Case Name: TEBO v. HAVLIK; BURNS v. CARVER
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1984-02-06
Citations: 418 Mich. 350
Docket Number: Docket Nos. 68033, 70881
Parties: TEBO v HAVLIK BURNS v CARVER
Judges: Cavanagh (participating as to Burns only) and Boyle, JJ., concurred with Brickley, J.
Reporter: Michigan Reports
Volume: 418
Pages: 350–422

Head Matter:
TEBO v HAVLIK BURNS v CARVER
Docket Nos. 68033, 70881.
Argued April 6, 1983
(Calendar Nos. 10, 11).
Decided February 6, 1984.
Rehearing denied as to Tebo, 419 Mich 1201.
Robert M. Tebo and Dorothy E. Tebo brought an action in the Saginaw Circuit Court under the dramshop act against Edward Havlik, the driver of an automobile which collided with a vehicle driven by Dorothy E. Tebo, and against Steven Brimmer and Gerald Forbes, owners of the Long Branch Bar, and Fred Denter, owner of the Oakley Liquor Bar, alleging that Havlik was intoxicated at the time of the accident and that the bar owners had sold or furnished alcoholic beverages to him while he was visibly intoxicated. Before trial, the plaintiffs entered into a "Covenant Not to Levy Execution on Judgment in Pending Action” with Havlik, under' which he was released of all liability in excess of $50,000, but was expressly "retained” in the action. Denter’s motion for summary judgment on the ground that Havlik was not retained as required by the dramshop act was denied, and his motion in limine to preclude the plaintiffs from submitting evidence of damages for which they received compensation under the no-fault act was granted by the trial court, Hazen R. Armstrong, J. The Court of Appeals, Danhof, C.J., and M. F. Cavanagh and Freeman, JJ., reversed the grant of the motion in limine (Docket No. 52297). Denter appeals the denial of his motion for summary judgment and the reversal of the grant of his motion in limine.
During the pendency of the appeal, on September 28, 1982, the Supreme Court decided Putney v Haskins, 414 Mich 181 (1982), holding that an allegedly intoxicated person named as a defendant in a dramshop action against a tavern owner is not "retained” in the action within the meaning of the "name and retain” provision of the dramshop act where a settlement of any kind is reached between the plaintiff and the intoxicated person before the litigation is concluded by trial or settlement; that at the time a settlement between the plaintiff and the intoxicated person is made the action against the tavern owner must be dismissed; and that continuation of the allegedly intoxicated defendant as a nominal party not formally dismissed from the suit is insufficient to satisfy the requirements of the act.
References for Points in Headnotes
[1, 2, 6] 45 Am Jur 2d, Intoxicating Liquors § 590.
Settlement with or release of person directly liable for injury or death as releasing liability under civil damage act. 78 ALR2d 998.
[3, 7, 8] 20 Am Jur 2d, Courts §§ 183,184, 231.
Validity and construction of "no-fault” automobile insurance plans. 42 ALR3d 229.
[4, 5, 11, 12] 7 Am Jur 2d, Automobile Insurance § 368.
22 Am Jur 2d, Damages § 206 et seq.
[5, 12] 45 Am Jur 2d, Intoxicating Liquors § 610.
[9] 4 Am Jur 2d, Appeal and Error § 309.
[10] 20 Am Jur 2d, Courts §§ 85, 231, 233 et seq.
Lois Burns, for herself and as administratrix of the estate of Frank Burns, deceased, brought a similar action in the Wayne Circuit Court under the dramshop act against Richard Piornack, II, the driver of an automobile which struck and killed Frank Burns, and against Richard B. Piornack, owner of the vehicle, and Vincent Carver and Brian Chase, owners of Jock’s Pub, alleging that Richard Piornack, II, was intoxicated at the time of the accident and that the bar owners had sold or furnished alcoholic beverages to him while he was visibly intoxicated. On May 21, 1982, the plaintiff executed a "Release and Settlement of Claim” with Richard Piornack, II, which "retained” him in the action. The trial court, John H. Hausner, J., granted Carver and Chase’s motion for summary judgment on the basis of the holding in Putney. The Supreme Court granted the plaintiff’s application for leave to appeal prior to decision by the Court of Appeals.
