Bradley v. Mid-Century Ins. Co.
| Decision Date | 09 January 1979 |
| Docket Number | 60615,Docket Nos. 60605,Nos. 15-23,MID-CENTURY,60945,60928,60003,60606,60861,60483,60614,s. 15-23 |
| Parties | , 20 A.L.R.4th 1069 Donald J. BRADLEY, Plaintiff-Appellee, v.INSURANCE COMPANY (Farmers), Defendant-Appellee, and Citizens Insurance Company of Howell, Michigan, Defendant-Appellant, and Secretary of State, State of Michigan, Intervening Defendant-Appellee. Donald J. BRADLEY, Plaintiff-Appellee, v.INSURANCE COMPANY (Farmers), and Citizens Insurance Company of Howell, Michigan, Defendants-Appellants, and Secretary of State, State of Michigan, Intervening Defendant-Appellee. Jerry L. HICKMAN and Nancy Hickman, jointly and severally, Plaintiffs- Appellees, v. COMMUNITY SERVICE INSURANCE COMPANY, Defendant-Appellant, Cross-Appellee, and Osee Vaughn Griggs, Defendant, and Secretary of State, Defendant-Appellee, Cross-Appellant. Wilbert H. ELLIS, Plaintiff-Appellee, v. STATE FARM INSURANCE COMPANY, Defendant-Appellant, and Richard H. Austin, Secretary of State, Director, Motor Vehicle Accident Claims Fund, Intervening Defendant-Appellee. Francis J. RUESING, Sr., Administrator of the Estate of Francis J. Ruesing, Jr., Deceased; and Francis J. Ruesing, Sr., and Mary Ann Ruesing, Plaintiffs-Appellants, v. AETNA CASUALTY & SURETY COMPANY, Defendant-Appellee. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a Foreign Insurance Corporation, v. Gary DAVIDSON, Defendant-Appellant. AMERICAN FIDELITY FIRE INSURANCE COMPANY, a Foreign Insurance Corporation, Plaintiff-Appellee, v. Catherine WILLIAMS, Beatrice Gilmer and David Gilmer, jointly and severally, Defendants-Appellants. Phyllis D. FLETCHER, Guardian of Scott Stephen McQueen, Plaintiff-Appellee, v. AETNA CASUALTY & SURETY COMPANY, Defendant-Appellant, and Roger Dale Ellis, Defendant. Melvin D. SCHIGUR, Plaintiff-Appellant, v. WEST BEND MUTUAL INSURANCE COMPANY, Defendant-Appellee. Calendar |
| Court | Michigan Supreme Court |
24, 1980. Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Joseph B. Bilitzke, Regina Ann King, Asst. Attys. Gen., Michigan Dept. of State MVACF Legal, Lansing, for Secretary of State.
Milliken & Magee by Herbert A. Milliken, Jr., Flint, for defendant-appellant.
Hoffmann, O'Neill, Wallace, Doyle & Jones by Charles L. Jones, Saginaw, for Mid-Century Ins. Co. (Farmers).
Benzion Gotlib, Flint, for plaintiffs-appellees in No. 60606.
Carl K. Carlsen, Asst. Atty. Gen., MVACF Legal, Lansing, for Secretary of State, defendant-appellee and cross-appellant.
Gault, Davison, Bowers & Hill by Russell E. Bowers, Flint, for Community Service Ins. Co., defendant-appellant and cross-appellee.
Kelly, Kelly & Kelly by Mark W. Kelly, Jackson, for defendant-appellant in No. 60614.
Wisti & Jaaskelainen by Michael E. Makinen, Hancock, for plaintiffs-appellants in No. 60003.
Blum & Sternberg by Irving R. Blum, Detroit, for plaintiff-appellee in No. 60861.
Draugelis, Ashton & Scully by Donald S. Scully, Plymouth, for plaintiff-appellee in No. 60483.
Newblatt & Grossman, P. C. by Howard R. Grossman, David Melkus, Flint, for appellee in No. 60928.
Butch, Quinn, Rosemurgy & Jardis, P. C., Escanaba by Terrill S. Jardis, Escanaba, for defendant-appellee in No. 60003.
Bain & Shapero, P. C. by Bryan H. Levy, Southfield, for defendants-appellants in No. 60861.
Rifkin, Kingsley & Rhodes, P. C., Detroit, for defendant-appellant in No. 60483; Kent D. Schultz, Detroit, of counsel.
Cline, Cline & Griffin by Earl J. Cline, Flint, for defendant-appellant Aetna Cas. & Surety Co.
Moore, Barr & Kerwin by Charles J. Barr, Detroit, for appellee in No. 60945.
Morbach, Cheatham & MacArthur by Donald J. Morbach, Detroit, for defendant-appellee in No. 60945.
