De Haan v. Marvin

• Decision Date: 05 September 1951
• Docket Number: Nos. 51-53,s. 51-53
• Citation: De Haan v. Marvin, 49 N.W.2d 148, 331 Mich. 231 (Mich. 1951)
• Parties: DE HAAN et al. v. MARVIN et al.
• Court: Michigan Supreme Court

Page 148

49 N.W.2d 148

331 Mich. 231

DE HAAN et al. v.MARVIN et al.

Nos. 51-53.

Supreme Court of Michigan.

Sept. 5, 1951.

Earl Waring Dunn, Grand Rapids, for plaintiffs and appellants.

Allaben, Wiarda, Hayes & Hewitt, Grand Rapids (Craig E. Davids, Grand Rapids, of counsel), for garnisheedefendant and appellee.

Before the Entire Bench.

SHARPE, Justice.

As the result of an automobile accident on October 25, 1949, plaintiffSiebren DeHaan recoverd judgment in the amount of $18,338.30 and Beatrice DeHaan recovered judgment in the amount of $2,000.Upon failure of defendantsOtto Marvin and Donald Marvin to pay the judgments, garnishment proceedings were instituted against the Detroit Automobile Inter-Insurance Exchange as the insurance carrier of Otto Marvin.Disclosure was made denying liability.

The facts necessary to decision are as follows: In March 1949, defendantOtto Marvin was the owner of an automobile.He talked with a representative of the insurance exchange about liability insurance on his automobile at which time Otto Marvin paid the agent $5.The policy dated March 16, 1949, was issued by the insurance company and delivered by mail to defendantOtto Marvin's home address.Along with the policy the insurer sent a schedule of deferred payments showing the first payment due on April 16, 1949, the second payment due May 16, 1949, the third payment due June 16, 1949, and the final payment due July 16, 1949.

At the time the application for insurance was signed, defendantOtto Marvin was informed that a person does not have a right to buy insurance in the exchange without being a member of the Automobile Club of Michigan.The receipt mailed to defendantOtto Marvin shows $5 paid on his application for membership in the club with a balance of $7 due in 30 days.The payment due on the policy on April 16, 1949, not having been paid, the agent called on Otto Marvin in the latter part of April and informed him that unless the payments were made very shortly the policy of insurance would be cancelled.None of the payments for the policy were ever paid.On October 25, 1949, defendants were involved in an automobile collision.On November 7, 1949, defendantOtto Marvin through an attorney wrote the insurance company and offered to pay the premiums claimed to be due on the policy.This offer was not accepted by the insurance company.On or about April 30, 1949, a cancellation notice was mailed to Otto Marvin with cancellation date stated to be May 10, 1949.DefendantOtto Marvin testified that he never received the notice.

The policy of insurance contains the following:

'Detroit Automobile Inter-Insurance Exchange (An Insurance Exchange Herein Called 'Exchange') Does hereby agree with the subscriber (herein called 'insured') named in the declarations made a part hereof, in consideration of the premium deposit herein provided and in reliance upon the statements contained in the declarations and subject to the limits of liability, exclusions, conditions and other terms of this policy: * * *'

'Conditions.* * * (6) No action shall lie against the Exchange unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy. * * *'

The cases were consolidated for trial and on appeal.At the close of plaintiffs' proofs, the following occurred: 'Mr. Allaben (Attorney for garnishee defendant): May it please the Court, at this time I wish to make a motion for a directed verdict for no cause of action on the grounds that under the undisputed proof in this case there was no insurance in effect at the time of this accident.No payment had been made at any time for any portion of the insurance premium, and it was therefore void ab initio; that the proof is undisputed that the $5.00 Mr. Marvin paid was for the part payment on a membership in the Automobile Club; and that he signed an application for insurance which provided on its face that there was no payment on the policy being made on the premium for the policy, and that it was to be on a deferred four-payment plan beginning a month from the date of the application, and Mr. Marvin himself has stated specifically on the stand that he made none of those payments; and therefore, no payment whatsoever was made on this insurance policy.'

