author: V. J. Brennan, P. J.

text:
    CITY OF IRONWOOD v GOGEBIC COUNTY BOARD OF COMMISSIONERS
    Docket No. 77-814.
    Submitted May 2, 1978, at Marquette.
    Decided July 5, 1978.
    In February, 1976, the City of Ironwood underwent a reassessment of real property for tax valuation purposes. The Board of Review met in accordance with a statute requiring such a meeting and received well over a thousand assessment appeals. As a result the Board of Review was unable to timely complete its work but finally reduced the assessed valuation on over half of the cases appealed, and also in some cases which were not appealed. The County Board of Commissioners of Gogebic County ignored the figures arrived at by the Board of Review and sent to the State Tax Commission the revised figure of the county equalization department. The City of Ironwood applied to the State Tax Tribunal alleging that the assessment figure submitted by the county was too high. The Townships of Ironwood, Bessemer, Marenisco, Watersmeet, Wakefield and Erwin intervened. The Tax Tribunal held that the board of commissioners arbitrarily rejected the adjustments of the Board of Review and granted relief in the form of accepting the Board of Review’s assessment figure and apportioning the difference between that amount and the figure sent to the State Tax Commission by the board of commissioners among all the governmental units in the county. The intervening townships appeal alleging error as a matter of law in holding that the board of commissioners had arbitrarily and improperly rejected the adjustments in assessments made by the Board of Review, and that any supplement to the equalized values of the other governmental units in the county was unconstitutional. Held:

    1. The Court of Appeals is bound by the factual determinations of the State Tax Tribunal, which did not err as a matter of law in holding the commissioners’ rejection of the Board of Review’s figures to be arbitrary where the Board began deliberations to equalize estimated assessment values two weeks prior to receipt of the report from the Board of Review.

      Reference for Points in Headnotes
    [1-4] 72 Am Jur 2d, State and Local Taxation §§ 787, 799-801.

      2. Apportioning the difference in assessment values to all other governmental units in the county was constitutional in view of the adoption by Michigan Courts of the primacy of equal treatment over strict adherence to the 50 percent cash value standard.
    Affirmed.
    1. Taxation — State Tax Tribunal — Decisions—Review.
    The Court of Appeals is bound by the factual determinations of the State Tax Tribunal (Const 1963, art 6, § 28, MCL 205.753[1]; MSA 7.650[53]).
    2. Taxation — City Board of Review — Review of Assessment of Individual Parcels.
    The Board of Review of a city has the power to review assessments of individual parcels of property (MCL 211.29; MSA 7.29).
    3. Taxation — City Board of Review — Review of Assessment of Individual Parcels.
    Adjustments of assessments of individual parcels of property by a city Board of Review need not be done in accordance with any set formula so long as they are not done arbitrarily.
    4. Taxation — Assessments—Review of Assessments — City Board of Review — County Board of Commissioners — State Tax Tribunal — Constitutional Law.
    Arbitrary rejection by a county board of commissioners of a city Board of Review’s assessed valuation figures requires the Tax Tribunal to accept the Board of Review’s figures and allocate the difference between the Review Board’s figure and the commissioners’ figure to all governmental units in the county; such action does not violate the constitutional section prohibiting real property from being taxed at greater than 50 percent of true cash value (Const 1963, art 9, § 3).

      David E. McDonald, City Attorney, for the plaintiff.

      Weis, Cossi & Slade, P. C., for intervening defendants.

      Before: V. J. Brennan, P. J., and R. B. Burns and M. J. Kelly, JJ.
   V. J. Brennan, P. J.

Intervening defendants Gogebic County township units appeal from the Michigan State Tax Tribunal judgment rejecting the Gogebic County Board of Commissioners proposed figure for equalization of real property in the City of Ironwood. The Tribunal’s judgment resulted from their determination that the county commissioners arbitrarily ignored the reassessment of real property values made by the City of Ironwood Board of Review. The Tribunal thus adjusted the assessed value figure for City of Ironwood real property downward to conform to the review board figure and distributed the resulting amount of overvaluation in the county board’s assessment to all units located within the county. Appeal from the Tax Tribunal is a matter of right. MCL 205.753(1); MSA 7.650(53).

In early 1960, Gogebic County was reappraised by private appraisers and its valuation figures accepted by the City of Ironwood. In 1968, the county established its tax department and the reappraisal of the entire county was commenced, with the City of Ironwood the last political subdivision so appraised. The reappraisal of property in the City of Ironwood commenced in 1973 and was not completed until late February, 1976. This appraisal was used by the city assessor in establishing the assessment roll.

The assessment roll was completed by the first Monday in March, as required by MCL 211.24; MSA 7.24, and the Board of Review for the City of Ironwood met that same day, in accordance with MCL 211.29; MSA 7.29. Apparently, the Board of Review was flooded with assessment reviews. The board received assessment appeals from 1,022 persons making personal appearances. Additional appeals from 61 persons were received by mail. As a result of this large number of appeals, the Board of Review was unable to complete its work by April 5, 1976, as required by MCL 211.30a; MSA 7.30(1).

During its consideration of these appeals, the Board of Review at one time attempted to set aside the entire assessment roll and rely upon the roll used in 1975 with adjustments made for 1976. However, the State Tax Commission ordered the Board of Review to consider the 1976 roll and extended the board completion date to April 16, 1976. The Board of Review ultimately completed its task on May 18, 1976. Part of this delay was due to a suit filed by aggrieved taxpayers challenging the 1976 assessment roll. The board ultimately reduced assessed valuation on 577 properties of the 1,083 cases under consideration. Some additional reductions were made for properties belonging to persons who had never appealed their assessed valuation. The board’s final assessed value for the real property in the City of Ironwood was $24,483,300, being a reduction of $1,225,200 from the city assessor’s figure of $25,708,500.

On May 3, 1976, prior to the completion of the Board of Review’s task, the County Board of Commissioners met, as required by MCL 211.34; MSA 7.52, to examine the various assessment rolls for purposes of equalization. Since the Board of Review for the City of Ironwood had not completed its task, the County Equalization Department sent an estimated county equalized valuation from the City of Ironwood to the State Tax Commission. The estimate of real property in the City of Ironwood was $24,900,508. The County Board of Commissioners rejected this figure.

On May 5, 1975, the County Equalization Department revised its estimate for real property in the City of Ironwood to $25,656,700 and sent this figure to the State Tax Commission. On May 19, 1976, this figure was also rejected by the Board of Commissioners. However, on June 16, 1976, this estimate was resubmitted and accepted by the Board of Commissioners, even though substantially higher than the figure submitted by the City of Ironwood Board of Review.

On June 18, 1976, the City of Ironwood filed an application with the State Tax Tribunal, alleging that the figure adopted for the equalized value of all property in the City of Ironwood was too high. Although both real and personal property values were involved at that stage of the proceedings, the question of personal property valuation is no longer involved in this appeal. A preliminary hearing was held on August 6, 1976, and a full hearing was subsequently ordered. On January 7, 1977, intervening defendants filed a motion to intervene which was subsequently granted.

The State Tax Tribunal heard the case on January 10-14, 1977, and issued its decision on February 25, 1977. In its opinion, the court held that the Board of Commissioners arbitrarily rejected the adjustments made by the City of Ironwood Board of Review. In granting relief, the Tribunal accepted the Board of Review’s figure of $24,483,300 for the value of the real property in the City of Ironwood. The difference between that figure and the figure sent by the County Board of Commissioners was then allocated equally to all the governmental units in the county on grounds that the Tribunal could not change the total state equalized value of the county because of changes made in the valuation of individual units. See MCL 211.34(13); MSA 7.52(3).

Intervening defendant-townships bring two principal allegations of error on this appeal. We will address each one respectively.

