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Michigan Supreme Court 

Lansing, Michigan 48909 

C hief Justice Justices 

Maura D. Corrigan	 Michael F. Cavanagh 

Elizabeth A. Weaver 

Marilyn Kelly 

Clifford W. Taylor Opinion Robert P. Young, Jr. 

Stephen J. Markman 

FILED JULY 3, 2001
 

UNIVERSAL UNDERWRITERS INSURANCE 


COMPANY, as Subrogee of Betten


Toyota and BETTEN TOYOTA,
 

Plaintiffs-Appellees,
 

v	 No. 114900
 

NANCY KNEELAND,
 

Defendant-Appellant.
 

BEFORE THE ENTIRE BENCH
 

CORRIGAN, C.J.
 

We granted leave to determine whether a contractual
 

provision that assigned “all responsibility for damages” to
 

defendant while she rented a vehicle contravenes our no-fault
 

act, MCL 500.3101 et seq., and thereby voids the parties’
 

contract. We hold that the no-fault act does not prevent
 
contracting parties from voluntarily allocating liability for
 

collision damage to a rented vehicle. We thus affirm the
 

judgment of the Court of Appeals.
 

I. Underlying facts and procedural history
 

While repairing defendant’s vehicle, plaintiff Betten
 

Toyota loaned her a vehicle. Defendant and a Betten employee
 

signed a “courtesy car agreement” that stated:
 

2. Renter agrees to replace gasoline used.
 

3. Renter agrees to pay cash for rental charge.
 

4. Renter agrees to assume all responsibility
 

for damages while vehicle is in his possession.
 

5. Renter agrees not to sublet or loan the car


to anyone. [Emphasis added.]
 

While driving the rented vehicle, plaintiff was involved
 

in an accident. Total collision damages amounted to
 

$3,738.49. Betten Toyota absorbed $1,000 as a deductible;
 

plaintiff Universal Underwriters Insurance Company, Betten’s
 

insurer, paid the remainder.
 

Betten and Universal sought recovery from defendant, but
 

she refused to pay. Plaintiffs then commenced this action
 

alleging breach of the courtesy car agreement. Universal
 

seeks recovery as Betten’s subrogee of the $2,738.49 it paid
 

to repair the rented vehicle; Betten demands payment of the
 

$1,000 deductible.
 

Plaintiffs moved for summary disposition under MCR
 

2
 
2.116(C)(10), arguing that no genuine issue of material fact
 

existed regarding defendant’s contractual liability. The
 

district court instead granted summary disposition for
 

defendant under MCR 2.116(I)(2).1 It relied on an unpublished
 

Court of Appeals opinion to conclude that the no-fault act
 

does not allow contractual allocation of liability for
 

collision damages. Universal Underwriters Ins Co v Stout,
 

unpublished opinion per curiam, issued February 2, 1996
 

(Docket No. 171069). The circuit court affirmed.
 

The Court of Appeals reversed and remanded for entry of
 

a judgment in plaintiffs’ favor unless the district court
 

“determines that defendant has defenses that have not yet been
 

addressed, in which case the court shall conduct proceedings
 

consistent with” the Court of Appeals opinion. 235 Mich App
 

646, 662; 599 NW2d 519 (1999). It noted that while the nofault act abrogated tort liability arising from the ownership,
 

maintenance, or use of a motor vehicle (except in certain
 

circumstances),2 it did not abolish contractual liability.
 

See Kinnunen v Bohlinger, 128 Mich App 635, 638; 341 NW2d 167
 

(1983); Nat’l Ben Franklin Ins Co v Bakhaus Contractors, Inc,
 

124 Mich App 510, 513; 335 NW2d 70 (1983).
 

1The rule provides: “If it appears that the opposing


party, rather than the moving party, is entitled to judgment,


the court may render judgment in favor of the opposing party.”
 

2MCL 500.3135(2).
 

