Parham v. Preferred Risk Mut. Ins. Co.

• Decision Date: 08 June 1983
• Docket Number: Docket No. 61538
• Citation: 124 Mich.App. 618,335 N.W.2d 106
• Parties: Victor PARHAM, Plaintiff-Appellant, v. PREFERRED RISK MUTUAL INSURANCE COMPANY, a Foreign Insurance Company, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 106

335 N.W.2d 106

124 Mich.App. 618

Victor PARHAM, Plaintiff-Appellant, v.PREFERRED RISK MUTUAL INSURANCE COMPANY, a Foreign Insurance Company, Defendant-Appellee.

Docket No. 61538.

Court of Appeals of Michigan.

Submitted Feb. 1, 1983.

Decided April 5, 1983.

Released for Publication June 8, 1983.

Franklin G. Koory, Troy, for plaintiff-appellant.

Eugene S. Hoiby, Livonia, for defendant-appellee.

Before WALSH, P.J., BEASLEY and THOMAS, ^* JJ.

THOMAS, Judge.

Plaintiff appeals as of right from a judgment of no cause of action in favor of defendant, Preferred Risk Mutual Insurance Company, after a trial without a jury.

The plaintiff was injured in an automobile accident which occurred near Bowling Green, Kentucky, on August 28, 1975, while driving an automobile owned by his brother-in-law, John Giacalone.Plaintiff was a member of the United States Army at the time of the accident.Prior to the accident he had been at his mother's home in Warren, Michigan, recuperating from injuries to his wrists.Plaintiff left Warren to return to Fort Campbell, the U.S. Army base at which he was stationed, on August 25, 1975.He drove his brother-in-law's automobile.

Brother-in-law Giacalone had been unsuccessfully trying to sell the car in Michigan, and it was his idea to have the plaintiff take the car to Kentucky, thinking it to be a better sales market.Mr. Giacalone requested plaintiff to sell the car during the trip as he did not have the time to take the car there himself.Mr. Giacalone did not consider the use of the car a loan arrangement but it would provide plaintiff with the ride he needed to Kentucky.

To that end Mr. Giacalone signed the title to the car in blank and told plaintiff to sign it also and have it notarized in the event that he was successful in selling the car.Mr. Giacalone did not put the plaintiff on any payroll and had no intention of paying plaintiff, but did intend to reimburse plaintiff for gas and maintenance expenses.Plaintiff put signs on the bulletin board at the base and in the car window in his attempt to sell the vehicle.According to plaintiff, the "sole purpose" for which he took the vehicle to Kentucky was to sell it.The record further reveals that plaintiff had never been allowed the use of the vehicle before and that he had only test driven it once before leaving for Kentucky.

The accident occurred as plaintiff was returning to Michigan and involved an uninsured motor vehicle.As a result of his injuries, plaintiff was retained in the Army until November 14, 1975.

Plaintiff originally brought an action to compel arbitration of uninsured motorist benefits against Detroit Automobile Inter-Insurance Exchange and defendant and an action for declaratory relief to determine "stacking" of uninsured motorist benefits against defendant.Plaintiff filed an amended complaint on September 24, 1976, seeking personal protection benefits under separate policies of insurance issued to Dorotha Parham and Gregory Parham, mother and brother of plaintiff, by defendant.Detroit Automobile Inter-Insurance Exchange, insurer of the vehicle owned by John Giacalone and being driven by the plaintiff at the time of the accident, was dismissed from the action after settlement under uninsured motorist provisions of its policy for noneconomic loss.

The controversy in this case revolves around the priority provisions of the Michigan no-fault act.In most situations where the injured person is insured or where his family member is insured under a no-fault insurance policy, that person seeks benefits from his own insurer.M.C.L. § 500.3114(1);M.S.A. § 24.13114(1);State Farm Mutual Automobile Ins. Co. v. Hawkeye-Security Ins. Co., 115 Mich.App. 675, 321 N.W.2d 769(1982).Section 3114(3) of the act provides an exception to the general rule:

"(3) An employee, his or her spouse, or a relative of either domiciled in the same household, who suffers accidental bodily injury while an occupant of a motor vehicle owned or registered by the employer, shall receive personal protection insurance benefits to which the employee is entitled from the insurer of the furnished vehicle."M.C.L. § 500.3114(3);M.S.A. § 24.13114(3).

The trial court determined that an employer-employee relationship existed between plaintiff and his brother-in-law at the time of the accident and, therefore, plaintiff was precluded from collecting personal injury protection benefits from the defendant under defendant's co-householder policy by virtue of M.C.L. § 500.3114(3);M.S.A. § 24.13114(3) aforestated.The court reasoned that as an employee of his brother-in-law, plaintiff's only discretion was in finding the highest bidder; the remainder of plaintiff's conduct was determined by the prior oral agreement.The court, in support of that holding, cited Laughlin v. Michigan Motor Freight Lines, 276 Mich. 545, 268 N.W. 887(1936), andBrinker v. Koenig Coal & Supply Co., 312 Mich. 534, 20 N.W.2d 301(1945).Both of these cases utilize the right of control test involving the doctrine of respondeat superior liability.The purpose of this theory is the definition and limitation of the scope of the master's liability under that doctrine.Nichol v. Billot, 406 Mich. 284, 279 N.W.2d 761(1979).The test focuses on the right of control, not the actual exercise of control.Brinker v. Koenig Coal & Supply Co., supra.

The plaintiff contends that the trial court should have utilized the "economic reality" test and not the "right of control" test in determining whether an employer-employee relationship existed, and that, had the court applied the "economic reality" test, it would have found that plaintiff was not an employee.Moreover, plaintiff contends that, if any legal relationship existed at all between the plaintiff and his relative, plaintiff should be considered an independent contractor and therefore he would not be barred from collecting personal injury protection benefits from the defendant by reason of M.C.L. § 500.3114(3);M.S.A. § 24.13114(3).An independent contractor is one who, carrying on an independent business, contracts to do work without being subject to the right of control by the employer as to the method of work but only as to the result to be accomplished.Marchand v. Russell, 257 Mich. 96, 241 N.W. 209(1932).

In Tata v. Muskovitz, 354 Mich. 695, 94 N.W.2d 71(1959), the Supreme Court adopted the economic reality test, discussed in the dissenting opinion of Justice Smith in Powell v. Employment Security Comm., 345 Mich. 455, 75 N.W.2d 874(1956), as a guide in determining the employment relationship for the purpose of the worker's compensation statute.By this test, factors to be considered include: (a) control of the worker's duties, (b) payment of wages, (c) right to hire, fire and discipline, and (d) the performance of the duties as an integral part of the employer's business towards the accomplishment of a common goal.SeeAskew v....