Mich. Mut. Liab. Co. v. Baker

• Decision Date: 07 October 1940
• Docket Number: No. 113.,113.
• Citation: Mich. Mut. Liab. Co. v. Baker, 295 Mich. 237, 294 N.W. 168 (Mich. 1940)
• Parties: MICHIGAN MUT. LIABILITY CO. v. BAKER et al., Commissioner of Department of Labor and Industry.
• Court: Michigan Supreme Court

295 Mich. 237

294 N.W. 168

MICHIGAN MUT. LIABILITY CO.

v.BAKER et al., Commissioner of Department of Labor and Industry.

No. 113.

Supreme Court of Michigan.

Oct. 7, 1940.

Bill in equity by the Michigan Mutual Liability Company, a Michigan corporation, against John Baker and others, and commissioners of the Department of Labor and Industry of the State of Michigan, to cancel and discharge a certificate alleged to have been filed with the department by mistake, and for other relief, wherein the Employers Mutual Liability Insurance Company and the State Accident Fund intervened.From an adverse decree, defendants appeal.

Affirmed.Appeal from Circuit Court, Ingham County, in Chancery; Leland W. carr, judge.

Argued before the Entire Bench.

Thomas Read, Atty. Gen., and Edmund E. Shepherd and John Panchuk, Asst. Attys.Gen., for Department of Labor and Industry.

Sessions & Warner, of Lansing (L. J. Carey and George J. Cooper, both of Detroit, of counsel), for appellee.

BUTZEL, Justice.

Plaintiff filed a bill in equity against the Commissioners of the Department of Labor and Industry and John Baker, an employer, to cancel an insurance certificate alleged to have been filed with the Department of Labor and Industry by mistake, and for other relief.The Employers Mutual Liability Insurance Company and the State Accident Fund are made partiesdefendant by intervention.

In 1937, the employer filed an acceptance to come under the Workmen's Compensation Act, and on October 21, 1937, the State Accident Fund filed an insurer's certificate.In September, 1938, the employer decided not to renew his coverage with the State Accident Fund, and on October 20, 1938, the fund received notice to that effect.On the same day it filed notice with the Department of Labor and Industry that its policy would terminate as of 12:01 a. m., October 31, 1938.The department promptly notified the employer that the effective date of the termination of the State Accident Fund policy was October 31, 1938.The defendantEmployers Mutual Liability Company solicited the employer's account, and toward the end of September, 1938, it issued a policy to be effective October 21, 1938, and on that date an insurer's certificate was filed with the department.This coverage was terminated by notice as of November 2, 1938.On October 19, 1938, plaintiffMichigan Mutual Liability Company solicited the employer's account, and on submission of an application, an insurer's certificate was filed with the department on October 24, 1938.This coverage was also terminated by notice as of November 2, 1938.The employer tentatively decided to place his business with plaintiff, and accordingly, on October 19, he notified the Employers Mutual Liability Company that he wished to cancel its contract, and he inclosed his check for the earned premium.On the strength of the notice from the Department of Labor and Industry that the fund's coverage would not expire until October 31, at 12:01 a. m., the employer told an agent of plaintiff on October 21 that he did not want coverage in more than one company for the period up to the 31st of October, 1938, and that he should ‘drop the whole matter.’The representative failed to notify the company to cancel its binder coverage of October 21.On October 25, after further solicitation by an agent of the Employers Mutual, the employer wired the Michigan Mutual to cancel its policy, and it appears that the Employers Mutual was to issue its contract as of October 31.On October 28, the agents of the two companies solicited the employer again, and by toss of a coin it was determined that the Employers Mutual was to be the carrier, starting October 31.

On October 29, an employee was fatally injured, and claim for compensation was duly made.In the proceeding before the Deputy Commissioner the State Accident Fund and the two insurance carriers were parties.The Deputy Commissioner held that the State Accident Fund was the insurer.Pending a review by the full board, plaintiff filed this bill seeking cancellation of its certificate of acceptance of risk on the ground of mistake, and praying for temporary and permanent injunctive relief against the Commissioners of the Department of Labor and Industry to restrain proceedings against plaintiff company.The trial court granted the relief prayed.Only the Commissioners of the Department of Labor and Industry appeal.

As the Commissioners of the Department of Labor and Industry are the sole appellants and raise only two questions, we shall limit our decision to them: (1) Is the jurisdiction to determine the validity of an insurer's certificate vested in the Department of Labor and Industry, or in a court of equity?(2) Has plaintiff an adequate remedy without the intervention of a court of equity?

We think the question of the cancellation of the insurer's certificate on the ground of fraud or mistake may be determined in a court of equity.It is within the province of equity to cancel instruments which may annoy and harass until their invalidity is determined.Fred Macey Co. v. Macey, 143 Mich. 138, 106 N.W. 722, 5 L.R.A.,N.S., 1036.

‘Equity has jurisdiction where complete protection and relief requires the cancellation of written instruments, the rescission of a transaction, or other specific relief of equitable character.’Haylor v. Grigg-Hanna Lumber & Box Co., 287 Mich. 127, 283 N.W. 1, 3.

Where an instrument purporting to be a meeting of the minds is sent out into the world through mistake, the purported obligor need not wait until an action is started thereon to raise his defense of invalidity.Equity has jurisdiction to put an end to the business embarrassment that such an outstanding document might cause.Baas v. Zinke, 218 Mich. 552, 188 N.W. 512;Meade v. Brown, 218 Mich. 556, 188 N.W. 514;Kutsche v. Ford, 222 Mich. 442, 192 N.W. 714.

Furthermore, because of the nature of the contract and the fact that the tribunal which acts thereon is one of limited powers, plaintiff would have no remedy at all in the premises unless a court of chancery intervenes.While the department has jurisdiction to determine ‘all questions', 2 Comp.Laws 1929, § 8455;§ 17.190...