¶ 1. JON P. WILCOX, J.
Catholic Knights Insurance Society (CKIS) petitions this court for review of a published opinion of the court of appeals, Fox v. Catholic Knights Insurance Society, 2002 WI App 117, 254 Wis.2d 632, 649 N.W.2d 307. The court of appeals, in a split decision, reversed an order of the Milwaukee County Circuit Court, Timothy G. Dugan, Judge, that granted summary judgment in favor of CKIS. The court of appeals held that coverage existed under an insurance policy even though the policyholder died before completing a required blood test and that under Wis.
¶ 2. Austin Fox (Fox), a minor, through his guardian ad litem, brought suit against CKIS, alleging breach of contract after CKIS denied his claim for benefits under the life insurance policy for which his father had applied. Patrick Fox (Patrick), Fox's father, applied for a life insurance policy and listed Fox as the primary beneficiary. Patrick filled out the application and paid the initial premium. The application included a section entitled "Receipt for Payment and Conditional Insurance Agreement." This section noted that coverage under the agreement would not begin until certain conditions were satisfied. One of these was completion of a medical study, a blood test. Unfortunately, Patrick was killed in an automobile accident before completing the blood test. Because the blood test was never done, CKIS denied coverage, claiming that the policy had never gone into effect.
¶ 3. Both parties filed motions for summary judgment in the circuit court. The circuit court ruled in favor of CKIS, finding that no insurance policy was in effect and that Wis. Stat. § 631.11(3) only related to conditions subsequent and, as such, did not apply. Fox appealed, and a divided court of appeals reversed. CKIS then petitioned this court for review, which we granted.
¶ 4. Two related issues arise before this court: (1) whether there was an effective conditional insurance agreement in place at the time of Patrick's death; and (2) whether Wis. Stat. § 631.11(3) applies in this case such that in order to avoid coverage, CKIS
¶ 5. The relevant facts of this case are undisputed. On May 21, 1997, Patrick completed an "Application for Membership and Life Insurance" for a $150,000 term life insurance policy from CKIS. In the application, Patrick named Austin Fox, his then two-year-old son, as the primary beneficiary. On that date, Patrick also paid $31.94 as a first premium.
¶ 6. The application contains a section titled "Receipt for Payment and Conditional Insurance Agreement." This section provides, in relevant part:
(Bold and italics in original.)
¶ 7. Another section of the application entitled "Agent's Report" required the agent to mark which of several medical requirements applied to the applicant. On Patrick's application, the agent marked only the box for the blood test.
¶ 8. Patrick initially set an appointment to get the required medical examination on May 30, 1997. Prior to the appointment, however, he canceled and rescheduled the testing for the afternoon of June 6, 1997.
¶ 9. Unfortunately, early on June 6, 1997, Patrick was killed in a motor vehicle accident. The accident occurred before he completed the required medical testing. However, shortly after his death, the coroner drew a blood sample from Patrick's body and sent it to the Wisconsin State Laboratory of Hygiene for evaluation to determine if alcohol was involved in the accident.
¶ 10. After receiving notice of Patrick's death, CKIS denied coverage and refused to pay any benefits based on Patrick's application. CKIS wrote to Patrick's father and explained that because the blood draw never took place, the life insurance policy never took effect. CKIS refunded the initial premium paid.
¶ 11. On August 19, 1997, at the request of Patrick's family, Attorney Thomas Graham wrote CKIS to request that the insurance company use the postmortem blood sample to test the insurability of Patrick.
¶ 12. Austin Fox, through a guardian ad litem, then brought an action against CKIS to recover the benefits under the policy. Both parties brought motions for summary judgment in the circuit court. Fox claimed that the policy's condition of the blood test was fulfilled when blood drawn from Patrick after his death was made available to the insurance company. He also argued CKIS could not avoid its obligation because the company could not prove any increased risk from the unfulfilled condition under Wis. Stat. § 631.11(3). CKIS, on the other hand, asserted that there was no policy in effect because Patrick failed to complete the medical exam before his death, and that the blood drawn after Patrick's death was not usable for the purpose of determining insurability.
¶ 13. The circuit court ordered summary judgment in favor of CKIS, finding that Patrick died before coverage began. The court also found that the blood draw was a condition precedent to coverage and that § 631.11(3) related only to conditions subsequent.
¶ 14. In a divided opinion, the court of appeals reversed the order of the circuit court. The majority held that § 631.11(3) was unambiguous and applied to
¶ 15. Judge Ted Wedemeyer Jr., dissented. He agreed with the circuit court's analysis and found that § 631.11(3) was inapplicable. Further, he held that because no blood was drawn from Patrick until after his death, the life insurance policy did not go into effect.