Intervening defendants claim that the Tax Tribunal erred as a matter of law by ruling that the County Board of Commissioners, while determining county equalized value, had arbitrarily and improperly rejected the adjustments in assessment made by the City of Ironwood Board of Review.

On appeal, we are bound by the factual determinations of the State Tax Tribunal. MCL 205.735; MSA 7.650(53); Const 1963, art 6, § 28. See also Ann Arbor v University Cellar, 65 Mich App 512, 516; 237 NW2d 535 (1975), rev’d on other grounds, 401 Mich 279; 258 NW2d 1 (1977). In its opinion, the Tax Tribunal noted that the final report ultimately adopted by the Board of Commissioners made no effort to take into account adjustments by the Board of Review of the City of Ironwood, "but merely in one stroke rejected all but minimal reductions made by the Board of Review”. What we must determine as a matter of law is whether such a rejection was permissible under existing authority.

Clearly, the Board of Review has the power to review assessments of individual parcels of property. City of Negaunee v State Tax Commission, 337 Mich 169, 176; 59 NW2d 136 (1953). This power is authorized by MCL 211.29; MSA 7.29. Nothing in the statutes indicates that adjustments to assessments must be done in accordance with any set formula so long as they are not done arbitrarily. National Bank of Detroit v Detroit, 272 Mich 610, 615; 262 NW 422 (1935). The objective in any of these adjustments is to assess property at 50 percent of its true cash value. MCL 211.27; MSA 7.27.

Upon review of the record, we find the Tax Tribunal determined that the Board of Review made a great effort to secure adequate data for the adjustments but that the large number of appeals prevented completion of its work on time. Although some of the delay was due to the review board’s attempt to reject the entire tax roll, the Tribunal also found that delay was occasioned in part by the county’s two rejections of the proposed Equalization Committee report. Contrary to defendants’ argument, we would also note that MCL 211.30; MSA 7.30 grants the Board of Review the power to change assessments on its own motion. Consequently, the Tribunal’s determination that the review board changed three or four assessments on its own motion portends no procedural error on this appeal. Our opinion is that the review board properly exercised its statutory function.

MCL 211.34a; MSA 7.52(1) provides for county equalization of the assessments submitted by each of its governmental units. The Tax Tribunal found that the Board of Commissioners arbitrarily rejected the Board of Review’s reductions in the assessed value for the City of Ironwood. We find support for this conclusion in the fact that though not reaching an actual final decision until June 16, 1976, the Board of Commissioners began serious deliberations to equalize estimated assessment values based on the county tax department’s higher figure some two weeks before the Board of Review even submitted its report. In light of this evidence, the Board of Commissioners has failed to perform its statutory duty to fully and fairly "examine the assessment rolls of the several townships and cities” when equalizing the assessments. MCL 211.34a; MSA 7.52(1).

Nor can the Board of Commissioners justify such conduct on the basis of improprieties by the Board of Review. We simply find no such improprieties. Though the attorney’s submission of the Board of Review’s report to the Board of Commissioners may have inconvenienced matters, we do not find this delay adequate cause for arbitrary rejection of the review board’s action. Certainly, some of the delay was not totally due to the conduct of the Board of Review.

Consequently, we find that the Tax Tribunal properly followed the law in reaching its decision to grant relief in this matter. Clearly, the risk exists that local boards of review may abuse their power by permitting reductions in individual assessments based on factors which would not be considered by trained assessors. However, we find equalization by the county applied to all real property in the local unit serves as an adequate deterent to such abuse. See Ypsilanti Twp Supervisor v State Tax Commission, 386 Mich 343, 355; 192 NW2d 227 (1971). When abuse or error of this kind occurs, use of the equalization process by the county board of commissioners will serve to adjust the figure submitted by the local unit. In this case, the Board of Commissioners simply rejected the Board of Review’s figures, which the Tax Tribunal found, and we on appeal affirm, as arbitrary conduct requiring the relief granted. In short, we affirm the finding of error by the Tax Tribunal in the procedure employed by the Board of Commissioners. We need express no opinion regarding the accuracy of any figure submitted by either party.

Defendants contend that any supplement to the equalized values of the other eight units in the county violates constitutional provision prohibiting real property from being taxed at greater than 50 percent of true cash value. Const 1963, art 9, § 3. This argument ignores the fact that Michigan courts have adopted the primacy of equal treatment over strict adherence to the 50 percent cash value standard. Allied Supermarkets, Inc v Detroit, 391 Mich 460, 466-468; 216 NW2d 755 (1974). Faced with the need to equitably adjust the City of Ironwood’s burden while maintaining the total state equalized valuation of the county, the Tribunal sought the middle course of increasing the assessment of each unit equally, thus minimizing the effect of the county’s error on any one unit. See MCL 211.34(3); MSA 7.52(3). We find no constitutional error in this solution.

Having reviewed intervening defendants’ allegations of error and finding neither persuasive, we sustain the holding of the State Tax Tribunal.

Affirmed.

       "On the Tuesday next following the first Monday in March, the board of review of each township shall meet at the office of the supervisor, at which time the supervisor shall submit to said board the assessment roll for the current year, as prepared by him, and the board shall proceed to examine and review the same, and during that day, and the day following, if necessary, said board, of its own motion, or on sufficient cause being shown by any person, shall add to said roll the names of persons, the value of personal property, and the description and value of real property liable to assessment in said township, omitted from such assessment roll; they shall correct all errors in the names of persons, in the descriptions of property upon such roll, and in the assessment and valuation of property thereon, and they shall cause to be done whatever else may be necessary to make said roll comply with the provisions of this act.” MCL 211.29; MSA 7.29.

      " * * * The county board of commissioners shall examine the assessment rolls of the several townships or cities and ascertain whether the real and personal property in the respective townships or cities has been equally and uniformly assessed at true cash value. If, on the examination, it shall deem the assessments to be relatively unequal, it shall equalize the same by adding to or deducting from the valuation of the taxable property in a township or city an amount as in its judgment will produce a sum which represents the true cash value thereof, and the amount added to or deducted from the valuations in a township or city shall be entered upon the records.” MCL 211.34(1); MSA 7.52(1).

       The most equitable solution would have been eliminating altogether the amount overassessed the City of Ironwood. We would thus avoid any need to confront the question of equalizing the improper inclusion of "one unit of amounts which should not have been assigned to any unit, in effect, non-existent value”. However, as the Tribunal noted, the statute as presently constituted precludes any change in the total state equalized value of a county where single units require changes in assessment figures by the Board of Commissioners or the Tribunal:
      " * * * The deductions or additions shall decrease or increase the state equalized valuation of the local unit affected thereby but shall not increase or decrease the total state equalized valuation of the county in the case of an appeal under this section to the state tax tribunal.” MCL 211.34(3); MSA 7.52(3).
      Given the statutory inability to pass the overassessment figure onto higher state levels of the taxing structure, the Tribunal chose the only reasonable avenue of accomodation when confronted with error made on the county level of government by the County Board of Commissioners. They equalized the burden of overassessment on all county units. We are bound by the direction in the same statute.


source: Caselaw Access Project

author: M. J. Kelly, P. J.

license: Public Domain

text:
    FARMERS INSURANCE GROUP v PROGRESSIVE CASUALTY INSURANCE COMPANY
    Docket No. 77-1023.
    Submitted April 5, 1978, at Detroit.
    Decided July 5, 1978.
    Leave to appeal applied for.
    Farmers Insurance Group is the plaintiff in this action and Progressive Casualty Insurance Company is the defendant-appellant. On June 1, 1972, plaintiff’s insured, Valerie Eversole, was involved in an automobile accident with Patrick Borer while driving a vehicle owned by Progressive’s insured, Billie Jo Jaynes. Mr. Borer filed a personal injury action against both Valerie Eversole and Billie Jo Jaynes. Progressive denied insurance coverage of Billie Jo Jaynes, claiming cancellation, and, as á result, Farmers defended and settled the lawsuit. Farmers brought an action against Progressive and Billie Jo Jaynes for full indemnity of the cost of the prior defense, including attorney’s fees incurred. Progressive claimed that the policy, financed by Progressive Premium Budget Company, was can-celled at the budget company’s request by mailing a 10-day notice of intent to cancel to Mr. Jaynes advising him of his default on the premium and that, if not paid by a specified date, his policy would be cancelled. On May 23, 1972, Progressive mailed a notice that the policy was cancelled effective May 24, 1972. Plaintiff was granted judgment against Progressive including an amount for attorney’s fees incurred in the prior lawsuit. Progressive appeals. Held:

