Ray v. Transamerica Ins. Co.

• Decision Date: 26 April 1973
• Docket Number: Docket No. 12042,No. 1,1
• Citation: Ray v. Transamerica Ins. Co., 208 N.W.2d 610, 46 Mich.App. 647 (Mich. App. 1973)
• Parties: Clarence RAY, Plaintiff-Appellee, Cross-Appellant, v. TRANSAMERICA INSURANCE COMPANY, a California corporation, Defendant-Appellant, Cross-Appellee
• Court: Court of Appeal of Michigan

Page 610

208 N.W.2d 610

46 Mich.App. 647

Clarence RAY, Plaintiff-Appellee, Cross-Appellant, v.TRANSAMERICA INSURANCE COMPANY, a California corporationDefendant-Appellant, Cross-Appellee.

Docket No. 12042.

Court of Appeals of Michigan, Division No. 1.

April 26, 1973.

Released for Publication June 27, 1973.

George L. Downing, Kelman, Loria, Downing & Schneider, Detroit, for defendant-appellant.

Leonard B. Schwartz, Sugar, Schwartz, Silver, Schwartz & Tyler, Detroit, for plaintiff-appellee.

Before LESINSKI, C.J., and J. H. GILLIS and PETERSON, ^* JJ.

J. H. GILLIS, Judge.

Plaintiff, Clarence Ray, was injured while operating an industrial machine on the premises of his employer, Chesley Industries, Inc.Plaintiff brought this action in negligence against his employer's insurer under the third- party tortfeasor provisions of the Michigan Workmen's Compensation Act.¹

The case was before our Court previously on an interlocutory appeal.We concluded there that a compensation carrier is not immune from common-law tort liability for its own acts of negligence causing injury to the employee and that the compensation insurance carrier may be a third-party tortfeasor within the meaning of the act.We remanded the cause for trial on the issue of liability.Ray v. Transamerica Insurance Co., 10 Mich.App. 55, 158 N.W.2d 786(1968), leave den.381 Mich. 766(1968).

Plaintiff's cause was tried before a jury.It rendered a verdict for the plaintiff in the amount of $85,000.Subsequently plaintiff filed a motion for an order apportioning recovery and reasonable expenditures based on M.C.L.A. § 418.827(6);M.S.A. § 17.237(827)(6).Plaintiff's motion was denied by the trial court.A judgment in the amount of $69,454 was then entered.Defendant, Transamerica Insurance Co., filed a timely appeal and the plaintiff cross-appealed in regard to the amount of the judgment entered by the trial court.

Plaintiff had operated the same machine on which he was injured for about 5 years.About 1 1/2 years prior to the injury, the factory moved from a location in Detroit to Farmington.During the move a cover protecting a gear at the upper right rear of the press operated by the plaintiff was lost.When a piece of stock fell behind the machine, plaintiff reached for it and tripped.His hand was caught in the unprotected gear when he tried to brace himself resulting in loss of his hand and part of his forearm.

Defendant's 'insurance engineer', Mr. James McCarthy, visited the plant once while it was in Detroit and several times after its relocation in Farmington.He testified that he was the 'eyes of the insurer', and that his job was to give guidance and education in safety matters.He recommended that the plaintiff's machine be equipped with 'dual micro control' safety switches so that plaintiff could not operate his machine without both hands removed from the vicinity of the cutting blade.The record indicates that this recommendation was discussed with a supervisory employee of Chesley.This recommendation was rejected by Chesley.McCarthy also asked that a wire guard be placed in front of the operating surfaces.It is not clear from the record whether this was an laternative suggestion; however, Chesley complied and fabricated the guard in the shop.McCarthy stated that he at no time made representations that he or his company was taking over any safety engineering function.He admitted having seen the plaintiff's machine on October 2, 1964, the Friday immediately before the accident.He had not noted then, nor had he ever been told, that the gear guard had been removed.

Further testimony of Mr. McCarthy elicited other facts.Even if he had noticed the uncovered gear, he stated that he probably wouldn't have recommended that it be covered because it was highly unlikely that anyone would be working near it.He had no authority to order unsafe machines shut down, and his recommendations were not uniformly followed in this plant or any other.It was further established that the rate paid by the insured would not be changed by dangerous conditions and that safety conditions had nothing to do with the rate that was charged by the insurer for the policy.

Plaintiff continued work at Chesley Industries until trial in January, 1971.He admitted that he knew the guard was off his machine, but claimed that he had told his supervisors of the absence of the cover prior to his injury.

