Court Opinion

ID: 9665216
Source: CourtListenerOpinion
Date Created: 2023-08-24 00:42:50.238014+00
Date Added: 2024-06-11T13:08:25.807465
License: Public Domain

Levin, J.
(concurring in part and dissenting in part). In these cases consolidated on appeal the principal question is the validity of the exception from nonowned automobile liability and uninsured motorist coverage when the person otherwise insured is driving or occupying a vehicle owned by a relative or a relative residing in the same household. I would hold that the so-called household exception is not invalid per se, but may be invalid as sought to be applied in particular cases.
In Powers v DAIIE, the household exception is invalid as the insurer would apply it.
In Deyarmond v Community Service Ins Co, Ester Deyarmond, rather than her son Steven, is the plaintiff. The exception is not invalid as applied to her.
In Auto Club Ins Ass’n v Nicholson, the exception is invalid as the insurer would apply it, but the insurer should be subject to liability for *644at most1
2one additional and not two additional $25,00Q/$50,000 coverages.
In Schiebout v Citizens Ins Co, I would remand for further factfinding and, because the majority does not reach the question, express no opinion on the question reserved in DAIIE v Widling, 420 Mich 549; 362 NW2d 227 (1984).
In Dennison v Wisniewski, where the facts parallel those in State Farm Mutual Automobile Ins Co v Ruuska, 412 Mich 321; 314 NW2d 184 (1982), the exception is invalid as applied.
i
The facts in Dennison parallel those in State Farm v Ruuska, supra, where this Court considered the validity of the exclusion from residual liability coverage when the policyholder was driving a vehicle owned by a relative residing in the same household. Three justices, in an opinion by Chief Justice Williams, were of the opinion that the clause was violative of the no-fault automobile liability act. I did not agree and wrote:
An insurer is not required by the no-fault act to provide portable coverage when the owner drives another insured vehicle.[2]
As set forth in the Ruuska syllabus, I agreed *645with their conclusion and said that "the exclusion in this case is unenforceable because it is unconscionable and contrary to the reasonable expectations of an insured where the insured, driving an automobile not owned or leased by him, has not been offered and has [not] declined to purchase a rider deleting the exclusion or a specific exception from the exclusion or coverage for 'frequent,’ 'regular,’ or other atypical use of nonowned automobiles.”
In Ruuska, Gloria Carlson owned an automobile with residual liability coverage of $25,000 per person, $50,000 per accident. Her father, in whose household she was living, owned an automobile covered by a separate insurance policy providing at least the coverage ($20,000 per person/$40,000 per accident) required by the no-fault act.
The accident occurred while Gloria Carlson was driving her father’s automobile. Her own automobile was not involved. Since the liability arising from the accident might have exceeded the coverage limits of her father’s policy, the question was whether Gloria Carlson’s policy was also applicable. State Farm, the insurer, said that liability was excluded by the insurance policy definition of a nonowned automobile as meaning an automobile " 'not owned by, registered in the name of, or furnished or available for the frequent or regular use of the named insured, his spouse, or any relative of either residing in the same household, other than a temporary substitute automobile.’ ” Id., 332.
Robert Dennison was a passenger on a motorcycle owned by Mitchell Wisniewski that was being operated by his son Myron Wisniewski. As in Ruuska, the child, who was driving the parent’s vehicle at the time of the accident, owned an automobile which he had insured for more than *646the statutory minimum. Myron had purchased policy limits of $50,000 per person/$100,000 per accident. The father, Mitchell, had purchased policy limits of $20,000/$40,000.
The exclusion from coverage in Dennison tracks closely the exclusion in Ruuska: a nonowned automobile is defined as meaning "any automobile or trailer, other than a temporary substitute automobile, not owned by, furnished or available for the frequent or regular use of the named insured, relative or other resident of the same household of such named insured . . .
For the reasons stated in Ruuska, I would hold that the exclusion in Dennison is not enforceable.
A policy of automobile insurance is not an ordinary contract. It is the classic contract of adhesion. As is apparent from the five cases being considered in this consolidated appeal and from the other cases we have seen over the years, the so-called household exception (or a variant that includes relatives not residing in the household)3 to the portability of residual liability and uninsured motorist coverage is generally written into all policies issued by all insurers. The household exception is imposed on all persons who purchase automobile insurance. There is no negotiation and no opportunity to purchase a waiver of the household exception.
