Smith v. Michigan State Acc. Fund.

• Decision Date: 24 July 1978
• Docket Number: No. 59718,59718
• Citation: 267 N.W.2d 909,403 Mich. 201
• Parties: Robert H. SMITH and Bob Smith Ford, Inc., Plaintiffs-Appellants, v. MICHIGAN STATE ACCIDENT FUND, Defendant-Appellee. 403 Mich. 201, 267 N.W.2d 909
• Court: Michigan Supreme Court

Page 909

267 N.W.2d 909

Robert H. SMITH and Bob Smith Ford, Inc. Plaintiffs-Appellants, v. MICHIGAN STATE ACCIDENT FUND, Defendant-Appellee.

No. 59718.

403 Mich. 201, 267 N.W.2d 909

Supreme Court of Michigan.

July 24, 1978.

Joseph C. Cox, Fowlerville, for plaintiffs-appellants.

James A. Sullivan, Detroit, for defendant-appellee.

PER CURIAM.

The question is whether the trial court's decision that the Michigan State Accident Fund was estopped from denying coverage to appellant has record support.

Robert Smith's service station business was insured for worker's compensation by the State Accident Fund (SAF). Smith contacted a licensed insurance agent named Robb to arrange procurement of workmen's compensation insurance for another business an automobile dealership. Robb submitted an application which was received by the SAF on August 4, 1967. Correspondence took place between Robb and an employee of SAF concerning information about the application. The employee for the SAF which handled the policy application went on vacation on August 11, 1967 and returned to work on August 21, 1967. The policy was not processed until August 22 because the employee had failed to follow the normal procedure of assigning the application to another employee. The SAF struck the desired effective date of August 4 on Smith's application and replaced it with August 22.

Smith thought he had coverage and on August 15 prepared to open the dealership. On August 18, an employee died due to a work-related accident.

Smith brought suit against the SAF and Robb ¹ to recover workmen's compensation benefits paid to the deceased employee and on March 25, 1975 the trial court issued an opinion favorable to Smith. The gist of the trial court's 16-page opinion is as follows:

"For the above reasons, and the other reasons stated in this opinion, this court concludes, and finds as a fact, that defendant, Michigan State Accident Fund, was negligent in the processing, in fact it failed to process plaintiffs' application for additional insurance covering the Ford dealership until after the death of Allen Elliott; that all questions asked by defendant Fund's underwriter, Mr. Paul Wilcox, had been answered at the time of Elliott's death; that defendant Fund would have issued the additional requested insurance policy in the ordinary course of business; that it would have issued the additional requested coverage had it not been for the death of Elliott; that defendant's underwriter, Mr. Paul Wilcox, had no right to alter the original application for additional insurance coverage, the Fund accept and retain the additional premiums and then deny coverage and liability to plaintiffs as employer of Elliott, and therefore, as a matter of fact and as a matter of law is estopped to deny coverage, and this court holds that at the time of Allen Elliott's death Bob Smith Ford, Inc., was insured by the defendant, Michigan State Accident Fund."

The majority of the Court of Appeals concluded that the trial court's determination was clearly erroneous. Judge Beasley dissented on the ground that there were sufficient facts in the record on which the trial court could base its decision. 73 Mich.App. 710, 252 N.W.2d 556 (1977).

An appellate court must give due deference to the findings of a trial court. ² In Tuttle v. Dep't of State Highways, 397 Mich. 44, 46, 243 N.W.2d 244, 245 (1976), we said:

"Under GCR 1963, 517.1, an appellate court will set aside the findings of fact of a trial court sitting without a jury when such findings are clearly erroneous. In construing comparable 'clearly erroneous' language in Rule 52(a) of the Federal Rules of Civil Procedure, the United States Supreme Court has stated that '(a) finding is "clearly erroneous" when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.' ...