    1. The statute exempting a premium finance company from the 10-day notice requirement for cancellation contemplates a premium finance company which is truly independent of any single insurer or group of insurers and does not apply to the situation where the insurer and finance company list the same address, the premium financing agreement is contained on the same page as the printed insurance application, the notices of intent to cancel and cancellation are mailed by the insurer rather than the finance company and it appears that the finance company is merely a division within the insurance company itself to handle periodic payment of premiums; in such a situation even a contractual assignment of the insured’s right to cancel to the finance company is merely an assignment to the insurance company and cannot be peremptorily exercised by the insurer.

      References for Points in Headnotes
    [1, 2] 7 Am Jur 2d, Automobile Insurance §§ 8, 10.
    Cancellation of compulsory or "financial responsibility” automobile insurance. 34 ALR2d 1297.
    [3] 44 Am Jur 2d, Insurance §§ 1849-1856.
    [4] 41 Am Jur 2d, Indemnity § 40.
    [5] 44 Am Jur 2d, Insurance §§ 1798, 1799.

      2. Cancellation of an automobile insurance policy requires 10 days prior notice of the date of cancellation and a 10-day notice of intent to cancel is insufficient.
    3. An insurance company is a real party in interest in a suit for indemnification where it is subrogated to the rights of its insured.
    4. Prior demand for participation in the settlement is not required in an indemnification suit where the defendant insurance company refused to defend or provide coverage and where it does not contest the settlement amount.
    5. It is proper in suits by excess insurers against primary insurers for indemnification to award the attorney’s fees previously incurred under the proposition that such fees are recoverable where the present defendant has by wrongful conduct caused the present plaintiff to defend or prosecute previous legal proceedings.
    Affirmed.
    1. Insurance — Automobile Insurance — Statutes—Cancellation— Premium Finance Companies — Assignment of Right to Cancel.
    The statute exempting a premium finance company from the 10-day notice requirement for cancellation of an automobile liability policy contemplates ,a premium finance company which is truly independent of any single insurer or group of insurers and does not apply to the situation where the insurer and finance company list the same address, the premium financing agreement is contained on the same page as the printed insurance application, the notices of intent to cancel and cancellation are mailed by the insurer rather than the finance company and it appears that the finance company is merely a division within the insurance company itself to handle periodic payment of premiums; in such a situation even a contractual assignment of the insured’s right to cancel to the finance company is merely an assignment to the insurance company and cannot be peremptorily exercised by the insurer (MCL 500.1511, 500.3020; MSA 24.11511, 24.13020).
    2. Insurance — Automobile Insurance — Cancellation—Notice of Cancellation — Notice of Intent to Cancel.
    Cancellation of an automobile insurance policy requires 10 days prior notice of the date of cancellation and a 10-day notice of intent to cancel is insufficient.
    3. Courts — Parties—Real Party in Interest — Insurance Companies — Subrogation.
    An insurance company is a real party in interest in a suit for indemnification where it is subrogated to the rights of its insured.
    4. Insurance — Indemnification—Demand for Participation — Denial of Coverage.
    A prior demand for participation in the settlement is not required in an indemnification suit for the settlement moneys that had been paid where the defendant insurance company had refused to defend or provide coverage and where it does not contest the settlement amount.
    5. Insurance — Indemnification—Attorney’s Fees.
    It is proper in suits by excess insurers against primary insurers for indemnification to award the attorney’s fees previously incurred under the proposition that such fees are recoverable where the present defendant has by wrongful conduct caused the present plaintiff to defend or prosecute previous legal proceedings.

      Harvey, Kruse & Westen, P. C. (by Mark D. Shoup), for plaintiff.

      Patterson, Patterson, Whitñeld, Manikoff & White, for defendant.
    Before: M. J. Kelly, P. J., and D. E. Holbrook, Jr. and Beasley, JJ.
   M. J. Kelly, P. J.

Plaintiff (hereafter Farmers) commenced this action seeking indemnity against defendant (hereafter Progressive) and its insured, Billie Jo Jaynes, on May 30, 1975, in Oakland County Circuit Court. On June 1, 1972, plaintiffs insured, Valerie Eversole, was involved in a collision with one Patrick Borer while driving a vehicle owned by defendant’s insured with his express consent. Mr. Borer filed a personal injury action against both owner and driver as codefendants, but Progressive denied liability insurance coverage. As a result of that denial, plaintiff Farmers defended the suit and settled for $10,000.

Farmers sought full indemnity from defendant Progressive, alleging that Progressive wrongfully denied coverage and was the primary carrier because it insured the vehicle involved. Progressive denied liability for indemnity, arguing that the policy of insurance issued to its insured was effectively cancelled before the collision.

On October 31, 1975, defendant Progressive filed a motion for summary judgment under GCR 1963, 117.2(1), based on the cancellation. It stated that it had entered into the insurance contract with Mr. Jaynes on October 30, 1971, " * * * as part and parcel of which the premium was budgeted through Progressive Premium Budget, Inc., * * * ”. In response to interrogatories, defendant Progressive stated that Progressive Premium Budget Company is not a wholly-owned subsidiary of defendant, but a totally separate entity. Nevertheless, the Premium Budget Company had the same address as that of defendant Progressive, and the financing contract was, as defendant puts it, "part and parcel” of the insurance contract. In the premium financing agreement, Mr. Jaynes assigned his right to cancel the policy to Progressive Premium Budget Company (hereafter Budget), in the event that he failed to pay installments due thereunder.

Mr. Jaynes defaulted on a payment due April 29, 1972, and Budget requested cancellation of the policy effective May 24, 1972, by authority of Mr. Jaynes’ assignment to it of his right to cancel. On May 10, 1972, defendant Progressive mailed a 10-day notice of intent to cancel to Mr. Jaynes, advising him: "This amount must be paid to our office on or before May 20, 1972, or your insurance policy will be cancelled”. On May 23, 1972, defendant sent a notice of cancellation to Mr. Jaynes by certified mail advising him that the policy was cancelled effective at 12:01 a.m. on May 24, 1972.

Plaintiff Farmers also filed a motion for summary judgment arguing that the above-described attempt to cancel was not effective because it did not comply with Michigan statutes. At a hearing held on February 28, 1976, only the applicability of MCL 500.3020; MSA 24.13020, was considered, and the trial court granted partial summary judgment against defendant. The pertinent statute provides:

"No policy of casualty insurance, excepting workmen’s compensation, but including all classes of motor vehicle coverage, shall be issued or delivered in this state by any insurer authorized to do business in this state for which a premium or advance assessment is charged, unless there shall be contained within such policy a provision whereby the policy may be canceled at any time at the request of the insured, in which case the insurer shall, upon demand and surrender of the policy, refund the excess of paid premium or assessment above the customary short rates for the expired time; and whereby the policy may be canceled at any time by the insurer by mailing to the insured at his address last known to the insurer or its authorized agent, with postage fully prepaid, a 10 days’ written notice of cancellation with or without tender of the excess of paid premium or assessment above the pro rata premium for the expired time, which excess, if not tendered, shall be refunded on demand and the notice of cancellation shall state that the excess premium, if not tendered, will be refunded on demand. The cancellation shall be without prejudice to any claim originating prior thereto. The mailing of notice shall be prima facie proof of notice. Delivery of such written notice shall be equivalent to mailing. A notice of cancellation, including a cancellation notice under section 3224, shall be accompanied by a statement that the insured must not operate or permit the operation of the vehicle to which notice of cancellation is applicable, or operate any other vehicle, unless the fees required by the motor vehicle accident claims act have been paid with respect to such vehicle.”

