authority by promulgating a rule that denies some 
owner-occupants the legal rights and benefits created under Wis. 
Stat. § 632.05(2).  
¶12 The circuit court dismissed the Seiders' complaint and 
upheld the validity of the rule.  The court reasoned that 
because the OCI was charged with administering and enforcing the 
valued policy law to achieve legislative intent, the OCI had 
authority to interpret Wis. Stat. § 632.05(2).  Although the 
court found "that the statute as a whole is clear and 
unambiguous and the term dwelling should be given its plain 
meaning," it observed that: 
 
[E]ven 
when 
given 
its 
plain 
meaning, 
the 
term 
"dwelling" is still subject to different applications 
and needs further clarification.  That is why the OCI 
promulgated Ins 4.01(2).  Just because a term needs 
clarification does not render the entire statute 
                     
2 Section 227.40(4)(a) provides: "In any proceeding pursuant 
to this section for judicial review of a rule, the court shall 
declare the rule 
invalid 
if it 
finds that 
it violates 
constitutional provisions or exceeds the statutory authority of 
the agency or was promulgated without compliance with statutory 
rule-making procedures." 
No. 98-1223   
 
 
6 
ambiguous.  Thus, it is not inconsistent to find that 
the valued policy law is clear and unambiguous, and to 
also defer to the OCI's definitions for the term 
"dwelling." 
Even though the court acknowledged that the administrative rule 
limits the meaning of "dwelling," it determined that the 
restriction does not conflict with the statute.  The court 
explored the legislative history of the valued policy law to 
reach this conclusion, cautioning that "the legislative history 
was not used as an extrinsic source to assist in interpreting 
what the court considered to be an ambiguous statute."  
¶13 The valued policy law applied to all real property 
before its repeal in 1975.  In 1979, the legislature reenacted 
the law in a modified form so that it covered only "real 
property which is owned and occupied by the insured as a 
dwelling."  Wis. Stat. § 632.05(2).  The legislature, the 
circuit court concluded, intended to apply the valued policy law 
to properties used as dwellings, not to properties that combined 
commercial and residential purposes.  Thus, the administrative 
rule's restrictive features matched the legislature's intent "to 
limit the scope of the statute to dwellings."  
¶14 The circuit court also remarked that the terms of the 
insurance policy spoke to the commercial nature of the property. 
 The 
policy 
referred 
to 
the 
building 
repeatedly 
as 
a 
"restaurant" and failed to describe the premises as a dwelling. 
 The court concluded that if the Seiders had planned to use the 
restaurant as their dwelling, they should have explained that 
use when the policy was issued.  
No. 98-1223   
 
 
7 
¶15 The court of appeals reversed.  Seider, 222 Wis. 2d at 
80.  The court, like the circuit court, found the valued policy 
law unambiguous.  Noting that the ambiguity of a statute hinges 
on the factual context, the court reasoned that the facts of 
this case presented no ambiguities because the Seiders occupied 
part of the insured building as a dwelling, and they did not own 
or occupy any other structure as a dwelling during the time the 
policy was in effect.  Id. at 86.  Judge Vergeront's opinion 
relied on the plain language of Wis. Stat. § 632.05(2) and held 
that the dictionary meaning of "dwelling" as a "building or 
construction used for residence" was not ambiguous when applied 
to the facts of the Seiders' claim.  Id. at 87 (citing WEBSTER'S 
THIRD NEW INT'L DICTIONARY, 706 (Unabr. 1993)). 
¶16 Unlike the circuit court, the court of appeals 
declined to review the valued policy law's legislative history. 
 Statutory interpretation, the court said, begins by determining 
whether the language of the statute conveys legislative intent. 
 If the language is not ambiguous, courts do not look beyond the 
statute for other meanings.  Id. at 88. 
¶17 After finding Wis. Stat. § 632.05(2) unambiguous in 
the context of this case, the court of appeals held that Wis. 
Admin. Code § INS 4.01(2)(e) conflicts with the statute: 
 
[T]he plain language of the statute does not suggest 
that use of a dwelling for additional purposes affects 
the statute's application.  Therefore, a rule that 
makes the statute inapplicable to a building that an 
insured owns and occupies as a dwelling on the ground 
that it is also used for commercial purposes does 
No. 98-1223   
 
 
8 
conflict 
with 
the 
statute 
and 
does 
exceed 
the 
authority of OCI. 
Id.  The court of appeals concluded that the Seiders were 
entitled to a declaratory judgment that Wis. Admin. Code § INS 
4.01(2)(e) is invalid. 
STATUTES AND ADMINISTRATIVE RULES 
 
¶18 This case requires the court to resolve an alleged 
conflict between a statute and its interpretive administrative 
rule.  The case presents recurrent questions about how courts 
approach statutory interpretation as well as the deference they 
show to administrative agencies. 
 
¶19 The statute at issue is the valued policy law, Wis. 
Stat. § 632.05(2).  Section 632.05 is the first section in the 
subchapter 
entitled 
"FIRE 
AND 
OTHER 
PROPERTY 
INSURANCE."  
Subsection (2) reads: 
 
(2) 
TOTAL LOSS.  Whenever any policy insures real 
property which is owned and occupied by the 
insured as a dwelling and the property is wholly 
destroyed, without criminal fault on the part of 
the insured or the insured's assigns, the amount 
of the loss shall be taken conclusively to be 
the policy limits of the policy insuring the 
property. 
¶20 Following the statute's restoration in 1979, the OCI 
promulgated an administrative rule interpreting the statute.  
Wis. Admin. Code § INS 4.01 reads in part: 
 
Ins 4.01  Interpretation and implementation of s. 
632.05(2), Stats.  (1)  SCOPE.  Section 632.05, 
Stats., and this section apply to policies issued or 
renewed on or after November 29, 1979, which insure 
real property owned and occupied by the insured as a 
dwelling. 
 
No. 98-1223   
 
 
9 
. . . 
 
(2) INTERPRETATIONS. . . .  
 
(e)  Combined commercial and residential properties.  
A policy insuring real property any part of which is 
used for commercial (non-dwelling) purposes other than 
on an incidental basis is not subject to s. 632.05(2), 
Stats. 
¶21 The Commissioner of Insurance is directed by statute 
to administer and enforce the insurance laws of Wisconsin.  Wis. 
Stat. § 601.41(1).  "The commissioner shall have rule-making 
authority 
under 
s. 
227.11(2)." 
 
Wis. 
Stat. 
§ 601.41(3).  
Wisconsin Stat. § 227.11(2)(a) provides that "[e]ach agency may 
promulgate rules interpreting the provisions of any statute 
enforced or administered by it, if the agency considers it 
necessary to effectuate the purpose of the statute."  However, 
"[n]o agency may promulgate a rule which conflicts with state 
law."  Wis. Stat. § 227.10(2).  The very statute that confers 
rule-making authority concludes with the admonition that "a rule 
is 
not 
valid 
if 
it 
exceeds 
the 
bounds 
of 
correct 
interpretation."  Wis. Stat. § 227.11(2)(a). 
¶22 The legislature long has recognized the potential for 
conflict between statutes and administrative rules, and it has 
authorized declaratory judgments as a means to test the validity 
of rules.  As far back as the early 1950s, the statutes directed 
courts to scrutinize interpretive rules to determine "the limits 
of correct interpretation."  Wis. Stat. § 227.05(2) (1953-54). 
No. 98-1223   
 
 
10
¶23 Chapter 227 was revised in 1955,3 leading to two 
current statutes.  The present authority to challenge rules is 
located in Wis. Stat. § 227.40.  Subsection (4)(a) of this 
section reads:  "In any proceeding pursuant to this section for 
judicial review of a rule, the court shall declare the rule 
invalid if it finds that it violates constitutional provisions 
or exceeds the statutory authority of the agency or was 
promulgated 
without 
compliance 
with 
statutory 
rule-making 
procedures."  This statute posits three grounds for attacking 
the validity of a rule.   
¶24 A second statute, Wis. Stat. § 227.11(2), picks up the 
"limits of correct interpretation" language from the early 1950s 
law, except that the phrase now reads "bounds of correct 
interpretation."  Reading these statutes together, a party 
challenging the validity of an administrative rule on the 
grounds that the rule "exceeds the statutory authority of the 
agency" may use Wis. Stat. § 227.11(2) as well as Wis. Stat. 
§ 227.10(2) to articulate the basis for the challenge.   
STANDARD OF REVIEW 
¶25 This case requires a finely tuned understanding of the 
standard of review.  In DeBeck v. DNR, 172 Wis. 2d 382, 386, 493 
N.W.2d 234 (Ct. App. 1992), the court of appeals concluded that 
courts should apply a de novo standard of review in "exceeds 
statutory authority" cases under Wis. Stat. § 227.40(4)(a).  We 
agree.   
                     
