Brunner v. Austin

• Decision Date: 25 July 1973
• Docket Number: No. 2,Docket No. 14746,2
• Citation: 48 Mich.App. 535,210 N.W.2d 786
• Parties: William BRUNNER, Plaintiff, v. Richard H. AUSTIN, Secretary of State, State of Michigan, Director of the Motor Vehicle Accident Claims Fund, Defendant
• Court: Court of Appeal of Michigan — District of US

Page 786

210 N.W.2d 786

48 Mich.App. 535

William BRUNNER, Plaintiff, v. Richard H. AUSTIN, Secretary of State, State of Michigan Director of the Motor Vehicle Accident Claims Fund, Defendant.

Docket No. 14746.

Court of Appeals of Michigan, Division No. 2.

July 25, 1973.

Released for Publication Oct. 4, 1973.

Duane S. van Benschoten, van Benschoten & van Benschoten, Saginaw, for plaintiff.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Joseph B. Bilitzke and Carl K. Carlsen, Asst. Attys. Gen., for defendant.

Before FITZGERALD, P.J., and J. H. GILLIS and ADAMS, ^* JJ.

ADAMS, Judge.

Plaintiff suffered personal injuries in an automobile accident with an uninsured motorist. He filed a claim against his insurer under the uninsured motorist provision in his policy, which provided a maximum coverage of $10,000 for any one injury. Plaintiff and his insurer settled for $8500. Plaintiff then filed an action against the uninsured motorist, was awarded a judgment of.$19,000, and subsequently sought to recover $10,000 of this judgment from the Motor Vehicle Accident Claims Fund.

The fund offered $9000, contending that the $10,000 maximum liability limit of plaintiff's policy rather than the $8500 settlement should be deducted from the.$19,000 judgment to determine the amount plaintiff could recover from the fund. Plaintiff filed a complaint in this Court for writ of mandamus and defendant was ordered to show cause why such a writ should not issue compelling him to pay $10,000, plus interest and costs, out of the Motor Vehicle Accident Claims Fund. ¹

1965 P.A. 388, as amended; M.C.L.A. § 500.3010; M.S.A. § 24.13010 requires that automobile liability policies issued in Michigan must include uninsured motorist coverage unless such coverage is rejected in writing by the named insured. This Court in Woods v. Progressive Mutual Ins. Co., 15 Mich.App. 335, 166 N.W.2d 613 (1968), recognized that 1965 P.A. 388 is In pari materia with the Motor Vehicle Accident Claims Act, 1965 P.A. 198, as amended; M.C.L.A. § 257.1101 et seq.; M.S.A. § 9.2801 et seq.

Judge Levin's concurring opinion in Collins v. Motorists Mut. Ins. Co., 36 Mich.App. 424, 434--435, 194 N.W.2d 148, 153--154 (1971), states in part:

'We have previously held that § 3010 of the insurance code and the Motor Vehicle Accident Claims Act are In pari materia.

'Under § 23 of the motor vehicle accident claims act, the fund is obliged to compensate persons injured by uninsured motorists to the extent of $10,000 on account of injury to or death of one person and $20,000 for two or more persons in any one accident, but the fund's liability is limited to situations where the damages caused by the uninsured motorist Exceed (i) whatever amount 'is recovered from any other source in partial discharge of the claim or judgment,' and (ii) amounts 'paid or payable by an insurer'. Sections 22(2) and 22(3) of the act similarly provide that no payments shall be made out of the fund 'of any amount paid or payable by an insurer by reason of the existence of a policy of insurance'.

'Since the fund is liable only to the extent that an injured person does not recover from other sources or from an insurer under a policy of insurance, it would tend to reduce potential claims against the fund if insured drivers carry insurance protection against the risk of damage caused by uninsured motorists. Read in conjunction with the motor vehicle accident claims act it is apparent that the legislative purpose in adding § 3010 to the insurance code (requiring insurance carriers to provide uninsured motorist protection unless such coverage is rejected by the policy holder in writing) was to reduce claims against the fund.' (Emphasis by the Court.)

