Cormack v. American Underwriters Corp.

• Decision Date: 18 December 1979
• Docket Number: Docket No. 78-2768
• Citation: 94 Mich.App. 379,288 N.W.2d 634
• Parties: D. H. CORMACK, Plaintiff-Appellant, v. AMERICAN UNDERWRITERS CORPORATION, a Michigan Corporation, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 634

288 N.W.2d 634

94 Mich.App. 379

D. H. CORMACK, Plaintiff-Appellant, v. AMERICAN UNDERWRITERS CORPORATION, a Michigan Corporation Defendant-Appellee.

Docket No. 78-2768.

Court of Appeals of Michigan.

Dec. 18, 1979.

Released for Publication Feb. 28, 1980.

Marvin D. Sharon, Detroit, for plaintiff-appellant.

Paul J. O'Reilly, Sterling Heights, for defendant-appellee.

Before T. M. BURNS, P.J., and BRONSON and MAHER, JJ.

PER CURIAM.

The plaintiff, D. H. Cormack, is a resident of London, England. He arrived in Detroit on April 1, 1974. The next day, he purchased a new Lincoln automobile at the Downtown Ford dealership for $6,900. He asked the salesman, Richard Warner, to arrange with Lloyds of London to extend insurance coverage to this automobile.

On the same day, April 2, 1974, Warner spoke on the telephone with William Shilson, a representative of American Underwriters, the defendant herein. Warner testified that at the time of this conversation, he had a copy of Mr. Cormack's insurance certificate covering plaintiff's other vehicle in England. Warner gave Shilson the information on this insurance slip, together with the motor number of the new car. The terms of plaintiff's existing insurance were to be extended to cover the newly purchased automobile, which was to be driven in the United States for 90 days and then shipped to England.

In a subsequent conversation between Warner and Shilson on April 2, 1974, Shilson stated to Warner that he had "taken care of it". The plaintiff himself never had direct contact with the defendant.

On April 4, 1974, the defendant by its agent Shilson called Richard Warner and stated that the car was not insured. In the meanwhile, the plaintiff had driven his new car to Chicago, where it was stolen while parked outside a friend's flat. The car was later recovered stripped, and the plaintiff received no salvage value.

A jury trial was held in Common Pleas Court in November of 1976 with Lloyds of London as an added party. At the close of plaintiff's proofs, the trial court granted a motion for a directed verdict in favor of Lloyds of London. A similar motion by defendant was denied. The jury returned a verdict in favor of the plaintiff in the amount of $6,200.

In an opinion dated December 29, 1976, the trial judge granted the defendant's motion for judgment notwithstanding the verdict. The judgment N. o. v. was appealed by the plaintiff to the Wayne County Circuit Court, which affirmed on May 17, 1978. The plaintiff appeals to this Court by leave granted.

The plaintiff first alleges that the trial court erred in finding that there was insufficient evidence to support the jury's determination that an oral binder of insurance was in existence. We agree.

We first note that a judgment N. o. v. on defendant's motion is appropriate only if the evidence is insufficient as a matter of law to support a judgment for the plaintiff. In reviewing a motion for judgment N. o. v., the Court must give the nonmoving party the benefit of every reasonable inference that could be drawn from the evidence. If reasonable minds could honestly disagree as to whether the plaintiff has satisfied his burden of proof on the necessary elements of his cause of action, judgment N. o. v. for the defendant is improper. Sabraw v. Michigan Millers Mutual Ins. Co., 87 Mich.App. 568, 571, 274 N.W.2d 838 (1978), Fitzpatrick v. Ritzenhein, 367 Mich. 326, 116 N.W.2d 894 (1962).

The seminal Michigan case on oral insurance binders is State Automobile Mutual Ins. Co. v. Babcock, 54 Mich.App. 194, 220 N.W.2d 717 (1974), which described a binder as a contract for temporary insurance pending issuance of an insurance policy unless proper notice is given of election to terminate by the insurance company. The Court quoted Bankers Indemnity Insurance Co. v. Pinkerton, 89 F.2d 194, 197 (C.A.9, 1937), which described the necessary elements to effectuate an oral contract of insurance as follows: (a) subject-matter; (b) the risk; (c) premium; (d) duration of the risk; (e) the amount of insurance. The Court noted that some sources also require as an additional element the identity of the parties.

In GRP, Ltd. v. United States Aviation Underwriters, Inc., 402 Mich. 107, 113, 261 N.W.2d 707 (1978), the Supreme Court noted that the absence of an express agreement upon each of these essential terms was not fatal. The proper test was contained in Martin v. Lincoln Mutual Casualty Co., 285 Mich. 646, 650, 281 N.W. 390 (1938), where the Court referred to the following statement contained in 1 Cooley's Briefs on Insurance (2d ed.), p. 535:

"Though it is regarded (as) essential that all the elements of the contract be agreed upon, it is not necessary that this be done expressly. In Concordia Fire Ins. Co. v. Heffron, 84 Ill.App. 610 (1899), it was held that an oral contract of insurance will sustain an action, though no express agreement is made as to the amount of premium to be paid or the duration of the policy, if the intention of the parties to the contract in these particulars can be gathered from the circumstances of the case."

At trial, the defendant introduced two Tel-Ex messages, exhibit A being from Shilson to the defendant's agent in London, and exhibit B being the agent's response. These Tel-Ex's contained the following information:

Defendant's Exhibit "A".

"D. H. Cormack has Lloyds Auto Policy # FP3034488 through Blick Paul & Company Limited, 101 Great Russell Street, London, in Detroit has purchased '73 Lincoln 4-Door, Serial No. 3Y8LA928840, which will drive around U.S. for 90 days and then ship to England. Would appreciate it if you would ask Blick Paul to extend present policy to cover car for same coverage as presently carried."

Defendant's Exhibit "B".

"Cormack, your Tel-Ex 4/2, Blick not prepared and unable to extend. We can quote premium, $200 for period with $250 deductible comp., $500 deductible collision, subject to record and value."

The message sent by Shilson indicates that the subject-matter, risk, duration of the risk and the amount of insurance were agreed upon, since it implies that coverage for the new car would be on the same terms as plaintiff's existing policy in England. The only missing element is the premium, but we can infer an implied promise to pay the ordinary amount charged by the defendant for such added coverage. Therefore, under Babcock and GRP, supra, a valid oral binder for insurance on plaintiff's Lincoln existed at the time the vehicle was stolen. It is irrelevant that defendant and plaintiff had no direct dealings, since Warner was clearly acting as plaintiff's agent in this matter.

We therefore find...