¶ 16. Upon review, we reverse the holding of the court of appeals. We agree with Judge Wedemeyer's dissenting opinion, finding that under the facts of this case, no effective policy of insurance coverage yet existed and, as such, § 631.11(3) does not apply.
¶ 17. This case arose as a review of a grant of summary judgment. "[W]e review a grant of summary judgment by applying the same methodology as the circuit court." Farm Credit Servs. v. Wysocki, 2001 WI 51, ¶ 7, 243 Wis.2d 305, 627 N.W.2d 444. Under Wis. Stat. § 802.08(2), summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,
¶ 18. Neither party here argues that material issues of fact remain. Determining whether summary judgment was appropriately granted here requires us to interpret both an insurance contract and a statute. The interpretation of an insurance contract is a question of law subject to de novo review. Wisconsin Label Corp. v. Northbrook Prop. & Cas. Ins. Co., 2000 WI 26, ¶ 22, 233 Wis.2d 314, 607 N.W.2d 276 (citation omitted). "Insurance policies are contracts and are governed by the same rules that govern interpretation of contracts in general." Id., ¶ 23. We interpret contracts with the goal of determining and giving effect to the parties' intentions. Id.
¶ 19. Statutory interpretation also raises a question of law that we review de novo. Gloudeman v. City of St. Francis, 143 Wis.2d 780, 784, 422 N.W.2d 864 (Ct. App. 1988). Statutory construction has the purpose of assisting the court to discern and apply legislative intent. State v. Martin, 162 Wis.2d 883, 893, 470 N.W.2d 900 (1991). If statutory language is unambiguous, we apply the statute using the common and generally accepted meanings of the terms. DNR v. Wisconsin Power and Light Co., 108 Wis.2d 403, 408, 321 N.W.2d 286 (1982). We may refer to a recognized dictionary to determine the common meaning of terms. Id. Although the rules of statutory construction preclude us from using legislative history to uncover ambiguity where otherwise none exists, we are not precluded from looking to legislative history "`to reinforce and demonstrate that a statute plain on its face, when viewed historically,
¶ 20. We begin our analysis with the language of the statute. Wisconsin Statute § 631.11(3) provides:
(Emphasis added.) The court of appeals found that, contrary to the assertions by CKIS, the phrase "no failure of a condition prior to a loss" was unambiguous and clearly applied to the policy at issue in this case. See Fox, 254 Wis.2d 632, ¶ 15 n.5. The majority held that the language of the statute operated to "trump what otherwise might be the preclusive effect" of the requirement for a medical examination. See id., ¶ 14.
¶ 21. We disagree with this interpretation. The court of appeals' interpretation overlooks several important words in the statute. The statute discusses the failure of a condition in the context of rescission and "an insurer's obligations under an insurance policy." Wis. Stat. § 631.11(3). Both of these contexts require an effective policy to be in existence, or they make no sense. For example, a policy that does not yet exist cannot be rescinded.
¶ 22. CKIS asserts that the term "condition" is not clearly defined in the statute. We agree to the extent
¶ 23. Our interpretation of the statutory language is supported in a variety of ways. First, as we have noted, the statute, by its own terms, applies only when there is an insurance policy in effect.
Couch on Insurance § 13.10 (3d ed. 1999) (emphasis added) (footnoted citations omitted).
¶ 24. A condition precedent relates to the very attachment of risk, whereas a condition subsequent "pertain[s] to the contract of insurance after the risk has attached and during the existence thereof." Couch on Insurance § 81:19 (3d ed. 1999). Because conditions precedent relate to the attachment of risk and precede the existence of the policy, application of the requirements of Wis. Stat. § 631.11(3) would make no sense. It would place an impossible burden on insurers. Insurers cannot show, under § 631.11(3), that the failure of such a condition increased the risk at the time of the loss or contributed to the loss because risk has not yet attached. Therefore, we find that if the conditional insurance agreement in this case was not yet in effect, § 631.11(3) is inapplicable.
