Keys v. Pace
| Decision Date | 24 November 1959 |
| Docket Number | No. 6,6 |
| Parties | Julia KEYS, Plaintiff-Appellee, v. Robert H. PACE, Defendant, and Detroit Automobile Inter-Insurance Exchange, Garnishee Defendant and Appellant. |
| Court | Michigan Supreme Court |
Erickson, Dyll, Marentay & Slocum, Detroit, for garnishee defendant and appellant, James R. Daoust, Detroit, of counsel.
Waldron, Brennan & Maher, by Thomas E. Brennan, Detroit, for plaintiff and appellee.
Before the Entire Bench.
The case before us involves the effect, upon a contract of insurance, of a representation made by the applicant to the insurer.
The facts of the case were stipulated. They are as follows:
'As a result of this collision, the plaintiff suffered considerable personal injury as well as damage to her automobile.
'On the 24th day of May, 1957, the plaintiff instituted her action in the Cicuit Court for the County of Wayne for the recovery of damages against the principal defendant Robert H. Pace, which she alleged to have been caused by his negligence in the above described collision.
'A summons and copy of plaintiff's declaration having been accordingly served upon the principal defendant, a general appearance and answer denying negligence by the principal defendant, were filed in his behalf by Erickson, Dyll, Marentay, VanAlsburg and Slocum, attorneys and counselors, on the 27th day of June, 1957.
'That on or about the 16th day of September, 1957, plaintiff filed her motion in the Cicuit Court for the appointment of guardian ad litem for the defendant, it appearing that the defendant was a voluntary mental patient in the Veterans' Hospital in Battle Creek, Michigan, and accordingly, the Honorable Carl M. Weideman, Circuit Judge, did on the 4th day of October, appoint one Richard R. Kubicki, guardian ad litem for the defendant Robert H. Pace.
'In the meantime, and on or about September 19, 1957, the attorneys of record for the defendant filed a motion in the Circuit Court to withdraw as attorneys for such defendant backed by an affidavit asserting that the answer to question 3 was false and that knowledge of such falsity was acquired subsequent to June 27, 1957. Pursuant to such motion, an order was entered on October 4, 1957, by the Honorable Theodore R. Bohn, Circuit Judge, permitting the said attorneys of record to withdraw.
'Thereafter a motion was filed by plaintiff for rehearing of the motion by attorneys of record for the defendant to permit them to withdraw as such attorneys, and on December 13, 1957, an order was entered by the Honorable Theodore R. Bohn, Circuit Judge, permitting the attorneys of record for the defendant to withdraw from the case but specifically providing that the entry of said order should not be construed to adjudicate, in any way, the liability of the Detroit Automobile Inter-Insurance Exchange, upon the certain policy of insurance which it had issued to the defendant Robert H. Pace.
'Thereafter, plaintiff filed her motion for judgment against the principal defendant and pursuant thereto, the Honorable Carl M. Weideman did enter judgment in favor of the plaintiff and against the defendant in the sum of nine thousand five hundred ($9,500.00) dollars with costs taxed in the amount of thirty-two ($32.00) dollars on the 13th day of December, 1957.
'Thereafter, plaintiff filed her affidavit for writ of garnishment against the garnishee defendant, Detroit Automobile Inter-Insurance Exchange, and a writ of garnishment was issued from the Circuit Court for the County of Wayne and duly served upon the said garnishee defendant, pursuant to which the garnishee defendant did, on the 11th day of March, file its disclosure and demand trial of the statutory issue.
'History of Insurance
'On or about the 27th day of November, 1956, the garnishee defendant, Detroit Automobile Inter-Insurance Exchange, a domestic insurance company, doing business only in the State of Michigan, issued to the principal defendant Robert H. Pace, its policy of automobile liability insurance, being No. 95-27-5040, pursuant to an application for such insurance made by the principal defendant and dated November 27, 1956. A premium therefor was paid to the garnishee defendant. Question number 3 on such application for insurance was as follows:
"Has your operator's license been revoked, suspended or refused within the past three years?'
Principal defendant's answer was 'No.'
On December 20, 1956, attorneys for plaintiff notified garnishee defendant of their retainer by her, which notice was acknowledged on December 24, 1956.
'On January 30, 1957, the garnishee defendant cancelled the insurance policy of the principal defendant and returned to him the 'unearned' portion of the premium which he had paid for the policy.
'On September 13, the principal defendant was notified by the garnishee defendant that it considered the policy totally void from its inception because of misrepresentation made by the principal defendant on his application for insurance in his answer to question No. 3, as aforesaid. A check for the 'earned' portion of the premium was tendered therewith to the principal defendant.
'On July 25, 1955, the principal defendant was found guilty of operating a motor vehicle fifty miles per hour in a thirty mile per hour zone on Van Dyke street in the city of Detroit, by John G. Carney, Referee of the Detroit Recorder's Court--Traffic and Ordinance Division, and placed on two years probation; 'no driving and no reporting.'
'In connection therewith, the principal defendant was required to surrender to the clerk of the said Recorder's Court--Traffic and Ordinance Division, his Michigan operator's license, numbered P 524 767.
'The offense with which the principal defendant was charged was a violation of section 13B of Chapter 237 of Compiled Ordinances of the City of Detroit, and was not, at the same time, a violation of state law.
'On January 22, 1957, principal defendant was convicted in said Recorder's Court for reckless driving in connection with the collision of December 3, 1956.
'The practice of both Judges and Referees of the Recorder's Court--Traffic and Ordinance Division of placing defendants on 'no driving' probation, and requiring such defendants to surrender their operators' licenses to that court, has long been followed by that court.
'The existence of this practice has been recognized by the Secretary of State, and in cases where the Secretary of State suspends a license which has already been surrendered to the court, the license is delivered by the court to the Department; and in cases where a suspension by the Department terminates at a time when such a probationary period has not expired, the Secretary of State follows the practice of returning such license to the court.
Upon this stipulation of facts, and after hearing testimony, judgment was entered on the statutory issue, from which the garnishee defendant appeals. It is contended that when Mr. Pace informed the insurer that his operator's license had not been revoked, suspended, or refused within the past 3 years, he was guilty of misrepresentation, in bad faith, of the true state of facts material to the risk insured.
The position of the appellee on this phase of the case is that the answer was true. It is argued that only the secretary of state may refuse to issue, revoke, or suspend licenses, and that he had not acted in the premises. Moreover, it is asserted:
'* * * that the action of the Referee of the Recorder's Court--Traffic and Ordinance Division in convicting the principal defendant and imposing a sentence of two years probation, 'no driving, no reporting,' was...
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