Opinion
No. 103 (1974).
Argued September 3, 1975. —
Decided September 30, 1975.
APPEAL from a judgment of the circuit court for Dane county: GEORGE R. CURRIE, Reserve Circuit Judge, Presiding. Reversed.
For the appellant there was a brief by Kaftan, Kaftan, Kaftan, Kuehne Van Egeren, S.C. of Green Bay, and oral argument by Fred F. Kaftan.
For the respondent Department of Industry, Labor Human Relations the cause was argued by Stephen M. Sobota, assistant attorney general, with whom on the brief was Robert W. Warren, attorney general; for the respondents Threshermen's Mutual Insurance Company and Town of Woodville, there was a brief by Boyle Wagner of Fond du Lac, and oral argument by Michael Wagner.
This appeal arises from a judgment affirming an order of the Department of Industry, Labor Human Relations (hereinafter department) allocating responsibility for certain workmen's compensation benefits to both Security Insurance Company of Hartford (hereinafter appellant) and Threshermen's Mutual Insurance Company (hereinafter Threshermen's).
The order of the department found that both insurers had policies of workmen's compensation insurance in effect for the town of Woodville during a period including October 22, 1968. On that date, one James E. Beach was injured while in employment for Woodville under circumstances entitling him to benefits of the Workmen's Compensation Act. No challenge is made to the fact of Beach's injury or rights to benefits, as determined by department examiners.
Initially, the examiners also concluded that Threshermen's was solely responsible for the benefits due the employee. The commissioners modified the findings to include appellant as equally responsible. The Dane county circuit court vacated the commission's order on March 22, 1972, finding that the modification actually set aside the examiner's findings without providing the aggrieved party an opportunity to reply. On remand, a department examiner again found Threshermen's to be solely responsible by order of July 11, 1972, and the commission then set aside such order and again held both insurers liable.
Appellant sought relief and filed a complaint in the Dane county circuit court. On December 31, 1973, judgment was entered affirming the order of the department. Security appeals from the judgment.
The appellant provided workmen's compensation insurance coverage for the town of Woodville from December 12, 1966, to December 12, 1967. Declining to renew the policy, appellant sent a notice of nonrenewal to Woodville, with notices also being sent to the ILHR Department and the Wisconsin compensation rating bureau.
In response, the town of Woodville procured a policy from Threshermen's for the period of December 12, 1967, to December 12, 1968. No dispute exists as to the examiner's finding that this policy was in force during the period of Mr. Beach's accident.
John Sohrweide, an agent of appellant, meanwhile informed the appellant to issue policies covering workmen's compensation and public liability for the town for the period of December 12, 1967, through December 12, 1968. He understood that appellant had refused renewal for lack of additional insurance business from the town and apparently believed that the town would purchase such supporting lines to regain workmen's compensation coverage with appellant. When he approached the town clerk some three to eight days after the effective date of the policy, he was informed of the coverage procured from Threshermen's and of the decision not to insure with appellant. He then returned the policy to appellant's home office.
When the policy originally was written in Milwaukee, copy of its front declarations page, known as a "daily," was sent to the Wisconsin compensation rating bureau as required by sec. 205.08(5), Stats. Threshermen's had made a similar filing for the same period. Receipt of these by the bureau prompted a letter to the town of Woodville on the assumption that unintentional double coverage might be indicated from "dailies" received. The letter was not answered by the town of Woodville. When the later accident prompted inquiries as to workmen's compensation insurance, appellant sent a notice of cancellation of policy No. WC780932 on April 24, 1969, to the town and the department. This policy purported to renewal of the policy which appellant had earlier declined to renew.
On the basis of appellant's failure to send a notice of cancellation to the department pursuant to sec. 102.31 (1) (a), Stats., until after the Beach accident, the commission and the circuit court found appellant responsible for one half of the employee's benefits.
The following issues are presented on appeal:
1. Was a valid policy of workmen's compensation coverage in effect by the activities of appellant, such that the requirements of cancellation under sec. 102.31(1)(a), Stats., had to be met before coverage would cease?
2. Does the language of sec. 102.31(1)(a), Stats., require the filing of a written notice of cancellation with the department in all cases even if the insured had procured coverage with another insurer?
3. Should the appellant insurer or correspondent insurer be awarded costs?
Existence of a policy by sec. 102.31(1)(a), Stats.
The commission's order that appellant is obligated to provide benefits to the injured worker is based on the undisputed fact that the appellant did write a policy of workmen's compensation insurance with a termination date of December 12, 1968, that a "daily" to this effect was sent to the rating bureau and that no effective cancellation occurred prior to the accident. It was further noted that a report of such insurance daily was forwarded to the ILHR Department's workmen's compensation division, pursuant to sec. 205.08(5), Stats. Without amplification in the order, the commission and Threshermen's apparently felt that a valid contract of insurance was in effect.In response to the appellant's claim that no complete contract existed, the trial court acknowledged this contention and explained the existence of insurance as an independent (of contract) insured status of the worker, arising as a "distinctive" feature of compensation insurance. The filing of the daily and the subsequent notice to the workmen's compensation division were apparently the significant acts indicating such status.