There was a time when a manufacturer could *647exclude implied warranties. In Henningsen v Bloomfield Motors, Inc, 32 NJ 358; 161 A2d 69 (1960), the Supreme Court of New Jersey held both the manufacturer of an automobile and the dealer who sold it to the purchaser’s wife, who was driving the automobile, were subject to liability on an implied warranty. The court held invalid the attempted contractual limitation on the manufacturer’s warranties noting that all three major manufacturers of automobiles had contracted against the implied warranty of merchantability that otherwise would attach as an incident of a sale of an automobile. Today the rule is very clear that the manufacturer of a product cannot contract against its liability for a defect in the product.
An automobile insurance policy is a product manufactured by the insurance industry.4 It is *649purchased — like an automobile, washing machine, or a toaster — by a consumer who has a right to expect that it will not be defective. The courts have defined what constitutes a defect for manufactured products. It is, I believe, incumbent on the courts (see n 4) to determine when a policy of insurance is defective because it does not do the job that the consumer reasonably expects it to do.
Liability coverage for the insured, spouse, and relatives residing in the household while driving a nonowned automobile has now become standard in automobile liability policies. The issue whether the household exception as written is conscionable should be viewed in that context.
Gloria Carlson and Myron Wisniewski pur*650chased the amount of automobile liability insurance that they thought they needed having in mind their economic status. There is no reason to suppose that they connived with their fathers to have them purchase only the statutorily required policy limits or that the insurers were somehow or other taken advantage of when Gloria Carlson or Myron Wisniewski were driving their father’s automobile.
Yet the household exception as written would deny Gloria Carlson and Myron Wisniewski portable coverage — ordinarily applicable whenever they might drive an automobile belonging to someone else — when occasionally driving their fathers’ automobiles simply because they resided with him. In the situation perhaps most likely to occur, occasional use of an automobile belonging to a family member residing in the same household, one’s own policy is without force or effect. In the companion case of Deyarmond, the policy issued by Community Service Insurance Company, and in the companion case of Ruuska, the policy issued by Farm Bureau Mutual Insurance Company of Michigan, would exclude portable coverage when occasionally driving any relative’s automobile without regard to whether the relative resides in the same household.5
Much has changed since the household exception was devised a long time ago when it was not typical for there to be as many automobiles as there now are in a family. It is commonplace today for parents to require their children who continue to reside in the household who wish to have their own automobiles to earn the money needed to provide that luxury. The parent may continue to provide room and board, but the parent is not *651involved in the child’s automobile. The child purchases the automobile, keeps or fails to keep up the payments, has it repaired and is responsible for insuring it. In that very typical situation, neither the parents nor siblings should ordinarily be treated as at fault if the child fails to purchase or keep up the premium payments on the vehicle. In households with two earners there frequently will be situations where, although the two earners may be married, there will be separate bank accounts and separate responsibility for purchase of automobiles and automobile liability insurance.
This Court should decline to enforce as unconscionable an insurance industry practice that in effect makes parents, spouses, and children responsible to see to it that others in the household keep their automobiles insured and that premiums are timely paid, and that would exclude coverage, in the policy limits they have provided for themselves and other members of the household, while driving or occupying a vehicle owned by the other household member, even if, as in Ruuska and the companion case of Dennison, that vehicle is insured.
In Ruuska, 351-352,1 wrote:
The exclusion from coverage is apparently designed to guard against a person having coverage on one vehicle and no coverage, or less coverage, on another vehicle owned by him or regularly used by him. The exclusion seeks to protect the insurer against a policyholder failing to buy coverage on another vehicle he owns. To be effective, the provision must exclude an uninsured vehicle registered in the name of another that the insured regularly uses — a leased automobile. The exclusion is to this extent clearly reasonable and conscionable.
The exclusion is written so broadly, however, that it encompasses situations beyond the evil it is designed to guard against. In seeking to protect *652itself against overreaching by the insured, the insurer has overwritten the exclusion and failed to protect the insured who acts in good faith. The exclusion is aimed at a particular evil; it goes beyond reason and good conscience to exclude liability beyond the need for the exclusion.
