Weisberg v. Detroit Automobile Inter-Insurance Exchange

Leven, P. J.

(dissenting). Morrey Weisberg, claiming that he was injured by the negligence of the driver of an automobile in which he was riding as a passenger, commenced this action for a declaratory judgment concerning the liability for the damages he suffered of the defendant insurer, Detroit Automobile Inter-Insurance Exchange, and of the defendant Secretary of State, as director of the Motor Vehicle Accident Claims Fund.

Weisberg owned the automobile and he was the named insured in an automobile insurance policy issued by the defendant insurer covering the automobile for public liability. The policy not only protects Weisberg as to his liability to other persons arising out of the ownership or use of the automobile, it also provides like protection to any person “using” the automobile with Weisberg’s permission. The person driving the automobile when Weisberg was injured was driving it with his permission.

But the policy provides that such liability coverage does not apply to injury to any named insured and that the uninsured motorist coverage of the policy does not apply to a motor vehicle owned by an insured.

The plaintiff, administrator of Weisberg’s estate (see footnote 1 of majority opinion), contends that the exclusion in the policy of liability to a named insured is invalid with the result that the insurer is required to respond for the legal obligation of the driver to Weisberg arising out of the driver’s negligent driving.

*525The driver was not otherwise insured. The plaintiff further contends that if the exclusion in the policy is valid, then the automobile was uninsured, with the result that the Motor Vehicle Accident Claims Fund is liable, and the insurer is also liable under the uninsured motorist coverage because the exclusion in respect to that coverage is also invalid.

The insurer denies liability claiming that the exclusions are valid; the fund denies liability on the ground that the vehicle was insured.

I.

If the challenged public liability exclusion is valid, then the driver who was driving Weisberg’s automobile was not insured, under the policy issued in respect to that automobile, for the liability imposed on her by law for personal injury caused Weisberg.

The Motor Vehicle Accident Claims Act1 provides that an “uninsured motor vehicle” is “a motor vehicle as to which there is not in force a liability policy meeting the requirements of the motor vehicle responsibility law of this state”. The motor vehicle responsibility law provides that an owner’s policy of liability 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 or motor vehicles”.2 (Emphasis supplied.)

Under that definition a vehicle is uninsured for the purpose of the accident claims act unless both the owner and any driver using it with the owner’s per*526mission are insured against the liability imposed on them by law arising ont of negligent driving of the vehicle. The statute does not say that the insurer is authorized to except from the required coverage protection of a driver against the legal liability imposed on him by law on account of personal injuries he causes the owner by his negligent driving.

Since the policy issued to Weisberg did not, by reason of the challenged exclusion, insure drivers of his automobile against loss from the liability imposed on them by law for personal injury caused Weisberg arising out of the negligent use of his automobile, the policy issued to Weisberg did not in terms provide the coverage required by the financial responsibility law.

It follows that if the policy exclusion for personal injury caused the owner is valid, Weisberg’s vehicle was, under the definition in the accident claims act, adopting the requirements of the financial responsibility law, an uninsured vehicle.

II.

The shorthand term “uninsured motor vehicle” can be misleading. To begin with, motor vehicles are not insured for public liability. Owners and drivers of motor vehicles purchase insurance to cover their liability, not the vehicle’s liability. Actions to recover for personal injury arising out of the ownership or use of a motor vehicle are brought against the owner or driver or both, not m rem against the vehicle. More importantly, the accident claims act’s definition of an uninsured motor vehicle controls; that definition explicitly provides that a vehicle is uninsured unless the accident claims fund is protected by insurance from exposure to an injured person arising out of the nonpayment of a *527judgment obtained against an uninsured driver even though the owner is insured for his responsibility-under the civil liability act.3

Without a requirement that the insurance cover the driver as well as the owner, in any case where the insurance covers only the owner and the damages assessed against the owner and the driver exceed the amount recoverable from the owner, the injured person could proceed against the fund if the driver did not pay the excess. By requiring that the owner’s insurance cover the driver as well as the owner the Legislature sought to reduce claims against the accident claims fund arising out of unpaid claims against drivers. Cf. Woods v. Progressive Mutual Insurance Company (1968), 15 Mich App 335; Collins v. Motorists Mutual Insurance Company (1971), 36 Mich App 424, Levin, P. J., concurring.