3 
The Court of Appeals distinguished this Court’s
 

peremptory order in Universal Underwriters Ins Co v Vallejo,
 

436 Mich 873; 461 NW2d 364 (1989). Vallejo held that the
 

defendant-renter was entitled to summary disposition on the
 

insurer’s claim for collision damages to a rented vehicle:
 

Although the trial court gave the plaintiff


insurer numerous opportunities to explain, with


specific factual allegations, how its conclusory


allegation of an express or implied contract of


bailment differentiated this case from any other


situation in which a permissive user of a car is


involved in a collision and therefore cannot return
 

the car to its owner in an undamaged condition, the


plaintiff repeatedly failed to do so. Under these
 

circumstances, the trial court correctly granted


the defendant’s motion for summary disposition. By


operation of the pertinent insurance statutes,


e.g., MCL 257.520(b)(2); MSA 9.2220(b)(2) and MCL


500.3009; MSA 24.13009, the defendant appears to


have been insured by the plaintiff against the very


loss at issue in this case, since a standard


automobile policy typically insures such a
 

permissive driver “against loss from the liability


imposed by law for damages arising out of the


ownership, maintenance or use of” a motor vehicle.


[Id.]
 

The Court of Appeals noted that, while the plaintiff in
 

Vallejo relied on a common-law bailment theory, plaintiff here
 

seeks recovery under the express terms of a written agreement.
 

The Court did not read Vallejo “as a blanket rejection of all
 

contract claims seeking to hold a permissive user responsible
 

for damage to a borrowed vehicle. Rather, we understand the
 

order as rejecting the insurer’s effort to convert a simple,
 

permissive-user, tort liability case into a contract case by
 

4
 
 

alleging an express or implied contract of bailment, without
 

providing specific factual allegations that would support such
 

a distinction.” Kneeland, supra at 659. The Court reasoned
 

that Vallejo suggested the possibility of a different result
 

where there is proof of an express contract.
 

II. Standard of Review
 

We review de novo a grant of summary disposition under
 

MCR 2.116(C)(10). Smith v Globe Life Ins Co, 460 Mich 446,
 

454; 597 NW2d 28 (1999). The issue under review is a question
 

of law, i.e., whether the no-fault act prevents contractual
 

assignment of liability for collision damages. We review
 

questions of law de novo. Cardinal Mooney High School v
 

Michigan High School Athletic Ass’n, 437 Mich 75, 80; 467 NW2d
 

21 (1991).
 

III. Contractual Interpretation
 

Before deciding whether the courtesy car agreement
 

contravenes public policy, we must determine what the contract
 

says. Absent an ambiguity or internal inconsistency,
 

contractual interpretation begins and ends with the actual
 

words of a written agreement. Henderson v State Farm Fire &
 

Casualty Co, 460 Mich 348, 354; 596 NW2d 190 (1999). A
 

contract is ambiguous if its provisions may reasonably be
 

understood in different ways. Farm Bureau Ins Co v Nikkel,
 

460 Mich 558, 566; 596 NW2d 915 (1999).
 

5
 
 

The fourth provision of the courtesy car agreement
 

states: “Renter agrees to assume all responsibility for
 

damages while vehicle is in his possession.” This language
 

clearly imposes liability on defendant. The contract is
 

unclear, however, regarding the extent of the shift of
 

liability. The provision refers to “damages,” but does not
 

explicate precisely the categories of damages that defendant
 

has agreed to pay.
 

The general term “damages” could refer to any harm caused
 

to a third party’s person or property, i.e., it could reach
 

damages for which no-fault insurance coverage is mandatory.
 

See, e.g., MCL 500.3107, 500.3121. A shift of liability to
 

that extent might contravene the no-fault act. Cf. State Farm
 

v Enterprise Leasing, 452 Mich 25, 36; 549 NW2d 345 (1996).3
 

Another reasonable interpretation of the contract is
 

available, however. Black’s Law Dictionary (6th ed) defines
 

“damages” as “[a] pecuniary compensation or indemnity, which
 

may be recovered in the courts by any person who has suffered
 

a loss, detriment, or injury, whether to his person, property,
 

or rights . . . .” The parties may reasonably have intended
 

3We express no view regarding whether State Farm would
 

control the legality of the contract here. This agreement and


the one addressed in State Farm are arguably different in


scope and effect. We merely observe that an argument is


available that the parties’ agreement, if it reaches beyond


optional collision damages, is illegal.
 