3 Chapter 221, Laws of 1955.  
No. 98-1223   
 
 
11
¶26 Resolving an alleged conflict between a statute and an 
interpretive rule requires statutory interpretation.  Wisconsin 
Hosp. Assn. v. Natural Resources Bd., 156 Wis. 2d 688, 705, 457 
N.W.2d 879 (Ct. App. 1990).  Statutory interpretation is a 
question of law.  State v. Bodoh, 226 Wis. 2d 718, 724, 595 
N.W.2d 330 (1999); Reyes v. Greatway Ins. Co., 227 Wis. 2d 357, 
364-65, 597 N.W.2d 687 (1999).  Here, the agency promulgated an 
administrative rule to interpret a statute.  The rule was a 
matter of first impression for the agency when it was created in 
1981, and only now is it challenged as invalid.  Independent 
review is the appropriate standard in these circumstances 
because it preserves the ultimate authority of the judiciary to 
determine questions of law, seeking to discern and fulfill the 
intent of the legislature.  Doe v. American Nat'l Red Cross, 176 
Wis. 2d 610, 616, 500 N.W.2d 264 (1993).  Our first duty is to 
the legislature, not the agency.  "A rule out of harmony with 
the statute is a mere nullity."  Plain v. Harder, 268 Wis. 507, 
511, 68 N.W.2d 47 (1955) (citing Manhattan Gen. Equip. Co. v. 
Commissioner, 297 U.S. 129, 134 (1936)).  Even if we accorded 
the agency that promulgated a rule great weight deference, we 
would not uphold a rule that directly contravenes the words of a 
statute.  CBS, Inc. v. LIRC, 219 Wis. 2d 564, 573, 579 N.W.2d 
668 (1998) (quoting Lisney v. LIRC, 171 Wis. 2d 499, 506, 493 
N.W.2d 14 (1992)). 
¶27 When this court decides questions of law, we benefit 
from the analyses of both the circuit court and the court of 
appeals.  Meyer v. School Dist. of Colby, 226 Wis. 2d 704, 708, 
No. 98-1223   
 
 
12
595 N.W.2d 339 (1999).  When we decide questions of law about an 
administrative rule, we benefit from the experience and analysis 
of the administrative agency that has a duty to execute the law 
enacted by the legislature.  Nottelson v. ILHR Dep't, 94 Wis. 2d 
106, 115-17, 287 N.W.2d 763 (1980). 
STATUTORY AMBIGUITY 
¶28 An 
administrative 
rule 
that 
conflicts 
with 
an 
unambiguous statute exceeds the authority of the agency that 
promulgated it.  Basic Prods. Corp. v. Department of Taxation, 
19 Wis. 2d 183, 186, 120 N.W.2d 161 (1963); Wis. Stat. 
§ 227.10(2).  We therefore begin our review by considering 
whether Wis. Stat. § 632.05(2) is ambiguous. 
¶29 The valued policy law requires insurers to pay the 
policy limits, not the actual amount of loss, to an insured in 
certain circumstances: 
 
Whenever any policy insures real property which is 
owned and occupied by the insured as a dwelling and 
the property is wholly destroyed, without criminal 
fault on the part of the insured or the insured's 
assigns, the amount of the loss shall be taken 
conclusively to be the policy limits of the policy 
insuring the property. 
Wis. Stat. § 632.05(2).  The OCI maintains that the phrase 
"which is owned and occupied by the insured as a dwelling" is 
ambiguous because it does not clearly direct a result in the 
case of a combined-use property.  This ambiguity, the OCI 
contends, requires the agency to promulgate a rule that 
harmonizes the ambiguous words of the statute with the intent of 
the legislature by refining how "dwelling" is defined. 
No. 98-1223   
 
 
13
¶30 A statute is ambiguous if reasonable minds can 
understand it in more than one way.  Drangstviet v. Auto-Owners 
Ins. Co., 195 Wis. 2d  592, 598, 536 N.W.2d 189 (Ct. App. 1995) 
(citing In re P.A.K., 119 Wis. 2d 871, 878, 350 N.W.2d 677 
(1984)).  Occasionally, of course, "clarity and ambiguity are in 
the eyes of the beholder."  Juneau County v. Courthouse 
Employees, 221 Wis. 2d 630, 642 n.8, 585 N.W.2d 587 (1998).  We 
will not find a statute ambiguous simply because either the 
parties or the courts differ as to its meaning.  UFE, Inc. v. 
LIRC, 201 Wis. 2d 274, 281-82, 548 N.W.2d 57 (1996); State v. 
Moore, 167 Wis. 2d 491, 497 n.6, 481 N.W.2d 633 (1992).   
¶31 The analysis of statutory ambiguity begins with the 
language of the statute itself.  Stockbridge Sch. Dist. v. DPI, 
202 Wis. 2d 214, 220, 550 N.W.2d 96 (1996) (quoting Jungbluth v. 
Hometown, Inc., 201 Wis. 2d 320, 327, 548 N.W.2d 519 (1996)).  
The valued policy law was enacted in 1874, repealed in 1915, 
reenacted in 1917, repealed in 1975, and reenacted in 1979.  
Over the years, we have demonstrated a pattern of giving "the 
literal meaning of the language of the statute . . . full 
force."  Gambrell v. Campbellsport Mut. Ins. Co., 47 Wis. 2d 
483, 488, 177 N.W.2d 313 (1970) (quoting Winfield V. Alexander, 
Insurance:  The Wisconsin "Valued Policy" Law, 1934-35 Wis. L. 
Rev. 
249 
[hereinafter 
Alexander, 
"Valued 
Policy" 
Law]).  
Beginning in 1877, this court observed that "[t]he words of this 
statute are neither obscure, doubtful nor ambiguous as to their 
meaning, 
and 
they 
therefore 
afford 
but 
little 
room 
for 
No. 98-1223   
 
 
14
interpretation."  Reilly v. Franklin Ins. Co., 43 Wis. 449, 454, 
28 Am. Rep. 552 (1877).4   
¶32 As a general rule, courts apply the ordinary and 
accepted meaning of language in statutes, DNR v. Wisconsin Power 
& Light Co., 108 Wis. 2d 403, 408, 321 N.W.2d 286 (1982), unless 
it leads to an absurd result.  State ex rel. Reimann v. Circuit 
Court for Dane County, 214 Wis. 2d 605, 622, 571 N.W.2d 385 
(1997).  This practice complies with legislative directive.  See 
Wis. Stat. § 990.01(1). 
¶33 The 1979 reenactment of the valued policy law added 
the phrase "owned and occupied by the insured as a dwelling."  
This case turns on the interpretation of the word "dwelling."  
Both the court of appeals and the circuit court applied the 
ordinary and accepted meaning of "dwelling."  Neither court 
found the valued policy law ambiguous.  Seider, 222 Wis. 2d at 
87.  Despite its validation of the agency rule, the circuit 
court reasoned that "the statute as a whole is clear and 
unambiguous and the term dwelling should be given its plain 
meaning."  Memorandum Decision and Order at 7.  The court of 
appeals relied on the dictionary definition of "dwelling" as "a 
building or construction used for residence."  Seider, 222 
Wis. 2d at 87 (quoting WEBSTER'S THIRD NEW INT'L DICTIONARY, 706 
(Unabr. 1993)).  The court reasoned that putting property to 
                     
4 The law favors continuity.  We must interpret the revised 
statute "in the same sense as the original unless the change in 
language indicates a different meaning so clearly as to preclude 
judicial construction."  Wis. Stat. § 990.001(7). 
No. 98-1223   
 
