Raska v. Farm Bureau Mut. Ins. Co. of Michigan

• Decision Date: 08 January 1982
• Docket Number: Docket No. 63507,No. 2,2
• Citation: 412 Mich. 355,314 N.W.2d 440
• Parties: Robert F. RASKA, and Mary L. Raska, His Wife, Plaintiffs-Appellants, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN, Defendant-Appellee. Calendar
• Court: Michigan Supreme Court

Page 440

314 N.W.2d 440

412 Mich. 355

Robert F. RASKA, and Mary L. Raska, His Wife, Plaintiffs-Appellants, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN, Defendant-Appellee.

Docket No. 63507.

Calendar No. 2.

Supreme Court of Michigan.

Argued June 3, 1980.

Decided Jan. 8, 1982.

Jack C. Chilingirian by Jack C. Chilingirian, Mount Clemens, for plaintiffs-appellants.

Glime, Daoust, Wilds, Rusing & Widlak by James R. Daoust, Denis R. LeDuc, Mount Clemens, for defendant-appellee.

KAVANAGH, Justice (for affirmance).

This case involves the validity of an exclusionary clause in a pre-no-fault automobile insurance policy.

Any clause in an insurance policy is valid as long as it is clear, unambiguous and not in contravention of public policy.

Although plaintiffs here assert that this "owned automobile" exclusion clause violates public policy, they cite us no public policy touching the area. Their argument is concentrated on the "obscurity" of the drafting on account of the placement of the clause in the policy, and the technicality of language used-both of which touch not on public policy but rather on the clarity or ambiguity of the words.

The only pertinent question, therefore, is whether the exclusionary clause in this contract is ambiguous, for if it is not ambiguous we are constrained to enforce it.

A contract is said to be ambiguous when its words may reasonably be understood in different ways.

If a fair reading of the entire contract of insurance leads one to understand that there is coverage under particular circumstances and another fair reading of it leads one to understand there is no coverage under the same circumstances the contract is ambiguous and should be construed against its drafter and in favor of coverage.

Yet if a contract, however inartfully worded or clumsily arranged, fairly admits of but one interpretation it may not be said to be ambiguous or, indeed, fatally unclear.

Plaintiffs also assert that as drafted the policy did not meet their "reasonable expectations". Still the expectation that a contract will be enforceable other than according to its terms surely may not be said to be reasonable. If a person signs a contract without reading all of it or without understanding it, under some circumstances that person can avoid its obligations on the theory that there was no contract at all for there was no meeting of the minds.

But to allow such a person to bind another to an obligation not covered by the contract as written because the first person thought the other was bound to such an obligation is neither reasonable nor just.

The capitalized reference at the bottom of the first page and the capitalized heading "Exclusions" on the second page of the endorsement involved here persuade me that a fair reading of the entire policy should leave no doubt that use of a vehicle not named in the policy which is either owned by the insured or furnished for his or her regular use is excluded from coverage.

I would affirm.

COLEMAN, C. J., and FITZGERALD and RYAN, JJ., concur.

WILLIAMS, Justice, dissenting.

Defendant insurance company almost simultaneously (within 11 days) sold a family automobile insurance policy for the Raska family and a business automobile insurance policy for the unincorporated Raska Trucking Company. The family policy included a special endorsement for disability income. The business policy did not. Mrs. Raska was injured in an accident while driving a Raska Trucking Company vehicle. She unsuccessfully sought recovery for disability income. The insurance company defended on the basis of an "owned automobile exclusion" in the family policy. The trial court granted the insurance company a summary judgment and the Court of Appeals affirmed.

There are two issues in this case. The first is whether the "owned automobile exclusion" is valid, construing it within the four corners of the family policy. The special disability income endorsement has a Dr. Jekyll/Mr. Hyde character. The front page grants complete and unlimited coverage for injuries occurring "while occupying or through being struck by an automobile", i.e., any automobile. However, the back page excludes coverage "while occupying an automobile owned by or furnished for the regular use of either the named insured or any relative" except a car listed in the policy. In short what the front page gives, the back page purports to take away. Validity or invalidity will be considered first under the traditional rule that an insurance contract, as a contract of adhesion, is construed in favor of the insured; and, second, under the rule of reasonable expectations. Under both rules we find the owned-automobile exclusion invalid as to the Raskas unless it can be shown that the effect of the qualifying clauses was understood by them.

