Royal Globe Ins. Companies v. Frankenmuth Mut. Ins. Co.

• Decision Date: 19 November 1984
• Docket Number: No. 15,Docket No. 69843,15
• Citation: 419 Mich. 565,357 N.W.2d 652
• Parties: ROYAL GLOBE INSURANCE COMPANIES, Plaintiff-Appellant, v. FRANKENMUTH MUTUAL INSURANCE COMPANY, Defendant-Appellee. Calendar
• Court: Michigan Supreme Court

Page 652

357 N.W.2d 652

419 Mich. 565

ROYAL GLOBE INSURANCE COMPANIES, Plaintiff-Appellant, v. FRANKENMUTH MUTUAL INSURANCE COMPANY, Defendant-Appellee.

Docket No. 69843.

Calendar No. 15.

Supreme Court of Michigan.

Argued April 5, 1984.

Decided Nov. 19, 1984.

Smith & Brooker, P.C. by Michael J. Huffman, Mona C. Doyle, Saginaw, for plaintiff-appellant, Royal Globe Ins. Companies.

Purcell, Tunison & Cline, P.C. by George M. Tunison, Saginaw, for defendant-appellee, Frankenmuth Mut. Ins. Co.

RYAN, Justice.

The broad and ultimate issue in this case is concerned with which of two insurance companies is responsible to pay no-fault benefits for injuries suffered by an insured's spouse who was injured in a single motor vehicle accident. That question is answered in turn by our determination whether, under the no-fault insurance act ¹ and upon the facts of this case, the injured party was or was not an "occupant" of a motor vehicle at the time she was injured.

We hold that she was not an occupant and reverse the decision below.

The following facts, as recounted in the opinion of the Court of Appeals, are not in dispute and we adopt them as correct:

"On the day of the accident [November 13, 1977], Mr. and Mrs. Karam had just returned home, and Mr. Karam had stopped his automobile either in front of or in the driveway. By use of an automatic device, Mr. Karam, apparently, opened the garage door from the automobile. He was at this time driving a Pontiac Grand Prix owned by his employer, General Motors, and insured by plaintiff. Mr. Karam owned a Chevrolet Caprice which was insured by defendant and which was parked in the garage.

"While the Grand Prix was parked, Mrs. Karam picked up a Thermos bottle and a bag, and proceeded to carry those items to the back door which was inside the garage. She planned to place these items inside the house, turn on the light to the garage and house, and return to the Grand Prix to unload it. While she was looking for the keys to the back door, Mr. Karam proceeded to back the Grand Prix into the garage. Unfortunately, the car proceeded at a speed much faster than he wished. He hit the brakes but the Grand Prix went faster. Apparently, a pop bottle was lodged under the brake pedal and also struck the accelerator. As the brake was depressed it pushed the accelerator down. He struck the side of the garage which caused the overhead door to crash down upon both cars. He also struck his wife and knocked her against the back wall."

As the Court of Appeals correctly stated, Royal Globe Insurance Company provided no-fault coverage for the Pontiac owned by General Motors and Frankenmuth Mutual Insurance Company provided coverage for the Chevrolet, the Karam's privately owned vehicle.

The Karams sought personal injury protection benefits from Frankenmuth for lost wages and medical expenses incurred as a result of Mrs. Karam's injuries. When Frankenmuth denied responsibility for the payment of benefits, Royal Globe paid the no-fault benefits under protest and filed this suit for declaratory relief.

The significance of the question whether Mrs. Karam was an "occupant" of the motor vehicle at the time she was injured derives from the language of § 3114(3) of the no-fault act, read in conjunction with § 3115(1), and § 3114(1). Section 3114(3) provides:

"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." (Emphasis added.)

Therefore, if, at the time of the accident, Mrs. Karam was an "occupant" of the Pontiac owned by her husband's employer, General Motors Corporation, Royal Globe is the insurer responsible for payment of Mrs. Karam's no-fault benefits. If, however, Mrs. Karam was "not an occupant" of the Pontiac when she was injured, then, under the first clause of § 3115(1), § 3114(1) becomes controlling. That is so because § 3115(1), in relevant part, provides:

"(1) Except as provided in subsection (1) of 3114, a person suffering accidental bodily injury while not an occupant of a motor vehicle shall claim personal protection benefits from insurers in the following order of priority:

"(a) Insurers of owners or registrants of motor vehicles involved in the accident.

"(b) Insurers or operators of motor vehicles involved in the accident." (Emphasis added.)