6
 
to limit the meaning of the word “damages” to losses for which
 

a legal right of recovery is available.
 

An ambiguity arises also because the contract shifts
 

liability for damages “while [the] vehicle is in [defendant’s]
 

possession.” Damages to the vehicle itself are likely to
 

occur while the renter possesses the vehicle. But other types
 

of damages, including wage loss and medical expenses, often
 

arise after the rental period has ended. The contract does
 

not clearly shift liability for the latter kinds of damages.
 

We thus conclude that the words of the contract may
 

reasonably be understood in different ways. This ambiguity
 

requires us to assume that the parties knew the law and wished
 

to comply with it. See 3 Corbin, Contracts, § 546, pp 170­

171:
 

[I]t is very commonly stated that when the


terms of agreement have two possible


interpretations, by one of which the agreement


would create a valid contract and by the other it


would be void or illegal, the former will be


preferred. This is an advisory rule of
 

interpretation, since it is believed that the
 

parties intend their agreement to be valid rather


than invalid, lawful rather than unlawful, and


honest and effective rather than fraudulent and
 

voidable.
 

See also Walsh v Schlecht, 429 US 401, 408; 97 S Ct 679; 50 L
 

Ed 2d 641 (1977) (“Since a general rule of construction
 

presumes the legality and enforceability of contracts, . . .
 

ambiguously worded contracts should not be interpreted to
 

7
 
render them illegal and unenforceable where the wording lends
 

itself to a logically acceptable construction that renders
 

them legal and enforceable”); Stillman v Goldfarb, 172 Mich
 

App 231, 239; 431 NW2d 247 (1988).
 

We follow these authorities and presume that the parties
 

intended to enter a valid, enforceable agreement and that the
 

contract thus does not shift liability for damages that may
 

not legally be reallocated.
 

IV. The dissent’s approach
 

The dissent first construes the contract against its
 

drafter and the drafter’s subrogee by extending the shift of
 

liability beyond collision damages. The dissent would then
 

invalidate the contract on the basis of its allegedly illegal
 

reach. We reject that analysis.
 

The dissent misapplies the rule requiring that
 

contractual ambiguities be construed against the drafter by
 

using the rule not to interpret the contract, but to
 

invalidate it. As discussed above, courts will presume that
 

a contract is legal if a reasonable interpretation supporting
 

the legality of the contract is available. The dissent
 

instead concludes that the parties meant to accomplish illegal
 

ends by their agreement.
 

Moreover, the dissent does not find an ambiguity
 

regarding whether defendant’s liability extends to collision
 

8
 
damages. As discussed above, the only ambiguity is whether
 

the contract shifted liability beyond collision damages. A
 

reasonable interpretation is not available---and even defendant
 

does not contend---that she did not agree to liability for
 

collision damages.
 

A proper application of the rule of construction against
 

the drafter would adopt the interpretation making defendant
 

liable to the least extent possible, i.e., for collision
 

damages only. Thus, regardless of whether one applies the
 

rule of construction against the drafter or the rule presuming
 

the legality of contracts, the same result is reached: the
 

contract shifts liability for collision damages only.
 

V. Is the assignment of collision damages void?
 

Having concluded that the contract shifts liability for
 

collision damages only, we now consider whether the no-fault
 

act prohibits the parties’ voluntary allocation of
 

responsibility. To decide this question, we must consider
 

relevant statutory provisions. Sun Valley Foods Co v Ward,
 

460 Mich 230, 236; 596 NW2d 119 (1999), articulated the proper
 

mode of interpretation:
 

The rules of statutory construction are well


established. The foremost rule, and our primary


task in construing a statute, is to discern and


give effect to the intent of the Legislature.


