State Farm Mut. Auto. Ins. Co. v. Ruuska

• Court: Court of Appeal of Michigan
• Writing for the Court: CYNAR; D. E. HOLBROOK
• Citation: State Farm Mut. Auto. Ins. Co. v. Ruuska, 90 Mich.App. 767, 282 N.W.2d 472 (Mich. App. 1979)
• Decision Date: 19 June 1979
• Docket Number: Docket No. 78-820
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois Corporation, Plaintiff-Appellant, v. Dale RUUSKA, Defendant-Appellee, and Gloria Carlson, Arvid Carlson and Kenneth Kemp, d/b/a Woody's Bar, Defendants.

Page 472

282 N.W.2d 472

90 Mich.App. 767

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois Corporation, Plaintiff-Appellant, v. Dale RUUSKA, Defendant-Appellee and Gloria Carlson, Arvid Carlson and Kenneth Kemp, d/b/a Woody's Bar, Defendants.

Docket No. 78-820.

Court of Appeals of Michigan.

June 19, 1979.

Rehearing Denied July 26, 1979.

Released for Publication Aug. 22, 1979.

Fraser, Trebilcock, Davis & Foster by Everett R. Trebilcock, Lansing, for plaintiff-appellant.

McDonald & Smith by William I. McDonald, Marquette, Robins, Davis & Lyons by Terry Wade, St. Paul, Minn., for Ruuska.

Wisti & Jaaskelainen by Andrew H. Wisti, Hancock, for Kemp.

Gloria Carlson in pro per.

Arvid Carlson in pro per.

Before D. E. HOLBROOK, P. J., and D. E. HOLBROOK, Jr., and CYNAR, JJ.

CYNAR, Judge.

Plaintiff appeals as of right from an entry of summary judgment declaring void an exclusion in a policy issued to Gloria Carlson. Plaintiff contends that it was entitled to summary judgment on the basis of the policy exclusion.

The relevant facts are not in dispute. In June of 1975 Gloria Carlson resided in the household of Arvid Carlson, her father. Each of them owned an automobile and each was insured by plaintiff.

On June 19, 1975, while driving her father's car, Gloria Carlson collided with a motorcycle driven by Dale Ruuska. Ruuska sustained serious injuries and filed suit against Gloria Carlson. Plaintiff does not dispute coverage of Gloria Carlson under her father's policy, as she was driving his car with his consent. However, as it appeared that the judgment for Ruuska might exceed the limits on that policy, plaintiff sought a declaratory judgment to determine its liability for any residual amount under the policy issued to Gloria Carlson.

Gloria Carlson's policy provides that if she owns a motor vehicle covered by the policy, such liability insurance as is afforded by the policy with respect to the owned motor vehicle is also provided when using a Non-owned vehicle, with the permission of the owner. Under the section labeled "Exclusions," none of the exclusions apply to the present situation. In the definitional section of the policy is the following:

"Non-Owned Automobile means an Automobile, trailer or detachable living quarters unit, not (1) owned by, (2) registered in the name of, or (3) furnished or available for the frequent or regular use of the named insured, his spouse, or any relative of either Residing in the same household, other than a Temporary substitute automobile."

The effect of this definition is to provide an exception to liability coverage when the insured is operating an automobile that is owned by another member of her household or which is available for her frequent use. Plaintiff claims that this type of exclusion is valid and acts to eliminate liability coverage for Gloria Carlson under her policy in the circumstances of this case.

In declaring the policy exclusion void, the trial judge relied solely upon provisions of the No-Fault Insurance Act. M.C.L. § 500.3101 Et seq.; M.S.A. § 24.13101 Et seq. He noted that M.C.L. § 500.3101; M.S.A. § 24.13101 requires that the owner or registrant of a motor vehicle maintain security for payment of benefits under residual liability insurance. He further noted that residual liability coverage is covered by M.C.L. § 500.3131; M.S.A. § 24.13131 which reads:

"Residual liability insurance shall cover bodily injury and property damage which occurs within the United States, its territories and possessions or in Canada. This insurance shall afford coverage equivalent to that required as evidence of automobile liability insurance under the financial responsibility laws of the place in which the injury or damage occurs. In this state this insurance shall afford coverage for automobile liability retained by section 3135."

He also referred to M.C.L. § 500.3135; M.S.A. § 24.13135, which sets out those instances where tort liability is retained in Michigan. The trial judge read these sections together and concluded that residual liability coverage for tort liability was required under the act.