Because of the language of exception in the first clause of § 3115(1), emphasized above, if it is determined that Mrs. Karam is "not an occupant" of the motor vehicle which struck her, § 3114(1) operates to identify the primarily applicable coverage. That section, in relevant part, provides:

"Section 3114(1) * * * a personal protection insurance policy * * * applies to accidental bodily injury to the person named in the policy, the person's spouse, and a relative of either domiciled in the same household, if the injury arises from a motor vehicle accident."

Therefore, and to summarize, under the priority provisions of the no-fault act, and particularly in light of the language of exception in § 3115(1), if Mrs. Karam was "not an occupant" of the motor vehicle which struck her at the time it struck her her no-fault benefits must be paid by Frankenmuth, and Royal Globe is entitled to reimbursement for benefits already paid. If she was an occupant, Royal Globe remains liable for all benefits due.

In determining the question of occupancy or nonoccupancy in this case, the trial court obviously believed itself bound by this Court's decision in Nickerson v. Citizens Mutual Ins. Co., 393 Mich. 324, 224 N.W.2d 896 (1975). For that reason, it held that Mrs. Karam was an occupant of the Pontiac company car at the time of the accident and entered a judgment of no cause of action. ² The Court of Appeals, likewise relying on Nickerson, affirmed the trial court in an unpublished per curiam opinion. ³

We granted leave to appeal. 418 Mich. 879 (1983).

I

The essentially undisputed facts of this case, as recited by the Court of Appeals and which we adopt as correct, would seem to suggest that a logically inescapable conclusion is that Mrs. Karam was not an occupant of the car that struck her and pushed her against the back wall of the garage, causing her serious injuries. The eminently learned judges of the lower courts concluded otherwise, however, obviously believing themselves bound by our decision in Nickerson, supra. In that respect, we think our colleagues below erred. For a number of reasons, Nickerson does not control this case.

In Nickerson, the plaintiff was a passenger in an uninsured vehicle being operated by Curtis Parvin. The car stalled on the highway and Nickerson helped push it to the side of the road before reentering it. A passing motorist was then flagged down, apparently by Parvin, to provide assistance. As this motorist began turning his car around to return to the site of Parvin's vehicle, Nickerson again got out of the vehicle, this time from the driver's side, and walked around to the front of the car. At this point a third and uninsured vehicle struck the Parvin vehicle from the rear, pushing it into Nickerson who suffered serious and permanent injury. Nickerson sought compensation for his injuries from the insurer of Parvin's vehicle. Under the language of Parvin's insurance policy, coverage extended to any person "occupying" the Parvin vehicle. The term "occupying" was explicitly defined in Parvin's insurance policy as "in or upon or entering into or alighting from" the vehicle.

In determining that, for purposes of insurance policy coverage, Nickerson was "occupying" the Parvin vehicle, this Court stated:

"We conclude that plaintiff Nickerson, due to his immediate prior 'occupying' of the insured vehicle and his subsequent injury arising out of the use or repair of the same vehicle, was an 'assured' under the policy of automobile insurance issued by defendant." 393 Mich. 331-332, 224 N.W.2d 896.

The first and most significant distinction between Nickerson and this case is the fact that Nickerson is a pre-no-fault act case in which the Court was construing the terms of a private insurance contract rather than, as in this case, the language of a statute. ⁴ It is a familiar and fundamental rule of construction of a private automobile insurance policy that the court's first duty is to determine, from the language used, the apparent intention of the contracting parties, and then to construe doubtful or ambiguous terms favorably to the insured and against the insurer as the contract drafter. See Gorham v. Peerless Life Ins. Co., 368 Mich. 335, 118 N.W.2d 306 (1962); Raska v. Farm Bureau Mutual Ins. Co. of Michigan, 412 Mich. 355, 314 N.W.2d 440 (1982). The language of a statute, on the other hand, is required to be construed by assigning to the words used their primary and generally understood meaning consistent with the apparent intention of the Legislature in enacting the law. See AT & T v. Employment Security Comm., 376 Mich. 271, 279, 136 N.W.2d 889 (1965) (Opinion of O'Hara, J.).

A second important distinction between Nickerson and this case is that, in Nickerson, the term being construed was "occupying", and it was expressly defined in the policy as meaning "in or upon or entering into or alighting from". The operative term in the no-fault act and applicable to this case is "occupant" which is not defined in the statute and is not used together with the expression "entering into or alighting from" the vehicle. ⁵

A further and significant distinction between this case and Nickerson is that, in the latter, if this Court had not found Nickerson to be an occupant of the Parvin vehicle, Nickerson would have had no recovery for his injuries under the insurance policy since the vehicle which caused his injuries was uninsured. Under...