In an opinion by Justice Brickley, joined by Justices Cavanagh (as to Burns only) and Boyle, and separate concurrences by Chief Justice Williams and Ryan, the Supreme Court held:
The rule that a settlement in a dramshop action between the plaintiff and an allegedly intoxicated defendant will result in a dismissal of the action against the tavern owner applies to actions where the settlement was entered into after the date of decision in the case announcing the rule, September 28, 1982. The no-fault act does not alter the common-law rule that recovery of damages from a tortfeasor is not reduced by receipt of money by the plaintiff from other sources in compensation for his injuries; under the act, duplicative recovery is limited only where the limitation would benefit a no-fault insurer, thus providing an incentive for lower insurance rates.
Justice Brickley wrote:
1. The dramshop act requires that an allegedly intoxicated defendant be retained in a dramshop action as an interested party defendant until litigation is concluded so as to prevent fraud and collusion by ensuring that the defendant will have a direct financial stake in personally testifying, examining witnesses, and arguing that his actions were not negligent. Once liability has been fixed, as by a settlement, the incentive is gone even though the defendant is "retained” as a nominal defendant.
2. Until this construction of the dramshop act was announced by the Supreme Court, however, the interpretation of the act by the Court of Appeals permitted such settlements so long as the defendant was nominally retained. Because of the unquestioned status of such settlements before the announcement of the new rule, it would be unjust to permit retroactive application of the new rule.
3. The Legislature intended that persons who participate in the no-fault scheme be required to give up the possibility of redundant recovery for injuries in exchange for lower insurance rates. Analysis of the setoff provisions of the act reveals a careful effort to limit such recovery only where the limitation would- benefit a no-fault insurer; there is no indication that the Legislature intended to benefit dramshop defendants or their insurers. Abolition of the collateral-source rule with respect to dramshop defendants would do nothing to fulfill the legislative goal of the no-fault act.
Chief Justice Williams concurred with Justice Brickley except that he agreed with Justice Levin as to the meaning of denial of application for leave. to appeal by the Supreme Court.
Justice Ryan concurred. When a Michigan appellate court construes a statute and unequivocally declares what it means the bench and bar are obligated to accept the construction as authoritative, and lawyers can be expected to render professional advice consistent with the construction without assuming that the construction will be overruled. Where the Supreme Court declines to review a decision of an intermediate appellate court, the bench and bar should be free to accept and act upon that court’s interpretation, no matter how aberrant, with confidence that the rules will not be later rewritten retroactively. When the Supreme Court does overrule a statutory interpretation by an intermediate appellate court, it must determine whether fundamental fairness requires that it give its decision retroactive effect or to make the effect prospective only. In this case, to apply the rule retroactively would penalize those lawyers and their clients who relied on a contrary rule an nounced by the Court of Appeals. Prospective application will result in the least injustice.
Justice Levin, joined by Justice Kavanagh, concurred in Burns and dissented in part in Tebo. He agreed that the application of the rule should be prospective, but would not suggest that a decision of the Supreme Court disapproving or overruling an unquestioned or uncontradicted interpretation by the Court of Appeals should invariably be given prospective effect. He did not agree that the common-law collateral-source rule should be extended to include personal injury protection benefits paid to the owner of an automobile by a no-fault insurer.
1. It should not be suggested that an unquestioned or uncontradicted interpretation by the Court of Appeals may invariably be relied on, because that is inconsistent with the concept that a denial of leave to appeal by the Supreme Court does not intimate anything regarding the Court’s view of the merits of a decision of the Court of Appeals. There is considerable institutional pressure to settle cases. Settlement is the norm, trial the exception. In that climate, it would be difficult for a lawyer to maintain, against the tide of professional and judicial opinion, that because a Court of Appeals decision might be overruled he could not safely advise his clients to settle a lawsuit on the authority of that decision. In this context, therefore, the clients of lawyers who accommodated the institutional juggernaut and accepted as the governing rule a decision of the Court of Appeals that made it possible to settle one part of a three-cornered dispute without the consent of all the parties should not be penalized by a retroactive application of the Supreme Court case disapproving that decision and the disapproving case should be given prospective effect only.