¶ 25. Fox counters this statutory language argument by noting that the statute specifically excludes one condition precedent, payment of premiums. He argues that the specific exclusion of one such condition means that all other conditions precedent are necessarily included within the bounds of the statute. We cannot agree. We find that the payment of premiums is different from all other types of conditions in that it recurs. As such, it may not always be a condition precedent. Although payment of an initial premium is certainly a condition preceding an insurance policy, premiums are typically due periodically without a lapse in coverage. For example, Wis. Stat. § 632.44(2) requires that every life insurance policy, except group policies, "contain a provision entitling the policyholder to a grace period of
¶ 26. The court of appeals has recognized the difference between conditions under a contract and conditions to the making of a contract:
Kocinski v. Home Ins. Co., 147 Wis.2d 728, 738, 433 N.W.2d 654 (Ct. App. 1988), aff'd by 154 Wis.2d 56, 452 N.W.2d 360 (1990). Thus, Wis. Stat. § 631.11(3) may apply differently depending on the specific condition in the context of an insurance policy or conditional insurance agreement. The court of appeals provided a good example: "`Where the parties to the proposed contract have agreed that the contract is not to be effective or binding until certain conditions are performed or occur, no binding contract will arise until the conditions specified have occurred or been performed.'" Id. at 739 (quoting Parkview Gen. Hosp., Inc. v. Eppes, 447 S.W.2d 487, 490-91 (Tex. Civ. App. 1969)).
¶ 27. Having examined conditions precedent generally, we now look for more specific support of our interpretation of Wis. Stat. § 631.11(3). Wisconsin Civil Jury Instruction 3105 indicates that § 631.11(3) was intended to apply only to conditions after an effective policy is in place. Wis JI-Civil 3105 is entitled "Insurance Contract: Failure of Condition or Breach of
Comment to Wis JI-Civil 3105 (emphasis added). The Comment makes clear that the terms are related to the time after the policy takes effect.
¶ 28. The jury instruction comment that promissory warranty and failure of condition have been generally treated as synonymous takes us back to the plain language of the statute. The titles of the subsections of Wis. Stat. § 631.11 (1997-98), separating affirmative and promissory warranties, lend additional support to our finding that § 631.11(3) was intended to deal only with conditions subsequent. Since 1975, when the statute was created, Wis. Stat. § 631.11 has had separate provisions for "breach of affirmative warranty" and "breach of promissory warranty." See § 41, ch. 375, Laws of 1975. At first, affirmative warranties were dealt with in Wis. Stat. § 631.11(2). Id. Then, in 1995, Wis. Stat. § 631.11 was amended and § 631.11(2) became part of the section for "Effect of Negotiations for Contract," § 631.11(1)(b). 1995 Wis. Act 259, §§ 1, 6. Meanwhile,
¶ 29. This separation is important. Black's Law Dictionary differentiates between promissory and affirmative warranties. See Black's Law Dictionary 1583 (7th ed. 1999). An affirmative warranty is defined: "A warranty—express or implied—that facts are as stated at the beginning of the policy period. An affirmative warranty is usu[ally] a condition precedent to the policy taking effect." Id. (emphasis added). In contrast, a promissory warranty is defined: "A warranty that facts will continue to be as stated throughout the policy period, such that a failure of the warranty provides the insurer with a defense to a claim under the policy.—Also termed continuing warranty." Id. (some emphasis added). These definitions make clear that affirmative warranties typically refer to conditions precedent, while promissory warranties refer to conditions subsequent, conditions relevant to the period after an effective policy exists. Therefore, it appears that the terms of § 631.11(3) only relate to conditions subsequent.
¶ 30. In addition to the plain language of the statute, we find that the legislative history of the statute also supports limitation of the applicability of § 631.11(3). Despite commentary from this court in Brown v. Equitable Life Insurance Company of Iowa, 60 Wis.2d 620, 630, 211 N.W.2d 431 (1973) suggesting distaste for insurance industry tools such as conditional receipts,
¶ 31. The note to § 631.11 provides some insight into the purposes of revising these insurance provisions. In one of its early reports, the ILRC noted that it intended to draft comments for the purpose of assisting, among others, the legislature and the courts. See Report of the Wisconsin Legislative Council, Volume III, Insurance Laws Revision Committee, at 90 (Nov. 1967) (hereinafter 1967 Report). The first draft of the statute
¶ 32. The note also points out that Wis. Stat. § 631.11 (1975) was intended to replace section 209.06 of the previous statutes and broaden it to expressly bring failures of condition within the statute. See § 41, ch. 375, Laws of 1975. The note suggests the reason for the explicit "failure of condition" language is to ensure that courts treat the failures of condition and promissory warranties the same, because a line of cases from other states, particularly Massachussetts, treated them differently and allowed insurers to "evade a warranty statute by couching the provision in conditional language." Id.
