Opinion
Docket No. 57197.
Decided April 22, 1982.
Wilson, Portnoy, Basso Leader, P.C. (by James M. Pidgeon), for Flint Dodge Company.
William E. Jungerheld, for Travelers Insurance Company.
The garnishee defendant, Travelers Insurance Company, appeals by right from an order denying its motion to quash garnishment proceedings and finding liability for $33,284.75 in favor of Flint Dodge Company and its insurer, Continental Insurance Company.
This case has had a long history in the appellate courts. See 399 Mich. 421; 249 N.W.2d 110 (1976). In December, 1968, Frank and Anna Tahash were driving in Genesee County when a car driven by defendant Gloria D. Martorelli crossed the highway center line and crashed into the Tahash vehicle. The automobile driven by Mrs. Martorelli was owned by Flint Dodge and was being test-driven by her to determine whether or not she would purchase the vehicle. Both Tahashes were injured in the accident. Mrs. Tahash brought this suit in her own name and as administratrix of her husband's estate (Mr. Tahash died of causes unrelated to the accident) against Flint Dodge and Mrs. Martorelli. The cases were consolidated for trial. Flint Dodge was insured by Continental Insurance Company (Continental). Gloria D. Martorelli and her husband were insured by Travelers. In each of these actions Flint Dodge filed a cross-complaint for indemnification against Gloria Martorelli. Flint Dodge alleged that its liability, if any, was passive in nature and arose solely by operation of law, MCL 257.401; MSA 9.2101.
"Sec. 401. Nothing herein contained shall be construed to abridge the right of any person to prosecute a civil action for damages for injuries to either person or property resulting from a violation of any of the provisions of this act by the owner or operator of a motor vehicle, his agent or servant. The owner of a motor vehicle shall be liable for any injury occasioned by the negligent operation of such motor vehicle whether such negligence consists of a violation of the provisions of the statutes of the state or in the failure to observe such ordinary care in such operation as the rules of the common law requires. The owner shall not be liable, however, unless said motor vehicle is being driven with his or her express or implied consent or knowledge. It shall be presumed that such motor vehicle is being driven with the knowledge and consent of the owner if it is driven at the time of said injury by his or her father, mother, brother, sister, son, daughter, or other immediate member of the family: Provided, however, That no person, transported by the owner or operator of a motor vehicle as his guest without payment for such transportation shall have a cause of action for damages against such owner or operator for injury, death or loss, in case of accident, unless such accident shall have been caused by the gross negligence or wilful and wanton misconduct of the owner or operator of such motor vehicle and unless such gross negligence or wilful and wanton misconduct contributed to the injury, death or loss for which the action is brought."
A trial was held and evidence adduced showed that during a snow storm the automobile driven by Mrs. Martorelli went out of control, spun and collided with the oncoming Tahash car. Both Mr. and Mrs. Martorelli testified that Flint Dodge was the owner of the vehicle driven by Mrs. Martorelli and that the test-drive was being conducted at the suggestion of a salesman. At the conclusion of the proofs, both of the Tahash actions ended in directed verdicts of liability against Mrs. Martorelli and Flint Dodge, although the jury was permitted to deliberate upon the amount of damages to be awarded. A decision on Flint Dodge's motion for a directed verdict on its cross-complaint for indemnification was reserved by the trial judge pending the jury's decision. The jury awarded Anna Tahash $15,000 for her injuries, and the estate of Frank Tahash was awarded $2,500. The jury returned a verdict in favor of Mrs. Martorelli on the cross-claim. The trial judge then considered the motion for a directed verdict on Flint Dodge's cross-claim as a motion for judgment notwithstanding the verdict and denied it.
Flint Dodge appealed the trial court's denial of its motion for a directed verdict against Mrs. Martorelli, and this Court affirmed in a memorandum opinion. The Supreme Court reversed and remanded the case to the trial court for entry of a judgment notwithstanding the verdict in favor of Flint Dodge on its cross-complaint for indemnification against Mrs. Martorelli. Thereafter, the trial court entered a judgment notwithstanding the verdict in favor of Flint Dodge requiring Mrs. Martorelli to pay Flint Dodge $17,500 plus costs, interest and attorney fees in the amount of $7,746.63, the total amounting to $25,246.63.
Mrs. Martorelli refused to satisfy any portion of the judgment, notwithstanding the fact that Flint Dodge had paid Anna Tahash $25,246.63. On April 11, 1977, Continental, Flint Dodge's insurer, moved for a writ of garnishment against Travelers, Mrs. Martorelli's insurer. A writ of garnishment issued. After lengthy proceedings below, including a default judgment, the parties stipulated that the trial court should decide the case on briefs, Travelers having moved to quash the garnishment proceeding.