2. The no-fault act substitutes one automobile insurer, who may be the no-fault/liability insurer of the injured person’s vehicle or of some other vehicle, for another, the liability insurer of a negligently operated vehicle, as the source of reparations for wage/work loss within the statutory limit and medical expense. Before the enactment of the no-fault act, amounts paid by a liability insurer of a negligently operated vehicle for such elements of damage would, to avoid compensating an injured person in an amount greater than his loss, have been subtracted from damages payable by a non-motorist tortfeasor, e.g., an automobile or parts manufacturer. There should not he ascribed to the Legislature, in changing the automobile insurer that reimburses for wage/work loss and medical expense, an intent to bring about, through extension of common- law doctrine (the collateral-source rule), double recovery of work loss and medical expense and a parallel enlargement of the liability of non-motorist tortfeasors. Damages and reparations required to be paid by the common and statutory law of this state — damages in a tort action, PIP benefits pursuant to the no-fault act — are not generated from independent, separate, or collateral sources, but rather from the same source, namely the public policy of this state. Damages and reparations are payable now, as before the enactment of the no-fault act, out of a pool of money funded with premiums paid by owners and drivers of motor vehicles to discharge the liability imposed on them by the law of this state. It is not consistent with the policy of the common law, or with the purpose of the no-fault act to provide a more cost-effective reparations system, to read the no-fault act to permit duplicative recovery of benefits, at common law collectible but once, required to be paid by the law of this state. The rationale of the collateral-source rule, judicially promulgated before the no-fault act was enacted, does not inexorably require extension of the rule to include PIP benefits; it should not be so extended absent evidence of a legislative purpose to provide, as part of the legislative program embodied in the no-fault act, for such double recovery and increase in the exposure of non-motorist tortfeasors.
3. The rule requiring the subtraction from verdicts against tortfeasors of amounts received from other sources that are required to provide reparations for the same loss by the law of this state should apply to a verdict against a tavern as well as a verdict against any other non-motorist tortfeasor.
The summary judgment in Burns is reversed, and the case is remanded for trial. In Tebo, the motion for summary judgment is denied, the decision of the Court of Appeals is affirmed, and the case is remanded for trial.
109 Mich App 413; 311 NW2d 372 (1981) affirmed.
Opinion by Brickley, J.
1. Intoxicating Liquors — Dramshop Act — Name and Retain.
The rule that an allegedly intoxicated person who is named as a defendant in a dramshop action against a tavern owner is not retained in the action within the meaning of the dramshop act where a settlement of any kind is reached between the plaintiff and the intoxicated person before the litigation is concluded by trial or settlement; that at the time a settlement is made between the plaintiff and the intoxicated person the action against the tavern owner must be dismissed; and that the fact that the allegedly intoxicated defendant continues as a nominal party and is not formally dismissed from the action is insufficient to satisfy the name and retain requirements of the act applies to actions where the settlement was entered into after September 28, 1982, the date the rule was announced by the Supreme Court (MCL 436.22; MSA 18.993).
2. Intoxicating Liquors — Dramshop Act — Name and Retain.
The dramshop act requires that an allegedly intoxicated defendant be retained in a dramshop action as an interested party defendant until litigation is concluded so as to prevent fraud and collusion by ensuring that the defendant will have a direct financial stake in personally testifying, examining witnesses, and arguing that his actions were not negligent; once liability has been fixed, as by a settlement, the incentive is gone even though the defendant is "retained” as a nominal defendant (MCL 436.22; MSA 18.993).
3. Courts — Court of Appeals — Decisions — Binding Rule.
A decision by a majority of the judges of any panel of the Court of Appeals is a decision of that Court and controls statewide until contradicted by another panel of the Court of Appeals or reversed or overruled by the Supreme Court (GCR 1963, 800.4).
4. Torts — No-Fault Act — Collateral-Source Rule.
The no-fault act does not alter the common-law rule that recovery of damages from a tortfeasor is not reduced by receipt of money by the plaintiff from other sources in compensation for his injuries; under the act, duplicative recovery is limited only where the limitation would benefit a no-fault insurer (MCL 500.3135[2]; MSA 24.13135[2]).
5. Torts — No-Fault Act — Collateral-Source Rule.
The Legislature intended that persons who participate in the no-fault scheme be required to give up the possibility of redundant recovery for injuries in exchange for lower insurance rates, but such recovery is limited only where the limitation would benefit the no-fault insurer; in dramshop actions, abolition of the collateral-source rule would benefit the dramshop defendant and would do nothing to fulfill the goal of the no-fault act (MCL 500.3101 et seq.; MSA 24.13101 et seq.).
Concurring Opinion by Ryan, J.