I

Defendant seeks review of our prior decision in the interlocutory appeal, based on a statute² enacted after the decision in that appeal.While the new statutory language is somewhat persuasive of legislative intent in the statute which was before the Court, closer examination reveals that the entire Workmen's Compensation Act was repealed and a new act enacted in 1969.The Legislature is presumed to know statutory construction given by the courts.Lenawee County Gas & Electric Co. v. City of Adrian, 209 Mich. 52, 176 N.W. 590(1920);Dept. of Conservation v. Connor, 321 Mich. 648, 32 N.W.2d 907(1948).Had the Legislature felt its intent violated by Ray, we conclude it would have altered the statute in 1969.See Judge O'Hara's concurring opinion in Banner v. Travelers Ins. Co., 31 Mich.App. 608, 611--612, 188 N.W.2d 51(1971).We hold that Ray was the proper interpretation of legislative intent in M.C.L.A. § 413.15;M.S.A. § 17.189.

Much is made of the economic argument that if insurers are subjected to unlimited liability for faulty inspection, they will cease all inspection to the detriment of workers, employers, and the public.We find this argument unpersuasive, especially in light of the changed statute.A recent case in the Sixth Circuit Court of Appeals said:

'Just as insurance carriers are voluntarily induced into insuring workmen's compensation risks by the premiums they charge, so also do these carriers voluntarily engage in safety inspections to enhance their economic returns from their insurance coverage.Promises to make safety inspections are not taken because there is a workmen's compensation law, but are made to reduce industrial accidents and enhance carrier profits.'Bryant v. Old Republic Insurance Co., 431 F.2d 1385, 1388(1970).

We find nothing in the governing statute which suggests that our Legislature sought to encourage such inspections by granting immunity to an insurance carrier where it negligently inspects the premises of its insured.Ray, supra.

II

The further issue which must be resolved is whether plaintiff's theory that defendant had undertaken to furnish safety inspection, giving rise to a duty to use reasonable care on behalf of the plaintiff, is supported by the record.

Normally the issue of duty owed a particular person is a question for the trial court.Elbert v. Saginaw, 363 Mich. 463, 476, 109 N.W.2d 879(1961).However, where, as here, the existence of a relationship between the parties determines the duty owed, and that relationship is not clear, the issue of duty may be properly given to the jury.Bonin v. Gralewicz, 378 Mich. 521, 526--527, 146 N.W.2d 647(1966).³

This is not to say that a mere failure to suggest or recommend a safety change would impose a duty and liability.It would not.On the facts adduced, the jury must have found that defendant had voluntarily and Actively undertaken to assist Chesley Industries in performing the obligation owed by every employer to his employees--to provide a safe place to work.Having undertaken the duty, defendant is held to a standard of due care.

It is clear to us that the jury found a duty existed on the part of the defendant, that duty extended to the plaintiff because the plaintiff was clearly within the orbit of risk created by the negligent performance of the duty undertaken.The record supports this finding of the jury.

III

Before reaching the issue on which this appeal is decided, we will treat some of the other issues raised in this case.We do so as the area of disagreement of the panel is limited to a narrow issue which is found in section V of this opinion.

Aside from defendant's other assignments of error, it suggests that plaintiff was contributorily negligent as a matter of law in failing to tell anyone about the missing gear cover.We hold awareness of the danger is not by itself sufficient for a finding of contributory negligence as a matter of law.Pigg v. Bloom, 22 Mich.App. 325, 177 N.W.2d 441(1970).On reviewing this issue we rely on the often stated principle that unless All reasonable men would agree that the plaintiff is guilty of contributory negligence, upon a view of evidence favorable to the plaintiff, then the question should be left to the jury, Ingram v. Henry, 373 Mich. 453, 455, 129 N.W.2d 879(1964);Bay City v. Carnes, 3 Mich.App. 623, 625, 143 N.W.2d 148(1966), as it was properly in this case.

IV

Plaintiff in his cross-appeal contends that the trial court erred in entering judgment in the amount of $69,454 after the jury's verdict for plaintiff was $85,000.Plaintiff also claims the trial court should have entered an order apportioning the recovery and the expenses between the plaintiff and defendant.

The language of the Workmen's Compensation Act found in M.C.L.A. § 418.827;M.S.A. § 17.237(827) provides:

'(5) In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort.Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier for any amounts paid or payable under this act to date of recovery and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits.

'(6) Expenses of recovery shall...