Eghotz v. Creech
| Citation | 113 N.W.2d 815,365 Mich. 527 |
| Decision Date | 15 March 1962 |
| Docket Number | J,No. 36,36 |
| Parties | Ellen EGHOTZ, Plaintiff and Appellant, v. Grady T. CREECH, Principal Defendant, Lincoln Mutual Casualty Company, a Michigan Corporation, Garnishee Defendant and Appellee. an. Term. |
| Court | Supreme Court of Michigan |
Hugh K. Davidson, Roy A. McGinty, Detroit, for plaintiff and appellant.
Michael J. Landers, Detroit, for garnishee defendant and appellee.
Before he Entire Bench.
On May 14, 1956, Lincoln Mutual issued a combined casualty and personal injury insurance policy to the principal defendant. The insurance company's agent solicited defendant Creech while he was polishing his car and obtained from him the information necessary to issue the policy of insurance. Creech at the time paid $10 on the policy, and agreed to make monthly payments of $10 until the total premium of $50 was paid. The policy was sent to Creech through the mail. The 6-page policy is entirely printed. Attached to the policy is a schedule of warranties, setting forth among other things, the name of the assured, the automobile covered, the date of the policy, the policy limits, and the premium. Also attached to the policy is a time payment endorsement blank T8, calling for payments of 1/6 of the premium on the effective date of the policy, and 1/6 of the premium each successive month for 5 ensuing months. The time payment endorsement also provides that in the event of failure to pay any installment when due, the policy shall expire when the payments which have been made are earned on a short rate basis. A short rate table is part of the time payment endorsement.
Defendant Creech made only one $10 payment on the insurance policy. On July 18, 1956, defendant Creech was involved in an accident with the plaintiff. Under the time payment endorsement, the policy coverage computed by the short rate table lapsed on June 19, 1956.
Plaintiff obtained a judgment in the sum of $10,000 against the principal defendant and sought to garnishee on the casualty policy. The trial judge directed a verdict for the garnishee defendant holding that the insurance policy was not in effect at the time of the accident.
Plaintiff contends that under the provision of the Insurance Code (C.L.S.1956, § 500.3020 [Stat.Ann.1957 Rev. § 24.13020]) if a casualty insurance policy is issued, the policy may be cancelled by he insurer only by mailing to the insured a 10 days' written notice of cancellation; also that if the premium had been prorated instead of being figured short rate, the policy would have been in effect for 73 days instead of 36 days, and would have amply covered the period of the accident.
If the provisions of the statute exclude any other method for the cancellation or suspension of a casualty insurance policy, the trial court was in error. If the provisions of the statute do not exclude a time payment endorsement, then the decision of the trial judge was correct.
The early Michigan cases laid down the proposition that a policy of insurance is much the same as any other contract. It is a matter of agreement by the parties. The courts will determine what that agreement was and enforce it accordingly.
In the case of Williams et al. v. Albany City Insurance Co., 19 Mich. 451, the insurance on a vessel was paid for by a note with a provision that the insurance would be void while the note was overdue and unpaid. A loss occurred under these conditions and recovery was denied even though the note was later paid.
In the case of Hauser v. Michigan Mutual Liability Co., 276 Mich. 624, 268 N.W. 759, the policy contained a statutory provision for cancellation, and also provided for a suspension of the policy during any period monthly premiums were not paid. The policy was delivered without the payment of any premium whatsoever. The court held that delivery had the effect of putting the policy into force and allowing a reasonable time for the payment of the monthly premiums. However, the policy went into effect on September 15, 1933. No premiums had been paid on January 3, 1934, when the insured was injured. One payment was made after the accident. The court held that the policy must be construed as a whole; that the provision for suspension was valid; and that the policy having been suspended at the time the injury occurred, no recovery would be allowed.
In Bek v. Zimmerman, 285 Mich. 224, 280 N.W. 741, the Court again held, in both the majority and minority opinions, that suspension provisions are valid. Justice McAllister dissented as to how to construe the policy provisions, particularly with regard to failure of consideration and computation of premiums, but not with regard to the validity of a suspension provision, saying (p. 238, 280 N.W. p. 747):
'It is entirely proper to include provisions of suspension during which time the insured is not covered because of nonpayment of premium.'
'The quoted statute applies where either the insurer or the insured seeks to terminate the insurance by cancellation; it cannot be stretched to cover a situation where, as here, liability under the contract has become automatically suspended by reason of the precise terms of the insurance agreement.'
The plaintiff recognizes that the above cases state the law of Michigan but urges that we reconsider the problem in the light of the statutory requirement for a mandatory provision relative to cancellation. Plaintiff contends that the legislative intent of the statutory provision has been overlooked, such intent having been to provide one single means for the cancellation of casualty insurance policies.
If the legislature had spelled out by statute a standard casualty insurance policy, as has been done with a standard fire insurance policy (C.L.S.1956, § 500.2832 [Stat.Ann.1957 Rev. § 24.12832]), and required the use thereof (C.L.S.1956, § 500.2806 [Stat.Ann. 1957 Rev. § 24.12806]), we might agree with plaintiff's contentions. Certainly this is...
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