In essence, the court ruled that insurance statutes were intended to protect the public and that the statute requires 10 days notice of cancellation. It held that since defendant’s notice of intent to cancel mailed May 10, 1972, did not state the effective date of the cancellation, but simply an intent to cancel in the future, the statutory requirements were not met and the attempted cancellation was ineffective. It therefore granted a partial summary judgment in plaintiffs favor.

A rehearing was held on March 31, 1976. At that hearing, defense counsel drew the court’s attention to MCL 500.1511; MSA 24.11511, pertaining to cancellations by a premium finance company. That section provides in pertinent part:

"(1) When a premium finance agreement empowers the premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be canceled by the premium finance company unless such cancellation is effectuated in accordance with this section.
"(2) Not less than 10 days’ written notice shall be mailed to the insured of the intent of the premium finance company to cancel the insurance contract unless the default is cured within the 10-day period.
"(3) After expiration of the 10-day period, the premium ñnance company may request cancellation of the insurance contract by mailing to the insurer a notice of cancellation, and the insurance contract shall be can-celled by the insurer without requiring the return of the insurance contract. The premium finance company shall also mail a notice of cancellation to the insured at his last known address at the same time the premium finance company requests cancellation of the insurance contract.
"(4) All statutory, regulatory and contractual restrictions providing that the insurance contract may not be canceled unless notice is given to a governmental agency, mortgagee or other third party shall apply where cancellation is effected under the provisions of this section. The insurer shall give the prescribed notice in behalf of itself for the insured to any governmental agency, mortgage or other third party on or before the second business day after the day it receives the notice of cancellation from the premium finance company and shall determine the effective date of cancellation taking into consideration the number of days’ notice required to complete the cancellation.”

After hearing arguments of counsel as to whether § 1511 mandates that cancellation shall not be effective until 10 days after notice of cancellation had been sent to the insured, the Court held:

"The motion is denied.
"I have examined it. I don’t think it adds anything. I think I will deny the motion for re-[h]earing. I think the original ruling of the Court should be pursued.”

Defendant Progressive filed a claim of appeal which was returned because the partial summary judgment was not a final order under GCR 1963, 518.2.

On November 4, 1976, plaintiff filed a motion for summary judgment for indemnity alleging that defendant Progressive was the primary carrier, since its attempt to cancel was ineffective. Progressive answered the motion for summary judgment and filed its own motion for summary judgment for failure to state a cause of action. Defendant argued that plaintiff was not a real party in interest, that actual attorney fees as opposed to taxable fees were not recoverable, and that indemnity was not available because even those jurisdictions which allow such recovery require notice to or demand on the proposed indemnitor to participate, and that was not done here.

In reply, plaintiff pointed out that it made a demand upon defendant Progressive to defend its insured driver in the underlying negligence action. At that time, defendant Progressive denied a duty to provide a defense, as well as denying coverage of the defendant therein. These facts were admitted by defendant Progressive in its answer.

On March 8, 1977, the trial court granted a final order of summary judgment against defendant Progressive for the amount of the settlement, $10,-000, plus attorney fees incurred by plaintiff in defending the underlying negligence action in the amount of $842.20. Defendant Progressive does not contest the reasonableness of the attorney fees or the amount of the settlement. Rather, it challenges the partial summary judgment concerning cancellation and the final summary judgment ordering it to indemnify plaintiff Farmers.

Defendant argues that the trial court erred in ruling that defendant’s attempt to cancel its automobile liability policy with its insured was ineffective. Defendant asserts that the notice of intent to cancel constituted substantial compliance with the requirements of MCL 500.3020; MSA 24.13020, and defendant fully complied with the requirements of MCL 500.1511; MSA 24.11511.

We hold the notice provisions provided in MCL 500.1511; MSA 24.11511, supra, are not applicable under the instant facts. MCL 500.1501; MSA 24.11501 provides in pertinent part:

"The provisions of this chapter shall not apply with respect to: (a) Any insurance company authorized to do business in the state or a subsidiary of an authorized insurer admitted in this state or a corporation under substantially the same management or control as an admitted authorized insurer or group of insurers, which such subsidiary, managed or controlled company is engaged in the business of financing insurance premiums on policies issued only by its parent insurer or affilliated group of insurers, subject to the provisions of subsection (3) of section 1508.”

As plaintiff points out, no factual determination was made as to the applicability of chapter 15 to this case. We observe, however, that both Progressive and Budget listed the same address, the premium financing agreement was contained on the same page as the printed insurance application, and the notices of intent to cancel and cancellation were sent by defendant Progressive rather than by Budget.

Chapter 15 of the insurance code was intended to exempt from the notice requirement of § 3020 of the insurance code a premium finance company which was truly independent of any single insurer or group of affiliated insurers. If a premium finance company is not independent, but rather is effectively an extension or a branch of the insurer or affiliated insurers, the exemption would not and should not apply. If, as appears here, a premium finance company is simply a division within the insurance company itself to handle periodic payments of insurance premiums, then the cancellation effected by the finance company is actually effected by the insurer itself, and the provisions of § 3020 would then apply. In that situation, even if the insured had contractually assigned to the premium finance company his right to cancel, the assignment would be in reality an assignment to the insurer, and could not be exercised peremptorily by the insurer because of the contrary requirements of § 3020.

Prior to the notice of cancellation sent by defendant Progressive on May 23 and effective at 12:01 a.m. the following day, the insured had no notice of the effective date of the intended cancellation. MCL 500.3020; MSA 24.13020 requires that any automobile policy must provide for cancellation at any time by the insurance company, by mailing or delivering to the insured a 10-day written notice of cancellation. This statute has been strictly and clearly construed. Another panel of this Court has held that 10 days actual notice is required before cancellation becomes effective. Phillips v Detroit Automobile Inter-Insurance Exchange, 69 Mich App 512; 245 NW2d 114 (1976).

It is patently unfair to permit Budget to cancel the policy involved without advance notice of the effective date of the cancellation to the insured where it was able to give such advance notice to the insurer. In fact, here, the notice of cancellation could not possibly have reached the insured prior to the effective date stated on its face. The notice of intent to cancel is not sufficient under § 3020, and the notice of cancellation could not have an effective date prior to 10 days after May 23, 1972, in which case the coverage would have applied when the accident occurred. The trial court did not err in ruling that defendant’s attempt to cancel its policy with the insured was ineffective.

Defendant next argues that the trial court erred in granting judgment to plaintiff for indemnification from defendant where the plaintiff was subrogated to the right of its insured under the insurance contract and by operation of law and had paid the entire loss in the underlying negligence action. Defendant concedes the reasonableness of the settlement and the attorney fees incurred. It contends, however, that insurance companies are not true parties in interest and may not bring an action for indemnification under these circumstances. Furthermore, defendant contends, plaintiff had a separate contractual duty to defend its own insured, and its involvement in the suit and payment of the settlement sum was due to that contractual obligation. Defendant says plaintiff failed to demand participation by defendant. Defendant claims that plaintiff is not entitled to attorney fees because it would have been involved in the previous lawsuit even in the absence of defendant’s wrongful activity.

Contrary to defendant’s argument, plaintiff is a real party in interest. See United States v Aetna Casualty & Surety Co, 338 US 366, 380-381; 70 S Ct 207; 94 L Ed 171 (1949). Cf. Katzbauer v Barret, 15 Mich App 253; 166 NW2d 482 (1968). The separate suit for indemnification is the preferable method of handling such a dispute between insurers, since the injured person recovers for his injuries without delay while the insurers thereafter iron out their respective liabilities.