 
15
additional uses does not impact either the dictionary or 
statutory meaning of "dwelling." 
¶34 In Drangstviet, the court of appeals concluded that 
"§ 632.05(2), STATS., read as a whole, is clear and unambiguous. 
 Thus, we must determine the legislative intent by giving the 
words 'occupied' and 'dwelling' their ordinary meaning."  195 
Wis. 2d at 599-600.  The court then defined "dwelling" as "[t]he 
house or other structure in which a person or persons live; a 
residence; abode; habitation; the apartment or building, or 
group of buildings, occupied by a family as a place of 
residence.  Structure used as place of habitation."  Id.  
(quoting Black's Law Dictionary 505 (6th ed. 1990)) (emphasis 
added). 
¶35 Although this court has not analyzed the meaning of 
"dwelling" under the current valued policy law, we did examine 
the term as it applied to a standard fire policy that allowed an 
additional ten percent coverage for dwellings.  In Trible v. 
Tower Ins. Co., 43 Wis. 2d 172, 186, 168 N.W.2d 148 (1969), the 
insurer argued that a destroyed lodge was not subject to the 
enhanced 
coverage 
since 
"the 
lodge 
was 
never 
a 
'dwelling' . . . it was never occupied."  We turned to a 
dictionary definition and held that the property did qualify 
because a lodge is "a building or construction used for 
residence."  Id. (quoting Webster's New Int'l Dictionary (3d 
ed.)).  The lodge's commercial, non-residential character did 
not alter its status as an insured "dwelling." 
No. 98-1223   
 
 
16
¶36 In this case, the OCI relies on the non-residential 
character of Steinthal Valley Lodge to contend that the 
"dwelling" language is ambiguous.  In both its brief and at oral 
argument, the OCI argued that the valued policy law is ambiguous 
because it implicitly excludes non-residential properties.  In 
cases in which the insured owns and occupies a combined-use 
property, the OCI maintains, the ambiguity arises from the 
difficulty in distinguishing between use of the insured property 
as a "dwelling" and as a business enterprise. 
¶37 The 
OCI's 
argument 
that 
the 
valued 
policy 
law 
implicitly excludes commercial properties is flawed.  In lay 
terms, the agency's reasoning is an example of inverse logic:  
We may agree that "if p, then q" is true, but it does not follow 
that "if not p, not q" is also true.  To illustrate, we may say 
that "if a child is born in Manitowoc, the child is an American 
citizen," but we would not accept the proposition that "if a 
child is not born in Manitowoc, the child is not an American 
citizen."  Here, the OCI has determined that if a building is 
exclusively residential, it is a dwelling; but if a building is 
not exclusively residential, it is not a dwelling.  The error in 
this logic is transparent.  
¶38 The OCI asks us to infer an ambiguity by reading an 
exclusion into the term "dwelling."  But the statute does not 
exclude combined-use dwellings.  It does not grant benefits to 
some dwellings and deny benefits to other dwellings.  Nothing in 
the valued policy law itself limits the dwelling clause to 
buildings used exclusively as residences.  The statutory 
No. 98-1223   
 
 
17
language certainly excludes buildings that are not dwellings.  
It excludes dwellings that are not owned by the insured.  It 
excludes dwellings that are owned by the insured but not 
occupied by the insured.  The language, however, does not 
exclude any dwellings that are "owned and occupied by the 
insured."  Only the administrative rule makes that exception. 
¶39 The OCI relies on this implicit exclusion to maintain 
that the administrative rule is necessary to clarify an 
ambiguous term.  A term, however, "is not ambiguous merely 
because it is general enough to encompass more than one set of 
circumstances." 
 
Drangstviet, 
195 
Wis. 2d 
at 
599. 
 
By 
promulgating Wis. Admin. Code § INS 4.01(2)(e), the OCI carved 
out one set of circumstances to which the valued policy law 
cannot apply.  The OCI itself created the exception by 
eliminating the class of combined-use dwellings. 
¶40 The decision to write an exception into a statute is 
best reserved for the legislature.  Motola v. LIRC, 219 Wis. 2d 
588, 614, 580 N.W.2d 297 (1998) (Abrahamson, C.J., dissenting). 
 Had the legislature intended to except combined-use properties, 
it would have done so directly.  See Meyer, 226 Wis. 2d at 713. 
 Had the OCI not been satisfied with the statute, it should have 
sought corrective legislation. 
¶41 Application of the ordinary and accepted meaning of 
the word "dwelling" as "a building or construction used for 
residence" does not lead to absurd results.  The OCI warns that 
inclusion of combined-use properties under the valued policy law 
will prompt business owners who occasionally sleep in their 
No. 98-1223   
 
 
18
workplaces to pursue the broad benefits of the statute.  This 
argument stretches credibility.  To qualify under the valued 
policy law, an insured has to own and occupy real property as a 
dwelling.  A "business" cannot occupy a building as a dwelling. 
 To qualify, the insured has to be a person who owns the 
building, occupies the building, carries the insurance in his or 
her own name, and makes the building his or her residence, 
meaning more than a periodic sojourn on an office cot.  
Incidental use of a building for sleeping does not rise to the 
level of "occupancy," or taking possession of, a building as "a 
residence."   
¶42 Moreover, the application of the valued policy law to 
the facts of the Seiders' claim does not produce absurd results. 
 This is not a case in which the insureds sought to redeem the 
policy limits of a costly business in which they occasionally 
resided.  These insureds lived at the property continually and 
exclusively.  Failure to apply the ordinary meaning of the 
statute, on the other hand, would produce the absurd result of 
denying the protections of the valued policy law to persons like 
the Seiderswhether in-home daycare providers or telecommuting 
business 
consultantswhose 
only 
dwelling 
also 
serves 
a 
commercial purpose. 
¶43 The court's analysis begins with the language of the 
statute.  If the meaning of the statute is plain, we ordinarily 
stop the inquiry.  Nonetheless, it is often valuable to examine 
the statute in context.  Context usually refers to the 
relationship with other statutes.  See Juneau County, 221 Wis. 
No. 98-1223   
 
 
19
2d at 641.  Context also can mean factual setting.  "Depending 
on the facts of a case, the same statute may be found ambiguous 
in one setting and unambiguous in another."  Reyes, 227 Wis. 2d 
at 365 (citing Sauer v. Reliance Ins. Co., 152 Wis. 2d 234, 241, 
448 N.W.2d 256 (Ct. App. 1989); Brandt v. LIRC, 160 Wis. 2d 353, 
368, 466 N.W.2d 673 (Ct. App. 1991)).  Permitting the facts of a 
case to gauge ambiguity simply acknowledges that reasonable 
minds can differ about a statute's application when the text is 
a constant but the circumstances to which the text may apply are 
kaleidoscopic. 
¶44 This contextual approach is not new to Wisconsin 
courts.  In Sauer, the court of appeals observed that the 
definition of "recreational activity" can vary in different 
circumstances.  Sauer, 152 Wis. 2d at 241.  We faced that 
particular dilemma in Meyer when our court explored whether a 
spectator walking on bleachers was engaged in "recreational 
activity."  Meyer, 226 Wis. 2d at 710.  In Roehl v. American 
Family Mutual Insurance Co., 222 Wis. 2d 136, 145, 585 N.W.2d 
893 (Ct. App. 1998), the court of appeals found that the statute 
governing renewal of insurance policies on "less favorable 
terms," although not ambiguous on its face, is ambiguous when 
applied to situations in which the legislature or the courts 
limit or reduce coverage.  More recently, in Reyes, we held that 
the "when operating a motor vehicle" language in the sponsorship 
statute is ambiguous when applied factually to a drive-by 
shooting carried out during vehicle operation.  Reyes, 227 
Wis. 2d at 366. 
No. 98-1223   
 
