*1 517 1980] Denham v Bedford DENHAM v BEDFORD GILLISPIE v BEDFORD (Calendar 3). 61284, 5, Argued Docket Nos. 61283. June No. 1, February Decided 1980. brought negligence Edna Denham and others an action for Bedford, Jr., against liability and Thomas for under the dram- R.C.S., Inc., shop against operator act of "Bimbo’s on the Arbor, injuries arising Hill” in Ann for out of an automobile driving. accident with a car defendant Bedford was Allen Gillispie brought action, arising B. a similar out of the same accident, Bedford, R.C.S., Inc., against defendants and others. trial, jury The cases were consolidated for a and Washtenaw Court, Ager, Jr., J., Circuit F. returned William a verdict for $15,403.18 $108,025 damages prejudgment total of and defendant Bedford a verdict of no cause R.C.S., action as to defendant Inc. Defendant Bedford’s automo- insurer, Group, paid plaintiffs bile Transamerica Insurance $40,000, coverage multiple arising the maximum claims out policy, of one accident under the terms of Bedford’s insurance party liability was added as defendant to determine its argued pay- interest. Transamerica ment of exceed would its contractual obligation policy, under the insurance all interest which entry judgment, prejudg- accrued after the and that the provision ment interest of the Revised Judicature Act not does [4, [2] [3] [6] [7, [8] [1, [9] [12] 44 Am Jur Liability 73 Am Jur 43 Am Jur 5] 44 Am Jur 43 Am Jur 11] 44 Am Jur 16A Am Jur 16A Am 43 Am Jur 44 Am Jur insurer’s 2d, over Jur 2d, 2d, 2d, 2d, 2d, References Insurance 2d, Insurance Statutes Insurance 2d, 2d, Insurance Insurance 2d, Constitutional Law Insurance §§ Insurance Constitutional Law liability limit. 76 ALR2d 983. §§278-280. §§ for Points § § §§ § 53. 1687. 1685-1688. 1685. 271-273. §§ 51-53, 1685-1688. interest and costs on excess in Headnotes §§ 56. §§ 663, 704, 705. ' 407 insurer, liability regu- which is of an automobile responsibility Code and the financial under the Insurance lated act. Circuit Court found that defendant Trans- The Washtenaw liable for the interest. The america was *2 Holbrook, Brennan, P.J., Appeals, D. E. J. V. and Court of J. (Martin, J., entry dissenting), for of a reversed and remanded $5,695.47 judgment against for as its share of the Transamerica (Docket 77-2597). 77-2596, prejudgment Nos. interest Trans- Group appeals. opinion by Moody, america Insurance In an Justice joined by and Chief Justice Coleman and Justices Williams Levin, Supreme Court held: the responsi- financial 1. the Code and the While both Insurance govern practices compa- bility purport to the of insurance act Legislature the nies is no indication that intended that there Although compliance with all-inclusive. the Insur- these acts be required business Michi- is to transact insurance in ance Code gan, statutory language support does not a that the conclusion companies subject are not to other statutes. insurance reasoning 2. the in this case have To follow insurer’s would making practical prejudgment the the statute effect of Legislature vacuum; nullity. not a The does act in a it was aware, Act, enacting obviously when the Revised Judicature paid by majority judgments tort that the vast insurance Legislature pre- companies. must The have intended that the and, therefore, meaning have interest statute some ,companies. fundamentally It to insurance would be un- to conclude that the intended that the reasonable defendants, corporate apply to and the self-: statute individual insured, Michigan, to and the State of but insurance companies. argues application prejudg- 3. that Transamerica the also policy ment interest statute to its insurance violates the consti- obligation prohibition against impairing of contract tutional the would, effect, to because it amend the insurance contract coverage beyond risk to which the insurer increase or that agreed by argument had without contract. This is merit. statute, part prejudgment interest the Revised Judicature Act, interpretation. is a remedial statute entitled to liberal Furthermore, Legislature may modify en- the method of obligation. impairing of a its Since forcement contract without merely remedy and interest statute modifies right, no not a contractual there can be constitu- substantive policies. objection application tional insurance provi- language policy any in the There is policy which is in conflict with the statutes of sion of Denham v Bedford state is issued is amended to conform to the provi- statutes. Since there is an obvious conflict between the policy postjudgment sion of the and the statutory provision filing interest from the complaint, language operates policy to amend the to conform with the Furthermore, language statute. of an insurance strictly writer, should be construed and in favor of company the insured. The insurance was the drafter of the policy; language belonged the choice of to it. If the insurance company provision fails to write a to indicate with reasonable certainty provision, just what it means it has no cause to complain provision given when that a reasonable construc- contrary tion to its contentions. 