The trial court reserved decision on the above motion by virtue of authority of the Empson Act, Comp.Laws 1948, §§ 691.691 to 691.693, and at the close of all testimony the motion was renewed.In granting the motion the trial court stated:

'The Court is granting the motion for directed verdict on the ground, first, primarily, Mr. Marvin never paid a dime for insurance.Even though he was warned his policy would be cancelled, and he stated his wife would send in the money, he never paid a dime for insurance.You can't have your cake and eat it too.If he wanted insurance, he had to pay for it.It is true that he was given credit.The insurance became effective at the time the policy was written and delivered to him upon the installment payment plan, but to keep the insurance in force, the installments must be paid under the terms of the policy.That was the consideration for the writing of the insurance, that he would make the payments, which he did not do.The Court is granting the motion for directed verdict on the further ground that the law presumes that the notice of cancellation was mailed and received by him based upon the evidence which you have heard, and the only evidence to the contrary is his bald statement, No, he did not receive it.He had everything else.He had saved everything except what had to do with insurance.He brought in the one envelope which he received his membership in the Triple A Club.He did remember the pink sheet, but he didn't save that.He didn't save anything else.A lot of time has been spent in this case.It seems to me that a lot of time has been unnecessarily spent when the only issue at any time was whether or not he had paid any premiums for this insurance, whether he had bought any insurance, paid any premiums, and also the simple matter of whether notices had been mailed in the usual way.They were matters that could have been covered in a very short period of time.

'So, under the instructions of the Court, the motion for directed verdict will be granted, and the Clerk will take your verdict.'

Plaintiffs appeal and urge that when credit for the payment of premium was extended, the insurer waived any claim that the payment of the premium was a condition to liability attaching; and that the agreement to accept the premium payment in installments and the delivery of the policy extended the policy coverage to Marvin as of March 16, 1949.Plaintiffs rely upon American Employers' Liability Insurance Co. v. Fordyce, 62 Ark. 562, 36 S.W. 1051, 1053, where it is said:

'The delivery of the policy without condition, and without exacting payment of the premium in cash, raised the presumption that a short credit was intended. * * *

'While the insurance company had the right to cancel the policy for the nonpayment of the premium, as per the contract between the parties, it had no power to make this cancellation relate back, and avoid the policy ab initio.'

Garnishee defendant urges that there never was a policy of insurance in force between Otto Marvin and defendant insurance company from the beginning because of a total failure of consideration.Garnishee defendant relies upon Musser v. Ricks, 271 Mich. 174, 259 N.W. 882, wherein Ricks made application for insurance on February 14, 1943.The policy was delivered 2 weeks later with premium payable in installments of $8.77 as a down payment and the balance in 5 monthly installments.The first payment was not made as agreed upon and before any payments were made Ricks was involved in an automobile accident on March 5, 1934.After the accident, Ricks surrendered the policy to the insurance company.In reversing a judgment for plaintiff, we said:

'Plaintiff's right to recover against the garnishee defendant is dependent on the principal defendant's right to so recover.In this garnishment proceeding plaintiff cannot prevail unless at the time the writ of garnishment was served defendant Ricks could have successfully prosecuted a suit on his insurance policy.This he could not have done, because, when he visited the agent's office on March 8, 1934, he surrendered his policy with the understanding that it was so surrendered for cancellation because of nonpayment of premium.* * * 'Ricks, the insured, has not complained of or sought to revoke or nullify such surrender and cancellation.Whether he did so in consequence of some misunderstanding of his legal rights in not now naterial.He has never paid, or tendered payment of, any portion of the premium.Surely under the circumstances he could not rightly claim that his policy was still in force on July 9, 1934, when the writ of garnishment was served.No claim is made that Ricks acted in bad faith or with any fraudulent intent in surrendering his insurance.He simply put himself in the position of an uninsured auto owner.'

In Schaefer v. Peninsular Casualty Insurance Co., 266 Mich. 386, 254 N.W. 139, the assured failed to pay any part of the premium after delivery of the policy.In reversing a judgment for plaintiff, we said: 'The insured never paid the premium and never intended to pay.Repeated requests to pay were ignored and, on one occasion, met by a falsehood that a check had been sent.The policy recited an undertaking, in consideration of the payment of the premium.There was no occasion for defendant to declare the stillborn policy dead.'

In hauser v. Michigan Mutual Liability Co., 276 Mich. 624, 268 N.W. 759, 760, we held that a personal accident policy combined with insurance against public liability, property damage, collision, et cetera, when delivered took effect according to its terms and became subject to subsequent conditions....