Martin v. Ohio Cas. Ins. Co., Docket No. 3131

• Court: Court of Appeal of Michigan
• Writing for the Court: Before LESINSKI; T. G. KAVANAGH
• Citation: Martin v. Ohio Cas. Ins. Co., 157 N.W.2d 827, 9 Mich.App. 598 (Mich. App. 1968)
• Decision Date: 20 March 1968
• Docket Number: Docket No. 3131,No. 1,1
• Parties: Joseph MARTIN and William Deneen, Plaintiffs-Appellees, v. The OHIO CASUALTY INSURANCE COMPANY, Defendant-Appellant

Page 827

157 N.W.2d 827

9 Mich.App. 598

Joseph MARTIN and William Deneen, Plaintiffs-Appellees, v. The OHIO CASUALTY INSURANCE COMPANY, Defendant-Appellant.

Docket No. 3131.

Court of Appeals of Michigan, Division No. 1.

March 20, 1968.

Released for Publication April 24, 1968.

Leave to Appeal Denied June 18, 1968.

Charles E. Randau, Davidson, Gotshall, Kelly, Halsey & Kohl, Detroit, for appellant.

John E. Young, Elsman, Young & O'Rourke, Detroit, for appellee.

Before LESINSKI, C.J., and GILLIS and T. G. KAVANAGH, JJ.

T. G. KAVANAGH, Judge.

Defendant, Ohio Casualty Insurance Company, issued an aircraft liability insurance policy to the Finney Aviation Company providing insurance coverage for property damage arising out of use of the insured aircraft. Plaintiffs rented a plane from Finney Aviation and while they were operating the plane, i.e., taxing down a runway, it hit a curb, nosed over and was damaged. Pursuant to the insurance policy defendant paid Finney Aviation $2179 for damages to the plane.

The defendant insurance company, as subrogee of Finney, sued plaintiffs, Martin and Deneen, for $2179, on the theory that plaintiffs were liable for damages to the plane caused by them.

The insurance policy issued to Finney Aviation provided that defendant insurance company would defend any suit against the insured alleging injury to or destruction of property caused by accident and arising out of the ownership, maintenance or use of the aircraft and would pay all expenses of such defense. Plaintiffs, claiming that they were insured, by definition, under the policy, timely demanded that Ohio Casualty assume defense of that suit and pay the expenses thereof. The insurance company refused so to do. Martin and Deneen retained counsel at their own expense and judgment of no cause of action was entered in their favor, on the ground that they had not been negligent in the operation of the plane.

Having successfully defended that action, plaintiffs commenced this action against defendant for expenses incurred in defending the prior suit. The lower court held that plaintiffs were insured under the policy and accordingly judgment in their favor was entered in the amount of $1,256 plus costs and attorney fees. Defendant appealed.

The sole issue before us is whether the lower court was correct in its ruling that plaintiffs were insured under the policy, or whether, as defendant claims, plaintiffs are not covered under the policy because they were operating the plane under a rental agreement.

Two provisions of the insurance policy are pertinent to the question before us. Paragraph III of the 'Insuring Agreements' defines 'Insured' as follows:

'The unqualified word 'Insured' wherever used in this policy with respects to coverages A, B, C, and D, includes not only the named insured but also any person while using or riding in the aircraft and any person or organization legally responsible for its use, provided the actual use is with the permission of the named insured.

'The provisions of this paragraph do not apply:

* * *

'(d) to any person operating the aircraft under the terms of any rental agreement or training program which provides any remuneration to the named insured for the use of said aircraft.'

Item 6 of the 'Declarations' provides:

'The aircraft will be used only for the purposes indicated by 'X':

' (e) 'Commercial'. The term 'Commercial' is defined as including all the uses permitted under (c) and (d) above.'

Item 6(c) referred to in the above-quoted clause permits rental of aircraft to pilots.

The question before us is one of first impression in Michigan, and while the cases involving such clauses as these in aircraft insurance policies are not numerous, there are a sufficient number from which to glean some general rules...