5. Interest and court costs are added to a compensate prevailing party delay money damages put pocket and to back in his some of the expense instituting prosecuting he incurs in an action. argument any Transamerica’s interest which causes the insurer to a sum in excess of its limit intrudes on right ability contrary contract to limit its risk runs *3 Legislature’s enacting prejudgment to the intent the interest rule, states, statute. The common-law in most has been estab- may obligated lished that the insurer be cost or interest on a although recovered the insured these may bring payment beyond items the insurer’s total the limits policy. principle in the There is no reason that the same should apply prejudgment not interest. The has dictated filing that interest should accrue from the date of the com- plaint, legislative purpose compensating prevail- and the of the ing party by prejudgment can be effected the allowance of case, interest in this even if the interest exceeds the limits of the insurance contract. public policy fully support 6. Considerations of this result. To responsible prejudgment make the insured for of appears interest in excess of the limits to be an uncon- By scionable result. the terms of the insurance the settlement, any investigation, insurer retained control over or litigation. processing The insured had no control over the of the claim, attempted and if the insured chose to act or to settle of volition, any his own he would run the risk of forfeiture of rights policy. injustice under the No manifest is committed holding prejudgment the insurer liable for The insurer interest. complete $40,000 filing had control over the from the date of complaint plaintiffs.' the until it tendered that amount to the 407 Mich required assuming to set the funds that the insurer were Even pending general the investment fund because of aside from They litigation, idle. were invested. the funds did not remain assuming short-term investments were conservative Even the anything by certainly enterprises, would not lose the insurer profit. probably paying prejudgment retain a interest but would only compensates Payment the liability prevailing party, act as an incentive to but promptly. Any other a meritorious claim the insurer to settle impunity, delaying engage, the insurer to with result allows Therefore, expense the defendant the of its insured. tactics at Act, insurer, prejudg- Judicature is liable under the Revised part judgment which is the on that ment policy. liability of the insurer under Affirmed. Fitzgerald Ryan, Kavanagh, joined by Justices Justice They agree did not that there is a concurred in affirmance. Michigan; right purely right common-law to interest They agreed statutory. interest statute respon- appear in Insurance Code or the financial need not insurer, sibility the defendant because while act to practices industry, regulate of the insurance these laws it; government compa- they insurance are not the exclusive ,of subject general this state as are all other laws nies changes only remedy, enterprises. A statute which
business
statute, may
applied
retro-
be
as does
obligation
They
actively
impairing
of contracts.
without
public policy prompts
disposition
agreed
cases.
these
(1978)
App
It would be provision Legislature intended that the Bedford Denham non-insurance-company the Revised Judicature Act defendants, Michigan, or the self-insured or the State of but not companies; to insurance does not act in a vacuum, aware, obviously enacting it was when the Re- Act, majority judgments vised Judicature that the vast of tort (MCL paid by companies 600.6013; are 27A.6013). MSA — n Prejudgment — 3. Costs Interest Statutes. provision
The of the Revised Judicature Act (MCL interpretation ais remedial statute entitled to liberal 27A.6013). 600.102, 27A.102, 600.6013; MSA — — — — 4. Contracts Remedies Statutes Constitutional Law Impairment of Contracts. Legislature may modify remedy The for enforcement of a (Const impairing obligation contract without of contract 10). 1, art § Prejudgment — — — 5. Costs Interest Constitutional Law Im- pairment of Contracts. provision The of the Revised Judicature Act merely remedy modifies a and not a substantive contractual and, therefore, right, objection there can be no constitutional application policies; statutory remedy to insurance part contract, replacing any becomes a of the insurance con- provisions (MCL contrary tractual that are to the statute 27A.6013). 600.6013;MSA — — 6. Insurance Contracts Construction. language strictly of an insurance should be construed writer, against insured; and in favor of the if the insurance company provision fails to write a to indicate with reasonable certainty provision, just what it means it has no cause to complain provision given when that a reasonable construc- contrary tion to its contentions. —
