[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 139 On May 30, 1935, plaintiff, a girl 10 years old, suffered injuries while riding in an automobile owned and driven by her cousin, John Bernadich, the above named defendant. The accident occurred near Elderton, in the State of Pennsylvania. Defendant Bernadich ran off the pavement, into a culvert and the automobile overturned. After the accident plaintiff's father and two boys came to Elderton and had a conversation with defendant regarding *Page 140 the cause of the accident. Defendant states that he was afraid of what the father of plaintiff would do to him if he told the truth about the accident. He states that he, therefore, told plaintiff's father that another car had forced him off the road and that he was entirely blameless for the occurrence of the accident.
Defendant had a policy of liability insurance with the Lincoln Mutual Casualty Company, above named garnishee defendant, in which the company agreed to indemnify and insure him against loss from liability arising out of a judgment against him for damages because of bodily injuries suffered by any person other than an employee of the insured, as the result of an automobile accident.
A few days after the accident, defendant furnished the insurance company with a statement from which it appeared that the responsibility therefor was due solely to the negligence of the operator of another automobile coming from the opposite direction and on the wrong side of the road. Approximately four months after the accident, plaintiff brought her suit against defendant. Before defendant's answer was filed and five days after the commencement of the suit, defendant gave another statement to the insurance company repeating in detail his previous version together with a drawing detailing the course that the alleged oncoming car followed in crossing the center of the highway and driving on the wrong side of the road, together with an indication of the course that the insured took in driving off the highway in order to avoid the collision. Defendant's answer was filed by the attorneys for the insurance company setting up as a defense the version as outlined by defendant in two statements submitted to the insurance company by him. On November 2, 1936, approximately 18 *Page 141 months after the accident, defendant gave another statement to the insurance company in which he again repeated that no accident would have happened if the oncoming car had remained on its proper side of the highway. None of defendant's three statements indicated any fault on his part.
On December 1, 1936, when the case was on call and about to be reached for trial, defendant sent by registered mail a letter to the insurance company stating that he did not know how the accident happened and could not swear that there was an approaching car. This was the first notification that the company had that no other car was involved and the first statement made to the insurance company indicating that defendant was in any way to blame. After receiving this letter, the company sent for defendant who appeared at its office and signed a statement setting forth that there was no other car at or near the scene of the accident and no other car was involved in any way. The day after receiving this statement the company denied liability to defendant because of his failure to aid in securing evidence and because of his falsification of reports which, it was claimed, constituted an attempt to defraud the insurance company. About two weeks later the case was reached for trial and defendant testified therein that there was no oncoming car and that he did not know how the accident happened. Plaintiff had verdict and judgment against defendant, and thereafter instituted proceedings in garnishment against the insurance company. On the trial of the issue before a jury, defendant joined in the statutory proceeding. He testified on the trial. The jury, in answer to a special question submitted by the court, found that defendant did not attempt to perpetrate a fraud upon the insurance company. Plaintiff had a verdict upon which judgment was *Page 142 entered, and from which defendant insurance company appeals.
The errors assigned embody the claim that the court erred in entering a judgment because of the fact that defendant was guilty of fraud which resulted in voiding the policy; that the participation in the garnishment trial by the defendant constituted reversible error; and that prejudicial error resulted when the trial court refused to strike out alleged hearsay testimony.
The insurance contract between defendant and the company provides:
"This policy contract shall be void * * * if the assured or his agent shall attempt to defraud the company either before or after any loss occurs."
A motion for judgment notwithstanding verdict was made by the insurance company; the trial court denied such motion on the ground that defendant was not guilty of any fraud in making the various statements to the insurance company, and that no damage or prejudice to the company resulted therefrom.
An automobile insurance policy is to be construed in favor of the insured to effect the result, and exceptions to the general liability provided are to be strictly construed against the insurer. Pawlicki v. Hollenbeck, 250 Mich. 38. See, also,Kangas v. New York Life Ins. Co., 223 Mich. 238.
In Waldbauer v. Hoosier Casualty Co., 285 Mich. 405, it was said:
"The doctrine is well established that fraud will not be presumed but must be proved. Robert v. Morrin's Estate,27 Mich. 306. * * *
"The burden of proof, therefore, rests upon plaintiff to show actionable fraud, the elements of which *Page 143 have been stated in Candler v. Heigho, 208 Mich. 115:
" 'It is well stated in 20 Cyc. p. 13:
" ' "The general rule is that to constitute actionable fraud it must appear: (1) That defendant made a material representation; (2) that it was false; (3) that when he made it he knew that it was false, or made it recklessly, without any knowledge of its truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by plaintiff; (5) that plaintiff acted in reliance upon it; and (6) that he thereby suffered injury. Each of these facts must be proved with a reasonable degree of certainty, and all of them must be found to exist; the absence of any one of them is fatal to a recovery." ' "
To sustain a defense of fraud because of misrepresentation or false statements in an insurance contract, it must be shown that the insurer was prejudiced or damaged by such conduct.Francis v. London Guarantee Accident Co., 100 Vt. 425 (138 A. 780).
