Lieberthal v. Glens Falls Indemnity Co.

Plaintiff, a resident of Gogebic county, Michigan, brought suit at law in the circuit court of Gogebic county to recover damages for his personal injuries sustained in an automobile accident which happened in Wisconsin. The sole defendant, a New York corporation, is the insurer of the owner of an automobile involved in the accident. Defendant's policy was delivered in Wisconsin to the insured. The validity of the service of the court's process on the defendant insurance company is not questioned. Defendant entered a special appearance. Subsequent to defendant's appearance plaintiff's declaration and an amendment thereto were filed. Defendant thereafter made a motion to dismiss. The reasons in support of defendant's motion are confined solely to challenging the court's jurisdiction of the subject matter of the suit. Defendant's motion to dismiss was granted by the circuit judge, and plaintiff has appealed.

The purport of defendant's motion appears from the following reasons which, among others, were assigned in support of the motion to dismiss.

"No cause of action exists in Michigan against this defendant.

"The situs of the cause of action alleged in plaintiff's declaration exists only in the State of Wisconsin.

"If, as plaintiff claims in his declaration, substantive rights are created by the statutes of Wisconsin, then those rights and any and all claims of the plaintiff that he is entitled to maintain this suit in this Court, are contrary to the public policy of the laws of the State of Michigan and particularly 3 Comp. Laws 1929, § 12460 (Stat. Ann. 1943 Rev. § 24.296).

The parties agree that plaintiff could prosecute his suit in Wisconsin against the insurer as a sole defendant notwithstanding judgment has not been obtained against the insured. Such is the case because of statutory provisions in Wisconsin^* and under decisions of the supreme court of that State. Since there is no controversy between the parties in this respect, we forego citation of the applicable statutory provisions and decisions in that State.

While there is some controversy between plaintiff and defendant as to whether the Wisconsin law, affording plaintiff the right in that State to bring his suit against the insurance company as sole defendant, is procedural in character or substantive law, we deem it unnecessary to pass upon that question because we are of the opinion that decision herein is controlled by another principle of law applicable to the instant case, even though it be assumed that the phase of the Wisconsin law above noted is substantive in character rather than procedural. However, an interesting decision bearing upon the question as to whether the law is procedural or substantive in character will be found inMcArthur v. Maryland Casualty Co., 184 Miss. 663 (186 So. 305, 120 A.L.R. 846).

Even though, as plaintiff asserts, the provision of the Wisconsin statute authorizing suit against the insurer as a sole defendant in this type of case vested plaintiff with a substantive right, and therefore normally should be recognized as a matter of comity in Michigan, nonetheless if such provision of law is contrary to the public policy of this State it will not be recognized or enforced in the courts of this State.

"Much has been written on the enforcement of transitory actions and the theory underlying decisions in such matters has been variously explained on the grounds of ``comity' and ``vested rights.' (Citing numerous authorities.)

"Under any theory of enforcement there is the well-established exception that the foreign law will not be recognized if contrary to the public policy of the forum." Eskovitz v. Berger,276 Mich. 536, 540.

"By comity, citizens of Illinois may sue in the courts of Michigan, but the law of Illinois has no extraterritorial force. The courts of this State may not be used to prosecute to effect a cause of action in a manner contrary to the laws of Michigan."Walton School of Commerce v. Stroud, 248 Mich. 85, 89.

"While the general rule is that a contract valid where made is valid in the courts of any other country or State where it is sought to be enforced, there are exceptions to the rule, and one of them is where the contract violates the public policy of the State of the forum. 9 Cyc. p. 674; Seamans v. Temple Co.,105 Mich. 400 (28 L.R.A. 430, 55 Am. St. Rep. 457)." Curtis v.Mueller, 184 Mich. 148, 152.

Notwithstanding plaintiff could prosecute his suit in Wisconsin, the question arises — Is it contrary to public policy in Michigan that a suit of this character should be prosecuted against the tortfeasor's insurer as a sole defendant? Public policy of a State is fixed by its Constitution, its statutory law, and the decisions of its courts; and when the legislature enacts a law within the limits of the Constitution, the enactment insofar as it bears upon the matter of public policy, is conclusive. See In re McKee's Estate, 71 N.D. 545 (3 N.W. [2d] 797), wherein, quoting from an earlier case, it is said: "Public policy is but the manifest will of the State. * * * And when the legislature has spoken and enacted a law embodying a certain principle, the policy is determined." Michigan's public policy touching the phase of the law under consideration has been definitely fixed by statute. As to bringing an insurance company into a suit of this character as a defendant, the following is provided in our statutory law.