Murphy v Michigan Bell Telephone Co, 447 Mich 93,
 

98; 523 NW2d 310 (1994). See also Nation v W D E
 

Electric Co, 454 Mich 489, 494; 563 NW2d 233


(1997). This task begins by examining the language
 

9
 
 

of the statute itself. The words of a statute
 

provide “the most reliable evidence of its intent .


. . .” United States v Turkette, 452 US 576, 593;


101 S Ct 2524; 69 L Ed 2d 246 (1981). If the
 

language of the statute is unambiguous, the
 

Legislature must have intended the meaning clearly


expressed, and the statute must be enforced as


written. No further judicial construction is


required or permitted. Tryc v Michigan Veterans’
 

Facility, 451 Mich 129, 135; 545 NW2d 642 (1996).
 

Our no-fault act requires owners to carry certain
 

categories of insurance. Mandatory coverages include personal
 

injury protection and property protection benefits. MCL
 

500.3107; MCL 500.3121. Other types of coverage, however, are
 

not mandatory, but purely a matter of contract. Collision
 

coverage plainly falls into the latter category: our no-fault
 

scheme does not mandate it.
 

Additionally, § 3135 of our no-fault act, MCL 500.3135,
 

expressly abolishes tort liability arising from the ownership,
 

maintenance, or use of a motor vehicle (with some exceptions).
 

The statutory language does not reflect an intent to abolish
 

contractual liability for collision damages, an optional form
 

of insurance not required by the no-fault act. See Kinnunen,
 

supra at 639 (“Had the Legislature intended to abrogate
 

contractual liability as well, the words any ‘liability
 

arising out of the ownership, maintenance, or use of a motor
 

vehicle’ could easily have been substituted”); Ben Franklin
 

Ins, supra at 513 (“Nothing in the no-fault system relieves a
 

10
 
motor vehicle operator of liability which he may have incurred
 

in contract”).4
 

Further, the Court of Appeals correctly ruled that
 

Vallejo is distinguishable. The limited reasoning in that
 

peremptory order offers little guidance. It appears, however,
 

that the insurer in Vallejo was relying on a common-law
 

bailment theory. The order does not mention an express
 

written agreement.
 

Vallejo prevents a party from converting a possible tort
 

claim into a “contract” claim by simply alleging a bailment
 

and thereby subverting subsection 3135(2). Those concerns do
 

not arise where parties have expressly agreed in writing to
 

allocate their respective duties.
 

VI. Subrogation
 

Our grant order asked the parties to address “whether, if
 

defendant is held to be liable for damage to the automobile at
 

issue based on her contract with plaintiff Betten Toyota, her
 

liability is limited to the $1,000 deductible in Betten
 

Toyota’s insurance policy covering that automobile on the
 

ground that this was the extent of the damages suffered by
 

4We emphasize that our holding is limited to contract


claims for collision damages. We offer no view regarding the


legality of a contract purporting to shift liability for other


categories of damages.
 

11
 
Betten Toyota.” 462 Mich 911 (2000). We hold that damages
 

are not limited to the amount of the deductible.
 

Betten incurred $3,738.49 in damages to its vehicle, but
 

had to pay only $1,000; Universal paid the balance. The plain
 

terms of Betten’s insurance policy grant Universal a right of
 

subrogation to Betten’s cause of action against defendant:
 

Subrogation—You and each insured must do all


in their power to preserve their rights to recover


from others. Once we have made a payment under
 

this policy, your or an insured’s rights to recover
 

from others become our rights.
 

Defendant has not articulated a reason why Universal may not
 

exercise its contractual right of subrogation.
 

Significantly, defendant did not challenge Universal’s
 

subrogee status below. In fact, her attorney implicitly
 

acknowledged Universal’s right of subrogation during
 

proceedings in the district court:
 

Mr. Arndt [defense counsel]: . . . I don’t
 

think either one of the parties made a distinction
 

between Universal’s claim or Betten’s claim.
 

