928 N.W.2d 534
Wis.2019Background
- Leicht Transfer & Storage used delivery tickets (signed by Leicht employees) plus invoices as its routine billing package for pallet purchases from Pallet Central.
- Pallet Central submitted numerous invoice packages; Leicht discovered many delivery tickets bore forged Leicht signatures and paid approximately $505,000 on fraudulent invoices (total alleged fraud ≈ $751,000).
- Leicht submitted a claim under its Commercial Crime Insurance Policy issued by Hiscox, invoking the policy’s "Forgery or Alteration" coverage for loss from forgery of "checks, drafts, promissory notes, ... or similar written promises, orders or directions to pay a sum certain in Money."
- Hiscox denied coverage; Leicht sued for breach and declaratory relief. The circuit court and court of appeals granted summary judgment for Hiscox; Leicht sought review.
- The Wisconsin Supreme Court considered whether (1) the delivery tickets (alone or with invoices) qualify as "directions to pay a sum certain in Money," and (2) whether the policy covers documents that merely function as directions to pay though they are not themselves such documents.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a delivery ticket (alone) is a "direction to pay a sum certain in Money" under the forgery clause | Delivery tickets evidenced and triggered payment and thus served as directions to pay | Delivery tickets are statements of delivery and contain no payment obligation or sum certain | No — delivery tickets alone are not directions to pay; they lack any sum certain or payment terms |
| Whether the delivery ticket combined with the invoice (invoice package) becomes a "direction to pay a sum certain in Money" | The signed ticket was a required condition precedent to payment and, in practice, the combined package functioned to direct payment | The invoice is a request; combining with the ticket does not convert either document into a direction to pay a sum certain | No — combining invoice and ticket does not transform them into a direction to pay a sum certain |
| Whether the policy covers documents that are not themselves directions to pay but are used as functional proxies to obtain payment | The policy should be read from the viewpoint of a reasonable insured and construed for coverage; habitual practice made the tickets function as directions to pay, so they are covered as "similar" instruments | The policy unambiguously insures only the enumerated instruments and "similar" writings that themselves are directions to pay; it does not extend to proxies or documents that only functionally direct payment | No — policy covers only documents that are themselves written directions to pay a sum certain; functional proxies are not covered |
Key Cases Cited
- Green Spring Farms v. Kersten, 136 Wis.2d 304 (summary judgment standard)
- Water Well Solutions Serv. Group Inc. v. Consolidated Ins. Co., 369 Wis.2d 607 (insurance policy interpretation reviewed de novo)
- American Family Mutual Ins. Co. v. Am. Girl, Inc., 268 Wis.2d 16 (courts will not add coverage for risks insurer did not contemplate)
- Bethke v. Auto-Owners Ins. Co., 345 Wis.2d 533 (undefined policy terms are given their ordinary meaning as a reasonable insured would understand)