Liberty Mut. Ins. Co. v. Allied Truck Equipment Co.

• Citation: 302 N.W.2d 588,103 Mich.App. 33
• Decision Date: 21 January 1981
• Docket Number: 45949,Docket Nos. 45948,46018 and 46019
• Parties: LIBERTY MUTUAL INSURANCE CO., subrogee of Barber-Boyd Ford, Inc., Plaintiff-Appellant, v. ALLIED TRUCK EQUIPMENT CO., Defendant-Appellant and Aetna Casualty & Surety Co., Defendant-Appellee. ROYAL GLOBE INSURANCE CO., subrogee of Northwest Plumbing & Heating Supply Co., Plaintiff, Appellant, v. ALLIED TRUCK EQUIPMENT CO., Defendant-Appellant, and Aetna Casualty & Surety Co., Defendant-Appellee.
• Court: Court of Appeal of Michigan (US)

Page 588

302 N.W.2d 588

103 Mich.App. 33

LIBERTY MUTUAL INSURANCE CO., subrogee of Barber-Boyd Ford, Inc., Plaintiff-Appellant, v. ALLIED TRUCK EQUIPMENT CO., Defendant-Appellant and Aetna Casualty & Surety Co., Defendant-Appellee.

ROYAL GLOBE INSURANCE CO., subrogee of Northwest Plumbing &

Heating Supply Co., Plaintiff, Appellant, v. ALLIED TRUCK EQUIPMENT CO., Defendant-Appellant, and Aetna Casualty & Surety Co., Defendant-Appellee.

Docket Nos. 45948, 45949, 46018 and 46019.

Court of Appeals of Michigan.

Jan. 21, 1981.

Released for Publication March 10, 1981.

Sam Ford Massie, Jr. (in 45948, 45949), Craig R. Noland (in 46018), Lance R. Mather, (in 46019), Grand Rapids, for plaintiff-appellant.

Lawrence P. Mulligan, Grand Rapids, in 45948 for Royal Globe, 45949 for Liberty Mutual.

Richard B. Baxter, Grand Rapids, in 45948 & 46018 for Aetna Cas.

J. Richard Peterson, Grand Rapids, in 45949 & 46019 for Aetna Cas.

Sam Ford Massie, Jr., Grand Rapids, in 46018 & 46019 for Allied Truck.

Before R. B. BURNS, P. J., and MacKENZIE and KALLMAN, ^* JJ.

KALLMAN, Judge.

Defendant Allied Truck Equipment Company appeals as of right after summary judgment against it was entered by Kent County Circuit Court Judge George R. Cook on June 15, 1979. Plaintiffs Liberty Mutual Insurance Company and Royal Globe Insurance Company filed separate appeals as of right. These consolidated cases involve a dispute over insurance for losses to motor vehicles resulting from a fire on March 9, 1974, at Allied's garage in Wyoming, Michigan. The parties are: Allied Truck Equipment Company, a truck body business that installs auxiliary equipment; Gerald K. Sterling, owner of a truck which was destroyed while repair work was being performed on its auxiliary gas tank; Aetna Casualty & Surety Company, the insurer of Sterling's truck; and Royal Globe Insurance Company and Liberty Mutual Insurance Company, subrogees of the owners of trucks which were damaged in the fire.

There is no dispute over the facts surrounding the outbreak of the fire. On March 4, 1974, Sterling left his three-quarter ton GMC pick-up for Allied to install a 50-gallon auxiliary gas tank in the bed of the pick-up behind the cab. Allied's employees selected and installed a tank and connecting parts. Allied did not test the tank's performance.

Sterling picked up the truck but returned the following day, complaining that the auxiliary tank caused the carburetor to flood.

On March 5, 1974, Allied's service manager attempted to solve the problem by raising a component switch. Sterling picked up his truck that evening but returned it the following day, complaining that the problem had not been resolved.