6. Intoxicating Liquors — Dramshop Act — Name and Retain — Court of Appeals — Decisions.
The rule that nominal retention of an allegedly intoxicated defendant in a dramshop action is insufficient to satisfy the “name and retain” provision of the dramshop act where a settlement is reached between the plaintiff and the defendant should be applied prospectively only from September 28, 1982, the date on which the rule was announced, where the bench and bar were previously invited to accept a contrary construction of the statute by ñve panels of the Court of Appeals in the course of six years, because prospective application will result in the least injustice (MCL 436.22; MSA 18.993).
Dissenting Opinion by Levin, J.
7. Courts — Court of Appeals — Decisions — Binding Rule.
A decision of the Court of Appeals is a binding precedent which must be followed by trial courts unless and until there is a conflicting decision by another panel of the Court of Appeals or until it is disapproved or overruled by the Supreme Court, but (with the possible exception of a decision en banc) it is not a rule of law within the doctrine of stare decisis, because it is not binding on either the Supreme Court or other panels of the Court of Appeals.
8. Courts — Court of Appeals — Decisions — Supreme Court — Stare Decisis.
A decision by the Supreme Court which disapproves or overrules a decision by the Court of Appeals is not a declaration of a new rule or the overruling of established precedent, because a decision of the Court of Appeals (with the possible exception of a decision en banc) is not a rule of law within the doctrine of stare decisis.
9. Courts — Supreme Court — Leave to Appeal Denied.
A denial of leave to appeal by the Supreme Court is not an expression of opinion with regard to the analysis or conclusion of the Court of Appeals.
10. Courts — Supreme Court — Decisions — Retroactivity.
A decision by the Supreme Court is generally retroactive unless it overrules established precedent or otherwise declares a new rule; retroactivity of a new rule may be limited.
11. Insurance — No-Fault — Damages — Collateral-Source Rule.
Personal injury protection beneñts are statutory reparations which substitute for common-law damages and are not a source of recovery collateral to the primary source of recovery for medical expenses and wage losses resulting from an automobile accident; the collateral-source rule, which prohibits the setoff of recoveries from collateral sources, such as insurance policies on which the tortfeasor has not paid the premium, against the recovery from a tortfeasor should not be applied to personal injury protection beneñts (MCL 500.3101 et seq.; MSA 24.13101 et seq.).
12. Insurance — No-Fault — Damages — Dramshop Actions.
Under circumstances giving rise to a dramshop action, a no-fault insurer and a tavern owner have a common burden of liability for payment of medical expenses and wage losses to a person injured in an automobile accident; thus, personal injury protection beneñts, where duplicative of a recovery in a dramshop action, should be subtracted from a verdict against the tavern owner (MCL 436.22, 500.3101 et seq.; MSA 18.993, 24.13101 et seq.).
Smith, Bovill, Fisher, Meyer & Borchard, P.C. (by James T. Borchard and David B. Meyer), for plaintiffs Tebo.
Philip S. Della Santina for defendants Brimmer and Forbes.
Smith & Brooker, P.C. (by Michael J. Huffman, Thomas A. Connolly, and Robert A. Jarema), for defendant Denter.
Lopatin, Miller, Freedman, Bluestone, Erlich, Rosen & Bartnick (by Stephen G. Silverman and Richard E. Shaw) for plaintiff Burns.
Grenn & Grenn (by Frederick M. Grenn) for defendants Carver and Chase.
Amicus Curiae:
Ulanoff Ross, Summer & Wesley, P.C. (by Stuart A. Ulanoff and Jerald R. Lovell), for Stonewall Insurance Company.

Opinion:
Brickley, J.
These cases involve the question whether this Court's decision in Putney v Haskins, 414 Mich 181; 324 NW2d 729 (1982), interpreting the name and retain provision of the dramshop act, is to be given retroactive application.
In Burns, plaintiff filed her complaint on February 26, 1981, alleging that plaintiff's decedent died as a result of injuries sustained in an automobile collision with Richard Piornack, II. Plaintiff also alleged that appellees Vincent Carver and Brian Chase, owners of Jock's Pub, were liable for serving intoxicating beverages to Piornack in violation of the dramshop act, MCL 436.22; MSA 18.993. On May 21, 1982, plaintiff executed a "Release and Settlement of Claim" with Piornack. The agreement provided that in exchange for $20,000 Piornack was to be "retained" in the action, but released from all liability. Following this Court's decision in Putney, appellees moved for and were granted summary judgment. On February 18, 1983, we granted plaintiff's application for leave to appeal prior to decision by the Court of Appeals. 417 Mich 887 (1983).
