Detroit Auto. Inter-Insurance Exchange v. Spafford

• Decision Date: 06 June 1977
• Docket Number: INTER-INSURANCE,Docket No. 26903
• Citation: 255 N.W.2d 780,76 Mich.App. 85
• Parties: DETROIT AUTOMOBILEEXCHANGE, Plaintiff-Appellant, v. Joan SPAFFORD and American Arbitration Association, Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

Page 780

255 N.W.2d 780

76 Mich.App. 85

DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE, Plaintiff-Appellant, v. Joan SPAFFORD and American Arbitration Association Defendants-Appellees.

Docket No. 26903.

Court of Appeals of Michigan.

June 6, 1977.

Released for Publication July 21, 1977.

Duane S. van Benschoten, Saginaw, for defendants-appellees.

Before DANHOF, C. J., and R. B. BURNS and QUINNELL, ^* JJ.

R. B. BURNS, Judge.

Plaintiff appeals from a circuit court order affirming an arbitration award in favor of defendant Spafford, and denying plaintiff's motion to vacate the award. We reverse.

Defendant was injured when the snowmobile on which she was a passenger, owned and operated by her husband, collided with another snowmobile. The accident occurred on the frozen surface of a lake.

Defendant sought to recover under the uninsured motorist provision of an automobile insurance policy issued by plaintiff to her husband. Plaintiff refused the claim primarily because it did not consider a snowmobile to be a motor vehicle within the terms of the policy. When the American Arbitration Association ordered arbitration to proceed, plaintiff sought a declaratory judgment that the insurance contract did not cover a snowmobile accident, and an injunction against arbitration. The circuit court granted summary judgment in favor of defendant, and we affirmed. Detroit Automobile Inter-Insurance Exchange v. Spafford, 62 Mich.App. 365, 233 N.W.2d 283 (1975), lv. den. 395 Mich. 767 (1975).

While plaintiff's initial appeal was pending before this Court, an arbitrator awarded defendant $34,530.95. It is the validity of this award which we are called upon to determine.

Defendant's argument that we have already decided the issue presented in this case in her favor in the above cited opinion is without merit. In that opinion we determined only that there was an agreement to arbitrate this dispute and that we should therefore not reach the merits of the dispute. The arbitrator having rendered his decision, and plaintiff having made a motion to vacate the award, the issue of whether a snowmobile operating off-the-road is a "motor vehicle" under the insurance contract is now properly before us.

An arbitration award must be vacated where the arbitrator exceeds his power. GCR 1963, 769.9(1)(c). The arbitrator has only that power conferred by the contract, which is to resolve disputes arising under the contract in accordance with the provisions of the contract. Where the arbitrator acts arbitrarily or makes a clear error of law, the award is outside the scope of his power and the courts may grant relief. See Stowe v. Mutual Home Builders Corp., 252 Mich. 492, 497, 233 N.W. 391, 392 (1930); Howe v. Patrons' Mutual Fire Insurance Co. of Michigan, 216 Mich. 560, 569-570, 185 N.W. 864, 867-868 (1921); Port Huron & N.R. Co. v. Callanan, 61 Mich. 22, 26, 34 N.W. 678, 679 (1886); American Motorists Insurance Co. v. Llanes, 64 Mich.App. 105, 235 N.W.2d 77 (1975), rev'd on other grounds, 396 Mich. 113, 240 N.W.2d 203 (1976).

Under the uninsured motorist coverage of defendant's husband's insurance contract, plaintiff agreed to pay:

"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 * * * caused by accident and arising out of * * * use of such uninsured automobile."

The contract defines "uninsured automobile" as a "motor vehicle" without applicable insurance coverage. Excluded from the definition of "uninsured automobile" are

"(4) a land motor vehicle * * * operated on * * * crawler treads * * * ;

"(5) a farm-type tractor or equipment designed for use principally off the public roads except while actually upon the public roads."

Woods v. Progressive Mutual Insurance Co., 15 Mich.App. 335, 166 N.W.2d 613 (1968), lv. den. 382 Mich. 754 (1969), limits the scope of crawler tread exclusions. In Woods the plaintiff's decedent was killed in a highway collision with an uninsured bulldozer. M.C.L.A. § 500.3010; M.S.A. § 24.13010, since repealed by 1972 P.A. 345 but still in effect at the time of the accident in the instant case, required automobile insurance policies to offer protection for damages inflicted by "uninsured motor vehicles". By looking to the motor vehicle code, the court found that a "vehicle" was

"every device in, upon, or by which any person or property is or may be transported or drawn upon a highway * * *." M.C.L.A. § 257.79; M.S.A. § 9.1879.

It therefore found that a bulldozer was a "motor vehicle" notwithstanding a crawler tread exclusion.

In Nepstad v. Randall, 82 S.D. 615, 152 N.W.2d 383 (1967), a statutory definition of a motor vehicle identical to that found in M.C.L.A. § 257.79; M.S.A. § 9.1879 was interpreted to mean that a motor vehicle not designed for highway use was not a "motor vehicle" unless actually being operated on the highway at the time of the...