The Supreme Court in Blakeslee v. Farm Bureau Mut. Ins. Co., 388 Mich. 464, 474, 201 N.W.2d 786, 792 (1972), cited Judge Levin's concurring opinion in Collins, supra, with favor and said (36 Mich.App. p. 475, 194 N.W.2d p. 148):

'We believe that the rule stated in Safeco Ins. Co. of America v. Jones, 286 Ala. 606, 614, 243 So.2d 736, 742 (1971) represents the better reasoning as well as the majority rule, which we now adopt. There the court stated:

"We hold that our statute sets a minimum amount for recovery, but it does not place a limit on the total amount of recovery so long as that amount does not exceed the amount of the actual loss; that where the loss exceeds the limit of one policy, the insured may proceed under other available policies; and that Where the premiums have been paid for uninsured motorist coverage, we cannot permit an insurer to avoid its statutorily imposed liability by its insertion into the policy of a liability limiting clause which restricts the insured from receiving that coverage for which the premium has been paid." (Emphasis added.)

The Supreme Court in Boettner v. State Farm Mut. Ins. Co., 388 Mich. 482, 201 N.W.2d 795 (1972), held that because of 1965 P.A. 388, exclusionary clauses in the insurance policy inconsistent with the statutory language must be judicially rejected. The Court then held that uninsured motorist coverages could be 'stacked' or 'pyramided' up to the total damages sustained by the insured.

Under the policy of insurance in the instant case, plaintiff's insurer was obligated to pay plaintiff 'all sums which the insured * * * shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury', subject to a maximum limit of $10,000 for a single injury. It is important to note that the liability of plaintiff's insurance company to plaintiff under the uninsured motorist provision of the policy and the fund's liability to plaintiff under the Motor Vehicle Accident Claims Act for injuries received at the hands of an uninsured motorist are identical in terms of proof. However, even though plaintiff's right to recover from his insurance company was predicated upon the same proof of liability as that prerequisite to his right to recover from the uninsured motorist fund, plaintiff, as a result of negotiations in which the Secretary of State had no part, elected to settle his claim with his insurer for $8500, $1500 less than his insurer's maximum liability limit under the policy. Nevertheless, plaintiff now maintains that the uninsured motorist fund should pay the Full amount authorized by statute.

Plaintiff relies upon Green v. Blicharski, 32 Mich.App. 15, 188 N.W.2d 113 (1971) to support his claim that the Motor Vehicle Accident Claims Fund should be liable for the difference between the amount of his judgment and the amount of his settlement with his own insurer, up to the fund's statutory maximum liability of $10,000. In Green, one plaintiff was injured by defendant Blicharski, an uninsured motorist. Plaintiffs filed a claim under the uninsured motorist provision of their own insurance policy. This policy provided a maximum liability of $10,000 on the part of the insurer and called for binding arbitration in the absence of agreement between the insured and the company. Following a contested arbitration hearing, the arbitrator awarded plaintiffs $7250 in full satisfaction of the insurer's obligation under its policy. Plaintiffs then sued defendant, obtained a judgment of $16,000 plus interest and costs, and sought to obtain from the fund the difference between the amount of the judgment and the amount of the arbitration award. The Secretary of State contended that the correct formula for determining fund liability was to subtract plaintiffs' policy limit ($10,000) under their uninsured motorist coverage from the amount of the judgment.

In resolving the dispute this Court stated pp. 19--20, 188 N.W.2d p. 114):

'It is immediately apparent that we are called upon to determine the difference between the meaning of the terms 'paid' and 'payable' as used in the statute (MCLA § 257.1122; MSA § 9.2822), as those terms affect the case at bar.

'There is none. The amount 'payable' is the amount 'paid'. This, of course, is by reason of the arbitration clause in the policy. After the arbitration award was made according to the terms of the policy, there was nothing more 'payable'.

'Following the valid, binding and final award of the arbitrator, plaintiffs had no further recourse against the insurance company. Plaintiffs have not limited their recovery against the insurance company in order to claim against the Motor Vehicle Accident Claims Fund. They have, will full diligence and vigor, Recovered from Allstate all that is payable to them under the policy.' (Emphasis added.)

This Court in Green ruled only upon the effect of an Arbitration award pursuant to terms of the insurance policy, and did not consider a Voluntary settlement such as that existing in the instant case. Although there is no indication in the case at bar of fraud or collusion between plaintiff and his insurer, extension of the Green holding to the present facts would place the fund at the mercy of future private settlements which are negotiated in the absence of the Secretary of State, over which he has no power of approval, and which--unlike Green--are not concluded by an independent, impartial arbitrator whose presence would preclude any inference of impropriety.

In Steele v. Wilson, 29 Mich.App. 388, 185 N.W.2d 417 (1971), plaintiffs negotiated settlements with several potential third-party defendants and subsequently sued the uninsured driver of the vehicle which...