7. Costs Interest. compensate Interest and court costs are added to a prevailing party delay money damages put pocket determined and to back in his some of the expense instituting prosecuting he incurs an action. — 8. Costs Insurance. obligated
An insurer costs or interest on a although recovered its insured those items *5 407 Opinion of the Court beyond may bring the limits set in the the total policy. — Prejudgment — 9. Insurance. Costs Interest money judgment that a has dictated interest on complaint; filing of if the from the date should accrue compensate prevailing party legislative purpose to was payment money damages delay and to cover the costs of by purpose be the allowance litigation, of can effected insurer, prejudgment even if the defendant (MCL of the the limits insurance interest exceeds 27A.6013). 600.6013;MSA Concurring Opinion Kavanagh, J. Prejudgment — — — 10. Remedies Interest Statutes. Costs right interest in Michi- There common-law is no (MCL 600.6013; statutory gan; right purely MSA 27A.6013). — Statutes. Insurance responsibility regulate act the ñnancial The Insurance Code and they industry, practices are not the insurance but it; companies subject government exclusive general as are other business enter- laws this state all (MCL prises seq., seq.; seq., 500.100 257.501 et et MSA 9.2201 et seq.). 24.1100 et — — — — 12. Contracts Statutes Law Remedies Constitutional Impairment of Contracts. changes only remedy may applied A retroac- statute which tively it was an insurance written before enacted contracts; therefore, obligation impairing without application to an interest statute unconstitutionally impair policy does not the defendant insur- (Const 1963, 600.6013; rights 1, §10; er’s MCL contractual art 27A.6013). MSA Logeman, P.C., Calder, Kirkendall & for plain- tiffs. Taylor, Poling,
Moore, Sills, Wooster, & Sinn P.C., Insurance defendant Transamerica Group. granted appeal leave to Moody, Jr., J. We
Blair Denham Bedford Opinion op the Court pre- to consider whether an insurer is liable for pursuant statute, 600.6013; 27A.6013, MCL MSA on portion judgment representing of a doing, limits of the insurer. In so we are asked to obligated by consider whether an insurer can be money statute as interest sums of over and *6 above the contractual of an limitations policy. upon Legislature, Based the intent of the interpretation policy, of the common public policy, law, and considerations we deter- ap- that the mine interest statute is plicable and, therefore, to insurance contracts an may obligated insurer excess of the contractual limitations of an insurance policy.
Accordingly, Appeals. affirm the we Court
Facts plaintiffs 30, 1973, On March were involved in an automobile accident with defendant Thomas Bedford, vehicle, Jr. Plaintiffs’ which was driven by plaintiff by Denham, Edna was struck by defendant, vehicle driven when defendant veered across the centerline of a street. Immedi- ately prior accident, defendant Bedford had drinking been ain bar known as on "Bimbo’s operated by Hill”, R.C.S., which was Inc. April plaintiffs negli- 17, 1974, On initiated
gence
against
dramshop
action
Bedford and a
complaint against the bar.1
dispute
There is some factual
as to whether Transamerica offered
$40,000 policy
plaintiffs prior
entire
limit to
to trial. Even if such
made, plaintiffs
an offer
compelled
reject
were
have felt
offer
act.
requirement
dramshop
because
the "name and retain”
of the
pertinent portion
dramshop
of the
act reads as follows:
against
"No
anyone
by
action
a retailer or
or
wholesaler
covered
surety,
this act or his
shall be commenced unless the minor or the
A commenced trial was jury of no 30, 1976, returned a verdict jury July On verdict, A defendant bar. cause of action plaintiffs against for defen- however, was entered $15,403.18 $108,025, pre- plus dant for Bedford interest. by automobile was covered Defendant Bedford’s subsidiary of the an insurance issued Group. pro- The policy Transamerica Insurance $40,000 coverage multiple maximum vided arising of one accident. claims out 9, 1976, entered on was September On verdict; and, paid subsequently, Transamerica $40,000. then filed a mo plaintiffs Transamerica tion the trial court for determination any interest on responsibility 2 Trans limits, plaintiffs. $40,000, paid the policy $5,695.47 any liability disclaimed america $40,000 portion interest on arguing any payment prejudg judgment, obliga exceed its contractual ment would *7 the policy. tion under not court ruled that Transamerica was trial interest over and above
liable for
of Appeals
the Court
policy
appeal,
limits. On
(1978).
