Docket No. 77-4900.
Decided October 3, 1978. Leave to appeal applied for.
Brownell, Andrews, Philpott Piper, for plaintiff.
Norman N. Gottlieb, P.C., for defendants.
Defendant Martha Watkins was injured in an automobile accident on July 14, 1972, while a passenger in an automobile owned by Bessie Evans, deceased, and driven by defendant Erwin Shanks. That automobile was insured under a policy issued to Bessie Evans by plaintiff. After Martha Watkins filed suit against Mr. Shanks and the estate of Bessie Evans, plaintiff sought a declaratory judgment to determine its obligation under the insurance contract. Plaintiff argued that its liability coverage did not apply to Martha Watkins because the policy excluded coverage to "any member of the family of an insured residing in the same household as the insured". In the trial court, Martha Watkins conceded that she was a sister of Bessie Evans and resided in her household. The case was submitted to the trial court on briefs and the court found plaintiff's exclusion void and the liability coverage of the policy applicable to Martha Watkins's claim.
The case was appealed to this Court, and in an unpublished per curiam opinion, No. 30617, issued September 14, 1977, this Court said:
"During oral arguments before this Court, counsel for defendant Martha Watkins asserted that he had only recently learned that Martha Watkins was not related to Bessie Evans. If this assertion is correct then the household exclusion cited by State Farm would have no application. Therefore, if proven, the nonrelative status of Martha Watkins may settle the issue conclusively in her favor. State Farm, however, may wish to contest the issue or assert other policy provisions in light of this new allegation by defendant Watkins. Under these circumstances we believe it would be improvident to reach the legal issue presented in this appeal." (Emphasis in original.) (Footnote omitted.)
The case was therefore remanded to the trial court to allow the parties to amend their pleadings and the court to determine whether Martha Watkins was related to Bessie Evans.
On remand, Martha Watkins testified by deposition that she and Bessie Evans were not related. Martha Watkins testified that they had neither a common mother nor father. The two women were born of separate parents, but when they were teenagers, after the death of Bessie Evans's father and Martha Watkins's mother, Martha Watkins's father married Bessie Evans's mother. The trial court found that "the exclusionary clause relied upon by the Plaintiff in denying liability to the Defendant Martha Watkins as [sic] inapplicable to her for the reason that she is not a `relative' of the named insured within the meaning of the policy provisions," and granted summary judgment in favor of defendant Martha Watkins. Plaintiff appeals.
The purpose of "household" exclusions such as the clause under consideration was to protect insurers from liability in cases where, due to close family ties between plaintiff and the insured, the insurer may be victimized by a collusive lawsuit. Anno: Validity, Construction, and Application of Provision of Automobile Liability Policy Excluding from Coverage Injury or Death of Member of Family or Household of Insured, 46 ALR3d 1024, 1030-1032, § 4. This note indicates that a majority of courts in other jurisdictions which have been required to interpret such clauses under similar circumstances have emphasized the domestic arrangement rather than consanguinity or lack thereof in determining the legal effect of such clauses. Anno, supra, § 11, pp 1050-1054.
In spite of the strong Michigan policy of construing all insurance contracts which require judicial interpretation against the preparer and in favor of the insured, 14 Callaghan's Michigan Civil Jurisprudence, Insurance, § 146, p 162, and cases cited therein, it would require an unusually strained construction of the term "household" in order to remove defendants Evans and Watkins from the intended meaning of the clause in question. They had resided together for 21 years, and had generally held themselves out to be "family". In addition, due to the close relationship which existed between them, the policy behind the clause in question seems clearly to apply. Therefore, the conclusion that the trial court erred in holding these defendants not to be members of the same "household" is compelling.
Nevertheless, resolution of this matter requires consideration of defendants-appellees' claim that the clause in question should be considered void as a matter of law, as it contravenes public policy. In support of this conclusion, appellees cite two recent Michigan cases holding the "household" exclusion to be invalid under comparable circumstances, Gurwin v Alcodray, 77 Mich. App. 97; 257 N.W.2d 665 (1977), and Allstate Insurance Co v DeFrain, 81 Mich. App. 503; 265 N.W.2d 392 (1978). Gurwin involved a declaratory judgment action brought by the plaintiff insured, as next friend of his minor children, to determine the liability of the insurer under a policy which excluded coverage of the plaintiff to "liability of any insured for bodily injury to (a) any member of the same household of the insured except the servant". The appellate Court upheld the trial court's ruling that the clause was void, noting that under the financial responsibility act, MCL 257.520(b)(2); MSA 9.2220(b)(2), a liability policy must insure the named insured "against loss from the liability imposed by law". The Court noted that under Lilje v Allstate Insurance Co, 393 Mich. 259; 224 N.W.2d 279 (1974), and Citizens Mutual Insurance Co v Central National Insurance Co of Omaha, 65 Mich. App. 349; 237 N.W.2d 322 (1975), an exclusion which deviates from the statutorily imposed standards is not valid. The Court held that as parental immunity is no longer recognized in Michigan, any attempt to exclude from the policy coverage the liability of an insured for actions brought by the insured's children was not in compliance with the statutory requirements governing insurance coverage. Although the Court never discussed the policy of discouraging "over-friendly lawsuits" the decision which it reached clearly implied repudiation of this policy as grounds for coverage exclusions.
