Court Opinion

ID: 9694164
Source: CourtListenerOpinion
Date Created: 2023-08-25 17:26:34.135325+00
Date Added: 2024-06-11T18:19:56.955892
License: Public Domain

T. M. Burns, P. J.
The question in this case is whether plaintiff, Ida Maxman,1 injured when the car she was driving was struck in the rear, may maintain an action against the insurer of the other driver based on misrepresentation of authority. To see how this question arises, it is necessary to set out a detailed statement of facts.
James Lihov, Farmers Insurance Exchange’s insured, and plaintiff were involved in an automobile accident on February 10, 1969. The Lihov car struck plaintiffs vehicle from the rear. There has never been any question of Lihov’s responsibility for the accident, the only question was the amount of plaintiffs loss.
Plaintiff retained counsel the day after the accident and the attorneys immediately notified Mr. Lihov and the present defendant. From that point on, plaintiffs attorney dealt only with representatives of Farmers. Settlement negotiations were *119begun immediately and continued until shortly before suit was filed against Mr. Lihov.
Mr. Lihov died six days after the accident from causes unrelated to the accident. Neither plaintiff nor defendant knew of this fact until after Lihov’s estate had been closed and the period for reopening it for presentation of a claim under the Probate Code had passed. Although the suit against Mr. Lihov was begun within the three-year statute of limitations, it was found to be time barred by the trial court under the Probate Code. This Court affirmed, Maxman v Goldsmith, 55 Mich App 656; 223 NW2d 113 (1974), and plaintiff abandoned the Supreme Court appeal to start this suit, 394 Mich 758 (1975).
In the present case, plaintiff filed a two-count complaint naming Farmers as the defendant. The trial court again granted summary judgment, although the basis of the motion is not readily apparent, counsel and court both having failed to specify the subrule which was being relied upon, GCR 1963, 117.2(1) or (3).
Only the first count is being pursued in this appeal. Plaintiff has alleged that Farmers misrepresented its authority to settle plaintiff’s original claim against Lihov, after Lihov’s death and after his estate had been closed and the time for reopening it had passed. It is this representation of authority, where none existed, which plaintiff claims has caused her injury. She is not alleging that defendant is directly liable for the automobile accident, although this will be the measure of damages in the misrepresentation action, nor is she claiming, at this point, that the defendant concealed Lihov’s death. The suit is based solely on a misrepresentation of Farmers authority to settle a claim where no authority existed.
*120The trial court granted summary judgment to Farmers after receiving briefs and hearing arguments. The basis of the motion is not readily apparent.2 Judge Bashara has written to affirm the summary judgment on the basis of GCR 1963, 117.2(3), no issue of material fact. We cannot agree.
Certain evidentiary facts are not disputed. Farmers acted for Lihov only under his policy of insurance, not as a volunteer. Neither Farmers nor plaintiff knew of Lihov’s death until no suit against him or his estate could be maintained. No representative of Farmers ever expressly stated that Lihov was still alive after his death. However, it also appears to be undisputed that the settlement negotiations continued past the point that the company could be held liable on its contract of insurance with Lihov or his estate.
But these evidentiary facts are not the material facts spoken of in the court rule. See, Simerka v Pridemore, 380 Mich 250, 275; 156 NW2d 509 (1968) (opinion of Souris, J.). One authority has stated the proposition thus:
"Whether or not the evidentiary facts are disputed, if the factfinder can go either way on a material fact, summary judgment grounded on no genuine issue of fact is improper.”
Bashara, The Elusive Summary Judgment Rule: *121Sifting Through the Maze, 1976 Det Col of Law Rev 397, 419.
Even given the undisputed evidentiary facts, if plaintiff has stated a cause of action there are material issues of fact in dispute: Was there a representation of authority? Did this deceive plaintiffs? Was the misrepresentation the proximate cause of plaintiffs loss? These questions are not answered by merely concluding that Farmers’ adjuster never expressly stated that Mr. Lihov was still alive.