The second issue is the impact in this case of the principle that the owned-automobile exclusion has the legitimate function of protecting an insurer from a policy purchaser taking adequate insurance on a low-risk owned vehicle and inadequate insurance on a high-risk owned vehicle and trying to collect from the adequate coverage on the inadequately insured owned vehicle. For example, if a person owns a conservative four-cylinder soundly built sedan and a racy eight-cylinder sports car and insures the sedan for twice as much as the sports car, he should not expect to use the sedan insurance to collect on the sports car. If Mrs. Raska, who was injured, had herself purchased both the family automobile insurance policy and the business insurance policy with full knowledge that the special disability income endorsement did not apply to the vehicles owned by the Raska Trucking Company and she had been offered supplementary coverage so that she could have had such coverage, then Mrs. Raska would probably not be entitled to disability income benefits. However, if Mrs. Raska had purchased the family automobile insurance policy with the special disability income insurance policy seemingly providing complete portability, and her husband had purchased the business automobile insurance policy without being informed by the insurer that the special disability income endorsement would not protect him or Mrs. Raska if either were injured in a Raska Trucking Company vehicle and without being offered a policy to provide such coverage, then in that case Mrs. Raska probably should be covered, particularly because of the obscurant drafting of the family automobile insurance policy. The problem with this case is that it comes to this Court on summary judgment with sparse pleadings, which illuminate not at all the circumstances surrounding the purchase of the two automobile insurance policies.

So it is impossible on the present record for this Court to know the favorable and unfavorable factors in the conduct of the respective parties. We are left with the obscurant drafting of the disability income endorsement and no information as to whether the Raska family with a purchase of a business automobile insurance policy from the same insurance company within 11 days should or should not have reasonably realized or been informed that their disability income endorsement in the family policy was not meant to cover them in Raska Trucking Company vehicles. As a consequence, the order granting summary judgment to the defendants is vacated and the matter is remanded to the trial court for further proceedings not inconsistent with this opinion. The judgments of the trial court and Court of Appeals are reversed.

I. FACTS

Defendant Farm Bureau Mutual Insurance Company of Michigan issued plaintiffs Mary and Robert Raska a family automobile policy on February 5, 1973 for their three family cars. The policy included a special endorsement for disability income and medical benefits. On February 16, 1973, Farm Bureau issued a combination (business) automobile policy to Robert Raska, doing business as Robert Raska Trucking. As relevant, the business policy provided some medical coverage but no disability-income or wage-loss benefits.

Plaintiffs allege but did not plead that "the defendant-appellee never informed plaintiffs-appellants that they would need duplicate coverage on the commercial vehicles for the special endorsements that appeared on the family policy" (PB, pp 13, 14). In other words, plaintiffs say that defendant at the time of purchase of the combination policy did not tell them that the "owned vehicle" exclusion clause in the family policy's endorsement would deny plaintiffs disability-income or wage-loss benefit coverage while they drove vehicles used in plaintiff Robert Raska's trucking business. Further, it is not of record whether the insurer offered disability-income coverage to override the "owned auto" exception.

On March 24, 1973, plaintiff Mary Raska was injured in a collision with another vehicle while driving a Robert Raska Trucking dump truck.

Plaintiffs Raska sought compensation from defendant Farm Bureau for all medical bills, disability income, and lost wages resulting from the injuries sustained by Mary Raska in a suit alleging breach of contract and requesting relief by way of declaratory judgment. Plaintiffs alleged that both the combination policy and the family policy protected Mary Raska. The family policy provided:

"PERSONS INSURED

"Division 1. To or for the named insured and each relative who sustains bodily injury or death caused by accident, while occupying or through being struck by an automobile."

In response Farm Bureau moved for summary judgment or, in the alternative, for declaratory judgment to determine its liability, if any, under the policies. Farm Bureau contended, basically, that plaintiffs had failed to present it with proof of medical expenses over and above those paid or payable by Blue Cross, as required by the terms of the combination policy. Farm Bureau further, and for this case significantly, contended that the family automobile policy, by its terms, did...