 
20
¶45 The OCI relies on two decisions from the court of 
appeals to argue that the valued policy law is ambiguous.  In 
Kohnen, the court concluded that the term "occupied" was 
ambiguous in the context of whether the valued policy law 
reached an insured owner who periodically leased a dwelling.  
Kohnen v. Wisconsin Mut. Ins. Co., 111 Wis. 2d 584, 586, 331 
N.W.2d 598 (Ct. App. 1983).  In Drangstviet, the court found 
that "occupied" is unambiguous in the context of whether the 
statute 
applies 
to 
the 
estate 
of 
an 
insured 
decedent.  
Drangstviet, 195 Wis. 2d at 599.  The OCI maintains that these 
divergent holdings about the meaning of "occupied" illustrate 
that the only reliable way to apply the statute is on a case-by-
case basis.  Although application of the term "occupied" is not 
at issue here, we agree with the OCI that context inflects 
statutory interpretation.  We disagree, however, with the 
proposition 
that 
such 
variation 
can 
render 
the 
statute 
universally ambiguous. 
¶46 A statute is not ambiguous simply because it is 
general 
enough 
to 
apply 
in 
more 
than 
one 
circumstance.  
Drangstviet, 195 Wis. 2d at 599.  Nor is a statute ambiguous if 
the facts of a case make the statute difficult to apply.  State 
v. Ambrose, 196 Wis. 2d 768, 776, 540 N.W.2d 208 (Ct. App. 1995) 
(citing Lawver v. Boling, 71 Wis. 2d 408, 422, 238 N.W.2d 514 
(1976)).  In an earlier analysis of the valued policy law, this 
court observed that we "cannot suspend the operation of statutes 
merely because an unexpected result may work out in a particular 
case."  Reedsburg Farmers Mut. Fire Ins. Co. v. Koenecke, 8 
No. 98-1223   
 
 
21
Wis. 2d 408, 412, 99 N.W.2d 201 (1959) (quoting Ciokewicz v. 
Lynn Mut. Fire Ins. Co., 212 Wis. 44, 51, 248 N.W. 778 (1933)). 
  
¶47 In this case, the valued policy law is not ambiguous. 
 The phrase "which is owned and occupied by the insured as a 
dwelling" is straightforward.  The destroyed building was owned 
and occupied by the Seiders as a dwelling.  They owned and 
occupied no other property as a residence.  As the court of 
appeals noted, a factual ambiguity might have resulted had the 
Seiders owned another home or stayed elsewhere temporarily.  
Seider, 222 Wis. 2d at 86-87.  Use of the property as a 
restaurant, however, did not alter its character as the Seiders' 
dwelling.  Had the legislature intended for the statute to apply 
only to properties used exclusively as dwellings, it could have 
inserted more restrictive language. 
¶48 We thus find that the valued policy law is not 
ambiguous when applied to those combined-use properties that 
insured owners occupy as their dwelling. 
HISTORY OF WIS. STAT. § 632.05(2) 
¶49 Having concluded that the valued policy law is not 
ambiguous, we now address the OCI's contention that the 
statute's 
legislative history 
nonetheless renders the law 
ambiguous.  Under the plain meaning rule, courts do not resort 
to legislative history to uncover ambiguities in a statute 
otherwise clear on its face.  Kelley Co. v. Marquardt, 172 
Wis. 2d 234, 247, 493 N.W.2d 68 (1992); see also Johnson v. 
County of Crawford, 195 Wis. 2d 374, 383, 536 N.W.2d 167 (Ct. 
No. 98-1223   
 
 
22
App. 1995).  The OCI urges this court to discard the plain 
meaning rule in favor of a method of statutory interpretation 
that permits consideration of extrinsic evidence irrespective of 
a finding of ambiguity.  Even if this court finds the valued 
policy law unambiguous, the OCI argues, the legislative history 
will show that the legislature intended to limit the statute's 
reach by excluding commercial properties. 
¶50 If a statute is unambiguous on its face, this court 
does not look to extrinsic evidence, such as legislative 
history, to ascertain meaning.  Reyes, 227 Wis. 2d at 365.  
Traditionally, "resort to legislative history is not appropriate 
in the absence of a finding of ambiguity."  State v. Sample, 215 
Wis. 2d 487, 495-96, 573 N.W.2d 187 (1998) (quoting State v. 
Setagord, 211 Wis. 2d 397, 406, 565 N.W.2d 506 (1977)).  This 
approach to statutory interpretation forms the core of the plain 
meaning rule.   
¶51 Although 
the canon 
prevents 
courts 
from tapping 
legislative history to show that an unambiguous statute is 
ambiguous, "there is no converse rule that statutory history 
cannot be used to reinforce and demonstrate that a statute plain 
on its face, when viewed historically, is indeed unambiguous."  
State v. Martin, 162 Wis. 2d 883, 897 n.5, 470 N.W.2d 900 
(1991).  
¶52 Where a statute unambiguously establishes legislative 
intent in its plain meaning, we apply that meaning without 
resorting to extrinsic sources.  Kelley Co., 172 Wis. 2d at 247. 
 On occasion, however, we consult legislative history to show 
No. 98-1223   
 
 
23
how that history supports our interpretation of a statute 
otherwise clear on its face.  See State v. Hall, 207 Wis. 2d 54, 
84-89, 557 N.W.2d 778 (1997); see also Murphy v. Droessler, 188 
Wis. 2d 420, 430 n.4, 525 N.W.2d 117 (Ct. App. 1994); Kerkvliet 
v. Kerkvliet, 166 Wis. 2d 930, 942 n.9, 480 N.W.2d 823 (Ct. App. 
1992).  "When aid to construction of the meaning of words, as 
used in the statute, is available, there certainly can be no 
'rule of law' which forbids its use, however clean the words may 
appear on 'superficial examination.'"  Sample, 215 Wis. 2d at 
508 (Abrahamson, C.J., concurring) (quoting Train v. Colorado 
Pub. Interest Research Group, Inc., 426 U.S. 1, 10 (1976)).  
This approach assists judicial construction of a statute.  Novak 
v. Madison Motel Assoc., 188 Wis. 2d 407, 416, 525 N.W.2d 123 
(Ct. App. 1994).  By confirming that our understanding of a law 
conforms with its history, we better fulfill our duty of 
effectuating the legislature's intent. 
¶53 Although we find the valued policy law unambiguous, we 
explore the statutory language in its context, subject matter, 
scope, and history to illustrate fully the legislature's 
objectives.  Martin, 162 Wis. 2d at 896-97.  To review this 
background information, we turn to extrinsic sources.  Extrinsic 
aids include materials pertaining to the passage of a statute, 
historical events that occurred at the time of enactment, and 
information generated after the statute's passage.  Juneau 
County, 221 Wis. 2d at 642-43.   
¶54 The valued policy law traces its legislative origins 
to 1874, when Wisconsin became the first state to enact such a 
No. 98-1223   
 
 
24
statute.  Spencer L. Kimball, Insurance & Public Policy 240-41 
(1960) [hereinafter Kimball, Insurance & Pub. Policy].  During 
the 1870s, the growing number of incendiary fires on overinsured 
property prompted insurance companies to limit recovery amounts 
to the policyholder's actual loss.  Id.; see also Herbert J. 
Baumann, Jr., Recovery Under the Valued Policy Law 19-WTR Brief 
45 (1990) [hereinafter Baumann, Recovery Under the Valued Policy 
Law].  Legislators subsequently interpreted this restriction as 
a means by which insurers could avoid the burdens of paying the 
negotiated 
policy 
limits 
while 
concurrently 
enjoying 
the 
benefits of full premium payments.  Kimball, Insurance & Pub. 
Policy, at 241; Tom Baker, On the Genealogy of Moral Hazard, 75 
Tex. L. Rev. 237, 261 (1996).  The valued policy law was 
designed to discourage owners from over-insuring property while 
simultaneously thwarting insurers from collecting excessive 
premiums.5  Gambrell, 47 Wis. 2d at 488.  It was assumed that the 
                     
5  In its first analysis of the valued policy law, this 
court observed: 
The manifest policy of the statute is to prevent over 
insurance, and to guard, as far as possible, against 
carelessness and every inducement to destroy property 
in order to procure the insurance upon it.  Where 
property 
is 
insured 
above 
its 
value, 
a 
strong 
temptation 
is 
presented 
to 
an 
unscrupulous 
and 
dishonest owner, either to intentionally burn it, or 
not to guard and protect it as he ought. . . . And 
insurance companies, too, actuated by motives of gain, 
or incited by sharp competition in business, take 
risks, frequently, recklessly and for amounts in 
excess of the real value of the property insured; 
which they would be less likely to do if compelled to 
pay the amount of insurance written in their policies. 
 It is evident that it was to prevent these evils and 
No. 98-1223   
 