Certainly Universal’s claim is derivative of their


subragor (sic) insured Betten. I guess it would be


our position that the case law and specifically


Universal versus Valajo [sic] addresses both not


only the insurer but the owners responsibility to


make sure that there is adequate protection and


insurance coverage on the vehicle. I think that
 

the case law that you’ve relied upon in determining


and adjudicating the issues of liability between


Universal and Kneeland are equally applicable to


Betten and Kneeland. That there would be no
 

distinction between the two claims, whether it was
 

insured or uninsured. [Emphasis added.]
 

12
 
Defendant has thus forfeited any claim that Universal has no
 

right of subrogation. Smith v Musgrove, 372 Mich 329, 337;
 

125 NW2d 869 (1964); Munson Medical Center v Auto Club Ins
 

Ass’n, 218 Mich App 375, 388; 554 NW2d 49 (1996).
 

VII. Conclusion
 

The no-fault act does not invalidate the parties’ written
 

agreement to assign liability for collision damages to
 

defendant. Universal has a right of subrogation under the
 

express terms of its insurance policy with Betten to seek
 

recovery of the amount it paid to repair the rented vehicle.
 

Accordingly, we affirm the judgment of the Court of Appeals.
 

TAYLOR, YOUNG, and MARKMAN, JJ., concurred with CORRIGAN, C.J.
 

13
 
___________________________________ 

v 

S T A T E O F M I C H I G A N
 

SUPREME COURT
 

UNIVERSAL UNDERWRITERS INSURANCE
 

COMPANY, as Subrogee of Betten


Toyota and BETTEN TOYOTA,
 

Plaintiffs-Appellees,
 

No. 114900
 

NANCY KNEELAND,
 

Defendant-Appellant.
 

CAVANAGH, J. (dissenting).
 

Because the majority opinion in this case is contrary to
 

well-established principles of contract law, I must dissent.
 

I would reverse the decision below and reinstate summary
 

disposition in favor of the defendant. 


This case presents two questions: (1) whether a party may
 

contractually assume liability for damages to a borrowed
 

vehicle and (2) if liability can be contractually assumed,
 

whether the defendant assumed liability pursuant to a courtesy
 

car agreement. I would hold that liability can be
 

contractually shifted, but that the instant courtesy car
 
agreement cannot be enforced to impose liability on the
 

defendant.
 

I
 

The defendant borrowed a loaner car from Betten Toyota
 

while Betten was servicing her vehicle. Before taking
 

possession of the loaner car, the defendant was required to
 

sign a document entitled “Courtesy Car Agreement.” The text
 

of the agreement was as follows:
 

Courtesy Car Agreement
 

1. Rental fee ONLY $28.00 per day.
 

2. Renter agrees to replace gasoline used.
 

3. Renter agrees to pay cash for rental charge.
 

4. Renter agrees to assume all responsibility for


damages while vehicle is in his possession.
 

5. Renter agrees not to sublet or loan the car to


anyone.
 

The agreement was printed on Betten stationery.
 

The defendant was involved in an automobile accident for
 

which she bore no fault. Rather, two other vehicles collided
 

with each other, and the force of the impact pushed one of
 

those vehicles into the loaner car. The plaintiffs are
 

seeking to recover collision damages. Both plaintiffs assert
 

that the defendant is liable for the full amount of damages
 

sustained pursuant to clause 4 of the courtesy car agreement.
 

The defendant asserts that Betten Toyota formed a
 

2
 
bailment contract with her by loaning her a vehicle. She
 

further argues that, pursuant to the bailment contract, she
 

was shielded from liability because the no-fault act, MCL
 

500.3101 et seq., and financial responsibility act, MCL
 

257.520(g), require the owner of an automobile and the owner’s
 

insurer to provide coverage for permissive users.
 

According to the plaintiffs, this case sounds purely in
 

contract. While the no-fault act abrogated tort immunity, it
 

did not abrogate contractual liability. The plaintiffs thus
 

contend that the no-fault act would not bar their claims,
 

citing Kinnunen v Bollinger, 128 Mich App 635, 638; 341 NW2d
 

167 (1983); Nat’l Ben Franklin Ins Co v Bakhaus Contractors,
 

Inc, 124 Mich App 510, 513; 335 NW2d 70 (1983).
 

