Maryland Cas. Co. v. McGee, Docket No. 8656

Decision Date21 April 1971
Docket NumberNo. 1,Docket No. 8656,1
Citation189 N.W.2d 44,32 Mich.App. 539
PartiesMARYLAND CASUALTY COMPANY, Plaintiff-Appellant, v. Eugene McGEE and Doris Alexander, Defendants-Appellees
CourtCourt of Appeal of Michigan — District of US

Ralph F. Jackson, Davidson, Gotshall, Halsey, Kohl, Nelson, Secrest & Wardle, Detroit, for plaintiff-appellant.

William N. Bradford, Southfield, for defendants-appellees; Stephen M. Landau, Southfield, for counsel.

Before V. J. BRENNAN, P.J., and LEVIN, and PETERSON, * JJ.

PETERSON, Judge.

Plaintiff is defendant's motor vehicle insurer. In addition to the usual casualty and liability coverage, the policy purchased by defendant included uninsured motorist coverage by which plaintiff agreed to pay its insured all damages sustained by the insured in an accident 'arising out of the ownership, maintenance or use of (an) uninsured automobile,' which the insured would 'be legally entitled to recover from the owner or operator of (such) uninsured automobile.' The policy further provides that the right to such damages and the amount thereof shall be determined by arbitration, absent agreement thereon:

'provided, for the purposes of this coverage, determination as to whether the insured or such representative is legally entitled to recover such damages, and if so the amount thereof, shall be made by agreement between the insured or such representative and the company or, if they fail to agree, by arbitration.'

And:

'If any person making claim hereunder and the company do not agree that such person is legally entitled to recover damages from the owner or operator of an uninsured automobile because of bodily injury to the insured, or do not agree as to the amount of payment which may be owing under this Part, then, upon written demand of either, The matter or matters upon which such person and the company do not agree shall be settled by arbitration in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Such persons and the company each agree to consider itself bound and to be bound by any award made by the arbitrators pursuant to this Part.' (Emphasis added)

One of the policy definitions of an uninsured automobile, is 'a hit-and-run automobile,' which in turn is defined as follows:

"hit-and-run automobile' means an automobile which causes bodily injury to an insured arising out of physical contact of such automobile with the insured or with an automobile which the insured is occupying at the time of the accident, provided: (a) there cannot be ascertained the identity of either the operator or the owner of such 'hit-and-run automobile'; (b) the insured or someone on his behalf shall have reported the accident within 24 hours to a police, peace or judicial officer or to the Commissioner of Motor Vehicles, and shall have filed with the company within 30 days thereafter a statement under oath that the insured or his legal representative has a cause or causes of action arising out of such accident for damages against a person or persons whose identity is unascertainable ascertainable, and setting forth the facts in support thereof; and (c) at the company's request, the insured or his legal representative makes available for inspection the automobile which the insured was occupying at the time of the accident.'

Defendant insured alleges that on February 13, 1968, on highway I--94 an unidentified automobile cut in front of his car, striking it, and driving it off the expressway, with resulting injuries to defendant and his passenger. Claiming to come within the 'hit-and-run' definition above, defendant instituted a claim with the American Arbitration Association.

Plaintiff insurer, however, asserts that there can be no arbitration, denying that there was any physical contact between defendant's automobile and an alleged 'hit-and-run' vehicle. It contends that while the insurance contract precludes judicial determination of the cause of action of the insured Vis-a-vis the uninsured motorist, if any, that being determined solely by arbitration, 1 Whether there is a question for arbitration is a separate question which is not arbitrable and which can be settled solely by judicial proceedings. In this view of the contract, one of the parties in a case such as this must seek declaratory relief. 2 Assuming a determination favorable to the insured on the question of whether there was a 'hit-and-run' accident, or whatever other factual question might be posed as a prerequisite to arbitration, 3 the dispute would then be commenced anew in arbitration. In such cases the result is to duplicate in two different forums the trial of what is essentially the same factual question arising out of a single event.

Plaintiff accordingly brought its action seeking a declaratory judgment as to whether its insured had been in an accident with an uninsured motorist as defined in the contract so as to be entitled to go to arbitration about that accident. The trial judge took a more frugal view of the procedure. He concluded that it was wasteful of the time and effort of the parties, productive of unnecessary litigation, and inconsistent with the ends which arbitration is designed to meet. He granted the insured's motion for summary judgment and entered an order requiring the arbitrator to determine whether there was physical contact between the insured vehicle and the alleged 'hit-and-run' vehicle. Plaintiff appeals.

This question was before the Court in Western Casualty & Surety Company v. Strange (1966), 3 Mich.App. 733, 736, 143 N.W.2d 572. In that case, we said:

'Since the only arbitrable matters are those specified in the insurance contract (Carr v. Kalamazoo Vegetable Parchment Co. (1958), 354 Mich. 327, 92 N.W.2d 295), we must look to the language of the policy for decision. As we read it, 3 things must be determined before plaintiff is liable to defendant, namely: (1) that someone other than defendant was the proximate cause of the accident; (2) that such person was operating an uninsured vehicle or was a hit and run motorist so determination of insurance coverage is not possible; (3) the amount of defendant's recovery.

'Interpretation of this, or similar, language has not been presented to the Michigan Supreme Court. Under a similar arbitration provision, the Court of Appeals of New York held in Rosenbaum v. American Surety Company of New York (1962), 11 N.Y.2d 310, 229 N.Y.S.2d 375, 183 N.W.2d 667, that items (1) and (3) above were arbitrable but that item (2) was for court determination. This interpretation was adopted by the Superior Court of Connecticut in Hartford Accident & Indemnity Co. v. Travelers Insurance Co. (1964), 25 Conn.Sup. 414, 206 A.2d 847. It appeals to us as reasonable and proper, and we adopt it as controlling in the case before us.'

We think Western Casualty errs in assuming as a basic premise that Carr says that the only matters arbitrable under an insurance contract are those specified in the contract. 4 Carr and Acme Cut Stone Co. v. New Center Development Corp. (1937), 281 Mich. 32, 274 N.W. 700, upon which Carr relies, merely state the general proposition that arbiters derive their powers from the arbitration submission agreement. Neither Carr nor Acme involved insurance contracts. Neither dealt with...

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