107;
Discussion setting, crystallizes: In this factual the issue prejudg- an can held whether insurer liable for of the ment interest excess contractual limita- policy. in its insurance tions
I prelude discussion, to our As becomes neces- specific sary provisions to set forth the contractual policy statutory language of the insurance and the controversy at the root of the in this pertinent provisions case. The contractual by issued Transamerica Bedford, Jr., Thomas as follows: read Supplementary Payments "II. Settlement, Defense, respects by "1. As such insurance as is afforded the the B, Coverages terms other of this under A and company shall: against "A. Defend in his any name and behalf suit arising any alleged bodily the insured injury less, false, fraudulent, from claim damage, or property ground- whether such suit is otherwise, or company but the right investigations shall have the such to any conduct as claim, negotiate adjustment or settlement thereof, upon and to enter conduct the defense against expedient insured the same as it deem waiving any provisions without or this subjecting limits company any liability beyond provided in this policy, and (a) Pay "B. lawfully all costs the in- taxed in any sured suit expenses pertaining such and all thereto company; incurred "(b) Pay all interest which shall accrue after entry company paid, and until has tendered, deposited or portion in court any such *8 judgment exceeding limit liability the of the of the added.) company.” (Emphasis 407 Opinion of the Court policy provisions is the
In contrast provides: statute, the money any allowed on Interest shall be "Sec. 6013. judgment action, such interest in a civil recovered ñling complaint at of date calculated from the on year is rendered per unless rate of 6% having higher of interest in rate a written instrument computed at the. rate shall be which case specified time legal at the if such rate was in the instrument In no case shall the instrument was executed. is per year after the date exceed rate entered. 7% if a fide judge, bona In the discretion in a action based on of settlement civil written offer tort judgment is party whom the offer of settlement is made is subsequently rendered and the substantially more or favorable substantially identical then no prevailing party judgment, to the interest shall be allowed than written beyond date the added.) (Emphasis is MCL offer of made.” settlement 600.6013; MSA 27A.6013. II argues liability that its Defendant Transamerica under interest the insurance clearly delineated, i.e., the insurer will
is "pay accrue after all interest which shall entry judgment”. Transamerica tendered Since immediately the try after the en- entire of limits liability judgment, it has no for interest. inter- Transamerica asserts that policies inapplicable est to insurance statute part Judica- because the statute is a the Revised seq.; 1961, Act 600.101 et MSA ture MCL argument, seq. According 27A.101 to this et not intend that did compa- interest nies; would to insurance statute had, if it have included because would statute within either the Insurance Code *9 527 Denham v Bedford Opinion of the Court seq.; seq., MCL 500.100 et 24.1100 et or MSA responsibility seq.; act, MCL financial 257.501 et govern seq., MSA 9.2201 et which acts the activi- companies pro- ties of insurance and dictate what placed policies. should be in visions arguments unpersuasive. We find defendant’s both the While Insurance Code and the financial responsibility purport govern prac- act do companies, tices of insurance there is no indication Legislature provisions that intended that § acts be that these all-inclusive. We note 120 of the Insurance Code reads as follows: person
"No shall transact an insurance or surety Michigan, subject resident, in business or relative located, performed Michigan, or be without com- plying applicable provisions with the of this code.” MCL 500.120; MSA 24.1120. Although compliance technical with the code is required, leap it would take an enormous of faith language to conclude from this that the code was and, therefore, intended to be exhaustive insur- companies subject statutory ance are not to other enactments. addition,
In there is another consideration which militates defendant’s construction of interest statute. To follow the insur- logic practical er’s in this case would have the making effect of interest statute nullity. Legislature We do not think that Legislature obviously acts ain vacuum. was enacting major- aware the statute that the vast ity judgments paid compa- of tort Clearly, Legislature then, nies. must have meaning intended that the and, statute have some apply companies. therefore, to insurance It would fundamentally unreasonable to conclude that Mich
Opinion of the Court the statute intended corporate defendants, or the self- individual insured or Michigan3 not to insur- but the State of companies. ance argues prejudg- if the next
