State Farm Mut. Auto. Ins. Co. v. Sivey, 59774

• Decision Date: 26 December 1978
• Docket Number: No. 59774,59774
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a Foreign Corporation, Plaintiff-Appellee, v. Emily SIVEY, William Horace Kelly, Defendants-Appellees, and Sandra Andary, Defendant-Appellant.
• Court: Michigan Supreme Court

Page 555

272 N.W.2d 555

404 Mich. 51

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a Foreign Corporation, Plaintiff-Appellee, v. Emily SIVEY, William Horace Kelly, Defendants-Appellees and Sandra Andary, Defendant-Appellant.

No. 59774.

Supreme Court of Michigan.

Dec. 26, 1978.

Draugelis, Ashton & Scully, by Richard T. Haynes, Plymouth, for plaintiff.

Lizza & Mulcahy, P. C., Detroit, for defendant Andary.

PER CURIAM.

The trial court and Court of Appeals upheld a provision in an automobile owner's liability insurance policy excluding recovery for bodily injury by the insured owner who was a passenger in the car as against a driver who was driving with the owner's permission. The driver of the car has applied for leave to appeal.

Defendant Emily Sivey and her father co-owned a 1974 Ford Pinto which was insured by plaintiff State Farm. On March 3, 1974, Sandra Andary was operating the Pinto on I-94 in Berrien County when she collided with a vehicle owned and operated by William Horace Kelly. Emily Sivey was a passenger in the Pinto at the time.

Emily Sivey filed suit against Kelly and Andary in Macomb Circuit Court seeking damages for her injury. Andary claimed that she was protected by the policy issued by State Farm to Emily Sivey and her father. Consequently, State Farm filed a complaint for declaratory judgment, asking that the court find that the insurance policy "does not provide bodily injury liability coverage to the defendant, Emily Sivey, with regard to her accident injuries of March 3, 1974". Andary responded with a prayer that the "company be ordered to provide a legal defense and liability coverage to the defendant Sandra Andary".

Plaintiff moved for summary judgment under GCR 1963, 117.2(3) and, on February 17, 1976, the trial judge granted the motion. The Court of Appeals affirmed in an unpublished per curiam opinion dated April 22, 1977.

Andary repeats here the argument she advanced in the courts below: (1) that the policy exclusion State Farm relies upon is ambiguous and, therefore, should be construed against the insurer; and (2) that, in any event, the exclusion is void as contrary to public policy.

The State Farm insurance policy issued to Emily Sivey and her father provides, in part:

"SECTION I LIABILITY AND MEDICAL PAYMENTS INSURING AGREEMENTS

"COVERAGE A BODILY INJURY LIABILITY

"COVERAGE B PROPERTY DAMAGE LIABILITY

"To pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as Damages because of

"(A) Bodily injury sustained by other Persons, and

"(B) Property damage, caused by accident arising out of the ownership, maintenance or use, including loading or unloading, of the Owned motor vehicle ; and to defend, with attorneys selected by and compensated by the company, any suit against the Insured alleging such Bodily injury or Property damage and seeking Damages which are payable hereunder even if any of the allegations of the suit are groundless, false or fraudulent; but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient.

"EXCLUSIONS SECTION I

"THIS INSURANCE DOES NOT APPLY UNDER:

"(h) COVERAGE A, TO BODILY INJURY TO ANY INSURED OR ANY MEMBER OF THE FAMILY OF AN INSURED RESIDING IN THE SAME HOUSEHOLD AS THE INSURED ;

"DEFINITIONS SECTION I

"Insured the unqualified word "insured" includes

"(1) the named insured, and

"(2) if the named insured is a Person or Persons, also includes his or their spouse(s), if a Resident of the same household, and

"(3) if Residents of the same household, the relatives of the first Person named in the declarations, or of his spouse, and

"(4) any other Person while using the Owned motor vehicle, PROVIDED THE OPERATION AND THE ACTUAL USE OF SUCH VEHICLE ARE WITH THE PERMISSION OF THE NAMED INSURED OR SUCH SPOUSE AND ARE WITHIN THE SCOPE OF SUCH PERMISSION, and

"(5) under coverages A and B any other Person or organization, but only with respect to his or its liability for the use of such Owned motor vehicle by an Insured as defined in the four subsections above." (Insurance policy's emphasis).

The insuring clause and the exclusionary clause excerpted above reveal unambiguously that Sivey and Andary are named insureds under the policy and that State Farm is bound to insure the named insured with respect to bodily injury sustained only by persons other than the named insured. Since State Farm has promised to pay on behalf of the Insured claims for bodily injury sustained by Other persons, the terms "insured" and "other persons" must be read with reference to each other. In view of the fact that the word "insured" as used in the insuring clause is not qualified by any additional language, we must apply the above definition of the word "insured" according to the direction of the policy. The term "other persons" stands in contrast to and is mutually exclusive with the term "insured". "Other persons" means those not having the status of the insured. The exclusionary clause corroborates this interpretation of the insuring clause by stating plainly, "THIS INSURANCE DOES NOT APPLY * * * TO BODILY INJURY TO ANY INSURED."

Since we have concluded that the exclusionary clause, if valid, would preclude Emily Sivey from recovering from State Farm pursuant to the policy, we must now address the question of whether the exclusionary clause is void as against public policy. The argument that such an exclusionary clause contravenes public policy was considered and rejected by a majority of the Court of Appeals panel in Weisberg v. Detroit Automobile Inter-Insurance Exchange, 36 Mich.App. 513, 194 N.W.2d 193 (1971). Specifically, the majority in that case found that an exclusion for named insureds in an automobile insurance policy did not violate either the Motor Vehicle Accident Claims Act ¹ or § 3010 of the Insurance Code. ² Then judge, now Justice, Levin dissented. In dissenting, he argued that the operation of such an exclusionary clause serves to render the driver of an automobile under circumstances such as are extant in the instant case uninsured for...