These cases concern contractual limitations on the coverage provided by uninsured motorist endorsements to automobile insurance policies:
i) the "owned vehicle exclusion" 1 which denies coverage under an uninsured motorist endorsement when the insured or relatives in his household are injured while occupying a motor vehicle owned by any of them if it is not the vehicle to which the uninsured motorist endorsement specifically applies;
ii) "limits of liability" 2 and "other insurance" 3 clauses which prevent recovery beyond the limits of a single uninsured motorist endorsement notwithstanding that the injured person is insured under multiple uninsured motorist endorsements or a single endorsement covering more than one vehicle;
iii) a set-off clause 4 requiring deduction of no[409 Mich. 22] -fault benefits paid or payable from amounts otherwise payable under an uninsured motorist endorsement.
In Blakeslee v. Farm Bureau Mutual Ins. Co. of Michigan 5 and Boettner v. State Farm Mutual Ins. Co. 6 this Court allowed recovery notwithstanding contractual limitations on uninsured motorist coverage. Those decisions were based on the Court's perception of the legislative policy reflected in the Motor Vehicle Accident Claims Act 7 and the uninsured motorist amendment to the Insurance Code. 8
We conclude that the rationale of those decisions governs the disposition of the questions raised in Bradley, Hickman, Ellis and Ruesing concerning the validity of the owned vehicle exclusion and in Fletcher concerning the limits of liability clause:
i) An owned vehicle exclusion which denies uninsured motorist coverage to a liability insured when his injuries are sustained in a family-owned vehicle which is not a vehicle for which the endorsement was purchased is violative of the legislative policy.
ii) Where premiums have been paid for multiple statutorily mandated uninsured motorist endorsements, an injured person may stack benefits and recover under each endorsement in an aggregate amount not greater than the actual loss.
Bradley, Hickman, Ellis, Ruesing and Fletcher arose before the amendments of the Motor Vehicle Accident Claims Act restricting the liability of the fund established under that act to persons not owning a motor vehicle for which security must be maintained under the no-fault act 9 and to accidents occurring before January 2, 1976 10 and the repeal of the uninsured motorist amendment to the Insurance Code. 11 Davidson, Williams and Schigur concern coverage issued and accidents occurring after restriction of the fund's liability and repeal of the amendment.
We conclude that in policies effective on or after October 1, 1973, the date of repeal of the uninsured motorist amendment, "other insurance" clauses which provide that damages shall be deemed not to exceed the policy limits and that the uninsured motorist coverage of the policy shall apply pro rata where there is other similar insurance available are enforceable and benefits under such policies may not be stacked.
We further conclude in Williams and Schigur that it would defeat the reasonable expectations of the insured to permit the insurer to deduct no-fault benefits from the amount otherwise recoverable for non-economic and excess economic loss under uninsured motorist coverage, and that the set-off is, to that extent, unenforceable.
The uninsured motorist endorsement was developed and the policy language defining its scope was drafted in the 1950's by the insurance industry and have become fairly standard. 12 By 1968, legislation in 46 states required that uninsured motorist coverage be offered with all automobile liability insurance policies issued within the state. 13 Most of the statutes, including Michigan's, contain similar or identical language, requiring that the coverage be provided unless expressly rejected in writing, without defining the scope of the coverage or permissible exclusions and limitations.
Subject to a variety of exclusions and limitations, the standard endorsement provides "family protection" for the insured and family members against loss caused by an uninsured motorist without regard to whether the covered vehicle is involved in the accident. The coverage is portable: The insured and family members are covered not only when occupying the covered vehicle, but also when in another automobile, and when on foot, on a bicycle or even sitting on a porch.
The exclusions and limitations of the standard endorsement have been the subject of much litigation and comment. 14 The two most often encountered, the owned vehicle exclusion 15 and other insurance clause 16 have been dealt with by courts across the country and held invalid by a clear majority as contrary to the public policy of the uninsured motorist statutes. 17
This Court invalidated an other insurance limitation in Blakeslee, an owned vehicle exclusion in Boettner, and in Pappas v. Central National Ins. Group of Omaha, 18 a limitation denying recovery to a non-family member who was using the covered vehicle.
In 1965 the Legislature established the Motor Vehicle Accident Claims Fund, liable only when the damages caused by an uninsured motorist exceeded amounts payable by an insurer, 19 and amended the Insurance Code to provide that no automobile liability policy could be issued without uninsured motorist coverage "for the protection of persons insured thereunder," unless such coverage was rejected. 20 In Blakeslee and Boettner this Court read the enactments together and concluded that the legislative purpose in amending the Insurance Code was to protect the accident claims fund by promoting the purchase of uninsured motorist coverage. That perception of the legislative purpose also underlies the rationale of Pappas.
In Blakeslee the decedent was a guest passenger. His estate collected under the driver's uninsured motorist endorsement and also sought to collect under the endorsement to the decedent's own automobile liability policy. This Court held that a clause providing that the amount payable under the uninsured motorist endorsement would be reduced by the amount of other similar insurance available to the insured on account of the same accident was...
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