The broader question posed by this case is whether a
 

party may contractually assume liability for damages to a
 

borrowed vehicle even though Michigan’s no-fault law,
 

precedent, and common-law principles would normally place
 

liability on the lender absent any contractual agreement to
 

the contrary. If liability can be contractually assumed, then
 

we must also resolve whether the defendant assumed liability
 

pursuant to the courtesy car agreement.
 

The genesis of the arguments raised by the present
 

parties can be traced to this Court’s decision in Universal
 

Underwriters v Vallejo, 436 Mich 873 (1990). Vallejo was a
 

3
 
peremptory reversal, which, in its entirety, provided as
 

follows:
 

In lieu of granting leave to appeal, the


August 21, 1989, judgment of the Court of Appeals


is reversed [179 Mich App 637; 446 NW2d 510
 

(1989)], and the case is remanded to the Saginaw


Circuit Court for entry of judgment in favor of the


defendant. Although the trial court gave the


plaintiff insurer numerous opportunities to
 

explain, with specific factual allegations, how its


conclusory allegation of an express or implied


contract of bailment differentiated this case from
 

any other situation in which a permissive user of a
 

car is involved in a collision and therefore cannot
 

return the car to its owner in an undamaged


condition, the plaintiff repeatedly failed to do


so. Under these circumstances, the trial court


correctly granted the defendant's motion for
 

summary disposition. By operation of the pertinent


insurance statutes, e.g., MCL 257.520(b)(2); MSA
 

9.2220(b)(2) and MCL 500.3009; MSA 24.13009, the
 

defendant appears to have been insured by the
 

plaintiff against the very loss at issue in this
 

case, since a standard automobile policy typically


insures such a permissive driver “against loss from


the liability imposed by law for damages arising


out of the ownership, maintenance or use of” a
 

motor vehicle. Jurisdiction is not retained.
 

[Emphasis added.]
 

The defendant interprets Vallejo as holding that no
 

express or implied bailment action lies against a permissive
 

user of a loaner vehicle. In the defendant’s view, Vallejo
 

was not premised on the insurer’s failure to factually
 

establish a contractual relationship. Rather, Vallejo
 

specifically found the lack of an express agreement to be
 

inconsequential. The Court held that a bailment contract
 

could not supersede the insurer’s statutory duty to supply
 

4
 
insurance to permissive drivers. 


The plaintiffs, on the other hand, argue that Vallejo is
 

inapposite. They assert that, where the action against the
 

defendant is purely for breach of contract and is not a tort
 

action arising out of rights implicit in a bailment
 

relationship, Vallejo and the no-fault act do not bar
 

plaintiffs’ claims. Instead, the plaintiffs urge us to
 

interpret Vallejo as determining only whether a bailment could
 

give rise to liability. While Vallejo recognized that any
 

tort liability arising out of a bailment would be barred
 

pursuant to the no-fault act, the plaintiffs posit that it did
 

not foreclose the possibility that a defendant could be held
 

liable if the parties agreed to rights and responsibilities
 

extending beyond the bailment situation. The plaintiffs
 

recognize Vallejo as accepting that a bailment relationship
 

alone would not shift liability to the defendant, but they
 

argue that Vallejo actually held only that the plaintiff
 

failed to prove the existence of any rights beyond those that
 

would exist in a bailment situation. 


II
 

The Court of Appeals noted that the no-fault act bars
 

tort liability but not contractual liability, and held that
 

the defendant could be bound by her agreement to assume all
 

responsibility for damages while the vehicle was in her
 

5
 
possession. 235 Mich App 658-659. It then distinguished
 

Vallejo from this case on the ground that Vallejo did not
 

involve an express contract. Further, the Court expressly
 

stated that Vallejo was not intended to shield permissive
 

users from liability expressly assumed by contract. The Court
 

wrote:
 

[I]n any permissive user case, except the


unusual one in which a bailment is expressly


disavowed, it can be alleged that there is an


implied or express contract of bailment, and
 

therefore, an enforceable contractual duty. The
 

Supreme Court declined to recognize such broadbased contractual liability in these circumstances.