When a court limits such an exclusion, it is subject to the charge that it is rewriting the policy. Implicit in the charge is the assumption that the insurer can draft the policy as it sees fit. Its power to do so is, however, restricted by the doctrines of unconscionability and reasonable expectations.22
An insured cannot purchase a rider deleting or a specific exception from the exclusion unless the insurer is willing to and offers to delete or make a specific exception upon payment of an additional premium. Nor can the insured reasonably be expected to purchase insurance on each automobile belonging to a relative or employer that he might potentially drive and on the automobiles of each neighbor or co-worker which a jury might decide he "frequently” or "regularly” uses.
A reasonable person would not expect the amount of liability coverage that he considers appropriate and purchased will not be in effect when he drives a family member’s automobile with the result that insurance protection is reduced to whatever amount of liability coverage, if any, the family member chose to purchase.
ii
Powers v DAIIE concerns the uninsured motorist coverage.
*653Wanda Powers was a passenger in her sister’s uninsured automobile. Her sister’s automobile was struck by another uninsured automobile. Both sisters lived with their mother who had purchased uninsured motorist coverage, $20,000/$40,000.
For purposes of uninsured motorist coverage, the term insured was defined as meaning the individual insured named in the policy (the mother, Louise Powers) and "while residents of the same household of such individual, the spouse and relatives of either.”
The policy excludes from uninsured motorist coverage bodily injury to an insured, i.e., including Wanda Powers, while occupying an automobile other than the insured vehicle and a nonowned automobile to which there is not applicable and available uninsured motorist coverage, but defines nonowned automobile in the same way the term is defined for residual liability purposes, namely as meaning an automobile "not owned by, furnished or available for the regular or frequent use of the named insured, relative or other resident of the same household of such named insured.”
The sister who owned an automobile and who did not choose to purchase any insurance should not be deemed to be a relative covered by the policy while driving or occupying her uninsured vehicle.6 Like Gloria Carlson and Myron Wisniewski, she had the "coverage” — no coverage — she chose to have.
The sister who was injured should, however, be viewed much as the New Jersey Supreme Court viewed Henningsen’s wife, who was driving her husband’s defective automobile and who, although not the purchaser or owner of the vehicle, never*654theless was permitted to bring an action based on an implied warranty of merchantability. The insurer chose to sell uninsured motorist coverage for the benefit not only of the named insured, but also for the benefit of a spouse and relative residing in the same household. The mother, Louise Powers, and the injured sister, Wanda Powers, are therefore essentially in the same position vis-á-vis the insurer.
For the reasons set forth in Ruuska and in this opinion regarding the companion case of Dennison, the insurer cannot conscionably be permitted to exclude from uninsured motorist coverage loss incurred while riding in a relative’s automobile that is uninsured.7
Louise Powers purchased for herself and her daughter the uninsured motorist protection she thought was needed, and could not reasonably have expected the coverage to be inapplicable because the uninsured motorist struck while her daughter was riding in her other daughter’s automobile.
The household exception would apply without regard to whether the automobile of the family member is insured. In all events, there is no reason to suppose that Wanda Powers or her mother Louise Powers were complicit in the other daughter’s automobile being uninsured. Possibly if they were complicit in some substantial way they should not be able to recover. Then perhaps the evil at which the household exception is aimed would have occurred.
in
Ester Deyarmond owned a 1978 Fairmont auto*655mobile insured for $20,000/$40,000 with Citizens Insurance Company. At the time of the accident, it was being driven by her son, William, who ran a stop sign, causing an accident which killed five persons. Citizens paid the policy limits of $40,000.
Ester Deyarmond commenced this action against Community Service Insurance Company which had insured a 1980 Mustang owned by her son, Steven. Ester Deyarmond was the named insured on the policy issued by Community Service covering the Mustang. Ester Deyarmond, being the named insured, somewhat confuses but does not change the essence of the matter because she was also a covered insured as a relative in respect to the nonowned Mustang. Both Steven Deyarmond, in whose name the Mustang was registered, and William Deyarmond, the driver of the Fairmont at the time of the accident, lived with their mother in the same household.
The issue, as in the other cases, concerns the nonowned automobile definition. The residual liability coverage under the Community Service policy covering the Mustang, $25,000 per person/$50,-000 per occurrence, applies to liability arising out of the ownership, maintenance, or use of an owned automobile or any nonowned automobile. But non-owned automobile is defined as meaning an automobile "not owned by or furnished for the regular use of either the named insured or any relative, other than a temporary substitute automobile.”8
