Blakeslee v. Farm Bureau Mut. Ins. Co. of Michigan, 3

• Decision Date: 31 October 1972
• Docket Number: M,No. 3,3
• Parties: Helen BLAKESLEE, Administratrix of the Estate of Jerome Blakeslee, Deceased, Plaintiff and Appellee, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN, Defendant and Appellant. ay Term.
• Court: Michigan Supreme Court

Page 786

201 N.W.2d 786

388 Mich. 464

Helen BLAKESLEE, Administratrix of the Estate of Jerome

Blakeslee, Deceased, Plaintiff and Appellee, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN, Defendant

and Appellant.

No. 3, May Term.

Supreme Court of Michigan.

Oct. 31, 1972.

Shanahan & Scheid by Peter L. Scheid, Owosso, for plaintiff and appellee.

Gault, Davison & Bowers by Russell E. Bowers, Flint, for defendant and appellant.

Fraser, Trebilcock, Davis & Foster by Everett R. Trebilcock, Lansing, for Auto-Owners Ins. Co., State Farm Mut. Auto. Ins. Co., Allstate Ins. Co., Frankenmuth Mut. Ins. Co., Detroit Auto. Inter-Insurance Exchange, Citizens Mut. Ins. Co. and Michigan Mut. Liability Co., amici curiae.

Before the Entire Bench.

WILLIAMS, Justice.

This case along with its two companions of Rowland v. Detroit Automobile Inter-Insurance Exchange, 34 Mich.App. 267, 191 N.W.2d 56 and Boettner v. State Farm Mutual Ins. Co., 34 Mich.App. 510, 191 N.W.2d 741 comprise a trilogy of cases presenting issues of first impression since the passage of 1965 P.A. 388; M.C.L.A. § 500.3010; M.S.A. § 24.13010. This act provides in pertinent part as follows:

'No . . . policy . . . shall be delivered . . . unless coverage is provided therein . . . for the protection of persons insured thereunder . . . in limits . . . set forth in (the Motor Vehicle Code ¹) . . . unless the named insured rejects such coverage in writing . . .'

The general question in each of these cases is the extent to which the above statute allows a person injured in an accident by an uninsured motorist to recover on more than one so-called 'other insurance' policy where the damages suffered exceed the limits of one or both policies.

The particular issues in this case are:

I. Does the specific language of the 'other insurance' limitation against recovery on other insurance policies as well as the primary policy in the uninsured motorist coverage apply to the facts of the instant case?

II. If so, does 1965 P.A. 388; M.C.L.A. § 500.3010; M.S.A. § 24.13010 invalidate such 'other insurance' limitation? Specifically, can the insured guest passenger of an insured host driver, who is injured in an accident through the fault of an uninsured motorist, combine recoveries (i.e. stack or pyramid) from the two different insurance companies which covered the guest passenger and host driver in excess of the limitation provisions?

On August 27, 1966, Jerome Blakeslee was riding as a guest passenger in the car of the host driver and owner Bernard Butcher. A collision occurred between the host driver and an uninsured motorist. The guest passenger suffered fatal injuries in the automobile collision. The host driver had uninsured motorist liability coverage through Riverside Insurance Company providing benefits of $10,000 payable for injuries to or death of one person occupying the automobile. The guest passenger had a similar policy issued by defendant Farm Bureau which covered the insured while riding as a passenger in an automobile owned and operated by another person.

Decedent's wife, in her capacity as the Administratrix of the decedent's estate, instituted suit against the driver of the uninsured automobile, to recover damages resulting from the alleged wrongful death of Jerome Blakeslee. She recovered on her suit in the amount of $112,007.71 with a reduction upon the judgment in the amount of $18,300 as monies received by the administratrix under the host driver's policy and from the Michigan Motor Vehicle Accident Claims Fund. The net judgment against the driver of the uninsured vehicle was, therefore, $93,707.71. ²

Subsequent to the judgment against the uninsured motorist, plaintiff administratrix brought suit against defendant Farm Bureau seeking recovery of the $10,000 uninsured motorist coverage provided for in the policy issued to decedent. The cause was submitted to the Circuit Court before the Honorable Donald L. Reisig. Defendant denied liability based upon an 'other insurance' limitation contained in the policy which provides:

'Other Insurance: With respect to bodily injury to an insured while occupying an automobile not owned by the named insured, the insurance under Part IV shall apply only as excess insurance over any similar insurance available to such insured and applicable to such automobile as primary insurance, and this insurance shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance.

