Stagray v. Detroit Auto. Inter-Insurance Exchange, INTER-INSURANCE

• Decision Date: 19 July 1965
• Docket Number: No. 48,INTER-INSURANCE,No. 3,48,3
• Citation: 1 Mich.App. 321,136 N.W.2d 51
• Parties: Donald STAGRAY and Regina Stagray, Plaintiffs-Appellants, v. DETROLT AUTOMOBILEEXCHANGE, a corporation, Defendant-Appellee. Cal
• Court: Court of Appeal of Michigan — District of US

Page 51

136 N.W.2d 51

1 Mich.App. 321

Donald STAGRAY and Regina Stagray, Plaintiffs-Appellants, v. DETROLT AUTOMOBILE INTER-INSURANCE EXCHANGE, a corporation Defendant-Appellee.

Cal. No. 48.

Court of Appeals of Michigan, Division No. 3.

July 19, 1965.

John M. Patterson, Patterson & Patterson, Bay City, for appellants.

Ralph J. Isackson, Patrick D. Neering, Bay City, for appellee.

Before LESINSKI, C. J., and BURNS and HOLBROOK, JJ

HOLBROOK, Judge.

Plaintiffs-appellants are owners of an insurance policy commonly referred to as 'automobile insurance,' issued pursuant to written application of Donald Stagray by defendant company. Amongst the risks covered in said policy is a provision for uninsured motorist coverage. The pertinent provisions relating to same are as follows:

'Section IV--Uninsured Motorists.

Coverage G--Part (1) All sums which the insured shall be legally entitled to recover as damages, including damages for care and loss of services, from the owner or operator of an uninsured automobile because of bodily injury, sickness or disease, including death, resulting therefrom, sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile; * * *

'Condition 5--Determination of Legal Liability and Amount of Damages. The determination as to whether the insured shall be legally entitled to recover damages and if so entitled the amount thereof, shall be made by agreement between the insured and the Exchange.

'In the event of disagreement and upon the written demand of either, the matter or matters upon which the insured and Exchange do not agree shall be settled by arbitration in accordance with the rules of the American Arbitration Association and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The insured and the Exchange each agrees to consider itself bound and to be bound by any award made by the arbitrators pursuant to this coverage. Such an award shall be a condition precedent to any action against the Exchange by reason of the insurance afforded by this coverage. * * *'

On December 20, 1962, plaintiff Regina Stagray was injured when struck as a pedestrian by an automobile owned and driven by Dwight E. Hepinstall, an uninsured motorist, at Bay City, Michigan, and plaintiffs claim damages under the provisions of the policy.

Plaintiffs have sued Hepinstall in a separate action but have not as yet taken judgment.

Plaintiffs-appellants conferred with defendant-appellee pursuant to the insurance contract, but could not reach an agreement on either the right to recover or amount of recovery under the uninsured motorist coverage of the policy. Defendant-appellee claims Regina Stagray to be guilty of contributory negligence.

Plaintiff, by letter dated September 23, 1963, addressed to defendant, demanded that the dispute be resolved by arbitration in accordance with the terms of the policy and nominated an arbitrator and demanded the defendant nominate an arbitrator. It now appears that plaintiffs believed that the two would name a third arbitrator. This may be because the terms of the policy refer to determination by arbitrators.

Defendant denied that plaintiffs' demand for arbitration in such manner was proper under the terms of the policy and filed a formal demand with the American Arbitration Association and served a copy on plaintiffs' counsel October 28, 1963.

Plaintiffs commenced this action on October 30, 1963, against the defendant claiming judgment therein for the reason that defendant violated its contract and refused to arbitrate properly under Michigan law and further charged that the method of selecting arbitrators by the American Arbitration Association is a fraud upon the plaintiffs.

An arbitrator was appointed by the American Arbitration Association, December 9, 1963, to hear the dispute. Promptly plaintiff filed a supplemental complaint objecting to such appointment upon the ground that the said arbitrator...