Defendant asserts that no theory of subrogation permits plaintiff to obtain indemnification from defendant. It argues that its only duty was to its own insured, Mr. Jaynes, and "the only method by which Farmers could claim would be by way of subrogation”.

Plaintiffs claim is, of course, based on subrogation. Under its insurance contract, defendant Progressive owed a duty to defend anyone using its insured’s car with his permission in case of a negligence suit arising out of such use. Plaintiffs insurance contract provided that plaintiff was subrogated to any claim which its insured had which it was required to cover. Since plaintiffs insured, Mrs. Eversole, was operating the vehicle owned by Mr. Jaynes with his express consent when she was involved in the accident on which the underlying suit was based, defendant Progressive was required to defend her and cover any losses. Because plaintiff defended Mrs. Eversole and paid the settlement sum, it was subrogated to her cause of action against defendant Progressive. The instant action between insurers for indemnification is entirely proper. See Detroit Automobile Inter-Insurance Exchange v Detroit Mutual Automobile Ins Co, 337 Mich 50; 59 NW2d 80 (1953).

Defendant’s argument concerning whether a demand for participation in the settlement was required must also be rejected. As plaintiff points out, defendant admitted its refusal to defend or provide coverage in the underlying negligence action. In addition, defendant has specifically stated on this appeal that it does not contest the settlement amount. Therefore the rationale of securing a fair settlement suggested by defendant has no application to the instant case. Plaintiff Farmers certainly was not a volunteer and after defendant Progressive’s denial of coverage and refusal to defend no notice of settlement or demand to participate in settlement was required.

Finally, defendant’s contention that the award of attorney fees was improper is also rejected. It does not appear to be disputable that plaintiff was an excess insurer, and defendant was the primary insurer. Had defendant assumed the duties which were placed primarily on it because of its position as insurer of the owned vehicle, plaintiff might not have incurred any attorney fees in defending. The primary insurer should not be permitted to profit by its wrongful refusal to defend. 1 Long, The Law of Liability Insurance, § 5.05c, pp 5-36.2, 5-37, 5-38, 5-39.

While there is a split of authority as to whether attorney fees are recoverable, cf. USF & GG v TriState Ins Co, 285 F2d 579 (CA 10, 1960), with Continental National American Group v Pluda, 115 NJ Sup 206; 278 A2d 540 (1971), the better rule seems to be to allow the excess insurer subrogation recovery for defense costs incurred. 1 Long, The Law of Liability Insurance, supra. To hold otherwise, would encourage insurers to deny coverage and subsidize refusal to defend. Unless attorney fees can be recovered, insurance companies might profit by unscrupulous tactics. We hold on these facts attorney fees are allowable as an exception to the general rule that they are only recoverable pursuant to statute or court rule. See State Farm Mutual Automobile Ins Co v Allen, 50 Mich App 71, 77-79; 212 NW2d 821 (1973), citing McCormick, Damages, § 66, p 246, for the proposition that such fees are recoverable "where the present defendant has by his wrongful conduct, be it tort or breach of contract, caused the present plaintiff to defend or prosecute previous legal proceedings”. (Emphasis by McCormick.)

Affirmed. Costs to plaintiff.


author: D. E. Holbrook, P. J. M. F. Cavanagh, J.

text:
    WEISS v BIGMAN
    Docket No. 77-1340.
    Submitted February 15, 1978, at Detroit.
    Decided July 5, 1978.
    Leave to appeal applied for.
    Complaint by Albert P. Weiss, administrator of the estate of Betty A. Weiss, deceased, against Oscar Bigman, M.D., A1 Kawecki, M.D., and H. Tabor, M.D., for damages for the wrongful death of his wife as a result of alleged medical malpractice by the defendant doctors. The Oakland Circuit Court, William J. Beer, J., granted defendants’ motion for accelerated judgment on the ground that plaintiffs suit was barred by the malpractice statute of limitations. Plaintiff appeals. Held:

    The medical malpractice two-year statute of limitations is applicable in an action for damages for wrongful death as a result of medical malpractice where the complaint is drafted solely with the intent of alleging malpractice. This statute of limitations begins to run from the date of last treatment, or ' from the date when the asserted malpractice is or should have been discovered, whichever is later. The trial court erred in granting an accelerated judgment based upon the expiration of the statute of limitations where a material issue of fact existed regarding the discovery date of the asserted malpractice. A cause of action is governed by the statute of limitations in effect at the time the cause of action arose.

      References for Points in Headnotes
    [1] 61 Am Jur 2d, Physicians, Surgeons, and Other Healers §§ 181-185.
    Statute of limitations applicable to malpractice action against physician, surgeon, dentist, or similar practitioner. 80 ALR2d 320.
    When statute of limitations commences to run against malpractice action against physician, surgeon, dentist, or similar practitioner. 80 ALR2d 368.
    [2] 61 Am Jur 2d, Physicians, Surgeons, and Other Healers §§ 182, 183.
    When statute of limitations commences to run against malpractice action against physician, surgeon, dentist, or similar practitioner. 80 ALR2d 368.
    [3] 51 Am Jur 2d, Limitation of Actions § 61.
    [4] 22 Am Jur 2d, Death § 40.
    Time from which statute of limitations begins to run against cause of action for wrongful death. 97 ALR2d 1151.

      Reversed and remanded.
    M. F. Cavanagh, J., concurs in the reversal of the accelerated judgment but does not agree that it was necessary, in this case, to decide whether to apply the two-year malpractice statute of limitations or the three-year statute of limitations for actions to recover damages for injuries to persons and property. He would hold that the statute of limitations did not start to run until the date of the decedent’s death since this is a suit for wrongful death based upon an alleged act of medical malpractice.
    Opinion op the Court
    1. Limitation op Actions — Malpractice—Damages—Wrongful Death — Accrual of Action — Statutes.
    The medical malpractice two-year statute of limitations is applicable in an action for damages for wrongful death as a result of medical malpractice where the complaint is drafted solely with the intent of alleging malpractice; this statute of limitations begins to run from the date of last treatment, or from the date when the asserted malpractice is or should have been discovered, whichever is later (MCL 600.5805[3]; MSA 27A.5805[3]).
    2. Appeal and Error — Accelerated Judgments — Limitation of Actions — Malpractice—Material Issues of Fact — Discovery Date.
    The trial court erred, in an action for damages for wrongful death as a result of medical malpractice, in granting the defendants’ motion for accelerated judgment based upon expiration of the two-year medical malpractice statute of limitations where a material issue of fact existed regarding the discovery date of the asserted malpractice; accelerated judgment grounded on the statute of limitations is improper where material factual disputes exist regarding discovery of the asserted malpractice.
    3. Limitation of Actions — Statute in Effect.
    A cause of action is governed by the statute of limitations applicable to such actions which was in eifect at the time the cause of action arose.
    Concurrence by M. F. Cavanagh, J.
    4. Limitation of Actions — Wrongful Death — Accrual of Action— Malpractice.

      The statute of limitations does not start to run until the date of

      the decedent’s death in a suit for wrongful death based upon an alleged act of medical malpractice.

      Sommers, Schwartz, Silver, Schwartz & Tyler, P. C. (by Norman D. Tucker), for plaintiff.

      Davidson, Gotshall, Kohl, Secrest, Wardle, Lynch & Clark (by Melvin R. Schwartz), for defendant Bigman.

      Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen (by Thomas M. O’Leary and Christine D. Oldani), for defendants Kawecki and Tabor.
    Before: D. E. Holbrook, P. J., and V. J. Brennan and M. F. Cavanagh, JJ.
   D. E. Holbrook, P. J.