In Tebo, plaintiff filed her complaint on January 17, 1977. She alleged that she suffered injuries as a result of a collision with an automobile driven by Edward Havlik. An amended complaint was filed, naming as defendants Steven Brimmer and Gerald Forbes, owners of the Long Branch Bar, and Fred Denter, owner of the Oakley Liquor Bar, predicating their liability on the provisions of the dramshop act. On August 4, 1977, plaintiff and Havlik entered into a "Covenant Not to Levy Execution on Judgment in Pending Action", under which Havlik was released of all liability in excess of $50,000, but he was expressly "retained" in the action. Denter's motion for summary judgment on the grounds that plaintiff had failed to retain Havlik as required by the dramshop act was denied on December 7, 1978. Denter subsequently brought a motion in limine to preclude plaintiff from submitting evidence of any damages for which plaintiff received compensation under the no-fault act, MCL 500.3101 et seq.; MSA 24.13101 et seq. The trial court granted this motion and was reversed on interlocutory appeal. 109 Mich App 413; 311 NW2d 372 (1981). Putney was decided while Denter's application for leave to appeal was pending. Denter moved for summary judgment in this Court pursuant to GCR 1963, 865.1(7). We granted leave to appeal to consider both the motion for summary judgment and the decision of the Court of Appeals. 417 Mich 887 (1983).
In Putney v Haskins, supra, p 188, this Court construed the "name and retain" provision of the dramshop act. We found in the statutory language a legislative mandate that the allegedly intoxicated person be "retained as an interested party defendant until the litigation [is] concluded". Only by requiring the allegedly intoxicated person to remain at risk could the name and retain provision's purpose of preventing fraud and collusion be completely fulfilled. As we stated:
"One of the ways the 'name and retain' provision prevents fraud and collusion is by ensuring that the defendant will have a direct financial stake in personally testifying, examining witnesses, and arguing that he did not act in a negligent manner. Once the defendant's liability is fixed and limited, he has no incentive to produce witnesses or testimony tending to prove that he was not 'visibly intoxicated' on the date in question. The dramshop defendant may have much more difficulty in identifying, locating, and obtaining favorable testimony from the defendant's friends or acquaintances who observed him at relevant times."
The agreements in the present cases obviously do not retain the allegedly intoxicated persons within the meaning of the dramshop act. Liability has been'fixed. If Putney is deemed to be retroactive, plaintiffs' actions must be dismissed.
Although it has often been stated that the general rule is one of complete retroactivity, this Court has adopted a flexible approach.
" 'It is evident that there is no single rule of thumb which can be used to accomplish the maximum of justice in each varying set of circumstances. The involvement of vested property rights, the magnitude of the impact of decision on public bodies taken without warning or a showing of substantial reliance on the old rule may influence the result.' Williams v Detroit, 364 Mich 231, 265-266; 111 NW2d 1 (1961) (opinion of Justice Edwards in which Justices Talbot Smith, T. M. Kavanagh and Souris concurred).
"The benefit of flexibility in opinion application is evident. If a court were absolutely bound by the traditional rule of retroactive application, it would be severely hampered in its ability to make needed changes in the law because of the chaos that could result in regard to prior enforcement under that law." Placek v City of Sterling Heights, 405 Mich 638, 665; 275 NW2d 511 (1979).
Appreciation of the effect a change in settled law can have has led this Court to favor only limited retroactivity when overruling prior law. Thus, when the doctrine of imputed negligence was overruled in Bricker v Green, 313 Mich 218; 21 NW2d 105 (1946), the decision was applied only to the case before the Court and to pending and future cases. When the doctrine of charitable im munity was overruled in Parker v Port Huron Hospital, 361 Mich 1; 105 NW2d 1 (1960), the retroactive effect of the decision was limited to the parties before the Court. Even where statutory construction has been involved, this Court has limited the retroactivity of a decision when justice so required. See Gusler v Fairview Tubular Products, 412 Mich 270; 315 NW2d 388 (1981); Franges v General Motors Corp, 404 Mich 590; 274 NW2d 392 (1979).