¶ 33. The ILRC comments also show a concern in policies both for the insurers and the insured:
§ 41, ch. 375, Laws of 1975. This comment suggests that
¶ 34. Finally, we note that one federal court in Wisconsin has already had the opportunity to interpret the language of Wis. Stat. § 631.11(3). In LaBonte v. Connecticut General Life Insurance Company, 723 F.Supp. 392, 395-96 (E.D. Wis. 1989), a federal district court in Wisconsin held that § 631.11(3) only applied to conditions after a policy takes effect, not before. In the case, the court was faced with a claim for coverage of a person under a group policy, where the person was not an employee. Id. at 393. The court found that membership was a condition precedent and, as such, there was no policy and § 631.11(3) did not apply. Id. at 395-96.
¶ 35. Based on all of the above, we find that § 631.11(3) only applies to conditions subsequent to a policy becoming effective. Thus, we proceed to the next issue raised in this case—whether an effective policy existed. Fox asserts that there was a binding contract in place at the time Patrick signed the application and paid the initial premium. He further asserts that the condition of a blood test was satisfied by the blood drawn from Patrick after his death. The court of appeals majority agreed, and found that the policy went into effect on May 21, 1997, the day Patrick submitted his application and paid the initial premium. This court does not agree.
¶ 36. We find that there is a great deal of authority for the proposition that the requirement of a medical examination may be made a condition precedent to coverage. Whether a condition is a condition precedent to coverage depends on the language of the contract itself. If the proposed insured does not then get an examination required for coverage to take effect, there is no contract for insurance. See Couch on Insurance § 13.10. In discussing conditions typically regarded as precedent to coverage, one leading scholar of insurance law has noted: "Of course, where the applicant becomes ill or dies prior to completing a precedent condition of medical examination, recovery will be denied." Couch on Insurance § 13:11, at 13-32 (internal citations omitted).
¶ 37. This type of condition has been examined by numerous courts. In Protective Life Insurance Company v. Robinson, 387 S.E.2d 603, 604-05 (Ga. Ct. App. 1989), for example, the Georgia Court of Appeals held that coverage under a conditional receipt for life insurance never became effective where the policy explicitly required a medical exam and the applicant died before submitting to the exam. Similarly, in Roscoe v. Bankers Life Insurance Company of Nebraska, 526 P.2d 1080, 1083-84 (Ariz. Ct. App. 1974), the Arizona Court of Appeals found that where a required medical exam was not taken, the application for insurance was incomplete and no contract for temporary insurance existed. See also Gladney v. Paul Revere Life Ins. Co., 895 F.2d 238 (5th Cir. 1990) (holding that failure to satisfy condition precedent means that policy never became effective); Wolters v. Prudential Ins. Co. of Am., 296 F.2d 140 (8th Cir. 1961) (application incomplete because applicant failed to complete medical examination before death);
¶ 38. Although this court has not previously decided a case regarding failure to get a medical examination prior to death, this court has decided a case raising a similar question regarding a condition precedent to coverage. In Brown, 60 Wis. 2d at 628, this court determined that, under the facts of the case, insurability was a condition precedent to coverage under the conditional receipt at issue. In the case, the deceased had applied for a life insurance policy. Id. at 622-23. He had a cancerous skin condition of which the agent was aware. Id. As a condition to insurance, the applicant was required to have a medical examination. Id. at 623. He did so, but soon after, died of a heart problem that was unforeseen and unrelated to the skin condition. Id. at 623-24. The court found that a reasonable insured would understand that the policy was conditioned upon a determination of insurability. Id. at 627-29. Since the insurance company determined in good faith that the deceased was uninsurable, this court concluded that there was no interim insurance coverage. Id. at 630-31.
¶ 39. In Smith v. North American Company for Life and Health Insurance, 775 F.2d 777 (7th Cir. 1985), the Seventh Circuit refused to allow collection on a policy where the applicant misrepresented the state of his health and died before submitting to the medical examination requested by the insurance company. The
¶ 40. There can be no doubt about the terms of the agreement between Patrick Fox and the insurance company. The agent testified that he explained the necessity of the blood test and Patrick's actions toward getting the test taken care of indicate that he understood there was no coverage until the test was completed. Section C of the Conditional Insurance Agreement specifically states that coverage under the conditional agreement will be effective on the last of several listed dates. Here, the last relevant date is the date of the medical exam. The agreement unambiguously states that no coverage is in effect until the examination (blood test) is taken. The court of appeals suggests that the post-mortem blood sample should suffice. Even putting aside the insurer's concerns about whether the blood could be adequately tested for insurance purposes, the test taken by the coroner after death is insufficient. Life insurance is to be paid upon the death of the applicant. Fox's claim arises from his father's death. There was no effective policy at the time of Patrick's death, however, because he had not yet submitted to the blood test.