Plaintiff appeals a March 30, 1977 order by the Oakland County Circuit Court which granted defendants’ motion for accelerated judgment. The defendants in their motion for accelerated judgment claimed that the plaintiff’s suit was barred by the malpractice statute of limitations, MCL 600.5805(3); MSA 27A.5805(3). Doctors Kawecki and Tabor based their motion for accelerated judgment on the fact that their last contact with the plaintiff’s decedent’s X-ray films was on March 15, 1973, and August 10, 1973, respectively. Dr. Bigman asserted that his last contact with plaintiff’s decedent was in February of 1974. As the complaint was not filed until July 19, 1976, the defendants claimed that the statute of limitations had run on plaintiff’s cause of action.

A review of the lower court file discloses that the facts of the instant case are as follows:

Albert Weiss, administrator of the estate of Betty Weiss, deceased, brought this action against Doctors Bigman, Kawecki and Tabor. In his complaint, Albert Weiss sought recovery for the wrongful death of his wife, alleging that the treatment of the deceased by the defendant doctors constituted malpractice and resulted in her death on July 20, 1974. Specifically, plaintiff alleges that the defendants continuously diagnosed the illness of plaintiff’s decedent as tuberculosis, and plaintiff’s decedent was so treated.

On September 13, 1972, Betty Weiss, age 67, was admitted to Beaumont Hospital. Radiographic films were taken that day and a lesion on the apex of the right lung was discovered.

On September 26, 1972, Mrs. Weiss was discharged from the hospital and remained under the treatment of Dr. Bigman, a specialist in internal medicine. Dr. Bigman treated Mrs. Weiss for tuberculosis until March of 1973. During the course of treatment, Dr. Bigman requested further X-rays of Mrs. Weiss’s chest. Dr. Kawecki interpreted the X-rays taken on March 15, 1973, and had no further contact with the case. Dr. Tabor interpreted the August 10, 1973, X-rays, and had no further contact with the case.

In February of 1974, Mrs. Weiss was told by Dr. Bigman that she was suffering from carcinoma of the right lung with metastasis to the brain. On July 20, 1974, she died as a result of the carcinoma of the right lung with widespread metastasis. On July 19, 1976, an action for wrongful death as the result of medical malpractice was filed in circuit court by Albert Weiss claiming $100,000 in damages.

The sole issue on appeal is whether the trial court erred in granting the defendants’ motion for accelerated judgment based on MCL 600.5805(3); MSA 27A.5805(3) when the plaintiff filed a claim seeking recovery for the wrongful death of his wife, as a result of alleged medical malpractice on the part of defendants.

PlaintiiFs argument on appeal is threefold. First, plaintiff asserts that the cause of action in the instant case is for wrongful death, therefore, the statute of limitations begins to run at the time of death and continues for three years. In the case at bar, the decedent died on July 20, 1974, thus, the plaintiff had until July 20, 1977, to commence the action. The suit was filed on July 19, 1976, and thus was not barred by the statute of limitations.

Second, even if we apply the two-year statute of limitations which is applicable to medical malpractice, the case is not barred. This is based on plaintiffs assertion that the two-year statute of limitations begins to run from the time of death. Therefore, the present suit was timely, having been filed one day short of the expiration of this period.

Third, plaintiff asserts that even ignoring the wrongful death aspects of this case, assuming that this is strictly a case of malpractice, the two-year statute of limitations runs from the date of last treatment or from the date when the malpractice is or should have been discovered, whichever is later. The plaintiff maintains that he did not discover the malpractice until August of 1974. Thus, the filing of his action in July of 1976 was commenced within the two-year statute of limitations. However, defendants maintain that plaintiff discovered the medical malpractice in February of 1974 and, thus, the action was not commenced within the two-year statute of limitations period. As a result of this argument, plaintiff maintains that there is a factual issue as to when he should have known of the malpractice and thus the trial court’s granting of accelerated judgment was improper.

We first deal with whether the two- or three-year statute of limitations should apply. In Castle v Lockwood-MacDonald Hospital, 40 Mich App 597, 607-608; 199 NW2d 252 (1972), the Court stated as follows:

"[I]f it is determined that any part of plaintiffs complaint sufficiently alleges general negligence against Dr. Drake for which the period of limitation is three years, then that part of the complaint will not be barred by the statute of limitation defense. However, any and all allegations that go to malpractice claims will be barred by the two-year statute of limitation found in MCLA 600.5805(3); MSA 27A.5805(3) for the following reasons.11” (Footnote 10 omitted.)

Footnote 11 states as follows:

"Even though in cases involving injuries to persons and property it has been held that the three year statute of limitation, MCLA 600.5805(7); MSA 27A.5805(7), applies.
" '(3) The period of limitations is 2 years for actions charging malpractice.
" '(7) The period of limitations is 3 years for all other actions to recover damages for injuries to persons and property.’ (Emphasis added.) "Consequently, any allegations of malpractice in this wrongful death action are governed by the two-year period of limitations.”

After examining the plaintiff’s complaint in the instant case, we conclude that the allegations contained therein were "drafted solely with the intent to allege malpractice”. Castle, supra, p 612. Therefore, the medical malpractice statute of limitations, MCL 600.5805(3); MSA 27A.5805(3), is applicable. This statute of limitations begins to run from the date of last treatment, or from the date when the asserted malpractice is or should have been discovered, whichever is later.

Having determined that the two-year statute of limitations of MCL 600.5805(3); MSA 27A.5805(3) controls, the question remains whether the suit was timely filed or whether accelerated judgment was properly granted.

A cause of action for malpractice is governed by MCL 600.5805(3); MSA 27A.5805(3). A malpractice cause of action accrues when the treatment is discontinued or when the asserted malpractice is or should have been discovered, whichever is later. Dyke v Richard, 390 Mich 739, 747; 213 NW2d 185 (1973).

In the instant case, the last daté of treatment was March of 1973 for Dr. Kawecki, August of 1973 for Dr. Tabor, and February of 1974 for Dr. Bigman. When the trial court granted defendants’ motion for accelerated judgment he relied on these dates and held: "This Court feels that the statute that applies here is two years from the last date of service”.

Thus, the trial judge disregarded the "time of discovery” rule in Dyke, supra.

The issue now becomes, when did the plaintiff discover the alleged malpractice. The plaintiff asserts he did not discover the alleged malpractice until August of 1974. However, defendants maintain that plaintiff discovered the alleged malpractice when he was told in February of 1974 that his wife had cancer and thus plaintiff should have known that the doctor’s treatment of the lesion in his wife’s lung as being tuberculosis was improper and might constitute malpractice.

Both plaintiff and defendants disagree as to when the plaintiff should have discovered the alleged malpractice. Thus, there is a material issue of fact regarding the discovery date of the asserted malpractice.

In Kelleher v Mills, 70 Mich App 360, 365; 245 NW2d 749 (1976), this Court held:

"Accelerated judgment grounded on the statute of limitations is improper where material factual disputes exist regarding discovery of the asserted malpractice. Winfrey v Farhat, 382 Mich 380; 170 NW2d 34 (1969), Cates v Frederick W Bald Estate, 54 Mich App 717; 221 NW2d 474 (1974), lv den, 394 Mich 758 (1975).”

Thus, the trial court erred in granting defendants’ motion for accelerated judgment because the date of discovery was a material issue of fact that should have been left for a jury.