The question before us is whether our interpretation of a statute should be applied retroactively to the statute's effective date. In Putney, we found the clear import of the statute to be to require the plaintiff to name and retain the allegedly intoxicated person at risk. Were Putney a case of first impression in the Michigan courts, we would hold that the statutory language gave plaintiffs no reason to believe that the settlements entered into would comply with the "retain" portion of the statute. Putney, however, was not a case of first impression in the Michigan courts.
In Buxton v Alexander, 69 Mich App 507; 245 NW2d 111 (1976), lv den 399 Mich 827 (1977), the plaintiff was struck by an automobile and brought suit against the driver and the bar owners who allegedly served the driver while he was visibly impaired. Four days prior to trial, the plaintiff entered into an "Indemnification Agreement", under which the driver's liability was limited to $19,000. The driver was expressly "retained" in the action. In analyzing the effect of this agreement on the plaintiff's action against the bar owners, the court looked to the purpose of the name and retain provision as stated by the Court of Appeals in Salas v Clements, 57 Mich App 367; 226 NW2d 101 (1975), rev'd 399 Mich 103; 247 NW2d 889 (1976), to avoid collusion and perjury. Extrapolating from that purpose, the Court stated:
"Balanced against this purpose is the policy of the law to encourage settlement of litigation. The statute is not intended to prohibit settlement between a plaintiff and his intoxicated tortfeasor except where claims against tavern owners are first or simultaneously settled. On the contrary, the language of the statute indicates only an intention to require the intoxicated tortfeasor to be retained as a defendant. In enacting this 'special interest legislation' the Legislature has manifested an intention to prohibit a plaintiff from going to a jury with only a claim versus a tavern. The plaintiff must not only name but must retain the tortfeasor in the lawsuit. But that is all the statute requires. To prohibit a plaintiff from a 'hold harmless' type settlement, as was used here, would impede the prompt disposition of litigation and force trials of cases that would otherwise be settled." Buxton, supra, p 511.
Of course, Buxton was implicitly overruled by Putney. Until Putney was decided by this Court, however, Buxton remained as the uncontradicted interpretation of the name and retain provision. Nonetheless, it is argued that any reliance by plaintiffs on Buxton was misplaced because it was a decision of the Court of Appeals, rather than one of this Court. This argument fails to take into account the structure of the Michigan appellate system.
A decision of a panel of the Court of Appeals is a decision of the Court. GCR 1963, 800.4. A decision by any panel of the Court of Appeals is, therefore, controlling statewide until contradicted by another panel of the Court of Appeals or reversed or overruled by this Court. See In the Matter of Hague, 412 Mich 532; 315 NW2d 524 (1982); Hackett v Ferndale City Clerk, 1 Mich App 6; 133 NW2d 221 (1965). While the possibility of reversal or contradiction may lessen a claim of reliance, it does not preclude it. And, although the possibility of the contradiction of Buxton by another panel of the Court of Appeals existed, that did not happen. Subsequent expressions by panels of the Court of Appeals on the same issue did nothing to lessen the authority of Buxton. See Cussans v Harris, 118 Mich App 567; 325 NW2d 793 (1982); Putney v Gibson, 94 Mich App 466; 289 NW2d 837 (1979), rev'd sub nom Putney v Haskins, supra; Rowan v Southland Corp, 90 Mich App 61; 282 NW2d 243 (1979); Denham v Bedford, 82 Mich App 107; 266 NW2d 682 (1978), aff'd 407 Mich 517; 287 NW2d 168 (1980). In light of the unquestioned status of Buxton at the time Putney was decided by this Court, it would be unjust to apply Putney retroactively to persons other than those before the Court in that case.
In contrast to the harsh effect which the full retroactivity of Putney would have on injured plaintiffs, prospective application will have little effect on dramshop defendants in those pending cases where settlement agreements have been made, even though the defense of Putney will be unavailable. For them, the law will simply remain as it was from 1976 to 1982. We hold that Putney v Haskins is applicable to all cases where settlement agreements are entered into with the allegedly intoxicated person after the date of decision in Putney.
In granting leave to appeal to defendant Denter, we directed that the following question be briefed: "[Wjhether the no-fault insurance act, MCL 500.3101 et seq.; MSA 24.13101 et seq., alters the common-law collateral-source rule". We answer that narrow question in the negative.