On the same analysis that persuades me that Gloria Carlson in Ruuska was, and Myron Wisniewski in the companion case of Dennison should be, entitled to the full protection of the policy *656limits they purchased when they were driving their fathers’ automobiles, Ester Deyarmond could not reasonably expect coverage in an amount greater than she chose to purchase on her Fairmont automobile.
If William had brought this action rather than Ester, he probably would be entitled to the benefit of the coverage on the Mustang. He, like Wanda Powers, was a relative residing in the same household as another family member, his brother Steven and his mother Ester. William and Steven were, under the terms of the policy issued on the Mustang, insureds. There is no reason to suppose that William was complicit with his mother or Steven in obtaining less coverage on the Fairmont than on the Mustang.
William, however, is not the plaintiff in this action. Ester is the plaintiff, and it was she who chose the $20,000/$40,000 limits for the Fairmont.9
iv
In Nicholson, the driver was Keith Kron. He was driving his sister’s automobile which was insured with daiie. Two persons were killed. Daiie paid the policy limits of a $25,000/$50,000 policy, i.e., $50,000. Karen and Keith lived with their parents, each of whom owned an automobile that was also insured with daiie with the same policy limits of $25,000/$50,000.
In this action, daiie seeks a declaration that neither Karen nor Keith have any recourse under the parents’ policies and thus the Nicholson estate is not covered under the parents’ policies. The definition of named insured would have included Keith but not Karen; the term relative, for purposes of defining who is a named insured as to a nonowned automobile, is defined as including any *657relative who does not own an automobile. The term nonowned automobile is defined, essentially, as it is in the policies in the companion cases.
There are two possible bases of liability, the owner’s liability and the driver’s liability. Daiie discharged its obligation in respect to the owner’s (Karen’s) liability when it paid $50,000. As to Keith’s liability as driver, he is, because daiie chose to market its policies to include relatives, at least when not driving another household member’s automobile, an insured. For the same reason Wanda Powers is covered under her mother’s policy without regard to the household exception, Keith is covered under his parents’ policies without regard to that exception. The insurer’s exposure is, however, limited to two coverages because there are only two possible bases of liability, owner and driver.
In sum, if Karen had been driving, she could look to daiie only for $25,000/$50,000, the policy limits she chose — she could not expect additional "stacking” protection as a relative residing in her parents’ household. Keith, as an insured under the daiie policy, is entitled in respect to his liability as a driver at most to one additional $25,000/$50,000 coverage.
The briefs and arguments have in the main focused on the household exception to the non-owned automobile and uninsured motorist provisions of the automobile’s insurance policy. The "stacking” question implicates the "other insurance” clause set forth in most, perhaps all, automobile insurance policies. The lead opinion notes that the insurers "do not claim that their policies contain other-insurance clauses, but instead rely on the owned-vehicle exclusion to prevent stacking in cases in which an insured is driving an automobile owned by a resident relative.”10
*658Since the applicability of the "other insurance” clause has not been briefed and argued and is not dealt with in the lead opinion the stacking question cannot be definitively decided in these cases.11
v
Schiebout presents a somewhat different issue. In this case, I would remand for further factfinding on whether the uninsured truck was furnished to or available for the regular use of the named insured, plaintiff Herman James Schiebout.
Schiebout owned two automobiles that he had insured with Citizens. At the time of the accident, he was driving a dump truck owned by Recreational Center of Kent, Inc. It is alleged that Recreational Center had permitted Schiebout to use the truck and that it was thus a vehicle furnished or available for his regular use and accordingly excluded as a nonowned automobile. That presents a factual question.
It is conscionable for an insurer to exclude coverage in respect to regular use of a nonowned vehicle by the insured if such regular use is such as to constitute the evil at which the exclusion is aimed, namely, purchasing insurance on one vehicle and seeking coverage without further premium payment on a second vehicle regularly used.
There is still another issue, whether residual liability coverage can, consistent with the no-fault automobile liability act, be excluded as to an uninsured nonowned automobile. This was the issue that the Court reserved in DAIIE v Widling, supra.12 The issue is, as set forth in Widling, complicated by the changing statutory pattern. The issue is not addressed in the lead opinion and no opinion is expressed thereon._