The Court’s express reference to the insurer’s


failure to support with factual allegations its


efforts to differentiate the case from any other


permissive-user situation implies that if the
 

insurer had successfully demonstrated the existence


of an express contractual assumption of
 

responsibility for damage to the vehicle, the


defendant might not have been granted summary


disposition. Thus, Vallejo did not say that the


existence of an express contract would not
 

differentiate the case from any other permissiveuser situation. Rather, it suggested that the


potential different result did exist, but that the


plaintiff insurer had failed to provide proof


sufficient to support a different result. [235 Mich


App 659-660 (emphasis in original).]
 

After determining that Vallejo was not intended to bar all
 

contract claims brought against permissive users, the Court of
 

Appeals concluded that plaintiffs could assert a contract
 

claim against the defendant because of her express assumption
 

of liability. Therefore, the Court reversed the circuit
 

court’s affirmance of summary disposition for the defendant.
 

6
 
III
 

I agree with the Court of Appeals that Vallejo should not
 

be read as “a blanket rejection of all contract claims seeking
 

to hold a permissive user responsible for damage to a borrowed
 

vehicle.” 235 Mich App 659. While Vallejo limited the extent
 

to which liability can be shifted to a permissive driver of a
 

loaned automobile, it did so under circumstances where the
 

insurer had failed to assert a factual basis for its contract
 

claim. The Court’s order recognized the general rule that a
 

bailee must return property to his bailor in an undamaged
 

condition. However, Vallejo then recognized that Michigan’s
 

pertinent insurance statutes, MCL 257.520(b)(2) and MCL
 

500.3009, modify the general rule. Through those statutes,
 

the Legislature chose to offset the costs and problems
 

associated with automobile collisions by requiring that
 

automobile owners carry insurance. Vallejo recognized that
 

standard automobile policies contain language covering use by
 

permissive drivers, and held that the plaintiff insurer had
 

failed to prove that liability had somehow been shifted back
 

to the defendant. 


I interpret Vallejo as holding that the lender, rather
 

than the permissive user, must pay for collision damages under
 

the lender’s insurance policy unless: (1) it is proven that
 

the policy does not extend to permissive drivers, or (2) the
 

7
 
lender or insurer carries his burden of differentiating his
 

case from the usual situation where a permissive user of a car
 

is involved in a collision. The plaintiffs’ own brief
 

categorizes its claim as “squarely one for breach of
 

contract.” Thus, this is not a case where the insurer refused
 

to pay on the grounds that the driver was not covered by the
 

terms of the policy between the insured and the dealer.
 

Instead, the complaint alleged that the contract between
 

Betten and Kneeland shifted liability to Kneeland. When she
 

refused to pay, she allegedly breached the courtesy car
 

agreement. Therefore, this case hinges on the second Vallejo
 

inquiry. Pursuant to Vallejo, the plaintiffs must prove that
 

the courtesy car agreement differentiates this case from the
 

usual situation where a permissive user of a car is involved
 

in a collision.
 

The plaintiffs claim that this case can be distinguished
 

from Vallejo because the instant defendant assumed all
 

responsibility for damages. While I agree with the plaintiffs
 

that Vallejo does not automatically bar recovery in cases
 

where the lender proves that the permissive driver has assumed
 

liability pursuant to a valid contract, I do not agree that
 

liability was shifted in the present case.
 

The majority acknowledges the potential shift of tort
 

liability that could occur were this Court to hold that the
 

8
 
contract is unambiguous as the plaintiffs suggest. Because of
 

the potential problem, the majority offers another “reasonable
 

interpretation of the contract.” Slip op at 6. In the
 

majority’s words, “[t]he parties may reasonably have intended
 

to limit the meaning of the word ‘damages’ to losses for which
 

a legal right of recovery is available.” Slip op at 7. 