¶ 41. We agree with CKIS that were we to decide that a policy did arise in this case, there would be a
¶ 42. Obviously, the facts of this case are tragic and we sympathize with Patrick Fox's family. Yet the law rules with an even hand and we cannot be controlled by such sympathies. This case implicates basic principles of contract and insurance law. The terms of the "Receipt for Payment and Conditional Insurance Agreement" in this case are clear. We have no doubt that Patrick understood that certain requirements, including the blood test, had to be fulfilled before the would have coverage. However, he died before the requirements were met. As a result, we must conclude that
By the Court.—The decision of the court of appeals is reversed.
¶ 43. SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE (concurring).
I write separately to highlight that this is another case in which the court mouths the exclusive plain meaning rule
¶ 44. I write further, however, to stress that courts, when looking to evidence of legislative intent in the history, context, subject matter, and object of a given statute, must engage in an analysis of both the evidence that supports a given interpretation as well as the evidence that contradicts a given interpretation.
¶ 48. Ultimately, I agree with the majority that Wis. Stat. § 631.11(3) is properly construed to apply only to conditions subsequent, not to conditions precedent. The preponderance of the evidence bearing on legislative intent supports the majority's conclusion. Yet this conclusion can, and should, be reached only after considering all relevant evidence of legislative intent, not merely that evidence which supports the interpretation that the court favors after looking to the statutory language in isolation.
¶ 49. For the foregoing reasons, I concur.
¶ 50. I am authorized to state that Justice WILLIAM A. BABLITCH joins this concurrence.
¶ 51. WILLIAM A. BABLITCH, J. (concurring).
"That depends on what the meaning of the word `is' is." William Jefferson Clinton.
¶ 53. Language is inherently ambiguous— perhaps not as ambiguous as the quotation above would have us believe, but the quote makes a point: plain meaning is frequently in the eye of the beholder. What is plain to one may be ambiguous to another. If good evidence as to legislative intent is present, why not use it? Accordingly, I join Chief Justice Abrahamson's concurrence.
While the Restatement expresses some dissatisfaction with the particular terminology utilized, it recognizes that courts have found that there may be events that must occur before a contract will exist. Id., cmt. c (noting that "[w]hen an event that is not normally part of the process of formation of contract is made an event upon which the performance of the contract is dependent, courts often describe it as a condition that must be performed before the contract comes into existence"). The Restatement concludes that what it terms "conditions to the parties' performance" are not substantively different from "what are often called conditions to the existence of the contract." Id.
We use the terms "condition precedent" and "condition subsequent" for convenience, but note that however described, conditions may be put upon contracts, such that the existence of the contract depends upon satisfaction of the condition.
See George A. Hardy, The Life Insurance Law of Wisconsin: Revision of 1967-1977 425, 467 (1977)(hereinafter Life Insurance Law of Wisconsin). Hardy then went on to cite language from the Brown decision. Id. Notably, however, this commentary does not indicate that the legislature responded to this court's remarks.
The efforts of the Insurance Laws Revision Committee (ILRC) were led by Professor Spencer L. Kimball, project director. See 1967 Report, at 87; see also Hardy, The Life Insurance Law of Wisconsin, at 426-27.
V Wisconsin Legislative Council and Council Committees, 1969-71, Insurance Contracts, at 27 (Aug. 1970).
This court has also espoused an alternative rule to plain meaning. See, e.g., City of Madison v. Town of Fitchburg, 112 Wis.2d 224, 236, 332 N.W.2d 782 (1983) ("[T]he spirit or intention of a statute should govern over the literal or technical meaning of the language used.").
I declared in 1983 that I am a critic of the plain meaning rule and that the court may examine material outside the statute to determine whether persuasive evidence exists of a "clear legislative intention different from that to which an ordinary reading of the plain words of the statute would lead." Id. at 243-44 (Abrahamson, J., dissenting). I maintain this position today.
Importantly, the Wisconsin "rule" forbidding a court from looking to legislative history except in instances where the legislative history supports an already unambiguous statute, "plain on its face," flatly contradicts the Train decision. It is no wonder that the Wisconsin version of the Train rule was announced in a footnote without any citation. See State v. Martin, 162 Wis.2d 883, 897 n.5, 470 N.W.2d 900 (1991).