Docket No. 62120 | Mich. Ct. App. | Apr 6, 1983
Lead Opinion
Plaintiff, Lease Car of America, Inc., appeals as of right from a judgment of no cause of action entered in favor of defendant Michigan Mutual Insurance Company. Associated Gen
Plaintiff leased a 1978 Mercedes Benz to defendant Stephen Rahn. The lease agreement provided that plaintiff would continue to hold title to the car and required Rahn to purchase insurance, including collision coverage, for the automobile. The lease agreement further provided that upon plaintiff’s receiving notice of cancellation of the insurance policy it could, at its option, continue the policy and charge Rahn for the premium payments.
The case was heard by the court based upon the following stipulated facts and issues:
"That on or about October 8, 1977, codefendant Stephen Rahn, purchased a policy of insurance with the Associated General Insurance Company.
"That thereafter on October 8, 1978, said policy of insurance was renewed to expire on October 8, 1979
"That from the inception of the policy dated October 8, 1978, the codefendant, Stephen Rahn, failed to make prompt and adequate payment of said premium, and as a result thereof, said policy was cancelled effective December 9, 1978 * * *.
"That the said policy provided that Stephen Rahn was the insured named in Item 1 of the Declaration under said policy of insurance. Further, that prior to the date of cancellation of said policy, by endorsement titled Extended Insurance, Lease Car of America was included as an 'Insured’ as defined in said Endorsement
"The policy of insurance so issued was cancelled effective December 9, 1978, by giving notice to the named insured, Stephen Rahn * * *. Further, for the purpose of this stipulated statement of fact, it is agreed that the Associated General Insurance Company did not*689 give notice to the plaintiff, Lease Car of America, of the cancellation of said policy.
"On January 3, 1979, the codefendant Stephen Rahn was involved in an automobile collision, said collision damaging the said Mercedes Benz to a point where it is claimed that the repair of said described vehicle was not feasible.
"That upon learning of the damage to the said Mercedes Benz, Lease Car of America contacted Associated General regarding the filing of a claim. Associated General rejected plaintiffs claim contending that the policy in question was cancelled prior to the loss and that the defendant had no obligation to inform or advise Lease Car of America of the prior cancellation.
"Therefore, the issue to be decided by the court in this case is:
"1. Was Associated General Insurance Company required to give notice of cancellation to Lease Car of America?
"2. Is Associated General Insurance Company liable to Lease Car of America for the damages to the said Mercedes Benz for not giving notice of cancellation to Lease Car of America?”
The trial court held that under the terms of the policy and MCL 500.3020; MSA 24.13020 the insurer had no duty to notify plaintiff of the cancellation of the insurance policy. Plaintiff appeals. A default judgment has been entered in favor of plaintiff against defendant Rahn.
The policy provision governing cancellation, which is ¶ 16, provides in pertinent part:
"[I]f the named insured fails to discharge when due any of his obligations in connection with the payment of premium for this policy or any installment thereof, whether payable directly to the company or its agent or indirectly under any premium finance plan or extension of credit, this policy may be cancelled by the company*690 by mailing to the insured named in Item 1 of the declarations at the address shown in this policy written notice stating when not less than ten days thereafter such cancellation shall be effective. The mailing of notice as aforesaid shall be sufficient proof of notice.” (Emphasis supplied.)
The "J-2” Endorsement reads in pertinent part:
"Extended Insurance
"Coverages A, B, and C — Bodily Injury Liability, Property Damage Liability and Automobile Medical Payments
"It is agreed: That, the unqualified word 'Insured’ wherever used in Coverages A, B, and C and in other parts of this policy, when applicable to such coverages, includes the named insured, and, except where specifically stated to the contrary also includes Lease Car of America, 21517 Kelly Road, East Detroit, MI 48021.”