 
25
law would diminish fraud and prompt insurance companies to issue 
more realistic appraisals.  Id.  Another purpose of the valued 
policy law was to eliminate controversy about the amount of loss 
in the event of property destruction.  Fox v. Milwaukee 
Mechanics' Ins. Co., 210 Wis. 213, 217, 246 N.W. 511 (1933); 
Baumann, Recovery Under the Valued Policy Law, at 45-46. 
¶55 The valued policy law is the product of a strong 
public policy position in the legislature.  Gambrell, 47 Wis. 2d 
at 487-88 (citing Kimball, Insurance & Pub. Policy, at 241).  
Although the law met initial hostility from both insurance 
companies and Wisconsin Insurance Commissioners, early attempts 
to repeal the statute failed.  Kimball, Insurance & Pub. Policy, 
at 241-43.  The statute has been in almost continuous effect, 
and courts have interpreted it uniformly since its inception.  
See Gambrell, 47 Wis. 2d at 488 (citing Alexander, "Valued 
Policy" Law, at 248).  Our understanding of the law's policy 
objectives remained unchanged for over one hundred years.  See 
Gimbels Midwest, Inc. v. Northwestern Nat'l Ins. Co. of 
Milwaukee, 72 Wis. 2d 84, 92, 240 N.W.2d 140 (1976) (citing 
Gambrell, 47 Wis. 2d 483; Fox, 210 Wis. at 217; and Reilly, 43 
Wis. at 456). 
¶56 The public policy mandate of the valued policy law 
governs judicial interpretation of insurance contracts.  Until 
                                                                  
guard against these mischiefs, that the statute was 
enacted. 
 
Reilly v. Franklin Ins. Co., 43 Wis. 449, 455-56, 28 Am. Rep. 
552 (1877). 
No. 98-1223   
 
 
26
its 1975 repeal, the statute applied to all real property.  
Historically, this court prohibited any construction of the law 
that would result in payment of less than the full policy limit. 
 Gambrell, 47 Wis. 2d at 491.  Insurers could not avoid full 
payment through policy exclusions or contractual modifications. 
 Arnold P. Anderson, Wisconsin Insurance Law § 6.4 (4th ed. 
1998).  Parties cannot waive the statutory provisions, even by 
express 
contract. 
 
Gimbels 
Midwest, 
72 
Wis. 2d 
at 
92.  
Provisions that limit the amount of loss must yield to the 
valued policy law.  Gambrell, 47 Wis. 2d at 491.  The statute 
thus overrides the clause in the Seiders' Wilson Mutual policy 
that set the valuation to the actual cash value of the property. 
¶57 In 1975, the legislature repealed the valued policy 
law as part of a general revision of insurance contract law.  
§ 10, ch. 375, Laws of 1975.  The goal of this reform was to 
make 
insurance 
contracts 
more 
uniform 
and 
reliable.  
INTRODUCTORY NOTE, § 41, ch. 375, Laws of 1975.  The legislature 
sought to eliminate statutory provisions that were inconsistent 
with, or overruled, standard fire policies.  INTRODUCTORY NOTE, 
§ 42, ch. 375, Laws of 1975.  As a result, the valued policy law 
was repealed because its provisions conflicted "with the 'actual 
cash value' language of the insuring clause."  Id.  By way of 
example, the legislative commentary addressed three specific 
repealed provisions relating to fire insurance: the valued 
policy law, a provision on coinsurance, and a provision about 
the distribution of coverage.  Id.  The commentary described the 
latter two statutes as "badly conceived" and "unnecessary," 
No. 98-1223   
 
 
27
respectively; but it made no similar qualitative assessments 
about the valued policy law.  Id.  The legislative history makes 
no reference to the original statute's expansive reach to all 
real property as a reason for its repeal.  The statute was 
portrayed as an obstacle to uniformity. 
¶58 In 1977, bills to restore the valued policy law were 
introduced in both houses of the legislature.  1977 Senate Bill 
53 
(Senator 
Sensenbrenner); 
1977 
Assembly 
Bill 
691 
(Representative Kincaid; Senator Krueger).  The Assembly bill 
had 40 authors.  The Legislative Reference Bureau (LRB) analysis 
of each bill stated:  "This bill restores a statutory provision 
that was repealed by chapter 375, laws of 1975, which was a 
general revision of insurance contract law."  Assembly Bill 691 
was taken up in the Assembly on September 11, 1977.6  The 
Assembly adopted an amendment that inserted the phrase, "which 
is owned and occupied by the insured as a dwelling," into the 
proposed law, then passed the bill, 81 to 13.  The Senate took 
up the bill on January 31, 1978, and it adopted an amendment 
stripping out the Assembly amendment before concurring in the 
bill.  The bill was sent back to the Assembly, where it was 
referred to a committee and died.  The Assembly did not vote on 
it a second time.   
¶59 In 1979, Representative Kincaid authored Assembly Bill 
85.7  This bill incorporated the language of the Assembly  
                     
6 1977 Assembly Bulletin, p. 339.  
7 1979 Assembly Bulletin, p. 81.  
No. 98-1223   
 
 
28
amendment from 1977, but the LRB analysis of Assembly Bill 85 
failed to describe the new language.  It said:  
 
Under this bill, if the insured property is wholly 
destroyed, without criminal fault on the part of the 
insured, the amount of the policy is to be taken 
conclusively as the value of the property when insured 
and the amount of loss when destroyed.  This bill 
restores a statutory provision that was repealed by 
chapter 375, laws of 1975, which was a general 
revision of insurance contract law. 
The Assembly Committee on Financial Institutions amended 1979 
A.B. 85 to take out the new language before approving the bill, 
but this amendment was nullified by a substitute amendment 
adopted on the floor.  The substitute amendment survived a 
rejection motion and then passed on a voice vote.  The bill 
passed 95 to 0, and the Senate subsequently concurred. 
¶60 The OCI reviews this history and contends that the 
statute's inability to pass in 1977 and 1979 without the 
"dwelling" language reveals  a "considered and deliberative 
legislative decision to exclude commercial and other non-
residential real estate from the coverage of the statute."  
Petitioner's Brief at 14-15.  This interpretation fails to 
describe or analyze the motivations and influences at work in 
No. 98-1223   
 
 
29
the legislative process.8  The legislative history may just as 
easily be interpreted as a struggle between legislators who 
worked to restore the valued policy law in full and legislators 
who sought to limit its restoration.  The words and motivations 
of the two camps do not appear in the record.  What is clear, 
however, is that the recorded action in the legislature is 
silent about a legislative determination to exclude combined-use 
dwellings or to limit the statute's application to properties 
used "principally" or "exclusively" as dwellings.   
                     