Defendants Kawecki and Tabor have asserted that the amendment of MCL 600.5838; MSA 27A.5838 by 1975 PA 142 retroactively bars the plaintiffs claim. The act provides:

"(1) A claim based on the malpractice of a person who is, or holds himself out to be, a member of a state licensed profession, intern, resident, registered nurse, licensed practical nurse, registered physical therapist, clinical laboratory technologist, inhalation therapist, certified registered nurse anesthetist, X-ray technician, hospital, licensed health care facility, employee or agent of a hospital or licensed health care facility who is engaging in or otherwise assisting in medical care and treatment, or any other state licensed health professional, accrues at the time that person discontinues treating or otherwise serving the plaintiff in a professional or pseudoprofessional capacity as to the matters out of which the claim for malpractice arose, regardless of the time the plaintiff discovers or otherwise has knowledge of the claim.
"(2) An action involving a claim based on malpractice may be commenced at any time within the applicable period prescribed in sections 5805 or 5851 to 5856, or within 6 months after the plaintiff discovers or should have discovered the existence of the claim, whichever is later. The burden of proving that the plaintiff, as a result of physical discomfort, appearance, condition or otherwise, neither discovered nor should have discovered the existence of the claim at least 6 months before the expiration of the period otherwise applicable to the claim shall be on the plaintiff. A malpractice action which is not commenced within the time prescribed by this subsection is barred.”

Plaintiff’s assertion is without merit as this question was answered in Quinlan v Gudes, 2 Mich App 506; 140 NW2d 782 (1966), wherein the Court held that the statute of limitations in effect at the time the cause of action arose governed. Thus, the cause of action in the instant case arose prior to the passage of 1975 PA 142 and, therefore, that amendment is not applicable.

Reversed and remanded. Costs to plaintiff.

V. J. Brennan, J., concurred.

M. F. Cavanagh, J.

(concurring separately). I concur separately with the majority’s reversal of the accelerated judgment entered below. I do not agree that to do so in this case we must decide whether the two (MCL 600.5805[3]; MSA 27A.5805[3]) or the three (MCL 600.5805[7]; MSA 27A.5805[7]) year statute of limitations applies in wrongful death suits where the alleged wrong is medical malpractice.

Because this action is based upon an alleged act of malpractice, my brothers seem to lose sight of the fact that it is, nonetheless, still a suit for wrongful death. As such, the statute of limitations cannot start to run until the date of death. It was clearly so stated by our Supreme Court in Coury v General Motors Corp, 376 Mich 248, 251; 137 NW2d 134 (1965), to wit:

"In Ford v Maney’s Estate, 251 Mich 461 [232 NW 393 (1930)] (70 ALR 1315), the action was under the so-called survival statute. In distinguishing between the 2 acts, the Court made the observation that:
" 'In this State it is held that the death act created a cause of action unknown to the common law, not by way of survival of a right accruing to the deceased which before had abated at this death, but as a new and special remedy accruing to those who suffer loss by the death.’
"It follows that in Michigan application of the above indicated prevailing view set forth in the ALR reference requires our holding and we think we should hold that the cause of action for a wrongful death and damages resulting therefrom accrues when that death occurs.”

The majority’s application of the rule enunciated in Dyke v Richard, 390 Mich 739, 747; 213 NW2d 185 (1973), to a wrongful death action could result in an action being barred (because not seasonably filed) before the plaintiff had any right to commence the action. I am not in accord with such an application and reiterate that it is unnecessary in this case. The date of death in the instant case was July 20, 1974, and this action was commenced on July 19, 1976. Whichever of the two possible limitation periods is correct, since this action was brought within the shorter of the two, the grant of accelerated judgment below was error and I would reverse.

       In light of the lengthy opinion in Castle v Lockwood-MacDonald Hospital, 40 Mich App 597; 199 NW2d 252 (1972), discussing another issue, the Court’s application of the two-year statute of limitations there appears perfunctory. I believe it would be a mistake to expand the Court’s limited holding in this regard. It should also be noted that in Castle, supra, suit was commenced more than two years after the death of the decedent. In the instant case suit was commenced within two years of the decedent’s death.


author: Danhof, C. J.

text:
    CUPPLES v AMEC, INC.
    Docket No. 77-1656.
    Submitted March 7, 1978, at Lansing.
    Decided July 5, 1978.
    Leave to appeal applied for.
    Clarence Cupples applied for and received general disability workmen’s compensation benefits from his employer, AMEC, Inc., and its insurer, Employers Fire Insurance Company. Subsequently, Cupples applied for differential benefits for total and permanent disability because of the loss of industrial use of his leg. The benefits were awarded. The Second Injury Fund appealed, contending that the one year back provision of the workmen’s compensation statute should apply to limit the benefits payable to the employee to a period no more than one year prior to the application for differential benefits. The Workmen’s Compensation Appeal Board affirmed the award, finding the one year back rule inapplicable, and applying a two year back rule instead. The Second Injury Fund appeals by leave granted. Held: l'

    The finding of the Workmen’s Compensation Appeal Board that Cupples suffered a further development of the original disability is conclusive in the absence of fraud, and in so finding the board applied the proper standard, which is whether that disability involves two results of a single injury, rather than distinct injuries sustained in an accident.
    Affirmed.
    1. Workmen’s Compensation — -Differential Benefits — One Year Back Rule — Burden of Proof — Statutes.
    The one year back rule of the workmen’s compensation law, which limits the period for which differential benefits may be paid where application is made for total disability based upon an earlier compensable disability to no more than one year prior to the date of filing for the differential benefits, does not apply if the claim is for a further development of the original disability; the burden of proof is on the party claiming such a further development (MCL 418.833[1]; MSA 17.237[833] [1]).

      References for Points in Headnotes
    [1] 82 Am Jur 2d, Workmen’s Compensation §§ 333, 511-517.
    [2] 82 Am Jur 2d, Workmen’s Compensation § 547.
    [3] 82 Am Jur 2d, Workmen’s Compensation § 552.
    [4] 82 Am Jur 2d, Workmen’s Compensation § 333.

      2. Workmen’s Compensation — Medical Causation — Question of Fact.
    Questions of medical causation are questions of fact in a workmen’s compensation case.
    3. Workmen’s Compensation — Findings of Fact — Constitutional Law — Statutes.
    Findings of fact made by the Workmen’s Compensation Appeal Board will not be reversed absent fraud (Const 1963, art 6, § 28, MCL 418.861; MSA 17.237[861]).
    4. Workmen’s Compensation — Further Development — Standard.
    The correct standard to be used by the Workmen’s Compensation Appeal Board in determining if a disability is a further development of an original injury is whether that disability involves not distinct injuries sustained in an accident, but rather two results of a single injury.

      Marcus, Ruck & Flynn, P. C. (by David M. Wells), for plaintiff.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Richard F. Zapala, Assistant Attorney General, for defendant Second Injury Fund.
    Before: Danhof, C. J., and D. E. Holbrook, Jr. and S. Everett, JJ.

       Circuit judge, sitting on the Court of Appeals by assignment.

   Danhof, C. J.

Defendant, Second Injury Fund, appeals on leave granted from a Workmen’s Compensation Appeals Board (WCAB) decision awarding plaintiff differential benefits for total and permanent disability due to the loss of the industrial use of his leg. The only issue on appeal is whether the award was contrary to MCL 418.833(1); MSA 17.237(833)(1), which reads:

"If payment of compensation is made, other than medical expenses, and an application for further compensation is later filed with the bureau, no compensation shall be ordered for any period which is more than 1 year prior to the date of filing of such application.”

On July 11, 1973, plaintiff was awarded general disability compensation benefits for a back injury which occurred as a result of three separate accidents, the last occurring in 1971. On September 5, 1974, plaintiff filed his present petition seeking differential benefits for total and permanent disability. The WCAB found that the "1 year back” rule was not applicable but limited plaintiff’s recovery of benefits to a period starting two years before the filing of his petition in accordance with MCL 418.381(2); MSA 17.237(381)(2).

In determining the applicability of MCL 418.833(1); MSA 17.237(833)(1), the case law has distinguished between cases of "further development” and cases of "further compensation”, see Morgan v Lloyds Builders Inc, 344 Mich 524; 73 NW2d 880 (1955), Loucks v Bauman, 356 Mich 514; 97 NW2d 321 (1959), Adcox v Northville Laboratories, Inc, 381 Mich 600; 166 NW2d 460 (1969), Drake v Norge Division, Borg-Warner Corp, 48 Mich App 88; 210 NW2d 131 (1973). If the claim is for further development, the one year back rule does not apply, Morgan, supra; Adcox, supra. The burden of proof is on the one claiming a further development to show a further development, Ad-cox, supra.