The reasoning and holding of our Court in Bennett v. Pitts (1971), 31 Mich App 530, 534, establishes that whether an automobile is an insured motor vehicle or an uninsured motor vehicle does not depend solely on whether an insurance policy has or has not been written covering the vehicle as a named or specifically identifiable vehicle. In that case we ruled that an automobile is an insured vehicle even though the owner of the automobile does not have insurance where the driver has insurance covering him while driving the automobile. We said that the accident claims fund was not subject to liability in that case because the fund is only liable “when there is no liability insurance policy in force with respect to that vehicle. [The driver’s] insurance policy was in force ‘with respect to that vehicle’. Ergo, it was not uninsured. Ergo, the fund cannot be liable.” (Emphasis by the Court.) The converse of that *528syllogism is also correct: There was no insurance “in force” covering’ the legal liability of a driver of Weisberg’s automobile for personal injury caused Weisberg. Ergo, the vehicle was not insured. Ergo, the fund would be liable.

III.

"Weisberg’s vehicle was licensed as an insured vehicle without payment of the uninsured motor vehicle fee on the insurer’s certification that the policy “complied” with the requirements of the accident claims act.

Recently in Allstate Insurance Company v. Motor State Insurance Company (1971), 33 Mich App 469, a panel of our Court held invalid an exception to the public liability coverage in an automobile liability policy for accidents caused while the vehicle is being operated by an “excluded driver”.

We said in Allstate that, while the exclusion would have been valid before the enactment of the accident claims act, it was clear from the provisions of that act that “the Legislature intended that no automobile should be registered in this state unless certain requirements have been met. To obtain registration for an automobile one must either have a policy of liability insurance or pay the uninsured motor vehicle fee.” (Emphasis supplied.) We further said that an exclusionary clause not authorized by the accident claims act was violative of the public policy expressed by the Legislature in that act.4

*529Similarly, the exclusionary clause in the liability policy now before us is invalid. Here, as in Allstate,

(1) the owner of the vehicle did not pay the uninsured motor vehicle fee; he had purchased a policy of liability insurance,

(2) the insurance company certified that the policy he had purchased complied with the requirements of the accident claims act; on the basis of that certification the state licensed the vehicle without payment of the uninsured motor vehicle fee, and

(3) the policy issued contained an exclusion not authorized by the statute.

One of the exclusions expressly permitted by the financial responsibility law is of “liability for damage to property owned by, rented to, in charge of, or transported by the insured”.5 (Emphasis supplied.) This express authorization of an exclusion for damage to the insured’s property and the failure to authorize an exclusion for personal injury caused an insured further supports the view that no distinction may properly be drawn in the required personal injury insurance coverage based on whether the insured or someone else is injured or on whether the injury was caused by a driver using one vehicle or another.

To distinguish the exclusion before us from the exclusion in the Allstate case on the ground that the exclusion in the present case precludes the owner of the vehicle — the purchaser of the policy — rather than a third party does not comport with the legislative purpose of protecting persons injured by uninsured vehicles. An owner suffers just the some as a third party when injured. As a practical matter, an *530owner is as likely to need such protection as a third party; in this very case the uninsured motorist protection which Weisberg purchased, like the liability coverage, does not in terms provide coverage in this situation.

The legislation which we construe is designed to protect the citizens of this state without regard to whether they might through the exercise of diligence and expenditure of funds otherwise protect themselves. The Legislature apparently concluded that the social problem of uncollected judgments against uninsured motorists requires such a paternalistic policy. There is no sound reason for supposing that the Legislature concluded that this comprehensive public policy should stop short of protecting an owner who is injured by a driver of the owner’s vehicle.

I am satisfied that the Legislature intended that all Michigan residents, except those entitled to workmen’s compensation benefits (§29 of the act),6 who are injured in this state by an uninsured vehicle — which under the statutory definition includes situations where the driver is uninsured — would be able to recover from the accident claims fund. 7 To *531give effect to this insurance policy exclusion, which makes a driver of Weisberg’s automobile uninsured for personal injuries caused Weisberg, would be to enlarge the exposure of the accident claims fund. I would, therefore, hold that this insurance policy exclusion is inconsistent with the breadth of the coverage provided in the accident claims act and the legislative expectation that the fund should have no exposure in respect to an insured vehicle.8

It is manifestly the intention of the Legislature, as our Court concluded in Allstate, to bar insurance companies from representing that automobile policies which they write comply with the requirements of the accident claims act — so that vehicles can be licensed as insured vehicles without payment of the $45 uninsured motor vehicle fee — and later claiming, when liability is asserted under a policy, that the vehicle is not insured by reason of an exclusion.