8 Historically, fire insurance companies have strongly 
opposed the valued policy law as costly and unfair.  They agree 
that the law makes insurers vulnerable to fraud.  According to 
W.A. Durkin, who represented the Wisconsin Insurance Alliance at 
a legislative hearing on 1977 Assembly Bill 691, the valued 
policy law is "an invitation to and a statutory reward for 
arson. . . .  Arson is difficult to detect and hard to prove 
because 'torch men' are frequently used by arson-inclined 
insured."  Position Paper, Wisconsin Insurance Alliance, May 12, 
1977.  The Wisconsin Insurance Alliance and several other 
insurance associations and companies opposed reenactment of the 
bill.  
In the spring of 1977, the Mutual Service Casualty 
Insurance Company sued Wisconsin Insurance Commissioner Harold 
Wilde for issuing an emergency rule that preserved the valued 
policy law after the legislature had repealed it as part of the 
general revision of insurance contract law.  In its action for a 
declaratory judgment, Mutual Service argued that the emergency 
rule was "invalid and in violation of the Constitution of the 
State of Wisconsin" and that extending the valued policy law by 
rule beyond the legislature's June 21, 1976, expiration date was 
an "interference with the legal rights and privileges" of the 
insurance company.  Mutual Serv. Cas. Ins. Co. v. Wilde, 
Unpublished Complaint at 3 (Dane County Circuit Court Case No. 
155450, (March 8, 1977) (as discussed in Insurer Challenges 
State Fire Ruling, Milw. J., Feb. 15, 1977, at I-7). 
No. 98-1223   
 
 
30
¶61 The legislature foresaw an expansive application of 
Wis. Stat. § 632.05(2).  Section 600.12(1) now provides: 
"[u]nless otherwise provided, chs. 600 to 655 shall be liberally 
construed to achieve the purposes stated therein."9  The valued 
policy law articulates no exceptions to this broad mandate.  
Moreover, it makes no difference what type of policy Wilson 
Mutual issued to the Seiders.  The statute applies "whenever any 
policy insures real property which is owned and occupied by the 
insured as a dwelling."  Wis. Stat. § 632.05(2) (emphasis 
added).  The valued policy law makes no conditions based upon 
the type of policy the insurer issues.  Rather, the law focuses 
on the uses to which the owners put the property.  The burden is 
on the insurer to conduct an inspection and secure an accurate 
appraisal before entering into the contract.  See Baumann, 
Recovery Under the Valued Policy Law, at 46. 
¶62 The OCI also directs our attention to the extrinsic 
sources generated after the 1979 reenactment of the valued 
policy law.  Extrinsic aids include postenactment events.  
Juneau County, 221 Wis. 2d at 643.  Although these materials are 
probative, we approach nonlegislative sources cautiously, and we 
do not afford them the same relevance or weight as evidence of 
legislative intent.  Id. at 643, 650. 
¶63 In particular, the OCI includes information pertaining 
to the promulgation of Wis. Admin. Code § INS 4.01(2)(e).  
                     
9 Wis. Stat. § 600.12(1) predates the restoration of the 
valued policy law.  See Chapter 260, Laws of 1971.  
No. 98-1223   
 
 
31
Shortly after reenactment of the valued policy law, the OCI 
turned to an advisory council made up of commission staff 
members and representatives of the insurance industry.  In its 
discussion of combined-use properties, the valued policy law 
subcommittee proposed: 
 
Commercial occupied dwellings are not subject to the 
law unless the commercial use is incidental.  Examples 
of incidental use are insurance agent's offices, piano 
lessons, and artist's studios.  A store or tavern with 
an apartment above would be non-incidental commercial 
use. 
Minutes of the Property and Casualty Advisory Council, August 1, 
1980 [hereinafter Council Minutes]. The subcommittee remarked 
that "[t]here is a common understanding of incidental use, but 
no specific definition."  Id.   
¶64 In 1981, Representative Calvin J. Potter asked Deputy 
Commissioner Thomas R. Hefty to explain the rationale for 
excluding combined-use property from the statute and the meaning 
of "property used on 'an incidental basis' for commercial 
purposes."  Letter from Calvin J. Potter, Chairperson, Assembly 
Committee on Financial Institutions, to Thomas R. Hefty, Deputy 
Commissioner, Office of the Commissioner of Insurance (Feb. 11, 
1981).  Mr. Hefty replied: 
 
The rationale for excluding real property which is 
used for commercial (non-dwelling) purposes from the 
provisions of s. 632.05(2) is that 632.05(2) only 
applies to real property which is owned and occupied 
by the insured as a dwelling.  If a property is used 
for 
commercial 
purposes, 
then 
it 
is 
no 
longer 
considered 
as 
being 
a 
dwelling. 
 
Examples 
of 
incidental use of a dwelling for commercial purposes 
which 
would 
not 
remove 
the 
property 
from 
the 
No. 98-1223   
 
 
32
classification of a dwelling would be: use of a 
portion of a dwelling for office uses, such as real 
estate or 
insurance 
agent; or 
give professional 
instruction, 
such 
as 
music 
or 
dancing 
lessons 
(emphasis added). 
Letter from Thomas R. Hefty, Deputy Commissioner, Office of the 
Commissioner of Insurance, to Calvin J. Potter, Chairperson, 
Assembly Committee on Financial Institutions (Feb. 19, 1981).   
¶65 The 
valued 
policy 
subcommittee 
also 
made 
some 
pertinent observations in its discussion of seasonal dwellings. 
Because the "[l]egislative history is not clear, but seasonal 
dwellings were included in prior laws," the subcommittee agreed 
that the statute should apply to such properties; after all, 
"[t]he statute doesn't say 'principal dwelling.'"  Council 
Minutes.  However, Mr. Hefty later added that "if a dwelling is 
ever used by someone other than the owner then it is no longer 
owner-occupied and s. 632.05(2) would not apply to it."  Letter 
from Hefty to Potter of Feb. 19, 1981.10 
¶66 These postenactment materials do not support the OCI's 
interpretation of the valued policy law.  Instead, they suggest 
that the OCI, not the legislature, narrowed the application of 
the valued policy law by selectively eliminating certain 
dwellings from the statute's reach.  "Incidental use," which 
provides the insured owner the benefits of the law, includes 
                     
10 This 
observation 
comports 
with 
the 
valued 
policy 
subcommittee's observation that "[s]ome people are renting to 
family members as a tax dodge, but the subcommittee felt that 
they 
are 
sophisticated 
and 
less 
in 
need 
of 
the 
law's 
protection."  Minutes of the Property and Casualty Advisory 
Council, August 1, 1980.  
No. 98-1223   
 
 
33
insurance agents' home offices but excludes homes situated above 
stores or taverns.  The law applies to seasonal dwellings, but 
only if the insured has not rented the property to a non-owner 
for any period of time.  This latter interpretation was rejected 
by the court of appeals in Kohnen, 111 Wis. 2d 584. 
¶67 The extrinsic sources also suggest that in other 
contexts, the OCI approaches the statutory language differently. 
 For example, in preparing to extend the law to seasonal homes, 
the valued policy law subcommittee relied on the statute's 
failure to use the word "principal" to modify "dwelling."  Here, 
on the other hand, the OCI asks us to read nothing into the 
legislature's choice to omit a word.  Petitioner's Reply Brief 
at 8-9.  Similarly, although the OCI argues in this case that 
the word "dwelling" is ambiguous and requires more than a 
dictionary definition, the agency rule itself is based on a 
"common understanding of incidental use" with "no specific 
definition." 
¶68 We conclude that the extrinsic evidence does not 
counter our interpretation of the valued policy law.  The 
legislative history reveals no explicit legislative intent to 
restrict the types of dwellings to which the valued policy law 
applies.  The legislative choice to narrow the scope of the law 
from all real property to only dwellings owned and occupied by 
the insured does not lead to the conclusion that the legislature 
further intended to restrict the statute to particular dwellings 
owned and occupied by the insured.  The legislature did not 
create classes of dwellings owned and occupied by the insured.  
No. 98-1223   
 
 
34
The extrinsic evidence demonstrates a concerted effort within 
the commission to create these classes and narrow the scope of 
the new statute.  Hence, the only exclusions we find are those 
created by the OCI in the administrative rule. 
VALIDITY OF WIS. ADMIN. CODE § INS 4.02(2)(e) 
¶69 We now turn to the question of whether Wis. Admin. 
Code § INS 4.01(2)(e) is invalid.  Courts give weight to 
statutory 
interpretations, 
particularly 
when 
those 
interpretations have been accepted by courts and the legislature 
over a number of years.  Juneau County, 221 Wis. 2d at 641 n.7. 
 Although the rule-making process creates agency expertise to 
which courts grant deference, the levels of deference are not 
uniform.  See Richland Sch. Dist. v. DILHR, 174 Wis. 2d 878, 
892, 498 N.W.2d 826 (1993); Kelley Co., 172 Wis. 2d at 244.  An 
agency rule cannot defeat the plain language of an unambiguous 
statute.  Lincoln Sav. Bank v. DOR, 215 Wis. 2d 430, 443, 573 
N.W.2d 522 (1998).  Thus, this court grants no deference to 
agency interpretations that contradict the clear meaning of a 
statute.  Id. (citing UFE Inc., 201 Wis. 2d at 282 n.2). 
¶70 An administrative rule is invalid if it exceeds the 
statutory authority of the promulgating agency.  Wis. Stat. 
§ 227.40(4)(a).  To determine whether an agency has exceeded its 
statutory authority in promulgating a rule, this court first 
examines the enabling statute.  In Interest of A.L.W., 153 
Wis. 2d 412, 417, 451 N.W.2d 416 (1990).  The enabling statute 
indicates 
whether 
the 
legislature 
expressly 
or 
impliedly 
authorized the agency to create the rule.  Id. (citing Brown 
No. 98-1223   
 
 
35
County v. H&SS Dep't, 103 Wis. 2d 37, 48, 307 N.W.2d 247 
(1981)). 
¶71 In this case, an enabling statute expressly authorized 
the OCI to issue rules enforcing the valued policy law.  
Wisconsin Stat. § 227.11(2)(a) provides, however, that "a rule 
is 
not 
valid 
if 
it 
exceeds 
the 
bounds 
of 
correct 
interpretation."   
 