Although somewhat appealing, we cannot concur in the trial court's analysis. M.C.L. § 500.3101; M.S.A. § 24.13101 requires only that the Owner or Registrant of the vehicle maintain security for payment of residual liability insurance benefits. Such benefits are provided for in the policy of Arvid Carlson, the owner of the vehicle involved in the accident. Similarly, Gloria Carlson's policy provides liability coverage when operating her car. There is nothing in the no-fault act which requires one to have residual liability coverage for injuries occurring when one is driving another's vehicle.

According to the second-to-last sentence of M.C.L. § 500.3131; M.S.A. § 24.13131, the financial responsibility laws of the place where the injury occurs should be referred to in determining the scope of the liability coverage required in the policy. Plaintiff argues that this provision is inapplicable to injuries incurred in this state. However, in State Farm Mutual Automobile Ins. Co. v. Sivey, 404 Mich. 51, 56, 272 N.W.2d 555 (1978), the Court looked to the Michigan financial responsibility laws to determine the required scope of liability coverage with respect to an injury incurred in this state. Furthermore, in Ziehm v. State Farm Mutual Automobile Ins. Co., 88 Mich.App. 576, 278 N.W.2d 678 (1979), a panel of this Court concluded that a portion of Michigan's financial responsibility act had not been impliedly repealed by the enactment of the no-fault act and that the financial responsibility laws determined the extent of liability coverage required under no-fault. Therefore, plaintiff's argument is without merit.

The financial responsibility laws of Michigan are contained in the financial responsibility act, M.C.L. § 257.501 Et seq.; M.S.A. § 9.2201 Et seq. M.C.L. § 257.517; M.S.A. § 9.2217 states that proof of financial responsibility may be given by filing a certificate of insurance, a bond, or a certificate of deposit of money or securities. M.C.L. § 257.518; M.S.A. § 9.2218 deals with the filing of certificates of insurance. It reads:

"(a) Proof of financial responsibility may be furnished by filing with the secretary of state the written certificate of any insurance carrier duly authorized to do business in this state certifying that there is in effect a motor vehicle liability policy for the benefit of the person required to furnish proof of financial responsibility. Such certificate shall give the effective date of such motor vehicle liability policy, which date shall be the same as the effective date of the certificate, and Shall designate by explicit description or by appropriate reference all motor vehicles covered thereby, unless the policy is issued to a person who is not the owner of a motor vehicle.

"(b) No motor vehicle shall be or continue to be registered in the name of any person required to file proof of financial responsibility unless such motor vehicle is so designated in such a certificate." (Emphasis added.)

The last part of subsection (a) notes that the policy need not describe the vehicles covered when it is issued to one who does not own an automobile. This distinction between one who does not own an automobile and one who does is also carried over to M.C.L. § 257.519; M.S.A. § 9.2219, which deals with a nonresident's insurance.

M.C.L. § 257.520; M.S.A. § 9.2220 sets out the scope of coverage required in a "motor vehicle liability policy". That section distinguishes between an "operator's" policy of liability insurance and an "owner's" policy of liability insurance. However, it fails to define these terms. We believe the distinction noted in M.C.L. § 257.518; M.S.A. § 9.2218 and M.C.L. § 257.519; M.S.A. § 9.2219 was again carried forward to M.C.L. § 257.520; M.S.A. § 9.2220. When one does not own a car, the liability policy issued is an "operator's policy"; when one does own a car, an "owner's policy" is issued.

It is undisputed that Gloria Carlson owns a motor vehicle covered by a policy issued by plaintiff. Therefore, the requirements of her liability coverage are governed by the requirements of an "owner's policy". M.C.L. § 257.520(b); M.S.A. § 9.2220(b) states:

"Such owner's policy of liability insurance:

"(1) Shall designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is thereby to be granted; and

"(2) Shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle or motor vehicles within the United States of America or the Dominion of Canada, subject to limits exclusive of interest and costs, with respect to each such motor vehicle, as follows: $20,000.00 because of bodily injury to or death of 1 person in any 1 accident and, subject to said limit for 1 person, $40,000.00 because of bodily injury to or death of 2 or more persons in any 1 accident, and $10,000.00 because of injury to or destruction of property of others in any 1 accident;

"(3) When a certificate is filed showing that a policy or policies have been issued covering all motor vehicles owned by the insured but not insuring such person when operating any motor vehicle not owned by him, it shall be unlawful for such person to operate any motor vehicle not owned by him or not covered by such certificate."

We believe that the exclusion created in plaintiff's policy is in conformity with the requirements of an owner's liability policy. Subsection (1) of M.C.L. § 257.520(b); M.S.A. § 9.2220(b) requires that those vehicles covered by the policy be expressly designated. By implication, this provision indicates that liability coverage need not be provided for...