"In such original action (including personal injuries caused by a motor vehicle), such insurance company (authorized to do business in Michigan), or other insurer, shall not be made, or joined as a party defendant, nor shall any reference whatever be made to such an insurance company, or other insurer, or to the question of carrying of such insurance during the course of trial." 3 Comp. Laws 1929, § 12460 (Stat. Ann. § 24.296).

In accord with the above provision, we have repeatedly held in substance: "There was prejudicial error in bringing before the jury, in the subtle method employed, the suggestion that defendant carried liability insurance." Janse v. Haywood,270 Mich. 632.

"It is a fact of which we cannot but take judicial notice that, in cases where jurors obtain information that the damages as fixed by them will be paid by insurance companies, the amount thereof is usually greatly enhanced." Holman v. Cole,242 Mich. 402.

"We do not condone what appears to have been a studied effort to get the matter of insurance before the jury." Nicewander v.Diamond, 302 Mich. 239.

See, also, Kerr v. National Fulton Brass Manfg. Co.,155 Mich. 191; and Dewey v. Perkins, 295 Mich. 611.

The public policy sought to be sustained in this State by the statute and judicial decisions is that a plaintiff shall not be permitted to inject into his suit the element of insurance and thereby obtain an excessive and unjust verdict.

We are not in accord with appellant's contention that: "If the above statute does declare a public policy for Michigan the letter of the declaration (statute) limits it to such suits on a policy ``issued or delivered in this State.'" We think the statute prohibiting a plaintiff from making the insurer a party defendant or referring to the insurer in the course of the trial, as a matter of public policy is not only applicable to the insurers who issue or deliver policies in this State but likewise to the insurer who delivered a policy in another State and is sued in a court in this State. Twice in the quoted portion of the statute the expression "or other insurer" is used, and evidently means an insurer other than one authorized to do business in Michigan. And further, it may be noted that the defendant in the instant case was authorized to do business in Michigan and to deliver its policies in this State.

We cannot escape the conclusion that plaintiff's attempt to prosecute his suit in Michigan against the insurer as a sole defendant is contrary to Michigan law, and for that reason a Michigan court may not assume jurisdiction as a matter of comity. The instant case does not fall within Kaiser v. North,292 Mich. 49, 57, wherein we said:

"The fact Michigan statutory regulations of the rights of a motor vehicle guest passenger may differ from Ontario statutory provisions, or even the provisions of the common law governing like rights, is not a reason for holding the statute of the foreign jurisdiction contravenes public policy here."

In effect the above is only a holding that a mere difference in statutory provisions of a foreign jurisdiction and those of this State is not sufficient alone to result in contravention of our public policy. Instead of being comparable to the Kaiser Case, the case at bar falls within the same field of law as Walton School of Commerce v.Stroud and Curtis v. Mueller, supra. And in point of law the instant case cannot be distinguished from Kircher v.Kircher, 288 Mich. 669 (7 N.C.C.A. [N.S.] 72), where, notwithstanding the suit could have been maintained in a Colorado court, we said:

"Plaintiff invokes the doctrine of comity. To recognize comity in this instance would contravene the public policy of this forum.

"As has been stated, it is contrary to public policy in this State to permit one spouse to sue the other for negligent injury, and this closes the court to the action at bar brought by a resident of Michigan against her husband for a tort committed in Colorado."

In general it may be said that the test as to whether courts of this State will entertain jurisdiction is not whether the law of another State under which the right of action is asserted differs from Michigan law; but rather is the prosecution of the suit in violation of the settled law of this State — i.e., the law of the forum. Prosecution of the instant suit would be in direct violation of our statutory law and judicial decisions which establish in that respect public policy in this jurisdiction.

"It is true that, under rules of law generally applicable, these courts (in the forum jurisdiction) may refuse to enforce a mere right of contract if it provides for doing within the District (of Columbia where suit was pending) things prohibited by its laws." Loughran v. Loughran, 292 U.S. 216, 227 (54 Sup. Ct. 684, 78 L.Ed. 1219).

"Under rules of law generally applicable a State may refuse to enforce a contract which provides for doing within it an act prohibited by its laws." Bothwell v.Buckbee, Mears Co., 275 U.S. 274 (48 Sup. Ct. 124,72 L.Ed. 277).