DeFrain reached the same conclusion in invalidating a "household" exclusion clause relied upon by the insurer in refusing to defend its insured against suit by his then-wife. The Court held that abolition of interspousal immunity necessarily rendered the claimed exclusion invalid as in contravention of public policy as stated in the financial responsibility act, supra.
In addition to the cases cited by appellees, a separate line of cases also suggests that exclusionary clauses such as the one in question contravenes public policy. Allstate Insurance Co v Motor State Insurance Co, 33 Mich. App. 469; 190 N.W.2d 352 (1971), lv den, 386 Mich. 760 (1971), Robinson v Mendell, 45 Mich. App. 368; 206 N.W.2d 537 (1973), Cadillac Mutual Insurance Co v Bell, 50 Mich. App. 144; 212 N.W.2d 816 (1973). Each of these cases relied upon MCL 257.520(b)(2); MSA 9.2220(b)(2) (set out in part above), as a declaration of legislative intent. In pertinent part, with emphasis added, the statute asserts that a policy of insurance:
"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." (Emphasis supplied.)
Although appellant relies upon Weisberg v Detroit Automobile Inter-Insurance Exchange, 36 Mich. App. 513; 194 N.W.2d 193 (1971), as authority for upholding the "household" exclusion despite policy arguments to the contrary, it is clear that whether or not Weisberg is good law, it is not apposite to actions involving the protection of third parties.
Weisberg involved an exclusionary clause which provided that public liability coverage did not apply to a named insured. It was upheld, and distinguished from Allstate v Motor State on the questionable grounds that the public policy, as embodied in the financial responsibility act, supra, and the accident claims act, MCL 500.3010; MSA 24.13010, was not offended by "exclusion [which] is inherent in the concept of liability insurance. It [liability insurance] contemplates protection of the insured against liability running from the insured to another", 36 Mich App at 517. Thus, Weisberg is not contrary to the Allstate v Motor State line of reasoning which protects third persons. The Legislature impliedly adopted the Allstate v Motor State result in 1971 when it amended the insurance code by adding MCL 500.3009; MSA 24.13009.
This section expressly authorizes the liability insurer to provide that its policy coverage will not be effective if the vehicle is operated by a specific named person. In Citizens Mutual Insurance Co v Central National Insurance Co of Omaha, 65 Mich. App. 349, 353-354; 237 N.W.2d 322 (1975), this Court, in passing upon the validity of a clause which excluded coverage of passengers, had occasion to assess the impact of the new statute on public policy as promulgated in Allstate:
"In accord with this view [the public policy view stated in Allstate] are Robinson v Mendell, 45 Mich. App. 368; 206 N.W.2d 537 (1973), Cadillac Mutual Insurance Co v Bell, 50 Mich. App. 144; 212 N.W.2d 816 (1973), Celina Mutual Insurance Co v Preferred Risk Mutual Insurance Co, 51 Mich. App. 99; 214 N.W.2d 704 (1974), overruled sub nom Lilje v Allstate Insurance Co, 393 Mich. 259; 224 N.W.2d 279 (1974), State Automobile Mutual Insurance Co v Babcock, 54 Mich. App. 194; 220 N.W.2d 717 (1974).
"The Legislature obviously remains interested in requiring automobile insurance policies to conform to the dictates of the statute. The theory underlying the Allstate decision was that exclusionary clauses with respect to policies covering a particular motor vehicle which were not contemplated by the Legislature are contrary to public policy and therefore void. A clear intent of § 3009 was to allow an insurance company to exclude from liability coverage only named persons operating a motor vehicle. There are no statutory references to other types of exclusions. It is a familiar rule of statutory construction that the express mention of one thing implies the exclusion of other similar things. Stowers v Wolodzko, 386 Mich. 119, 133; 191 N.W.2d 355 (1971), Marshall v Wabash Railway Co, 201 Mich. 167, 172; 167 N.W. 19 (1918). An exclusionary clause which exempts from liability coverage all passengers of a motor vehicle is at variance with the intent of the Legislature, contrary to public policy and is therefore void and unenforceable." (Emphasis in original.)
We find the reasoning of this Allstate line of cases still to be persuasive, and furthermore, agree with the assessment of legislative intent made by the Court in Citizens Mutual. Unlike the Gurwin and DeFrain cases, supra, there has never been any recognized "member-of-household immunity" which would be effectuated by the exclusionary clause under consideration. Therefore, no sound reasoning exists to justify continued recognition of "household" exclusions from liability coverage when such recognition would clearly violate the statutorily expressed policy of comprehensive liability coverage.
Affirmed. Costs to defendants.