¶72 The Seiders contend that the administrative rule is 
invalid because it exceeds the statutory authority of the OCI.  
A rule exceeds an agency's statutory authority if it conflicts 
with an unambiguous statute.  Basic Prods. Corp., 19 Wis. 2d at 
186.  An agency interpretation is not reasonable if it 
contradicts either the language of a statute or legislative 
intent.  Ide v. LIRC, 224 Wis. 2d 159, 167, 589 N.W.2d 363 
(1999).  In those cases in which a conflict arises between a 
statute and an administrative rule, the statute prevails.  
Richland Sch. Dist. v. DILHR, 166 Wis. 2d 262, 278, 479 N.W.2d 
579 (Ct. App. 1991), aff'd, 174 Wis. 2d 878, 498 N.W.2d 826 
(1993). 
¶73 If the rule promulgated by the OCI contradicts the 
language of Wis. Stat. § 632.05(2) or the statute's legislative 
intent, the rule is not reasonable, exceeds the agency's 
statutory authority, and must be invalidated. 
¶74 We begin by considering whether the agency rule 
contradicts the language of the valued policy law.  The key word 
in the statute is "dwelling."  "Dwelling" is not a technical 
term.  Drangstviet, 195 Wis. 2d at 600.  Section 632.05(2) 
No. 98-1223   
 
 
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places no restrictions on its use of the word "dwelling."  
Nothing in the statute, or the ordinary meaning of the term, 
indicates that additional uses alter a building's status as a 
dwelling.  Under the circumstances of this case, this property 
was "owned and occupied . . . as a dwelling."  The Seiders owned 
no other home, and they occupied no other property as a 
dwelling.  Thus, the statute entitled them to the benefits of 
the valued policy law.   
¶75 By contrast, the rule provides: 
 
(e) Combined commercial and residential properties.  A 
policy insuring real property any part of which is 
used for commercial (non-dwelling) purposes other than 
on an incidental basis is not subject to s. 632.05(2), 
Stats. 
Wis. Admin. Code § INS 4.01(2)(e).  There is no dispute that 
part of the Seiders' property was used for commercial, non-
dwelling purposes.  The use was not "incidental."  The rule 
therefore deprived the Seiders of the benefits of the valued 
policy 
law. 
 
The 
rule's 
conflict 
with 
the 
statute 
is 
inescapable.  Consequently, the rule cannot stand. 
¶76 The OCI suggests that it will be difficult for 
administrative agencies to promulgate clarifying rules when 
statutory ambiguity can depend on the facts of a particular 
case.  As we observed earlier, this court cannot suspend 
statutory operation simply because an unexpected result might 
arise in a particular situation.  Reedsburg Farmers Mut., 8 
Wis. 2d at 412.  The validity of an agency rule should not pivot 
on the possibility of unexpected results.  Nor should we 
No. 98-1223   
 
 
37
uniformly validate agency rule promulgation because factual 
context might impact statutory interpretation. 
¶77 Even if we were to accept the OCI's premise that 
factual ambiguity compromises agency rule promulgation, we 
nonetheless are required to invalidate Wis. Admin. Code § INS 
4.01(2)(e) because it is unreasonable on other grounds.  A rule 
also exceeds statutory authority if it contradicts legislative 
intent.  Ide, 224 Wis. 2d at 167. 
¶78 The legislative history reveals no policy objectives 
designed to narrow the types of dwellings to which the valued 
policy law applies.  By eliminating a class of dwellings from 
the benefits of the valued policy law, the OCI, not the 
legislature, created categorical exceptions within the statute. 
 In effect, the OCI superimposed its policy judgments upon those 
of the legislature by determining which insured parties were 
entitled to benefit from the broad statutory provisions of the 
valued policy law.11  "An agency charged with administering the 
law may not substitute its own policy for that of the 
legislature."  DeBeck, 172 Wis. 2d at 388 (quoting Niagara of 
Wis. Paper Corp. v. DNR, 84 Wis. 2d 32, 48, 268 N.W.2d 153 
(1978)). 
¶79 The agency rule conflicts with the language of the 
valued policy law and, more broadly, its legislative intent.  We 
therefore find that Wis. Admin. Code § INS 4.01(2)(e) exceeds 
                     
11 The agency's policy making is apparent in its conclusion 
that certain persons "are sophisticated and less in need of the 
law's protection."  See Council Minutes and ¶53, n.5. 
No. 98-1223   
 
 
38
the statutory authority of the OCI, and under Wis. Stat. 
§ 227.40(4)(a) we are required to invalidate it. 
CONCLUSION 
¶80 We hold that Wis. Admin. Code § INS 4.01(2)(e) is 
invalid because it exceeds the statutory authority of the OCI.  
We further find that under the facts of this case, the valued 
policy law is not ambiguous.  Application of the statute to 
combined-use dwellings like the Seiders' will not produce absurd 
results.  We also acknowledge the history of Wisconsin's valued 
policy law and its public policy mandate.  This court has 
applied those policy objectives consistently since 1874, as we 
must.  It is the role of the legislature to expand, contract, or 
repeal the statute.  Had the legislature intended to exclude 
particular dwellings, it would have done so expressly.  An 
agency rule that renders the statute inapplicable to real 
property that the insured owns and occupies as a dwelling is not 
reasonable.  Therefore, we affirm the decision of the court of 
appeals, reversing and remanding the cause to the circuit court 
for the entry of a declaratory judgment. 
By the Court.—The decision of the court of appeals is 
affirmed. 
 
No. 98-1223.jpw 
 
1 
¶81 JON 
P. 
WILCOX, 
J. 
(dissenting). 
 
The 
majority 
concludes that Wis. Admin. Code § INS 4.01(2)(e) exceeds the 
statutory authority of the Office of the Commissioner of 
Insurance (OCI) because it conflicts with the language and 
legislative intent of Wis. Stat. § 632.05(2).  Majority op. at ¶ 
79. 
 
I 
believe 
that 
§ INS 
4.01(2)(e) 
is 
a 
reasonable 
interpretive rule that does not conflict with the language or 
intent of § 632.05(2).  I would not overturn the OCI's 
reasonable, longstanding rule.   
¶82 Wisconsin Stat. § 601.41 (1997-98)12 authorizes the OCI 
to administer Chapters 600 to 655 of the Wisconsin Statutes and 
to promulgate interpretive rules.  Thus, the OCI is authorized 
to "prescribe forms and procedures in connection with any 
statute enforced or administered by it, if the agency considers 
it necessary to effectuate the purpose of the statute."  Wis. 
Stat. § 227.11(2)(b).  The public policy reflected in agency 
rule-making "is no less fundamental or well-defined merely 
because it is to be found not in a statute but in the 
administrative code."  Winkelman v. Beloit Mem'l Hosp., 168 Wis. 
2d 12, 23, 483 N.W.2d 211 (1992).  Although this court may 
declare an interpretive rule invalid, it should not do so unless 
the rule violates the constitution, exceeds the statutory 
authority of the agency adopting it, or was adopted without 
compliance with statutory rule-making procedures.  Wis. Stat. 
§ 227.40(4)(a).  
                     