Transamerica applying as were construed ment interest statute policies, would be such construction to insurance constitutionally of Const defective violation expan- assertion, an 1, § this 10.4Under art interpretation would interest statute sive require *10 with the insurance contract of
amendment coverage or risk over in the increase a resultant agreed by the insurer had that to which and above contract. Such a is of a statute liberal construction justified only in nature. is remedial when statute equally argument merit. without We find this begin with, it is clear To entitled to a remedial statute statute is pre- interpretation. noted, the As has been liberal part is RJA. statute specifically enunciates of the RJA Section 102 provisions applied to which should be construction act: of that character, and shall be is remedial "This act pur- intents and
liberally to effectuate the construed 600.102; MSA poses MCL thereof.” 27A.102._ 3 apply to statute has been construed State, Secretary Douglas Michigan v motorist fund. the 32 Mich uninsured (1971). Douglas, Secretary 533; App 114 In 189 NW2d here, was no argued, that there much defendant insurer does State as statutory authority awarding statutory limits interest where the paid. $10,000 Fund were the Motor Vehicle Accident Claims of The under stating: argument, Douglas rejected this Court postjudgment holding prejudgment and "It of this Court that is Fund Accident Claims from the Motor Vehicle interest when the fund recoverable motorist, but is an uninsured intervenes on behalf of portion on that of interest limited does not supra, statutory obligation.” Douglas, exceed the fund’s 4 attainder, post 1963, 1, provides: facto ex art 10 "No bill Const § impairing obligation be enacted.” of contract shall law or law 529 Denham Bedford v op Opinion the Court question
Thus, there can no of the remedial be of the interest statute. nature interpretation Further, we are satisfied with rejection of defendant’s constitutional conten- Appeals case, tions the Court of a similar App Cosby Pool, 571; v 36 Mich 142 NW2d (1972). (1971), Cosby, lv den 386 In acknowledged defendant, here, unlike defendant generally applicable interest statute was policies. However, to its insurance because the question prior had been issued 1965,5 to amendment of interest statute in any retrospective applica- statute had no force constitutionally tion of the would statute infirm infringement right as an on the of freedom of contract. dismissing
In defendant insurer’s constitutional objections, Cosby Court noted that the amend- ment of the interest statute related procedures. Ballog to remedies or modes of Knight Newspapers, Inc, 381 Mich 164 NW2d (1969). Citing precedent Court,6 of this Cosby Court in determined that: *11 changes "A statute which substance contracts changes retroactive, cannot made but if the statute only remedy, Cosby, a it can be made retroactive.” supra, 576. Legislature, may modify remedy therefore, The impairing for enforcement of a contract without obligation. Cosby The Court concluded and held as follows: 5 changed The 1965 amendment to the statute the date upon begin judgment which interest would from the accrue date of filing complaint.
to the date of 240. 1965 PA 6 Hansen-Snyder 480; Corp, See vCo General 371 Mich 124 Motors (1963); Depositors Corp Brown, NW2d 286 Guardian 290 (1939). 798 NW 407 Mich Opinion of the Court merit in the defendant finds no thus "This Court company’s contention. constitutional was remedial in contention the statute amendment to or way procedural. the substantive in no affects It parties. Therefore, the amendment two interests of the becoming party of the contract the effect of has added.) (Emphasis as written.” replaces the clause Cosby,supra, holding thrust of Cosby the main While pre- application
pertains retroactive to the equally statute, is its rationale merely pertinent statute the interest here. Since remedy contrac- a substantive and not modifies a tual to its statutory remedy objection right, no constitutional there can be policies. application Thus, the to insurance part the insurance becomes provisions any replacing contract, contractual contrary. readily evident, continu- defendant insurer isAs policy language ally its insurance relies on the opposition complete and in as sacrosanct language However, in the the there is interest statute. insurance resolve which itself incorporate by seeming refer- direct conflict policy. into the insurance the interest statute ence language boilerplate the end of near In following provision contract, found: provision "Any with is in conflict of this which hereby it is issued is of the state wherein
the statutes amended to conformto