Section 3135(2) of the no-fault act provides:
"(2) Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance, or use within this state of a motor vehicle with respect to which the security required by section 3101(3) and (4) was in effect is abolished except as to:
"(c) Damages for allowable expenses, work loss, and survivor's loss as defined in sections 3107 to 3110 in excess of daily, monthly, and 3-year limitations con tained in those sections. The party liable for damages is entitled to an exemption reducing his or her liability by the amount of taxes "that would have been payable on account of income the injured person would have received if he or she had not been injured." MCL 500.3135(2); MSA 24.13135(2).
In the trial court, Denter moved to exclude all testimony regarding plaintiffs economic losses on the grounds that the above provision barred tort damages to the extent plaintiff had received compensation under the no-fault insurance act. The trial court granted the motion, and on interlocutory appeal the Court of Appeals reversed, relying on Citizens Ins Co of America v Tuttle, 411 Mich 536; 309 NW2d 174 (1981), rev'g 96 Mich App 763; 294 NW2d 224 (1980).
In Tuttle, the motorist plaintiff brought suit for damages sustained when he collided with the defendant's negligently kept cow. This Court held that because the cause of action against the defendant arose out of negligent cow-keeping, the plaintiffs action was not barred by § 3135(2) of the act. We stated:
"Only persons who own, maintain or use motor vehicles can be subject to tort liability for injuries or damage caused by the ownership, maintenance or use of a .motor vehicle [under the no-fault act]. The non-motorist tortfeasor cannot be subject to tort liability for injuries or damage caused by the ownership, maintenance or use of a motor vehicle. The abolition of tort liability for injuries or damage caused by (arising from) the ownership, maintenance or use of a motor vehicle, therefore, does not abolish the tort liability of the non-motorist tortfeasor." 411 Mich 545-546.
In the present case, Denter did not own, maintain, or use the motor vehicle that caused plain tiffs injuries. His liability, instead, arises out of his alleged sale of intoxicating liquors to a visibly intoxicated person. Just as the tort liability bar of § 3135 is inapplicable, so too is the remainder of the act inapplicable.
Notwithstanding that the language of the no-fault insurance act does not apply to the present case, Denter contends that the act manifests a legislative intent to prohibit recovery of damages in all tort actions where the plaintiff has been compensated by insurance. In short, Denter requests abolition of the collateral-source rule. We find no reason in the no-fault insurance act to comply with that request.
The common-law collateral-source rule provides that the recovery of damages from a tortfeasor is not reduced by the plaintiffs receipt of money in compensation for his injuries from other sources. Motts v Michigan Cab Co, 274 Mich 437; 264 NW 855 (1936); Perrott v Shearer, 17 Mich 48 (1868). In the context of insurance, the rationale for the rule is that the plaintiff has given up consideration and is entitled to the contractual benefits. The plaintiffs foresight and financial sacrifice should not inure to the benefit of the tortfeasor, who has contributed nothing to the plaintiffs insurance coverage. Similarly, gratuitous compensation should not inure to the benefit of the tortfeasor. The tortfeasor has contributed nothing, except the activity which caused the plaintiffs injuries.
The no-fault insurance act was a radical restructuring of the rights and liabilities of motorists. Through comprehensive action, the Legislature sought to accomplish the goal of providing an equitable and prompt method of redressing injuries in a way which made the mandatory insurance coverage affordable to all motorists. See Shav ers v Attorney General, 402 Mich 554; 267 NW2d 72 (1978), cert den 442 US 934 (1979). It is in light of that goal that the setoff provisions of the no-fault insurance act must be viewed.
The obvious purpose of the setoff provisions of the act is to eliminate duplicate benefits. The act "reduces the amount that the insurance companies must pay out, making it possible for them to reduce the amount that they must charge, and it does so only in those situations where benefits are redundant". O'Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524, 546; 273 NW2d 829 (1979). In effect, the Legislature made a trade-off. Those who were required to participate in the no-fault scheme gave up the possibility of redundant recoveries, but they were intended to receive the benefit of lower insurance rates.