Now that our Court has declared § 29 of the act unconstitutional (Bowser v. Jacobs [1971], 36 Mich App 320), and, therefore, even those persons entitled to workmen’s compensation benefits can recover from the accident claims fund, the result reached in this case leaves matters in this posture: all resi*532dents of Michigan injured in this state by uninsured vehicles excepting only an owner of a vehicle who is injured by the negligent driving of the driver of his own vehicle may recover up to $10,000 either under a liability policy insuring against the negligence of the driver, or, ir there is no insurance, from the accident claims fund. This narrow preclusion of an owner injured under those circumstances is not required by the language of the act; it is opposed to the language and the policy of the act and common sense.

I would hold that the exclusion in the liability portion of the policy is invalid to the extent of the statutorily-required policy limits, $10,000/$20,000/ $5,000, and that the vehicle is, therefore, an insured vehicle with the consequences that the insurer has no liability under the uninsured motorist portion of the policy and that the accident claims fund has no liability to the plaintiff.

MCLA § 257.1102(d) (Stat Ann 1968 Rev § 9.2802[d]).

MOLA § 257.520(b) (Stat Ann 1968 Rev § 9.2220[b]).

MOLA § 257.401 (Stat Ann 1968 Rev § 9.2101).

“The public policy as delineated by the Legislature requires that the liability policy must be written in conformity with the statutory requirements. The statute does not provide for the type of exclusionary clauses as were contained in the instant policy. Thus, the exclusionary clauses are contrary to the public policy of this State and are therefore invalid and of no effect.” Allstate Insurance *529Company v. Motor State Insurance Co. (1971), 33 Mich App 469, 473, 474.

MCLA § 257.520(e) (Stat Ann 1968 Rev § 9.2220[e]).

See MOLA § 257.1129 (Stat Ann 1968 Rev § 9.2829)..

My colleagues argue that the Secretary would have had the right under the accident claims act to recover back from Weisberg any amount paid to him by the fund and, therefore, he had no right of recovery against the fund. They refer to MCLA § 257.1106(5) (Stat Ann 1968 Rev § 9.2806 [5]) which requires the Secretary of State to suspend the registration and operator’s license “of the persons to whom the notice was forwarded under this section” until the fund is reimbursed, or the commencement of installment repayments in accordance with an agreement with the Secretary or proof of financial responsibility is filed. Under subparagraph (1) of that section any person who has a cause of action “against the owner or driver of the uninsured motor vehicle” (emphasis supplied) may make claim against the fund and under subparagraph (2) of that section notice of the claim is required to be forwarded to “the owner and driver of the uninsured motor vehicle against whom liability for damages is alleged”. Clearly Weisberg, as owner of the vehicle, did not have any liability under the civil liability act

*531to Weisberg, the person injured by the negligent driving of the driver — Weisberg eonld not have sued Weisberg. Thus, Weisberg was not an “owner * * * against whom liability for damages is alleged”. (Emphasis supplied.) Accordingly, no notice could have been sent to him under subparagraph (2) and he would not have had any obligation of reimbursement under subparagraph (5).

Similarly, MCLA § 257.1110 (Stat Ann 1968 Rev § 9.2810) provides for the suspension of the license or registration of “the judgment debtor on whose behalf the payment [by the fund] is made”. Clearly Weisberg could not be a judgment debtor in an action commenced by him against the driver. The provisions of MCLA § 257.1120 (Stat Ann 1968 Rev § 9.2820) concern actions against the Secretary directly where the identity of the uninsured driver is unknown (MCLA § 257.1113 et seq. [Stat Ann 1968 Rev § 9.2813 et seq.]); that is not this case.

Cf. Woods v. Progressive Mutual Insurance Company (1968), 15 Mich App 335; Collins v. Motorists Mutual Insurance Company (1971), 36 Mich App 424, Levin, P. J., concurring.