12 Subsequent references to Wisconsin Statutes are to the 
1995-96 volumes unless otherwise indicated.  
No. 98-1223.jpw 
 
2 
¶83 Administrative rules promulgated pursuant to a power 
delegated by the legislature "'should be construed together with 
the statute to make, if possible, an effectual piece of 
legislation in harmony with common sense and sound reason.'"  
State 
v. 
Busch, 
217 
Wis. 2d 
429, 
441, 
576 
N.W.2d 
904 
(1998)(quoting Law Enforcement Standards Bd. v. Village of 
Lyndon Station, 101 Wis. 2d 472, 489, 305 N.W.2d 89 (1981)).  
Even if Wis. Stat. § 632.05(2) is unambiguous, Wis. Admin. Code 
INS § 4.01(2)(e) is not necessarily invalid unless it conflicts 
with the statute.  See Basic Prods. Corp. v. Department of 
Taxation, 19 Wis. 2d 183, 186, 120 N.W.2d 161 (1963).  I would 
not conclude that § INS 4.01(2)(e) conflicts with § 632.05(2).  
¶84 Wisconsin 
Admin. 
Code § INS 
4.01(2)(e) 
does not 
contradict the statute.  It merely clarifies the meaning of the 
word "dwelling" by distinguishing between people who conduct a 
business out of their residence and those who reside at their 
place of business.  As the trial court stated: 
 
It is true that by clarifying the word "dwelling", the 
OCI was in essence limiting and restricting the scope 
of the valued policy law.  However, by doing so, the 
OCI was not contravening the words or intent of the 
statute; by categorizing the word "dwelling" and 
consequently narrowing the applicability of the valued 
policy law, the OCI was not exceeding its power or 
promulgating a rule that conflicts with state law. 
Rather, the OCI was clarifying and interpreting the 
provisions of a statute that it was charged to 
administer and enforce; a statute whose plain meaning 
could yield situations inconsistent with the original 
intent of the legislature.  
¶85 The majority stretches the OCI's argument in order to 
make it appear excessive.  The majority claims that the OCI uses 
No. 98-1223.jpw 
 
3 
"inverse logic."  Majority op. at ¶ 37 (explaining that even if 
"if p, then q" is true, it does not necessarily follow that "if 
not p, not q" is also true).  However, the OCI does not rely on 
inverse logic.  The OCI does not argue that a building can never 
be a dwelling if it is also used for commercial purposes.  The 
OCI merely argues that when a building is put to both commercial 
and residential use, a question arises about whether the 
building is still "owned and occupied by the insured as a 
dwelling."  Wisconsin Admin. Code INS § 4.01(2)(e) is a 
reasonable interpretation that provides a clear rule in such 
cases.  Moreover, Wis. Admin. Code § INS 4.01(2)(e) itself 
recognizes that commercial use does not automatically affect a 
property's status as a "dwelling."  Under the rule, "[a] policy 
insuring real property any part of which is used for commercial 
(non-dwelling) purposes other than on an incidental basis is not 
subject to s. 632.05(2), Stats."  § INS 4.01(2)(e).  Thus, the 
rule provides that incidental commercial use does not affect a 
building's status as a dwelling. 
¶86 The undisputed facts of this case demonstrate why the 
rule is a reasonable interpretation of the statute.  The Seiders 
presented themselves to the insurer as a business, and they 
insured the Steinthal Valley Lodge for business purposes.  The 
policy the Seiders obtained was a Commercial Package Policy, 
which described the premises as a "restaurant."  Majority op. at 
¶ 8.  The insureds were identified as "Richard R. Seider and 
Jean M. Seider, d/b/a Steinthal Lodge."  Id. (emphasis added).  
Nothing in the policy described the premises as having any 
No. 98-1223.jpw 
 
4 
residential purpose.  The policy explicitly indicated that if a 
loss occurred, coverage would be limited to the property's 
actual cash value.  Id. at ¶ 9.  Having obtained this "actual 
cash value" policy of commercial insurance for their restaurant 
business, the Seiders now seek to take advantage of the valued 
policy law, which by its own terms applies to "real property 
which is owned and occupied by the insured as a dwelling."  Wis. 
Stat. § 632.05(2).  
¶87 Property insurance boils down to a risk-loss analysis. 
 In the insurance context, a rule that defines "dwelling" by 
distinguishing 
between 
"incidental" 
and 
"non-incidental" 
commercial usage makes sense.  Common sense illuminates the 
importance of this difference.  For example, compare an attorney 
who makes business-related phone calls out of his or her home 
with the Seiders, who reside in the same building where they 
conduct their 
restaurant 
business. 
 
Restaurants 
typically 
contain a deep fryer in the kitchen and serve food or alcoholic 
beverages to many patrons every evening.  Obviously, there is a 
much greater risk that the building that contains a restaurant 
will be wholly destroyed by some accident such as a fire.  
Insurers rely on this distinction, along with all other rules 
and regulations, when determining policy rates. 
¶88 Contrary 
to 
the 
majority, 
I 
believe 
that 
the 
legislative history supports Wis. Admin. Code § INS 4.01(2)(e). 
 Beginning in 1874 and until its repeal in 1975, the valued 
policy law applied to all real property.  See Majority op. at ¶¶ 
54, 56.  In 1979 the legislature reenacted the valued policy law 
No. 98-1223.jpw 
 
5 
in modified form, covering only property "which is owned and 
occupied by the insured as a dwelling."  Id. at ¶¶ 58-59.  This 
history shows that the legislature only wished to extend the 
valued policy law protection to property that is used as a 
"dwelling."  The OCI used its rule-making authority to clarify 
the application of the statute in multiple-use situations like 
the one in this case. 
¶89 Moreover, the legislature had the opportunity to 
reject the rule before it went into effect and during the 18 
years before this case came to this court.  In 1981 the rule was 
referred to the Assembly Committee on Financial Institutions for 
review under Wis. Stat. § 227.018(4)(1979-80).  Representative 
Potter, who chaired the committee, asked the OCI to respond to 
several questions, including the rationale for Wis. Admin. Code 
§ INS 4.01(2)(e).  Letter from Calvin J. Potter, Chairperson, 
Assembly Committee on Financial Institutions, to Thomas R. 
Hefty, Deputy Commissioner, Office of the Commissioner of 
Insurance (Feb. 11, 1981).  Specifically, Representative Potter 
wrote, "would you please respond to these questions by February 
23, 1981, in order to assist me in determining whether 
scheduling a meeting with the Insurance Commissioner’s Office, 
pursuant to § 227.018(4)(b), Stats., is necessary."  Id.  The 
deputy commissioner of the OCI responded that the rationale for 
the rule "is that [Wis. Stat. §] 632.05(2) only applies to real 
property which is owned and occupied by the insured as a 
dwelling.  If a property is being used for commercial purposes, 
then it is no longer considered as being a dwelling."  Letter 
No. 98-1223.jpw 
 
6 
from Thomas R. Hefty, Deputy Commissioner, Office of the 
Commissioner of Insurance, to Calvin J. Potter, Chairperson, 
Assembly Committee on Financial Institutions (Feb. 19, 1981).  
The committee had the power to object to the rule and refer the 
rule to the joint committee for review of administrative rules. 
 See Wis. Stat. § 227.018(4)(d) and (5)(a) (1979-80).  However, 
the legislature took no further action, and the rule went into 
effect and has been the law of Wisconsin for 18 years. This 
sequence of events supports the conclusion that the legislature 
considered the OCI’s interpretation of the valued policy law to 
be reasonable. 
¶90 In 
sum, 
I 
believe 
that 
Wis. 
Admin. 
Code 
INS 
§ 4.01(2)(e) is a reasonable interpretive rule that does not 
conflict with Wis. Stat. § 632.05(2).  The OCI has enforced this 
rule, relied on by policyholders and insurers, for over 18 
years.  The legislature was aware of, yet took no action 
against, the rule.  The Seiders purchased a commercial insurance 
policy for a restaurant, and their commercial usage of the 
premises was not "incidental."  Under the OCI's reasonable 
interpretive rule, the valued policy law is inapplicable.  
Therefore, I respectfully dissent.   
¶91 I am authorized to state that Justice N. PATRICK 
CROOKS joins this dissent.   
 
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1