The attorney general acknowledges this line of reasoning but additionally cites Piscitello v. Boscarello (1931), 113 Conn. 128, 154 A. 168, to the effect that the filings made were legally significant acts creating the insured status. The declarations of coverage made in the report are a representation that the insurer is estopped to deny. Such reasoning may be sound in a situation where the employee is left without coverage. Here, Threshermen's policy of insurance furnished full coverage.
It is clear that although Security did write a policy of workmen's compensation for the town of Woodville to take effect on December 12, 1967, such policy never ripened into a contract. The existence of an insurance contract is a matter of contract law. 1 Couch, Insurance (2d ed.), p. 30, sec. 1:4; Bulman v. Bulman (1955), 271 Wis. 286, 289, 73 N.W.2d 599; Weed v. Lepianka (1966), 30 Wis.2d 198, 205, 140 N.W.2d 305.
In Weed, the insurance company forwarded automobile insurance renewal policies to its agent, without request of the insured. The agent was expected to sell them. When the claimant in Weed disregarded such sales attempts until suffering an accident, this court reaffirmed the trial court's ruling that no contract had previously existed. "`. . . [A] renewal cannot be effected or consummated without the mutual assent of the parties and a meeting of the minds of the parties on all the essentials of the contract, and a new consideration.'" Weed, supra, at 205.
In this case, a lack of mutual assent to contract was clearly demonstrated in the town's refusal of the policy. The lack of delivery and nonpayment of premiums, while having no independent significance here, evidence the mutual understanding that appellant's policy was not in effect.
Case law from other jurisdictions would agree that the refusal of the compensation policy by the potential assured prevents a contract from ever existing. Knox County Feed and Hatchery, Inc. v. Ivers (1960), 130 Ind. App. 481, 166 N.E.2d 132; Employers Mut. Liability Ins. Co. v. Howard (Tex.Civ.App. 1956), 286 S.W.2d 302.
The appellant incorrectly states that the finding of coverage "imposes" a contract. The adherence to the filing urged here does not create a contract with the listed insured, but rather creates an estoppel to deny the statutorily defined benefits for the named insured's employees while the record stands uncorrected. Contracts of insurance are never created by estoppel. Kamikawa v. Keskinen (1969), 44 Wis.2d 705, 711, 172 N.W.2d 24.
Even as so stated, appellant's contention that the statutes reveal no such obligation has merit. The estoppel in Piscitello is without clear statutory support and is at best implied by that court in effectuating the purpose of providing coverage benefits to workers. Thus, the coverage imposed on appellant is unwarranted.
Although neither the independent insured status followed by the reviewing court nor the estoppel of Piscitello separately compel that the judgment be upheld, there is merit to requiring that estoppel be applied in some circumstances. When the activity of an insurer under the requirements of sec. 205.08(5), Stats., would leave an employee without the benefits guaranteed by the act, then the rationale of Piscitello is sound. If another insurer has made a valid contract to cover the injured employee, then the insurer of erroneous record need not be estopped from denying his filing. This acknowledges the contractholder's duty to provide full coverage, sec. 102.31 (1) (a).
Since respondent Threshermen's was already on the risk in this case, the worker Beach was not jeopardized by the appellant's failure to correct its filing. The judgment of the circuit court upholding the order must be reversed.
The negative answer to the first issue eliminates the need for analysis of the second issue.
Costs
. Both insurance parties to this appeal request the award of costs, both for the action in the trial court and for this appeal.The statutory provision, sec. 102.26(1), Stats., reads in its pertinent section:
". . . In proceedings to review an order or award, costs as between the parties shall be in the discretion of the court, but no costs shall be taxed against the department."
In commencing its appeal to the circuit court, appellant requested costs. No order for costs was provided in the judgment. Unlike sec. 251.23, Stats., governing costs on appeals in general to this court, sec. 102.26(1) does not imply costs for the prevailing party. ". . . [C]osts are not to be taxed unless the court expressly orders costs." Rice Lake Creamery Co. v. Industrial Comm. (1962), 17 Wis.2d 177, 180, 115 N.W.2d 756. That provision also governs on ch. 102 appeals that reach this court. Rice Lake, supra, 180, 181.
Appellant requests costs because "The real party involved in the dispute with appellant . . . is Threshermen's Mutual." Certainly, Threshermen's has been a party throughout the dispute, before examiners, commission, circuit court and in this court. However, appellant was brought into the dispute initially by the complaining employee who, at that time, was adverse to appellant and Threshermen's. Appellant charges that Threshermen's is "hiding behind statutes intended for protection of employees." The statutes involved are most forcefully asserted by the ILHR Department on this appeal for which Threshermen's cannot be faulted. It has every right to assert those legal arguments pertinent to the issue. We find little reason supporting the appellant's request for costs and conclude that no costs be allowed.
By the Court. — Judgment reversed and no costs to be awarded to either party.