 Subject to the possible applicability of the "other insurance” clause. See part rv, last two paragraphs.

 In a footnote I said:
Other provisions and policies of the act are implicated where a person insured or covered by a no-fault policy drives an uninsured vehicle. No opinion is intimated in that regard. [Id., 343, n 8.]
The issue suggested in the footnote arises in Schiebout, and is adverted to in part v of this opinion.

 As noted in a footnote in State Farm v Ruuska, supra, the policy in the companion case of Raska v Farm Bureau Mutual Ins Co, 412 Mich 355; 314 NW2d 440 (1982), written by Farm Bureau, did not limit the exception to a relative residing in the same household. By its terms, the Farm Bureau exception applied if one were to borrow, perhaps for the first time, an automobile belonging to a cousin or in-law. It would apply if the cousin or in-law’s automobile was parked on the driveway behind one’s own automobile, and the accident occurred when the only driving was moving the cousin or in-law’s automobile out of the driveway onto the street so as to gain access to one’s own automobile.

 The analysis in Henningsen applies to the automobile insurance industry as well as to the automobile manufacturing industry:
In the modern consideration of problems such as this, Corbin suggests that practically all judges are "chancellors” and cannot fail to be influenced by any equitable doctrines that are available. And he opines that "there is sufficient flexibility in the concepts of fraud, duress, misrepresentation and undue influence, not to mention differences in economic bargaining power” to enable the courts to avoid enforcement of unconscionable provisions in long printed standardized contracts. 1 Corbin on Contracts (1950) § 128, p 188. Freedom of contract is not such an immutable doctrine as to admit of no qualification in the area in which we are concerned. As Chief Justice Hughes said in his dissent in Morehead v People of State of New York ex rel Tipaldo, 298 US 587, 627; 56 S Ct 918; 80 L Ed 1347,1364 (1936):
"We have had frequent occasion to consider the limitations on liberty of contract. While it is highly important to preserve that liberty from arbitrary and capricious interference, it is also necessary to prevent its abuse, as otherwise it could be used to override all public interests and thus in the end destroy the very freedom of opportunity which it is designed to safeguard.”
That sentiment was echoed by Justice Frankfurter in his dissent in United States v Bethlehem Steel Corp, 315 US 289, 326; 62 S Ct 581; 86 L Ed 855, 876 (1942):
*648"It is said that familiar principles would be outraged if Bethlehem were denied recovery on these contracts. But is there any principle which is more familiar or more firmly embedded in the history of Anglo-American law than the basic doctrine that the courts will not permit themselves to be used as instruments of inequity and injustice? Does any principle in our law have more universal application than the doctrine that courts will not enforce transactions in which the relative positions of the parties are such that one has unconscionably taken advantage of the necessities of the other?
"These principles are not foreign to the law of contracts. Fraud and physical duress are not the only grounds upon which courts refuse to enforce contracts. The law is not so primitive that it sanctions every injustice except brute force and downright fraud. More specifically, the courts generally refuse to lend themselves to the enforcement of a 'bargain’ in which one party has unjustly taken advantage of the economic necessities of the other. . . .”