The applicable statute, MCL 500.3020; MSA 24.13020, states in relevant part:
"(1) A policy of casualty insurance, except worker’s compensation, including all classes of motor vehicle coverage, shall not be issued or delivered in this state by an insurer authorized to do business in this state for which a premium or advance assessment is charged, unless the policy contains the following provisions:
"(b) That the policy may be canceled at any time by the insurer by mailing to the insured at the insured’s address last known to the insurer or an authorized agent of the insurer, with postage fully prepaid, a 10 days’ written notice of cancellation * * *.”
In the instant case, ¶ 16 of the policy unambiguously provides that cancellation may be effected by the insurer mailing notice to the "insured named in Item 1 of the declarations”. The only insured named in Item 1 of the declarations is Stephen Rahn.
Plaintiff argues that MCL 500.3020; MSA 24.13020 requires the insurer to give notice of cancellation to all parties who are insureds under the policy. Since plaintiff was an insured under the "J-2 Extended Insurance” endorsement, plaintiff argues that it was entitled to notice pursuant to the statute. Plaintiff relies on Du Brul v American Manufacturers Mutual Ins Co, 60 Mich App 299; 230 NW2d 404 (1975). In that case, plaintiff was the owner of a van which she used in her employment with a catering company. The van was insured by the defendant as part of the catering company’s fleet policy. Defendant issued a certificate of insurance directly to plaintiff. The insurer cancelled the policy and notified the catering company but failed to notify plaintiff of the cancellation. Plaintiff was subsequently involved in an accident and the insurer refused coverage. The Court held that plaintiff was an insured under the policy and was therefore entitled to notice of
However, that case made no mention of any cancellation provision in the policy. In contrast, the policy involved herein contained a notice of cancellation provision which was fully complied with by the insurer. We hold that where the policy contains a provision authorizing cancellation upon notice to a specific named insured, and where the insurer complies with the policy provision, the insurer’s failure to give notice to other parties insured under the policy does not render the cancellation ineffective. In cases where the policy contains a specific provision governing notice of cancellation, we do not believe the statute requires notice to all other insureds under the policy. To the contrary, we believe that, had the Legislature intended to impose such a requirement, it would have specifically used the phrase "all insureds” rather than the singular term "insured”.
This Court is of the opinion that ¶ 16 of the policy was in compliance with MCL 500.3020(l)(b); MSA 24.13020(l)(b). Since the insurer fully complied with ¶ 16 by giving notice to the insured named in Item 1 of the declarations, Stephen Rahn, the cancellation was effective.
We note, as did the trial judge, that plaintiff could have protected itself from an unknown lapse in the policy by requiring the lessee to tender the insurance premiums directly to plaintiff, along with the lease payments.
Affirmed.
Dissenting Opinion
(dissenting). I respectfully dissent. I find that Lease Car of America (LCA) was entitled to notice of cancellation because it was included as an insured in the policy. There is
"(1) A policy of casualty insurance, except worker’s compensation, including all classes of motor vehicle coverage, shall not be issued or delivered in this state by an insurer authorized to do business in this state for which a premium or advance assessment is charged, unless the policy contains the following provisions:
"(b) That the policy may be canceled at any time by the insurer by mailing to the insured at the insured’s address last known to the insurer or an authorized agent of the insurer, with postage fully prepaid, a 10 days’ written notice of cancellation * *
I feel that under the statute the insurer was required to give notice of cancellation to all insureds within the policy. Therefore, the insurer’s failure to notify the insured LCA should not result in a penalty to LCA.
The language of one lonely paragraph in the policy, to the exclusion of the language of the entire remaining insurance contract, surely cannot be construed as setting forth the only standard or requirement for notice. The insurance contract should be read as a whole and a simple reading of the contract in the present case reveals immediately who the insureds are. I believe that the appropriate test to be used in determining who is to receive notice pursuant to the statute, MCL 500.3020; MSA 24.13020, is simply who are the insureds within the contract, not where their names appear in the contract.
The insured is entitled to rely upon the language of MCL 500.3020; MSA 24.13020 more than
I would reverse.