Shelby Mutual Insurance v. United States Fire Insurance

162 N.W.2d 676, 12 Mich. App. 145

Opinions

T. G-. Kavanagh, J.

The plaintiff brought this action in garnishment against the defendant insurance company under the terms of defendant’s policy of comprehensive liability insurance.

The facts giving rise to this claim are these: Frank X. and Mary Holzer were insured by defendant under a homeowners’ policy which provided in pertinent part:

“Provisions applicable to section II “This company agrees with the named insured. * * *

“1. Coverage E-Personal liability:

“(a) Liability: To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage. * * *

“Section II of this policy does not apply: * # *

“(b) Under coverages E and F, to the ownership, maintenance, operation, use, loading or unloading of (1) automobiles or midget automobiles while away from the premises or the ways immediately adjoining * * *. (Emphasis added.)

“(f) Under insuring agreement (1) (a) of coverage E, to property damage to property used by, rented to or in the care, custody or control of the insured, or property as to which the insured for any purpose is exercising physical control.”

The insurance policy provisions themselves recognize that each member of the family is separately insured and that there is a separate liability to each insured. The policy states:

“General Conditions

“Definitions

“(a) The insurance afforded under coverage E applies separately to each insured against whom claim is made and suit is brought.”

The insureds’ minor son, Wilfred D. Holzer, stole an automobile from Katterheinrieh Motor Sales and damaged it through reckless operation. The plaintiff insurance company, subrogee of Katterheinrieh Motor Sales, obtained a judgment in the amount of $472 against the parents of the minor child pursuant to CLS 1961, § 600.2913, as amended by PA 1962, No 23 (Stat Ann 1962 Eev § 27A.2913)

Footnotes

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* which renders parents liable to the extent of $500 in damages for malicious and wilful acts of minors under 18 years of age residing in the parental home.

Subsequent to the judgment, a garnishment action was filed against the defendant, United States Pire Insurance Company asserting liability under their comprehensive personal liability policy with the Holzers. The defendant refused to pay, relying on the special exclusions in the policy for liability arising out of the use of automobiles.

The only question on appeal is whether this homeowners’ policy affords coverage for statutory lia bility imposed upon parents under CLS 1961, § 600-.2913, as amended by PA 1962, No 23 (Stat Ann 1962 Rev § 27A.2913) where the wanton and malicious act of the child is performed through the use of an automobile.

It is admitted by the plaintiff that if judgment had been obtained against Wilfred Holzer, the minor, the exclusion would apply and the defendant would be under no duty or obligation to pay a judgment against him. However, as the judgment is not against the minor child but is against the insured parents by virtue of the statute imposing liability, it is plaintiff’s contention that the exclusion does not apply and that defendant has an absolute duty under coverage E of the contract of insurance to pay the full amount of the judgment.

On the other hand, defendant admits that if the judgment against the parents were for damages caused by the use of any instrumentality other than an automobile the exclusion would not apply and they would be obligated to pay the judgment under the contract.

To decide this question, then, we must construe the policy of insurance.

The rules of construction of an insurance policy are well known. If the question is whether the policy be broad enough to cover an asserted liability the terms are liberally construed to favor coverage. If the question is whether the exclusionary provisions of a policy avoid the asserted liability, the exclusionary language is strictly construed, again to favor insurance.

If the insurance afforded by the policy applies to each insured, it would seem that the exclusion of such coverage should be tested against the liability sought to he enforced.

Assuming A, B and C are each insured under the policy, and A and B are independently liable in suits against them arising out of C’s act there is no provision of the contract which should be construed to deny them coverage simply because C’s coverage would be excluded if an action were brought against him.

Here the parents are liable because of the statute which becomes operative on account of the maliciously destructive act of the child, independent of the means the child employed to cause the destruction.

To extend the exclusionary language of this policy in our view violates the general rule of construction of insurance policies.

For this reason we hold that the decision of the trial court must be reversed. Appellant may tax costs.

Lbsinski, C. J., concurred with T. G. Kavanagh, J.

Since amended by PA 1967, No 184, effective July 1, 1968.