Submitted under sec. (Rule) 251.54 March 6, 1975. —
Decided April 10, 1975.
APPEAL from an order of the circuit court for Rock county: ARTHUR L. LUEBKE, Circuit Judge. Affirmed.
For the appellant the cause was submitted on the brief of Wickhem, Consigny, Sedor, Andrews Hemming, S.C. of Janesville.
For the respondents the cause was submitted on the brief of Nowlan, Mouat, Lovejoy, Wood Cripe, attorneys, and Richard E. Rosenberg of counsel, all of Janesville.
This action was commenced by plaintiffs-respondents, Donald Collicott and Julia Collicott, an incompetent by her guardian, Gloria Miller, against defendant-appellant, Economy Fire Casualty Company to recover damages under an uninsured motorist policy.
Donald Collicott and Julia Collicott are the parents of Dale Collicott. On August 13, 1971, Dale Collicott was a passenger in an automobile owned and operated by one Raymond Dieter and at 3:55 p.m. on that day the Dieter vehicle collided with a truck operated by one Donald J. Guse and an automobile being operated by one James D. Gallagher. Dieter was alleged to be causally negligent in several respects. The Dieter vehicle was not covered by any liability policy at the time of the accident. Dale Collicott suffered personal injuries resulting in his death.
The complaint alleges that a policy of automobile insurance was issued by defendant to Donald Collicott and by the terms of said policy, defendant agreed to pay damages up to $15,000 for injury or death of Dale Collicott caused by the negligence of an operator of an uninsured vehicle.
Plaintiffs made demand for payment of their claim and allege that the defendant refused to pay or arbitrate according to the terms of the policy.
Defendant served and filed its answer. As an affirmative defense, it alleged that at the time of the accident, Donald J. Guse and James D. Gallagher, respectively, were causally negligent and also that both Guse and Gallagher had in force with American Family Insurance Group and Union Insurance Companies, respectively, valid, collectible and enforceable policies of automobile liability insurance with maximum limits at least equivalent to the minimum requirements then effective ($15,000) under the financial responsibility laws. It further alleged that under the uninsured motorist insurance, coverage does not apply where claimant's damages are recoverable to the extent of such minimum limits from other valid and collectible insurance maintained by other causally negligent tort-feasors.
Through their attorneys, the parties stipulated that the court should treat the procedural posture of the case as if the defendant was entering a plea of abatement to plaintiffs' proceeding without arbitration as a condition precedent under the policy and as if plaintiffs were entering a demurrer to that part of the answer alleging the other drivers' causal negligence and responsibility, and that the court should determine (1) whether the policy requirement for arbitration had been waived by the insurer either prior to the commencement of the action or by defendant's answer, and (2) whether plaintiffs should affirmatively show they are entitled to uninsured motorist coverage by alleging and establishing the absence of other sources to provide sums at least equal to the uninsured motorist coverage.
The trial court in its memorandum decision of March 2, 1973, held the policy requirement for arbitration had not been waived, and that plaintiffs must affirmatively show that they are entitled to uninsured motorist coverage by establishing no other equivalent collectible source of recovery for their damages. The court ordered the plaintiffs' action dismissed as not timely brought, without prejudice to recommencement of the action after arbitration requirements had been complied with and at such time as plaintiffs could show the unavailability of other sources of collection of their damages.
Thereafter, plaintiffs served a motion seeking an order vacating the court's previous order of dismissal and permitting plaintiffs to file an amended complaint. In the proposed amended complaint, it was alleged that plaintiffs had made "claims" against American Family Insurance and Union Insurance Group, the insurers for the other drivers involved, but that each had denied causal negligence and refused to make voluntary payment; letters reflecting such refusal were attached. Plaintiffs alleged there were no funds available from any source to pay their damages.
The trial court held a rehearing on the two questions determined in its March decision, and thereafter rendered its memorandum decision, dated June 27, 1973. The trial court reversed itself and granted plaintiffs' motion to vacate and set aside the two rulings of its previous decision. The trial court found that arbitration had been waived and that plaintiffs were not required to establish absence of other collectible sources.
The court ordered the defendant's plea in abatement dismissed and the order of dismissal vacated. Defendant appeals from the order.
Three issues are presented upon this appeal:
1. Is arbitration a condition precedent to suit under the terms of the uninsured motorist coverage of the insurance contract and the statutes of the state of Wisconsin?
2. Was arbitration waived by the appellant insurance company?
3. Must plaintiffs show they qualify for uninsured motorist coverage by establishing absence of other collectible funds that would provide the contractual amount of the uninsured motorist coverage?
Arbitration as condition precedent. Defendant contends that the action cannot be maintained because the insured failed to resort to arbitration before bringing its action. Ch. 298, Stats., is the Wisconsin Arbitration Act. Sec. 298.01 provides:
" Arbitration clauses in contracts enforceable. A provision in any written contract to settle by arbitration a controversy thereafter arising out of such contract, or out of the refusal to perform the whole or any part thereof, or an agreement in writing between two or more persons to submit to arbitration any controversy existing between them at the time of the agreement to submit, shall be valid, irrevocable and enforceable save upon such grounds as exist at law or in equity for the revocation of any contract . . . ."
