Opinion
Docket No. 57371.
Decided January 29, 1976.
Garan, Lucow, Miller, Lehman, Seward Cooper for defendant Allstate Insurance Company.
Harvey, Kruse Westen, P.C., for defendant Farm Bureau Insurance Group.
The parties disagree on the meaning of the word "replaces" in Farm Bureau's policy defining "owned automobile" to include an automobile which "replaces an owned automobile". The Court of Appeals said:
"For `replacement' to occur when an insured has two vehicles in his possession, the newly acquired vehicle must take the place of the described vehicle and the described vehicle must be treated in such a manner that it becomes clearly apparent that it has been replaced by the newly acquired vehicle and is no longer covered by the insurance policy." 62 Mich. App. 557, 564; 233 N.W.2d 649 (1975).
Construing the policy against the insurer, we are unable to accept the Court of Appeals' holding on the facts of this case. Consequently, pursuant to GCR 1963, 853.2(4), in lieu of leave to appeal, we reverse the Court of Appeals judgment and reinstate the judgment of the Wayne Circuit Court.
In the context of replacement clauses, see Plasman v Foremost Insurance Company, 365 Mich. 586; 113 N.W.2d 906 (1962), and Kaczmarck v LaPerriere, 337 Mich. 500; 60 N.W.2d 327 (1953).
The facts are fully set forth in the Court of Appeals opinion. 62 Mich. App. 557, 559-561.
Many states accept the proposition that for an acquired vehicle to "replace" the car described in the policy, the described car must be disposed of, or if retained, be inoperable or incapable of further service. See, e.g., Pioneer Casualty Co v Jefferson, 456 S.W.2d 410, 412 (Tex Civ App, 1970); Fitch v Bye, 288 Minn. 344; 180 N.W.2d 866, 870 (1970). In Filaseta v Pennsylvania Thresherman Farmers' Mutual Insurance Co, 209 Pa. Super. 322; 228 A.2d 18 (1967), a 1953 Chevrolet was covered despite the insured's retention of a 1949 Studebaker that, at the time in question, was inoperable although later repaired and sold.
The reason for such a finding was well-stated by the Minnesota Supreme Court:
"In the replacement-automobile cases the courts are usually willing to allow coverage under the policy as long as there is only one operable car. It makes no difference that the replacement car is purchased before the replaced car is sold as long as the replaced car is sold or is not operable at the time of the accident. In this way other users of the highways are protected and the insurance company's liability is limited to the operation of one car by the insured." St Paul Fire Marine Insurance Co v Nyquist, 286 Minn. 157; 175 N.W.2d 494 (1970).
At no time was there more than one operable, covered vehicle under the Jameson policy. The listed vehicle was inoperable, and the insurer bore no risk of double exposure. This has been a determinative factor for other courts. Iowa National Mutual Insurance Co v McGhee, 408 F.2d 4 (CA 4, 1969); National Indemnity Co v Giampapa, 65 Wn.2d 627; 399 P.2d 81 (1965); State Farm Mutual Auto Insurance Co v Johnston, 9 Cal.3d 270; 107 Cal.Rptr. 149; 507 P.2d 1357 (1973). It is a determinative factor for us.
We agree with the Pennsylvania court in Filaseta that the result must depend on the facts of each individual case; "a hard and fast rule that the car must be junked or sold * * * would work in many cases a substantial injustice". 209 Pa. Super. 322, 329; 228 A.2d 18, 22. We find that Jameson's 1960 Chevrolet "replaced" his 1959 Chevrolet pickup within the meaning of the Farm Bureau policy.
KAVANAGH, C.J., and WILLIAMS, LEVIN, COLEMAN, FITZGERALD, LINDEMER, and RYAN, JJ., concurred.