To the same effect, see The Kensington, 183 U.S. 263, 269 (22 Sup. Ct. 102, 46 L.Ed. 190) and Bond v. Hume, 243 U.S. 15, 21 (37 Sup. Ct. 366, 61 L.Ed. 565).

The result would be the same in the instant case regardless of whether the pertinent law of Wisconsin is held to be procedural or substantive. Nor, for the purpose of determining defendant's motion to dismiss on the ground that the Michigan court could not entertain jurisdiction of the subject matter — i.e., of a suit brought against the insurer as a sole defendant, is it at all material whether the appearance of defendant was special, or general as claimed by plaintiff. See Michigan Court Rule No. 18, § 1 (b) (1945). Under the practice in this jurisdiction one who has entered a general appearance may thereafter make a motion to dismiss on the ground that the court does not have jurisdiction of the subject matter. In the instant case the subject matter, in a material part at least, is the right of the plaintiff in this type of case to bring suit against the insurer.

The trial court was not in error in granting defendant's motion to dismiss. In so holding we are mindful of Kertson v.Johnson, 185 Minn. 591 (242 N.W. 329, 85 A.L.R. 1), cited by appellant. But it does not appear in the Kertson Case that Minnesota has an express statutory provision comparable to 3 Comp. Laws 1929, § 12460 (Stat. Ann. § 24.296) above quoted. A decision more in point, and which was controlled by Michigan law, will be found in Pitcairn v. Rumsey, 32 F. Supp. 146, where a headnote reads:

"Where liability insurer was wrongfully joined as defendant in original action against assured by receivers, insurer would be dismissed."

Mr. Justice BUTZEL, in an opinion for reversal in the instant case, has cited numerous cases in support of plaintiff's contention that the Michigan court should entertain jurisdiction. Among them is Kertson v. Johnson, supra, which, as above noted, is not in point for the reason that so far as appears from the reported case the State of Minnesota, unlike Michigan, has not, as a part of its public policy, embodied in its statutory law a provision forbidding in a case of this character making the insurer of a tortfeasor a party defendant. The same may be said of each and every one of the other cases cited by my Brother to the point under consideration. In none of the jurisdictions where the respective cited decisions were rendered is it made to appear that in the statutory law of the forum there was a provision comparable to 3 Comp. Laws 1929, § 12460 (Stat. Ann. § 24.296), above quoted.

Burkett v. Globe Indemnity Co., 182 Miss. 423 (181 So. 316), noted in my Brother's opinion went so far as to hold that an action of this character could not be maintained in the Mississippi courts because in that State there was no statutory provision authorizing such a suit. Thus the holding went much further than our conclusion in the instant case, since in Michigan there is the express statutory provision against making the insurer a party defendant in a case of this character.

Justice BUTZEL'S opinion notes that in Larabell v.Schuknecht, 308 Mich. 419, the suit was instituted not only against a tavern keeper but his bondsman was also joined as a party defendant; however, as is noted in my Brother's opinion, in that type of case there is a specific provision in the Michigan statute for so joining the bondsmen or surety. See Act No. 8, § 22, subd. 2, Pub. Acts 1933 (Ex. Sess.), as amended by Act No. 281, Pub. Acts 1937 (Comp. Laws Supp. 1940, § 9209-37, Stat. Ann. 1946 Cum. Supp. § 18.993). Obviously the Larabell Case is not a precedent for holding that in violation of our express statutory provision forbidding it, an insurer may be made either a sole defendant or a joint defendant with a tortfeasor in a case such as that under consideration.

Because we are not in accord therewith, we do not review in detail appellant's contention that Michigan's so-called third-party beneficiary contracts statute (Act No. 296, Pub. Acts 1937 [Comp. Laws. Supp. 1940, § 14063-1 et seq., Stat. Ann. 1946 Cum. Supp. § 26.1231 et seq.]), affords ground for holding plaintiff may maintain his suit against the insurer. We decline to hold that the third-party beneficiary statute repeals by implication 3 Comp. Laws 1929, § 12460 (Stat. Ann. § 24.296).

The judgment entered in the circuit court is affirmed, with costs to appellee.

CARR, and SHARPE, JJ., concurred with NORTH, J.

^* See Wisconsin Statutes, § 85.93. — REPORTER.