'Except as provided in the foregoing paragraph if the insured has other similar insurance available to him and applicable to the accident, the damages shall be deemed not to exceed the higher of the applicable limits of liability of this insurance and such other insurance, and the company shall not be liable for a greater proportion of any loss to which this coverage applies than the limit of liability hereunder bears to the sum of the applicable limits of liability of this insurance and such other insurance.'

Judge Reisig held that this 'other insurance' limitation conflicted with the plain language of the uninsured motorist statute and thus was invalid and entered judgment for plaintiff administratrix for the full sum of $10,000. The Court of Appeals affirmed the trial court's decision, finding that the insurer was no longer free, as he had been prior to the statute, to insert language restricting the coverage to less than the statute requires. 32 Mich.App. 115, 120, 188 N.W.2d 216.

I.

The limiting language of the other insurance provision of decedent guest passenger's policy issued to him by the defendant appears to definitely cover a guest passenger insured in a third party host driver's car. The relevant language of the policy is:

'Other Insurance: . . . while occupying an automobile not owned by the named insured, the insurance . . . shall apply only as excess insurance over any similar insurance available to such insured and applicable to such automobile as primary insurance . . .'

Defendant claims nonliability because of this limitation, and cites our decision in Horr v. Detroit Automobile Inter-Insurance Exchange, 379 Mich. 562, 153 N.W.2d 655 (1967) as controlling in not allowing stacking. In Horr, this Court held that the 'other insurance' limitation clauses in two separate policies of insurance required prorata contribution by the two insurance companies, but only until a total of $10,000, the maximum average contained in each policy had been paid to the claimant. Thus, each insurance company could be held liable for only $5,000, no matter how large the claimant's damages were.

The Horr decision is clearly distinguishable. ³ The accident which gave rise to the controversy in Horr occurred in 1963 when there were no statutes requiring the inclusion of an offer of uninsured motorist coverage in policies of insurance. This Court specifically did not take M.C.L.A. § 500.3010; M.S.A. § 24.13010 and M.C.L.A. § 257.504(d); M.S.A. § 9.2204(d) into consideration in arriving at our decision in Horr. The Court noted this in stating:

'We find no statutory or decisional law of this State applicable in 1963 to the insurance clauses requiring our interpretation and the parties assert there were none. Consequently, our task is limited to determining the intent of the contracting parties.' Horr, supra, 566, 153 N.W.2d 656.

II.

Thus, the disposition of this case turns on the effect of 1965 P.A. 388; M.C.L.A. § 500.3010; M.S.A. § 24.13010 on the 'other insurance' limitation in defendant's policy. In other words, does the 'other insurance' limitation contravene the policy of the statute?

Though a matter of first impression with this Court, several other jurisdictions have considered the problem in interpreting similar uninsured motorist statutes. ⁴ The cases are divided. There are 19 states plus one Federal case applying state law which disallow such limitations as contrary to the statute. ⁵ There are 8 states with a contrary doctrine but only 3 of them are directly on point--in 3 there is no uninsured motorist statute involved, in 2 the statute itself allows prorating. ⁶ This leaves a heavy preponderance in favor of disallowing such limitations.

The trend of the most recent decisions where an uninsured motorist statute is involved is toward allowing stacking (i.e. voiding 'other insurance' clauses). This is persuasive but not decisive. Determinative must be the apparent policy of the Michigan Legislature.

Defendant argues that 'the purpose of the statute in making uninsured motorist coverage compulsory . . . is to give the same protection to a person injured by an uninsured motorist as he would have if he had been injured in an accident caused by an automobile covered by a standard liability insurance policy.' ⁷

We are unable to accept defendant's construction of the statute. The language of the statute is plain, unambiguous and Mandatory.

It unequivocally requires that 'No . . . policy . . . be delivered . . . unless coverage is provided therein.' Stated in the affirmative, Every policy Must have this coverage. Only after the mandatory offer is made can the insured reject it in writing.

Nowhere in the statute does the legislature attempt to fix any maximum amount of recovery less than the amount of the loss. The lack of pro ration language in the statute is conspicuous and can only weigh in favor of an inference of allowing stacking recovery.

As was said in State Farm Mutual Automobile Co. v. Murphy, 226 Ga. 710, 714, 177 S.E.2d 257, 260 (1970), 'The statute is designed to protect the insured as to his actual loss, within the limits of the policy or policies of which he is the beneficiary.'

It would be unconscionable to permit an insurance company offering statutorily required coverage to collect premiums for it with one hand and allow it to take the coverage away with the other by using a self-devised 'other insurance' limitation. Nothing could...