On March 9, 1974, Allied's service manager planned to install a new line within the auxiliary tank to correct the problem. He crawled under the truck and removed a plug from a vent line at the bottom of the auxiliary tank. Gasoline dripped from the line, hit the floor, then splashed on the bare bulb in a trouble light that had been placed under the truck. The gasoline immediately burst into flames. A mechanic pulled the service manager from beneath the truck, and the two attempted to subdue the fire. They succeeded in extinguishing the flames, but the fire broke out again. The fire burned out of control, destroying Sterling's truck and Allied's building and damaging trucks insured by Royal Globe and Liberty Mutual.

Liberty Mutual and Royal Globe sued Allied and Aetna, seeking damages for vehicles that had been given to Allied for repair but which were damaged in the fire.

Aetna filed a motion for summary judgment on March 11, 1977, in all three cases. That motion was based on this Court's holding that the property protection provisions of the no-fault insurance act were unconstitutional. Shavers v. Attorney General, 65 Mich.App. 355, 237 N.W.2d 325 (1975). The trial court deferred ruling on that motion until the Supreme Court decided the Shavers appeal.

Aetna filed an application for leave to appeal the trial court's decision to defer ruling. In support of its application, Aetna's attorneys drafted a consolidated statement of facts, which stated the fire was accidental and arose during the maintenance of Sterling's truck. Leave to appeal was denied in an order dated October 28, 1977. In an opinion dated May 18, 1979, the trial court found the Legislature intended liability in bailment situations to be governed by the garage keepers' liability act, M.C.L. § 256.41 et seq.; M.S.A. § 9.1721 et seq., and not by the no-fault insurance act, M.C.L. § 500.3101 et seq.; M.S.A. § 24.13101 et seq. The court examined the purposes of each act and found that the no-fault insurance act was intended to apply only in situations where there is some causal connection between the vehicle, its owner or operator, and the loss. In orders dated June 15, 1979, the court granted partial summary judgment in Aetna's favor and found Allied liable to Royal Globe for $11,860 plus costs and interest and to Liberty for $17,263.37, plus costs and interest.

We are now asked to decide whether the no-fault insurance act or the garage keepers' liability act should control when a fire occurs in the course of a garage keepers' work on a vehicle insured under the no-fault insurance act. The garage keepers' liability act, passed in 1919, established a rebuttable presumption that whenever any motor vehicle was damaged while in the possession or under the control of a person who stored or repaired vehicles for profit, that damage was due to the negligence of that person. The purpose of that act was stated as:

"AN ACT to protect the owners of motor vehicles, entrusting the same for any purpose, the care, custody or control of the owner or keeper of a public garage or other establishment where such motor vehicles are so accepted for hire or gain." 1919 P.A. 391.

While this title is not part of the statute, we may consider it as expressing the act's object and purpose. In re Chamberlain's Estate, 298 Mich. 278, 281, 299 N.W. 82 (1941).

This presumption, when considered with the common law of bailments, afforded motor vehicle owners protection against damages incurred while the garage keeper was in control of the automobile. See Loving v. Howard Lare, Inc., 344 Mich. 97, 99, 73 N.W.2d 290 (1955). Clearly, the terms of the garage keepers' liability act apply in the instant situation.

Allied argues, however, that the no-fault insurance act's property protection provisions not the garage keepers' liability act should govern.

The goal of the no-fault insurance act is "to provide victims of motor vehicle accidents assured, adequate, and prompt reparation for certain economic losses." (Emphasis added.) Shavers v. Attorney General, 402 Mich. 554, 579, 267 N.W.2d 72 (1978). The act does not purport to compensate accident victims for all economic losses.

The no-fault insurance act provides, in pertinent part:

"(1) Under property protection insurance an insurer is liable to pay benefits for accidental damage to tangible property arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle subject to the provisions of this section and sections 3123, 3125 and 3127.

"(2) Property protection insurance...