HALLOWS, C. J.
On an appeal from the overruling of a demurrer, we are confined to the facts stated in the complaint. The complaint alleged the plaintiff's policy of insurance issued by Western Casualty contained an endorsement protecting him against damages for bodily injury caused by the operator of an uninsured automobile; that this endorsement provided settlement by arbitration and this provision had been expressly waived by the defendant.
The plaintiff alleged that on the 5th day of August, 1962, he as owner of a 1955 Dodge was driving with his wife, a passenger in the front seat, in an easterly direction on County Highway F in Shawano county and when he commenced to make a left-hand turn onto intersecting Highway E, he was struck by one William F. Grosskopf, Jr., driving a 1955 Buick south on County
Wisconsin requires by sec. 204.30 (5) (a), Stats., that an automobile-liability insurance policy delivered in this state in respect to a motor vehicle registered in this state to provide coverage for bodily injury "for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles." The named insured has a right to reject such coverage. The exact endorsement on the plaintiff's policy is not disclosed in the pleading, but presumably it is the customary form issued in compliance with this section of the statute.
Uninsured motorist coverage originated in a standard endorsement promulgated in 1956 by the National Bureau of Casualty Underwriters. Its use was in response to the threat of various legislatures to require compulsory automobile-liability insurance of all motorists. A majority of the states have now adopted statutes similar to or substantially the same as sec. 204.30 (5) (a) of the Wisconsin Statutes
The sole issue on this appeal is whether a suit brought on the uninsured motorist coverage is governed by the three-year tort statute of limitations of sec. 893.205 (1), Stats., or by the six-year statute of limitations prescribed for contracts in sec. 893.19 (3). We think the trial court was correct in holding this complaint stated a cause of action in contract and not in tort and the six-year statute was applicable.
The uninsured-motorist-coverage endorsement does not state a period of time within which claims thereunder must be presented. The three arguments of Western Casualty for the application of the tort statute of limitations have been discussed and evaluated by the cases and literature on the subject. They are: (1) Because the tort statute of limitations has run and barred any suit against the uninsured motorist, the insured consequently has no rights under the terms of the endorsement requiring that he be "legally entitled to recover;"
Western Casualty relies mainly on cases from Louisiana, Tennessee, and South Carolina, but in analyzing these cases, we find in them little support for the contention that the tort statute of limitations should apply. Two of the intermediate appellate court decisions from Louisiana
It is true as contended by Western Casualty, that in Schleif v. Hardware Dealer's Mut. Fire Ins. Co. (1966),
In Laird v. Nationwide Ins. Co. (1964), 243 S.C. 388, 134 S.E.2d 206, the language is more in support of the plaintiff's position than the defendant's. But Western Casualty argues the attitude of the South Carolina court indicated the insured must prove he is "legally entitled to recover" by reducing his claim against the uninsured motorist to a judgment. Consequently, if he has not proceeded in a timely manner, his tort claim would be barred and he would no longer be "legally entitled to recover" as that term is used in the endorsement. By statute California requires suit to be brought against an uninsured motorist as one alternative condition of recovery. See Fireman's Ins. Co. v. Diskin (1967), 255 Cal.App.2d 502, 63 Cal.Rptr. 177; Travelers Indemnity Co. v. Bell (1963), 213 Cal.App.2d 541, 29 Cal.Rptr. 67. This requirement that an insured must obtain a judgment against the uninsured motorist before suing his insurance company prevails in the state of Virginia.
Thus an insured under the uninsured motorist endorsement must first make a claim against his insurer. The insurer may then negotiate settlement, require the insured to bring suit against the uninsured motorist in which event it would become bound by the judgment, or make a written demand for arbitration. If the insurer does nothing, the insured may demand arbitration or sue the uninsured motorist without the consent of the insurer. The insured must, however, forward a copy of the summons and complaint to his insurer. See Allstate Ins. Co. v. Charneski (1962), 16 Wis.2d 325, 114 N.W.2d 489. If an insured deliberately delayed giving notice to his insurer of his claim or refused to bring suit when requested, such action would breach the endorsement provisions.
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. In this case we are not informed of the reason for the breakdown in this process; the complaint alleges only arbitration was waived.
The "legally entitled to recover" argument seems hardly appropriate on this demurrer which rests on the ground that the tort statute of limitations applies. The gist of the argument is not that the tort statute applies to this action but to the action against the uninsured motorist and consequently this complaint does not state a cause of action.
But in answer to the merits of this argument, the phrase "legally entitled to recover" raises the question
Although the phrase "legally entitled to recover" appears both in sec. 204.30 (5) (a), Stats., and in the uniform uninsured motorist coverage, we find no basis in the history of the statute or of the endorsement that coverage should be restricted to those situations in which the insurer can stand in the shoes of the uninsured motorist. The purpose and intent of this type of coverage was to benefit the insured so that he would be reimbursed for his injuries. The purpose was not to provide free liability insurance for an otherwise uninsured motorist; and the endorsement does not do so because
We are not sympathetic with the argument that because the plaintiff's claim against his insurer is founded upon the negligent tort of the uninsured motorist it should be governed by the same considerations as an action for negligence. This is another phase of the argument that the insurer stands in the shoes of the uninsured motorist and therefore should have all his rights. The insurer has not so contracted in the uninsured motorist endorsement. We think it clear the action by an insured against his insurer under the uninsured motorist endorsement is an action on the policy and sounds in contract although in order to recover the insured must prove the negligence of an uninsured motorist. Western Casualty's argument to base an interpretation upon the considerations of the tort action would invoke a new standard of construction of contractual language.
It is true an insurer such as Western Casualty is put to some disadvantage when it can no longer pursue subrogation against an uninsured motorist. However, such hardship does not go to the nature of the cause of action and consequently does not determine what statute of limitations should apply. The application of any statute of limitations generally creates a hardship but it is a hardship because someone delayed doing what he might
The trial court was correct and should be affirmed.
By the Court.—Order affirmed.