The traditional contract is the result of free bargaining of parties who are brought together by the play of the market, and who meet each other on a footing of approximate economic equality. In such a society there is no danger that freedom of contract will be a threat to the social order as a whole. But in present-day commercial life the standardized mass contract has appeared. It is used primarily by enterprises with strong bargaining power and position. "The weaker party, in need of the goods or services, is frequently not in a position to shop around for better terms, either because the author of the standard contract has a monopoly (natural or artificial) or because all competitors use the same clauses. His contractual intention is but a subjection more or less voluntary to terms dictated by the stronger party, terms whose consequences are often understood in a vague way, if at all.” Kessler, Contracts of Adhesion— Some Thoughts About Freedom of Contract, 43 Colum L Rev 629, 632 (1943); Ehrenzweig, Adhesion Contracts in the Conflict of Laws, 53 Colum L Rev 1072, 1075, 1089 (1953). Such standardized contracts have been described as those in which one predominant party will dictate its law to an undetermined multiple rather than to an individual. They are said to resemble a law rather than a meeting of the minds. Siegelman v Cunard White Star, 221 F2d 189, 206 (CA 2, 1955),
The warranty before us is a standardized form designed for mass use. It is imposed upon the automobile consumer. He takes it or leaves it, and he must take it to buy an automobile. No bargaining is engaged in with respect to it. In fact, the dealer through whom it comes to the buyer is without authority to alter it; his function is ministerial — simply to deliver it. The form warranty is not only standard with Chrysler but, as mentioned above, it is the uniform warranty of the Automobile Manufacturers Association. Members of the Association are: *649General Motors, Inc., Ford, Chrysler, Studebaker-Packard, American Motors (Rambler), Willys Motors, Checker Motors Corp., and International Harvester Company. Automobile Facts and Figures (1958 Ed., Automobile Manufacturers Association) 69. Of these companies, the "Big Three” (General Motors, Ford, and Chrysler) represented 93.5% of the passenger-car production for 1958 and the independents 6.5%. Standard & Poor (Industrial Surveys, Autos, Basic Analysis, June 25, 1959) 4109. And for the same year the "Big Three” had 86.72% of the total passenger vehicle registrations. Automotive News, 1959 Almanac (Slocum Publishing Co, Inc) p 25.
The gross inequality of bargaining position occupied by the consumer in the automobile industry is thus apparent. There is no competition among the car makers in the area of the express warranty. Where can the buyer go to negotiate for better protection? Such control and limitation of his remedies are mimical to the public welfare and, at the very least, call for great care by the courts to avoid injustice through application of strict common-law principles of freedom on contract. Because there is no competition among the motor vehicle manufacturers with respect to the scope of protection guaranteed to the buyer, there is no incentive on their part to stimulate good will in that field of public relations. Thus, there is lacking a factor existing in more competitive fields, one which tends to guarantee the safe construction of the article sold. Since all competitors operate in the same way, the urge to be careful is not so pressing, See Warranties of Kind and Quality, 57 Yale LJ 1389, 1400 (1948). [Henningsen v Bloomfield Motors, Inc, supra, 388-391.]

 See ns 3 and 8.

 See Keeton, Basic Text on Insurance Law, §§6.2, 6.3, pp 348-361; see also Atiyah, The Rise and Fall of Freedom of Contract (Oxford University Press, 1979), pp 731, 734.

 That sister was not injured. She had left the vehicle, which had become stalled, and had gone for aid before her automobile was struck by another uninsured motor vehicle.

 The injury was not caused by negligence of the sister who had not insured her automobile, but rather by the negligence of a driver of another uninsured automobile.

 Here as in Raska, see n 3 supra, the term relative is not limited to a relative residing in the same household. Community Service, as well as Farm Bureau, broadened its exclusion to include cousins and in-laws.

 It was Ester Deyarmond who insured the Mustang through another insurance company at greater policy limits, $25,000/$50,000.

 Ante, p 635.

 Civil Service Comm v Dep’t of Labor, 424 Mich 571, 609; 384 NW2d 728 (1986).

 See n 2.