TAHASH v FLINT DODGE COMPANY
Docket No. 57197
Court of Appeals of Michigan
Submitted March 2, 1981. — Decided April 22, 1982.
115 Mich. App. 471
The clause in the insurance policy issued by Continental
REFERENCES FOR POINTS IN HEADNOTES
[1] 7A Am Jur 2d, Automobile Insurance § 433.
Apportionment of liability between automobile liability insurers one or more of whose policies provide against any liability if there is other insurance. 46 ALR2d 1163.
[2] 7A Am Jur 2d, Automobile Insurance § 442.
Reversed.
BEASLEY, J., dissented. He would hold that Continental should recover because it stands in the shoes of its insured, Flint Dodge, and not because of the escape clause in Continental‘s policy. He would hold Travelers liable because its insured, Mrs. Martorelli, was primarily and directly responsible for the damages and Travelers insured her against such liabilities. All other considerations are irrelevant.
OPINION OF THE COURT
1. INSURANCE — AUTOMOBILES — ESCAPE CLAUSES.
A clause in an automobile insurance policy which states that coverage is provided only if there is no other valid and collectible insurance available, either on a primary or excess basis, is void as a matter of public policy as it violates the financial responsibility law by excluding a class of persons from insurance coverage (
DISSENT BY BEASLEY, J.
2. INSURANCE — RESTITUTION.
An insurer is entitled to recover from the insurer of an actively negligent party any amounts the first insurer has paid on behalf of one of its insureds where the insured was liable only through operation of law and subsequent proceedings resulted in the actively negligent party being found liable for all damages.
Wilson, Portnoy, Basso & Leader, P.C. (by James. M. Pidgeon), for Flint Dodge Company.
William E. Jungeheld, for Travelers Insurance Company.
Before: R. M. MAHER, P.J., and BEASLEY and P. J. MARUTIAK,* JJ.
* Circuit judge, sitting on the Court of Appeals by assignment.
This case has had a long history in the appellate courts. See 399 Mich 421; 249 NW2d 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,
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
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,
We agree that the escape clause in the Continental policy is void because it contravenes
Michigan courts have taken a dim view of exclusion clauses which would operate to violate the public policy of the financial responsibility act,
Reversed, costs to Travelers Insurance Company.
R. M. MAHER, P.J., concurred.
BEASLEY, J. (dissenting). 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 NW2d 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,
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.