In the instant case, the policy provisions for arbitration provide as follows:
"If any person making claim hereunder and the company do not agree that such person is legally entitled to recover damages from the owner or operator of an uninsured automobile because of bodily injury to the insured, or do not agree as to the amount payable hereunder, then each party shall, upon written demand of either, select a competent and disinterested arbitrator. The two arbitrators so named shall select a third arbitrator, or if unable to agree thereon within 30 days, then upon request of the insured or the company such third arbitrator shall be selected by a judge of a court of record in the county and state in which such arbitration is pending. The arbitrators shall then hear and determine the question or questions so in dispute, and the decision in writing of any two arbitrators shall be binding upon the insured and the company . . . ."
Under the uninsured motorist policy and the provisions of sec. 298.01, Stats., either party could invoke the arbitration procedure as a matter of right.
Sec. 298.02, Stats., provides:
" Stay of action to permit arbitration. If any suit or proceeding be brought upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration."
"By providing for a stay pending arbitration, the statute implicitly denies the validity of a provision that no action may be brought until arbitration has been had and the dismissal which defendant consistently sought at every stage of the action." (p. 682.)
Under Schramm v. Dotz, supra, arbitration is not a condition precedent to commencement of an action under an uninsured motorist policy. Waiver of arbitration. The complaint, in paragraph 13, alleges as follows:
"Plaintiffs have made a demand for payment of their claim by defendant and defendant refused either to pay or to arbitrate according to the terms of the policy. A copy of defendant's letter of refusal is marked Exhibit A, attached hereto and incorporated herewith."
"In the normal adjustment of this type of claim, it is anticipated a settlement will be reached by negotiation and failing that, by arbitration. If the insurer refuses to arbitrate on demand, it breaches its contract." (p. 67.)
It is, of course, possible to waive one's right to arbitration. Schramm v. Dotz, supra. In the instant case, when the defendant rejected the plaintiffs' demand for arbitration for the reasons stated, it thereby waived its right to arbitration. Applicability of uninsured motorist coverage where other tort-feasers are involved. Defendant contends that the uninsured motorist coverage is not applicable where other insured tort-feasors are involved. Motorists Mut. Ins. Co. v. Tomanski (1971), 27 Ohio St.2d 222, 271 N.E.2d 924, is directly on point. There the court said:
"Where the occupant of a motor vehicle, covered under an uninsured motorist insurance contract obligating insurer to `pay all sums which the insured or his legal representative shall be legally entitled to recover from the owner or operator of an insured automobile because of bodily injury,' is injured in an accident with such an uninsured automobile, his right of recovery under the contract is not eliminated by the presence of an insured motor vehicle in the same accident." (p. 226.)
The Ohio court points out that recovery under the uninsured motorist endorsement is on the contract, not in tort. (p. 223). This court has recognized the contractual nature of the coverage. Sahloff v. Western Casualty Surety Co., supra, at pages 64 and 70.
Morateck v. Milwaukee Automobile Mut. Ins. Co. (1967), 34 Wis.2d 95, 101, 148 N.W.2d 704, would support the trial court's decision here. In discussing Wisconsin case law on arbitration under the uninsured motorist provision, the author of Comment, Arbitration: Uninsured Motorist Endorsement, 53 Marq. L. Rev. (1970), 411, 432, said of this case:
"In Morateck v. Milwaukee Auto Mut. Ins. Co., as to the subsidiary issue of whether uninsured motorist coverage exists where only one of the two joint tort-feasors was uninsured, coverage was apparently found. The opinion reports only that the parties `waived' arbitration under the endorsement and stipulated instead to Circuit Judge LEO HANLEY as arbitrator."
The "Trust Agreement" in the uninsured motorist endorsement would indicate that it is not necessary to first sue all other potentially liable tort-feasors. In particular, that agreement provides:
"In the event of payment to any person under this Part:
"(a) the company shall be entitled to the extent of such payment to the proceeds of any settlement or judgment that may result from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury because of which such payment is made;
". . .
"(d) if requested in writing by the company, such person shall take, through any representative designated by the company, such action as may be necessary or appropriate to recover such payment as damages from such other person or organization, such action to be taken in the name of such person; in the event of a recovery, the company shall be reimbursed out of such recovery for expenses, costs and attorneys' fees incurred by it in connection therewith; . . ." (Emphasis supplied.)
These provisions indicate that the general coverage provision is not limited as contended by the defendant.
Under the defendant's contention, the plaintiffs could be compelled to verify a complaint containing allegations of negligence against parties they believed were not negligent in any respect. They also would be exposed to payment of attorney's fees and statutory costs in the event of no liability on the part of the insured party defendants.
We conclude that there is no provision in the statutes or in the insurance policy which requires the plaintiffs to exhaust any other possible remedies before seeking recovery under the terms of the family protection coverage.
By the Court. — Order affirmed.