"It is a firmly established rule of construction that policies of insurance will be liberally construed to uphold the contract, and conditions contained in them which create forfeitures will be construed most strongly against the insurer and will never be extended beyond the strict words of the policy. The court will never seek for a construction of a forfeiture clause in a policy which will sustain it, if one which will defeat it is reasonably deducible from the terms and words used to express it. * * * Concededly, the insured did not 'commit or attempt false swearing.' Nor was there any proof of a failure to comply with the provisions of the policies requiring the insured to cooperate and assist in defending against the claims presented, and in adjusting and minimizing the loss or damage, and to abstain from fraud. * * * Appellants contend that they suffered detriment and injury by reason of the untruthful version of the occurrence given in the first statement. * * * His version of the occurrence contained in the first statement tended to exculpate him from negligence. It cannot be said that this denotes a failure to cooperate and assist the *Page 144 insurer in making a defense, or a purpose to perpetrate a fraud. Rather the reverse is the case. The insured thereby evinced a willingness and purpose to cooperate with and assist the insurer in resisting the claims for damages asserted by plaintiff. * * * Construing this clause most strongly against the insurer, it merely requires such aid and assistance as the assured may be able to render in effecting an adjustment of the claim covered by the policy, and in minimizing the loss sustained by the insured thereunder. * * * When the first action was instituted, the insurers were given a correct statement of the facts. Admittedly, they had ample time to investigate and prepare for trial, or adjust the claims if that were deemed the preferable course. They suffered no detriment or injury by reason of this alleged breach of the provisions of the contracts. * * * The proofs indisputably show that the insured substantially complied with the stated conditions of the policies, and that, in any event, the delay in advising the insurers of the facts did not result in the substantial impairment of any of their policy rights, or any detriment or injury, and, therefore, will not be permitted to work a forfeiture." Rockmiss v. New Jersey Manfrs. Ass'n Fire Ins.Co., 112 N.J. Law, 136 (169 A. 663).
"It is not enough that there is a deviation from the terms of the contract, but it must be a material deviation with a paid surety, and one which results in injury to it in order torelease it from liability." Realty Construction Co. v. Kennedy,234 Mich. 490, 495.
"It (the surety) is not relieved from its obligationsexcept when it is shown that there is a material departure from the contract which resulted in some injury to the surety."Grinnell Realty Co. v. General Casualty Surety Co., 253 Mich. 16.
Whether misrepresentations or false statements void an insurance policy depends upon the intent *Page 145 to defraud and this is a question of fact for the jury. SeeAlma State Savings Bank v. Springfield Fire Marine Ins. Co.,268 Mich. 631.
The court properly submitted the special question to the jury on the question of whether defendant, by his statements, attempted to perpetrate a fraud; the jury's finding that no such attempt was made is conclusive.
The participation of defendant in the garnishment proceeding was not prejudicial error as garnishment is ancillary to the principal suit and defendant is properly a party therein and may participate in the proceedings. See Hiles v. The Selas Co.,219 Mich. 88.
On the trial defendant was asked by counsel:
"Q. Did you talk with Matt about this accident?
"A. Why, he asked me how it happened, I tell him that —.
"Mr. Ricard: Just a minute, please. We think discussions between these people amount to hearsay."
Thereafter, there ensued a colloquy between the court and counsel, following which defendant testified that he had told plaintiff's father that another car had pushed him off the road. No objection was made to such questions or answers. Later, plaintiff's father was asked by her counsel whether he had asked defendant for a statement as to how the accident occurred. Upon objection that such answer would be hearsay, the court allowed the witness to state that defendant had told him not to be angry; that he did not know how it happened; and that all he knew was that the car upset. The admission of such testimony, while perhaps subject to the objection made, was unimportant and did not constitute reversible error. *Page 146
Many cases are cited by garnishee defendant relating to the voiding of policies because of lack of cooperation. Such cases can be distinguished from the instant case largely because of the fact that there is no similar "cooperation clause" in the policy under consideration. In the instant case the cooperation clause of the policy provides:
"The assured shall personally appear in court in the trial of any cause brought against the assured, and when requested by the company, shall aid in effecting settlements, securing evidence, the attendance of witnesses and in prosecuting appeals."
There is no proof that the assured did not comply with such provision of the policy; and in any event, there was no prejudice or loss to the insurance company shown because of the conduct of defendant.
It is urged that the insurance company was prejudiced in not being able to investigate the accident and had not sufficient opportunity to make settlement rather than to go to trial. The company had two weeks from the time of learning of defendant's final version of the accident until the time of trial. No attempt was made to secure a continuance by the attorneys before the company proceeded to the trial of the principal case.
The company having failed to show prejudice, loss or damage because of the false statements of defendant, the jury having answered the special question to the effect that the defendant had not attempted to perpetrate any fraud upon the insurer, and no prejudicial error appearing in the conduct of the trial, the verdict is sustained and the judgment is affirmed, with costs to plaintiff.
WIEST, C.J., and BUTZEL, BUSHNELL, SHARPE, POTTER, CHANDLER, and NORTH, JJ., concurred. *Page 147