such statutes.” conflict between there is an obvious Since provisions post- provide this n in- and the provides for interest from terest statute which complaint, may filing be considered date of *12 Denham v Bedford Opinion op the Court boilerplate language this amends the insur- policy ance prejudgment to conform with the mandate of the gains statute.7 This notion particular light force when in viewed of the hack- neyed oft-quoted judicial but maxim that the lan- guage policy strictly of an insurance should be policy construed the writer and the should interpretation boilerplate language We that our note of this in the policy insurance Appeals F2d 711 differs from that of the Sixth Circuit Court of Co, Ring Heating in Westchester Fire Ins Co v Brothers (CA 1974). Westchester, plaintiffs money judgment negli- In obtained a in a gence According provisions policy, action. to the of its insurance plus postjudgment defendant’s insurer tendered the all limits argued they interest. Plaintiffs date of were entitled to interest from the filing complaint. argument upon Plaintiffs’ was based boilerplate language policy, in the language similar to the case, non-conforming policy provisions in this which amended Thus, provide statutes of the state. for would be amended to statutorily mandated interest. rejected plaintiffs’ argument. Although The Westchester court reaching result, contrary Cosby, the Westchester court relied on supra. panel holding Cosby turning The Westchester viewed the as interpretation. Cosby on contract Since the insurance contract "accruing called for the of interest on verdict or after judgment”, sufficiently it was different from Westchester contract entry judg- which limited interest to that "which accrues after following language Cosby controlling, ment”. The court found the for purposes holding: of its "An insurer can limit the risk it assumes. It follows that the that accrues on the insurer should be liable for the interest Otherwise, paying amount of risk it has assumed. it would be charge premi- on a risk it did not assume and for which it did not (Citations omitted.) Cosby,supra, ums.” 578-579. respect court, interpre- With all due to the Westchester we view its misreading Cosby. Cosby tation as a was not so much concerned interpretation indicating with contract as it inwas that whatever language contractual interest existed would be amended conform with the Fitzgerald’s Judge holding: statute. This is clear from "Therefore, becoming part the amendment has the effect of added.) replaces (Emphasis Cosby, contract and the clause as written.” supra, 578. addition, upon In the Westchester court’s reliance the "limitation of language Cosby equally misplaced. Cosby risk” insurer liable for refused, Court found interest on its limits. The Court upon language, go step based the limitation of risk one further and find insurer liable for interest on the entire $200,000, judgment, liability by when it had limited its contract to $100,000. *13 Mich 517
532 407 op Opinion the Court interpreted Hilburn v in of the insured. be favor Co, 494; 339 Mich Automobile Ins Mutual Citizens’ 64 (1954); Roth, 1; v 290 Mich Pastucha NW2d 702 (1939). Supreme Court The Wisconsin 287 355 NW proposition well: has stated of this company] was the drafter "[The insurance, belonged language the choice contract of drafting in fails company to it. If an insurance reasonable provision as to indicate with to write a just provision, has no certainty what it means given a provision is rea- complain when that cause to (Foot- contrary to its contentions.” construction sonable note omitted.) Co, Ins 57 McPhee v American Motorists (1973). 669, 682; 152 2d 205 NW2d Wis Ill to Transamerica’s concern seems boil Defendant following: An insurer limits its risks down to the chargeable Any limit. it sets a certain when to a sum in causes the insurer interest which upon this limitation is an intrusion excess of right ability However, and to contract. insurer’s very concept contrary runs this notion purpose charging has been interest. Interest defined as follows: to a "Interest and court costs are added pay- in recompense prevailing party delay damages put money determined and ment pocket expense incurs in in his some of the he
back
Waldrop Ro-
instituting
prosecuting
action.”
an
(1971).
1, 4;
dery,
App
34 Mich
time that
recovered
on
interest
although
bring
the total
these items
policy.”
beyond
in the
v TA & C
the limits set
Powell
(1963).
NH
188A2d
Co,
Taxi
principle
deeply
at common law
is this
So
rooted
*14
every jurisdiction that has considered
that almost
question
followed the rule.8
has
pres-
tangentially
only issue,
related to the
The
law
one,
unresolved at common
which remains
ent
is liable for interest on
an insurer
is not whether
policy
is liable
but whether the insurer
limits
judgment.
the whole
The courts
interest on
although
majority
split
on this issue
have
holding
insurer
in favor of
modern trend is
judgment.9
the whole
We
for interest on
liable
note, however,
jurisdictions
that even those
8
regarding
list
the state and Federal decisions
For an exhaustive
Practice,
Appleman,
8
Insurance Law and
the common-law rule see
4899,
contrary
Only
pp
have reached a
361-363.
two states seem to
§
Mills v Frankfort Marine
result. See National & Providence Worsted
Co,
126;
(1907);
A 58
Munro v
Accident & Plate Glass Ins
Maryland Casualty
28 RI
66
(1905).
