Madar v. League Gen. Ins. Co.

• Decision Date: 16 October 1986
• Docket Number: Docket No. 86355
• Citation: 394 N.W.2d 90,152 Mich.App. 734
• Parties: Arthur J. MADAR, as Personal Representative of the Estate of Albert R. Madar, deceased, Plaintiff-Appellant, v. LEAGUE GENERAL INSURANCE COMPANY, a Foreign Corporation, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 90

394 N.W.2d 90

152 Mich.App. 734

Arthur J. MADAR, as Personal Representative of the Estate of Albert R. Madar, deceased, Plaintiff-Appellant, v. LEAGUE GENERAL INSURANCE COMPANY, a Foreign Corporation Defendant-Appellee.

Docket No. 86355.

Court of Appeals of Michigan.

Submitted April 7, 1986.

Decided June 17, 1986.

Released for Publication Oct. 16, 1986.

O'Reilly, Rancilio, Nitz, Andrews & Turnbull by Paul J. O'Reilly and Neil J. Lehto, Sterling Heights, for plaintiff-appellant.

Zweig, Harkness and Lane, P.C. by Robert H. Harkness and Timothy R. Van Dusen, Southfield, for defendant-appellee.

Before DANHOF, C.J., and HOOD and SULLIVAN, JJ.

PER CURIAM.

Plaintiff appeals as of right from the trial court's grant of summary disposition in favor of defendant pursuant to MCR 2.116(C)(10). The trial court's order held that "[b]ecause plaintiff's decedent had a policy of insurance in effect at the time of his injury and death, Auto Club Insurance Association is the proper priority insurer from whom plaintiff can claim benefits pursuant to MCL 500.3114(1)." On appeal, plaintiff argues that the prior transfer of his decedent's ownership interest in the motor vehicle named in the no-fault insurance policy automatically terminated the personal protection insurance coverages of the policy and made defendant the priority insurer. We disagree with plaintiff and affirm the trial court.

Plaintiff's decedent, Albert R. Madar, took out a six-month no-fault insurance policy from the Auto Club Insurance Association (AAA). The policy was effective, by its terms, from November 22, 1982, through May 22, 1983. On March 7, 1983, Albert Madar, while a pedestrian, was struck by an automobile driven by a person insured by defendant. As a result of injuries sustained in the accident, Madar died on April 16, 1983. However, prior to decedent's accident, on February 23, 1983, plaintiff's decedent transferred and sold the automobile named in the AAA policy.

On March 11, 1983, shortly after the accident, plaintiff submitted, on his father's behalf, an application for benefits, and AAA made a payment under its policy on behalf of Albert Madar as a "medical benefit". On May 20, 1983, plaintiff submitted a request that effective May 22, 1983, his father's insurance policy not be renewed due to his death. Thereafter, on January 20, 1984, after the instant case was filed, plaintiff requested a cancellation of his father's policy retroactive to February 23, 1983, the date the ownership of his vehicle was allegedly transferred by Albert Madar.

The trial judge found that the personal protection insurance coverage protects insured persons and that there was no requirement that an insured motor vehicle be involved. The judge held that "first party" personal protection benefits are in the nature of personal accident policies, which in the AAA policy focused on plaintiff's decedent and not his automobile, and therefore continued in effect after decedent's car was transferred absent cancellation of the policy of decedent. Thus, the court ruled, since plaintiff's decedent had a policy of insurance in effect at the time of his injury and death, AAA, not defendant, which is the insurer of the driver whose vehicle struck Madar, is the proper priority insurer from whom plaintiff can obtain benefits.

The no-fault act provides that a person suffering accidental bodily injury while not occupying a motor vehicle shall claim no-fault insurance benefits from the insurer of the owner of the motor vehicle involved in the accident. M.C.L. § 500.3115(1)(a); M.S.A. § 24.13115(1)(a). The no-fault act, however, makes an exception to this requirement if the injured person is covered by a no-fault policy. If this is the case, M.C.L. § 500.3114(1); M.S.A. § 24.13114(1) requires the injured person to look to his own no-fault policy for coverage.

It is on this basis that defendant states that it is not the proper priority insurer under §§ 3114 and 3115 of the no-fault act. Defendant has denied any liability for personal protection benefits. Defendant asserts that, notwithstanding the sale of the automobile prior to the accident, the personal protection benefits of the AAA policy were still effective on the date of the accident since there had been no cancellation up to that time, and, thus, AAA is the proper party from whom plaintiff should seek personal protection insurance benefits. Plaintiff, however, asserts that all of AAA's coverage terminated as a matter of law when plaintiff's decedent sold the automobile.

Plaintiff first argues that once the plaintiff's decedent transferred his ownership in the vehicle named in the policy, he no longer had an insurable interest and the personal protection insurance coverage automatically terminated. An insurable interest in property is broadly defined as being present when the person has an interest in property, as to the existence of which the person will gain benefits, or as to the destruction of which the person will suffer loss. Crossman v. American Ins. Co., 198 Mich. 304, 309, 164 N.W. 428 (1917). Plaintiff would apply this principle in the automobile context by relying upon Payne v. Dearborn Nat'l Casualty Co., 328 Mich. 173, 177, 43 N.W.2d 316 (1950), for the proposition that automobile insurance is entirely dependent on ownership by the named insured of the automobile described in the policy, and that there is no insurance separate and distinct from ownership of the automobile. Consequently, plaintiff argues that since plaintiff's decedent did not have an automobile on the date of the accident, he could not have no-fault automobile insurance as a matter of law because he had no insurable interest in an automobile.

Plaintiff's argument fails to fully consider the substantial changes wrought in the automobile insurance area by the no-fault act. In Lee v. DAIIE, 412 Mich. 505, 315 N.W.2d 413 (1981), the plaintiff was injured while unloading mail from a government-owned mail truck, an insured vehicle. The Court held that the plaintiff's personal insurer was liable for the payment of personal protection benefits under the no-fault act, despite the fact that this insurer had written no coverage for the vehicle involved. 412 Mich. 516, 315 N.W.2d 413. The Court expressed the underlying basis for its decision as follows:

"Our decision in this case rests, in the last analysis, upon our recognition that it is the policy of the no-fault act that persons, not motor vehicles, are insured against loss." 412 Mich. 509, 315 N.W.2d 413.

The Lee Court made it clear, explicitly overruling Shoemaker v. Nat'l Ben Franklin Ins Co., 78 Mich.App. 175, 259 N.W.2d 414 (1977), that it is not required, as Shoemaker previously held, that a vehicle intended to be covered under the no-fault act be involved in an accident for the insurer to be liable to its insured for personal protection benefits. 412 Mich. 511, 315 N.W.2d 413. The Court found that, in enacting the no-fault act, the Legislature:

"intended to provide benefits whenever, as a general proposition, an insured is injured in a motor vehicle accident, whether or not a registered or covered motor vehicle is involved; and in its narrower purpose, intended that an injured person's personal insurer stand primarily liable for such benefits whether or not its policy covers the motor vehicle involved and even if the involved vehicle is covered by a...