I agree with the majority that the courtesy car agreement
 

in this case is ambiguous, and may be interpreted in a fashion
 

that would avoid illegality. However, I disagree strongly
 

with the majority’s decision to construct a decision favorable
 

to the plaintiffs, rather than construing the contract against
 

the drafter, as we are bound to do. See, e.g., Vanguard Ins
 

Co v Clarke, 438 Mich 463, 471-472; 475 NW2d 48 (1991); Raska
 

v Farm Bureau Mut Ins Co, 412 Mich 355, 361-362; 314 NW2d 440
 

(1982). See also 2 Restatement Contracts, 2d, § 206, p 105
 

(“In choosing among the reasonable meanings of a promise or
 

agreement or a term thereof, that meaning is generally
 

preferred which operates against the party who supplies the
 

words”); 11 Williston, Contracts, § 32.12, p 471 (since the
 

language is within the control of the drafter, it is a
 

generally accepted principle that any ambiguity in that
 

language will be interpreted against the drafter); 5 Corbin,
 

Contracts, § 24.27, pp 282-283; 17A Am Jur 2d Contracts, §
 

348, pp 360-361 (It is fundamental that doubtful language in
 

9
 
a contract should be interpreted most strongly against the
 

party who has selected the language). 


Two opposing interpretations of the courtesy car
 

agreement are offered. In the plaintiffs’ view, by signing
 

the courtesy car agreement, the defendant agreed to be an
 

insurer against damages to the automobile. The defendant
 

contends that she read the agreement as meaning only that she
 

would be responsible for her own negligence, and that she
 

assumed that the car was insured by the dealership. Here, the
 

drafter was Betten. Construing the agreement against Betten
 

is proper because, as the drafter, Betten had the opportunity
 

of drafting the language in a manner that avoided any
 

ambiguity or dispute. Thus, I would resolve the courtesy car
 

agreement in the defendant’s favor, in accordance with wellestablished contract principles. 


The document was a one-page form contract to which no
 

insurer was a party and that never mentioned insurance. The
 

dealership never informed the defendant that she needed to
 

obtain her own insurance, nor did it inform the defendant that
 

she would be liable for damages caused by the negligence of
 

others. The courtesy car agreement also did not mention
 

collision damages. It is not unreasonable for defendant to
 

have assumed that she would be covered by a standard
 

automobile policy between the dealer and its insurer. In this
 

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respect, the present case is similar to Vallejo. While
 

Vallejo left open the possibility that contractual liability
 

could be shifted to a permissive user, Vallejo also recognized
 

that the burden was upon the plaintiff insurer to prove that
 

liability had been so shifted. Here, the plaintiffs point
 

only to overbroad language that in no way mentions insurance
 

obligations. Thus, I would conclude that the plaintiff failed
 

to bear its burden of proving that collision damages were
 

validly shifted.
 

Contrary to the majority’s assertion, my approach is not
 

a method of invalidating the contract. It is, instead, a
 

recognition that, when choosing between valid constructions of
 

an ambiguous contract, we must choose the construction that
 

goes against the drafter of the ambiguous language. Here, the
 

construction offered by the defendant would not invalidate the
 

courtesy car agreement; rather, it would limit the scope of
 

the agreement.
 

IV
 

The majority chooses to construe the contract in a manner
 

that would be favorable to the plaintiffs who drafted the
 

ambiguous contract. I cannot join the majority’s decision to
 

find in favor of the plaintiffs when the agreement signed by
 

the defendant contained a provision that must be interpreted
 

as ambiguous or void against public policy. 


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I would hold that the defendant is not liable under the
 

courtesy car agreement. The plaintiffs have failed to carry
 

their burden of establishing that a valid contract existed and
 

of differentiating this case from the usual situation where a
 

permissive user of a car is involved in a collision.
 

Therefore, I would reverse and reinstate summary disposition
 

in favor of the defendant.
 

WEAVER and KELLY, JJ., concurred with CAVANAGH, J.
 

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