Analysis of the setoff provisions in the no-fault act reveals a careful legislative effort to limit duplicative recovery only where the limitation would benefit a no-fault insurer, thus providing an incentive for lower insurance rates. Section 3116 of the act requires that personal injury protection no-fault benefits be reduced to the extent the insured has received equivalent compensation from tort judgments arising from accidents outside of the state, from accidents with uninsured motorists, and from intentionally caused harm. This reduction of benefits payable inures to the benefit of the injured party's no-fault insurer in situations where the tortfeasor would normally not be within the coverage of the no-fault act. Similarly, § 3109 of the act provides that personal injury protection no-fault benefits are to be reduced by the amount of governmental benefits provided or required by law to be provided to the injured insured. Again, when the additional compensation to the insured has come from a source outside the scope of the no-fault act, the no-fault insurer benefits by having to pay less compensation to the insured.
Finally, § 3135 of the act provides that tort judgments against persons arising from their ownership, maintenance, or use of a motor vehicle within the scope of the no-fault act are allowable only to the extent they exceed personal injury protection no-fault benefits received by the injured party under § 3107 to 3110 of the act. Although under §3135 it is the liability insurer of the tortfeasor who benefits, it is still, normally, a no-fault insurer.
As relevant to the present action, the dramshop defendant Denter has not participated in the no-fault scheme. Denter asks us to turn around the policy of the no-fault act to benefit a tortfeasor rather than a no-fault insurer. This would not only be an unwarranted extension of the no-fault act, but it would be contrary to its intent. Abolition of the collateral-source rule as to him would do nothing to fulfill the legislative goal of lower no-fault insurance rates. The careful structure of the no-fault act's setoff provisions evinces no legislative intent to benefit dramshop defendants and their insurers.
In Burns, the summary judgment is reversed, and the cause is remanded for trial.
In Tebo, pursuant to GCR 1963, 865.1(7), the motion for summary judgment is denied, the decision of the Court of Appeals is affirmed, and the cause is remanded for trial.
Cavanagh (participating as to Burns only) and Boyle, JJ., concurred with Brickley, J.
For a review of this Court's treatment of retroactivity see Moody, Retroactive Application of Law-Changing Decisions in Michigan, 28 Wayne L Rev 439 (1982).
That is not to say that a denial of leave to appeal fixes the state of the law or strengthens the case for the prospectivity of a later overruling case. A denial of leave to appeal has no precedential value. See Frishett v State Farm Mutual Automobile Ins Co, 378 Mich 733 (1966). We, therefore, ascribe no weight to our denial of leave to appeal in Buxton. What must be given some weight, however, is that an uncontradicted decision of the Court of Appeals must be followed by the circuit courts.
As our brother Justice Levin notes, the institutional pressure towards settlement is great. In light of the oft-stated policy of this Court favoring settlement, see, e.g., Brewer v Payless Stations, Inc, 412 Mich 673, 679; 316 NW2d 702 (1982); Ogden v George F Alger Co, 353 Mich 402, 407; 91 NW2d 288 (1958), a party's reliance on Buxton can hardly be deemed unreasonable.
We find United States v Estate of Donnelly, 397 US 286; 90 S Ct 1033; 25 L Ed 2d 312 (1970), cited in support of full retroactivity, to be distinguishable. There, in 1960, the respondents purchased property subject to federal tax liens in reliance on the Court of Appeals decision in Youngblood v United States, 141 F2d 912 (CA 6, 1944), where the 6th Circuit had held certain federal tax liens invalid for failing to comply with Michigan filing requirements. In United States v Rasmuson, 253 F2d 944 (CA 8, 1958), however, the 8th Circuit held that such federal tax liens need not comply with local law. The Supreme Court ultimately agreed with the position taken by the 8th Circuit. United States v Union Central Life Ins Co, 368 US 291; 82 S Ct 349; 7 L Ed 2d 294 (1961). In holding that Union Central was to be retroactively applied to the respondents in Donnelly, the Supreme Court stated:
"Deviant rulings by circuit courts of appeals, particularly in apparent dictum, cannot generally provide the 'justified reliance' necessary to warrant withholding retroactive application of a decision construing a statute as Congress intended it. In rare cases, decisions construing federal statutes might be denied full retroactive effect, as for instance where this Court overrules its own construction of a statute, cf. Simpson v Union Oil Co, 377 US 13, 25; 84 S Ct 1051; 12 L Ed 2d 98 (1964), but this is not such a case." Donnelly, supra, 397 US 295.
Even assuming that we would have decided Donnelly as did the United States Supreme Court, and ignoring the structural differences between the federal courts and the courts of Michigan, Buxton cannot be considered a "deviant" decision. It was uncontradicted.