The crux of this case is whether plaintiff has pled facts upon which the court will recognize a right to recover. In other words, by pleading that Farmers represented it had authority to settle plaintiffs claim against Mr. Lihov or his estate, where in fact no such authority existed, has plaintiff stated a cause of action for misrepresentation? The answer lies in an examination of the relationship between Lihov, Farmers and plaintiff and the substantive law of the tort of misrepresentation.
Agency in its broadest sense includes every relation in which one person acts for or represents another by his authority. Saums v Parfet, 270 Mich 165, 171; 258 NW 235 (1935), Stephenson v Golden, 279 Mich 710, 734-735; 276 NW 849 (1937). In dealing with plaintiffs, Farmers was acting on behalf of Mr. Lihov, not as a volunteer but because of a contract of insurance. Farmers was contractually given power, but not the duty, to make any compromise within the policy limits and authority to conduct negotiations toward that end.
The relationship admittedly does not fit neatly into the definition3 of agency with all its ramifica*122tions. The insurance company also furthers its own interest by settling claims as quickly and inexpensively as possible. But, the overriding concern in the relationship is for the insured — not the company — as witnessed by those cases imposing liability on the insurer for failing to make a good faith effort to settle the claim within the policy limits. City of Wakefield v Globe Indemnity Co, 246 Mich 645; 225 NW 643 (1929), Citizens Mutual Ins v Nationwide Ins, 29 Mich App 91; 185 NW2d 99 (1970). See also, 40 ALR2d 168. We conclude, therefore, that as to third parties injured by the insured, the insurer acts as the insured’s agent in negotiating possible settlements.
An agent is liable to third parties for misrepresenting his authority to act on behalf of a principal where no such authority exists in fact. 2 Restatement Agency 2d, § 330, pp 86-87.
There is no requirement that misrepresentation of authority be treated any differently than any other tortious misrepresentation. In Michigan, any representation which is false in fact and actually deceives the other and is relied on by him to his damage is actionable, regardless of whether the person making the representations acted in good faith in making them, where the loss of the party deceived inures to the benefit of the other. Phillips v General Adjustment Bureau, 12 Mich App 16; 162 NW2d 301 (1968). The misrepresentation may consist of mere silence. Michigan National Bank v Marston, 29 Mich App 99; 185 NW2d 47 (1970). The rules stated in these two cases apply to the situation raised in plaintiffs complaint.
*123Under the rules stated in Phillips, plaintiff has stated a cause of action sufficient to avoid summary judgment. The loss that plaintiff did not recover against Lihov inured to the benefit of Farmers. Plaintiff has pled facts to fulfill the other requirements. Whether a jury will conclude that the misrepresentations alleged were the cause of plaintiff’s failure to recover in the first suit is not a question we should be called upon to answer at the present time.
The trial court erred in granting summary judgment.
Reversed and remanded for further proceedings not inconsistent with this opinion. Costs to appellant.
N. J. Kaufman, J., concurred.

 There are actually two plaintiffs in this case, Mr. and Mrs. Maxman. Mrs. Maxman was injured in the automobile accident. Her husband has presented a derivative claim.

 In arguing the motion before the trial court defense counsel stated that "under either theory plaintiffs have simply failed to state a cause of action”. Later when questioned by the trial court defense counsel stated, "There is no statement of law which would support plaintiffs position of false representations”.
In granting defendant’s motion, the court stated it was relying on the arguments made by defense counsel. The only conclusion that we can draw after examining the record is that the court was granting summary judgment under GCR 1963, 117.2(1), failure to state a cause of action.

 We have examined the cases plaintiff cites for the proposition that the relationship was one of agency and also examined the authority *122cited by defendant criticizing that conclusion. On balance, we believe that the courts have resorted to calling this relationship agency almost by default. There is no other term in the law which can accurately describe the relationship. Because there is a void in this area, courts have resorted to calling the relationship agency and have applied agency rules.