In that proceeding, Travelers contended that it was not liable because its insurance policy with Gloria Martorelli provided excess coverage over and above the coverage provided to Flint Dodge by Continental. Continental argued that the policy between Mrs. Martorelli and Travelers was the primary coverage in this case because Travelers' policy specifically provided coverage under the facts involved herein, and the act of negligence on the part of Mrs. Martorelli gave rise to the injuries sustained by Mr. and Mrs. Tahash.
At issue is that portion of the Continental policy insuring Flint Dodge which reads:
"Each of the following is an insured under this insurance to the extent set forth below:
"(e) with respect to the operation, for the purpose of locomotion upon a public highway, of mobile equipment registered under any motor vehicle registration law; * * *
"(ii) any other person while operating with the permission of the named insured any such equipment registered in the name of the named insured and any person or organization legally responsible for such operation, but only if there is no other valid and collectible insurance available, either on a primary or excess basis, to such person or organization."
Continental argues that § (e)(ii) relieves it of liability in this case. Travelers counters that the escape clause cannot be enforced for two reasons: first, the escape clause is void as a matter of public policy as it violates the financial responsibility act, MCL 257.520(b)(2); MSA 9.2220(b)(2), and second, the Martorelli policy with Travelers contains an "excess" clause limiting Travelers' liability where an insured is driving a nonowned automobile to the excess amount over and above the policy limits in the other valid and collectible insurance policy.
We agree that the escape clause in the Continental policy is void because it contravenes MCL 257.520(b)(2); MSA 9.2220(b)(2). This is so because a class of persons is excluded from insurance coverage. If an insured has a policy providing insurance coverage while he or she is driving an unowned vehicle, that person is excluded from coverage under Flint Dodge's policy with Continental.
Michigan courts have taken a dim view of exclusion clauses which would operate to violate the public policy of the financial responsibility act, MCL 257.520(b)(2); MSA 9.2220(b)(2). See, inter alia, State Farm Mutual Automobile Ins Co v Sivey, 404 Mich. 51, 54; 272 N.W.2d 555 (1978); Gurwin v Alcodray, 77 Mich. App. 97; 257 N.W.2d 665 (1977); Allstate Ins Co v Motor State Ins Co, 33 Mich. App. 469; 190 N.W.2d 352 (1971); State Farm Mutual Ins Co v Taylor, 83 Mich. App. 603; 269 N.W.2d 242 (1978); and Detroit Automobile Inter-Ins Exchange v Irvine, 92 Mich. App. 371; 284 N.W.2d 535 (1979)
We read nothing in the recently decided case of State Farm Mutual Automobile Ins Co v Ruuska, 412 Mich. 321; 314 N.W.2d 184 (1982), that changes our view that this escape clause is not lawful.
Reversed, costs to Travelers Insurance Company.
R.M. MAHER, P.J., concurred.
I respectfully dissent.
The active negligence which caused the damages giving rise to this litigation was that of Travelers' insured, Gloria D. Martorelli. The liability imposed upon Continental's insured, Flint Dodge, was derivative and passive, arising out of their ownership of the vehicle driven by Martorelli, with Flint Dodge's consent, in the collision.
As between Travelers' insured (Gloria Martorelli) and Continental's insured (Flint Dodge), Martorelli was liable to Flint Dodge. Any doubt on that score was resolved by Tahash v Flint Dodge Co, 399 Mich. 421; 249 N.W.2d 110 (1976). Travelers insured Martorelli for public liability and property damage arising out of her negligent driving. As insurer for Flint Dodge Continental paid the joint judgment and costs awarded Tahash. Continental is entitled to recover that amount from Martorelli. See 399 Mich. 421 (1976). Continental may garnishee Travelers to recover that amount.
The remaining issues appear to be an irrelevant smokescreen, unnecessary to a decision in this action. Whether or not the so-called escape clause in Continental's policy is invalid and unconstitutional is irrelevant. Continental recovers because it stands in the shoes of its insured, Flint Dodge, not because of any escape clause in its insurance policy.
Neither is the excess clause in Travelers' policy relevant. Travelers is liable because its insured, Gloria Martorelli, was primarily and directly responsible for the damages, and Travelers insured her for such losses. The excess clause is inapplicable.
The fact that Continental chose to satisfy the deserved Tahash judgment should be applauded rather than now used as a device by the insurer of the guilty party to avoid liability.
I would affirm.