Co,
183;
We note
48 NY Misc.
Although, Michigan strangely, courts have entirely been almost silent on whether charged can be excess of the limits of an policy, authority sup- insurance port there is some proposition. In the context of a suit in- volving policy, opined a life insurance this Court and held as follows: $2,000. "The was The ad damnum clause in $2,000. $2,- judgment
the declaration was
was for
amounting
urges
000 and interest
Defendant
$108.
error because the
clause.
exceeds the ad damnum
Helli,
We held
Patrons’ Mutual Fire Ins Co v
(1925)],
IV The result we reach today fully supported by of public policy. considerations If we were to rule insurer, following in favor of the would take insured, insurer, place: would be re- sponsible of the prejudgment in and, interest excess of the policy pre- limits sumptively, on the entire as well. Such a result would appear unconscionable.
We note that very terms of the insurance the insurer retained control policy over inves- any tigation process, settlement or litigation. The in- sured had no control over the process and if the insured chose to act or attempted to settle of his volition, own he would run the risk of forfeiture of courts, any rights under in policy. Many simi- situations, lar have held that the insurer should be liable for interest on the limits or judgment very because of this element of control which the insurer wields over the litigation settlement process. United Services Automobile Ass’n v Rus- (CA som, 5, 1957); Powell, supra; 241 F2d 296 Crook, supra.
As the Court
Appeals
out,
below pointed
no
jurisdictions
prejudg
We note that several
have refused to allow
ment
in
excess of the
limits
situations similar to the
See, e.g., Factory
Liability
one in this case.
Mutual
Ins Co of America
Cooper,
632;
(1970); Laplant
Casualty
106 RI
Payment prejudgment only com- liability pensates prevailing party also for but may act as an incentive to promptly insurer settle a meritorious claim. incentive, insurer refuse such an Without hopes forcing a meritorious claim settle plaintiff to for less than the claim’s true settle nothing. pro- risks Even if value. insurer litigation results, the insurer will tracted reaping for limits —all the while liable its tidy limits. sum its investment of from Finally, law commentators even highly attempts by evade critical of insurers to responsibility their for interest. One forcefully very such commentator has noted: liability part "Since this is controlled insured’s largely by required litigation, the time a matter insurer, by contract under control of control, upon as a insisted this the courts matter barring any provision public should strike down being interest. the insurer from liable engage, with Any other allows the insurer result v Bedford Denham Opinion Kavanagh, J. expense at impunity, delaying tactics Appleman, insured.” 8 Insurance Law Practice *17 (1979 4899, Supp), p § gener- we think that this comment Not ally appropriate do is policies it
as but validity statute, has more when a state even such prejudgment statute, the interest as mandates the prejudgment interest. of
Conclusion upon Based the intent of in enacting statute, interest inter- pretation policy, of and common-law public policy considerations, we hold that an insurer is liable for portion interest on that judgment representing aof lia- bility of the insurer. appellee.
Affirmed. Costs to Coleman, C.J., JJ., Levin, and Williams J. Moody, Jr., concurred with Blair affirmance). (concurring J. in Kavanagh, We do agree Moody with Justice that there is right Michigan. common-law the in Here right purely statutory. Solakis v (1975); Roberts, 13, 395 21; 233 1 NW2d Motyka Detroit, Co, v GH & M R 260 Mich (1932); Ayer, 244 181, NW 897 Kermott v 11 Mich (1863). 184 agree We do that the interest stat- appear ute need not in the Insurance Code or responsibility financial act to to defendant. regulate practices While these laws industry, they insurance government are not the exclusive companies subject
of it. Insurance 407 Mich 517 538 Kavanagh, J. Opinion as other of this state are all general laws enterprises. business reasoning Appeals the Court adopt
We 571; 194 Pool, App 36 Mich NW2d v Cosby (1972), and are (1971), 386 Mich lv den prejudg that refutes claim satisfied obligation impairs statute ment constitutionally defec accordingly and is contracts tive. Moody public observes
Justice these cases and we disposition our prompts public policy exposition A fuller concur. dissent Judge is set forth argument Walsh’s 433; 242 68 Mich Geyman, App NW2d Dittus (1976).
Fitzgerald JJ., concurred Ryan, Kav- with J. anagh,