The legal standard used in determining whether the disablement is a further development has been stated in a variety of ways. In Palchak v Murray Corp of America, 318 Mich 482, 493; 28 NW2d 295 (1947), further development was defined as "not involv[ing] distinct injuries sustained in an accident, but rather two results of a single injury”. This standard was cited in Morgan, supra, at 528, Drake, supra, at 95. Emphasis has also been placed on the fact that the subsequent disablement was not present or recognizable at the time of the original hearing, Palchak, supra, at 492, Loucks, supra, at 531, Adcox, supra, at 608 (dissenting opinion). Analyzing and reconciling the holdings on the facts and/or the language used in these cases is difficult. Some support for both plaintiff’s and defendant’s claims can be found in almost every case.

However, the holdings in all these cases are consistent with each other when viewed in light of the scope of appellate review of workmen’s compensation decisions. This is possibly the only way to reconcile the differing results reached in Morgan, supra, and Adcox, supra. In Morgan, supra, the WCAB found that plaintiff had met his burden of proof in showing a further development while in Adcox, supra, plaintiff had not carried his burden. The Supreme Court affirmed both decisions. The most plausible explanation for this is that questions of medical causation are questions of fact, Galac v Chrysler Corp, 63 Mich App 414; 235 NW2d 359 (1975), and findings of fact will not be reversed absent fraud, Const 1963, art 6, § 28; MCL 418.861; MSA 17.237(861), Steel v Suits News Co, 398 Mich 171; 247 NW2d 284 (1976). The only instances in which the WCAB found further development and was reversed on appeal involve situations where there was no change in the petitioner’s disábility since the time of the original hearing, see Hlady v Wolverine Bolt Co, 393 Mich 368; 224 NW2d 856 (1975), Baldwin v Chrysler Corp, 67 Mich App 61; 240 NW2d 266 (1976), lv den, 396 Mich 862 (1976).

In the instant case, the WCAB found further development. They accepted plaintiffs evidence as establishing a "prima facie” case. The doctor treating plaintiff testified that recent X-rays had shown the development of arthritic spurs on the lumbar vertebrae not shown in the earlier X-rays used at the original hearing in 1973. He testified that now, plaintiff was disabled from performing any job because he could not stand and/or sit for any extended length of time, due to the pain generated by the use of his legs. The doctor also testified that the development of these spurs was a progression of the underlying condition. These findings of fact are conclusive in the absence of fraud, Const 1963, art 6, § 28.

In determining whether the facts found established a further development, the WCAB opinion indicates that it applied the standard enunciated in Morgan, supra. This is the proper standard and the WCAB committed no reversible error in their application of it.

Affirmed.


text:
    DEPARTMENT OF NATURAL RESOURCES v FROSTMAN
    Docket No. 77-1731.
    Submitted May 3, 1978, at Marquette.
    Decided July 5, 1978.
    Leave to appeal applied for.
    James Frostman was found to have fished in the Michigan waters of Lake Superior without a license. After a hearing, an order was entered for confiscation by the Department of Natural Resources of all of the equipment used by the defendant, Gogebic Circuit Court, Donald L. Munro, J. Defendant appeals. Held:

    1. Admission of the testimony of the DNR’s expert witnesses was erroneous because of the lack of qualifications of the witnesses and the inaccuracy of the instruments used to establish the defendant’s position on Lake Superior. The sum of the plaintiffs methods of placing the defendant in Michigan waters lacked substance and credibility.
    2. There is no denial of equal protection in the statutory distinction between mandatory confiscation of the property when the value exceeds $300 and discretionary confiscation when the value is equal to or less than $300.
    Reversed.
    1. Evidence — Witnesses—Expert Witnesses — Admission of Expert Testimony — Circumstances.
    Expert testimony may be admitted under the following circumstances: (1) there must be an expert, (2) there must be facts in evidence which require or are subject to examination and analysis by an expert, and (3) there must be knowledge in the particular area which belongs more to an expert than to a lay person.
    2. Witnesses — Expert Witnesses — Evidence—Discretion of Trial Court.
    Discretion exists in the trial court to receive or reject the opinions of expert witnesses.
    References for Points in Headnotes
    [1, 3] 31 Am Jur 2d, Expert and Opinion Evidence §§ 1, 2.
    [2] 31 Am Jur 2d, Expert and Opinion Evidence § 3.
    [3] 31 Am Jur 2d, Evidence § 604.
    [4] 31 Am Jur 2d, Evidence §§ 26-32.
    [5] 35 Am Jur 2d, Fish and Game § 54.

      3. Evidence — Witnesses—Opinion Testimony — Facts—Expert Witnesses.
    Ordinarily, a witness is restricted to the facts, and opinion evidence is inadmissible; a witness is entitled to express an opinion or conclusion where that opinion is dependent on professional or scientific knowledge or skill.
    4. Evidence — Witnesses—'Scientific Apparatus — Qualifications of Operator — Expert Witnesses.
    Testimony as to the reliability of scientific apparatus and the qualifications of the operator of such apparatus is a sine qua non to the admission of expert opinion evidence.
    5. Constitutional Law — Equal Protection — Game and Fish Laws —Confiscation of Property.
    No denial of equal protection exists in the distinction in the game and fish enforcement statutes between mandatory confiscation of property when the value exceeds $300 and discretionary confiscation when the value is equal to or less than $300 (MCL 300.13, 300.14; MSA 13.1223, 13.1224).

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Anders B. Tingstad, Prosecuting Attorney (Prosecuting Attorneys Appellate Service, by Keith D. Roberts, Assistant Attorney General), for plaintiff.

      Green, Renner, Weisse, Rettig, Rademacher & Clark, for defendant.
    Before: V. J. Brennan, P. J., and R. B. Burns and M. J. Kelly, JJ.
   V. J. Brennan, P. J.

Defendant James Frostman was found to have fished in the Michigan waters of Lake Superior without a license in violation of MCL 308.22; MSA 13.1513. After a hearing was held on March 9-10, 1977, Gogebic County Circuit Judge Donald L. Munro entered an order on April 28, 1977, confiscating all of the equipment used by defendant under the authority of MCL 300.14; MSA 13.1224. Defendant appeals this order as of right. GCR 1963, 806.1. Defendant raises several allegations of error. We will address those which merit discussion.

We must determine at the outset whether, if the trial court abused its discretion in admitting expert testimony of witnesses not duly qualified as experts, sufficient competent evidence exists to support its finding that defendant’s fishing nets were located within Michigan waters.

Admission of expert witness testimony depends upon requirements established by the Michigan Supreme Court and followed by this Court. O’Dowd v Linehan, 385 Mich 491, 509-510; 189 NW2d 333 (1971). See also Johnson v Detroit, 79 Mich App 295, 300-301; 261 NW2d 295 (1977). O’Dowd established that expert testimony may be admitted under the following circumstances: (1) there must be an expert, (2) there must be facts and evidence requiring or subject to examination and analysis by an expert, and (3) there must be knowledge in the particular area that belongs more to an expert than to a lay person.

Discretion exists in the trial court to receive or reject the opinion of experts. Siirila v Barrios, 398 Mich 576, 591; 248 NW2d 171 (1976), Moore v Lederle Laboratories, 392 Mich 289, 295-296; 220 NW2d 400 (1974), People v Zimmerman, 385 Mich 417, 426; 189 NW2d 259 (1971). Ordinarily, a witness is restricted to the facts, and opinion evidence is inadmissible. A witness is entitled to express an opinion, or conclusion, where that opinion is dependent on professional or scientific knowledge or skill. Dudek v Popp, 373 Mich 300, 305-306; 129 NW2d 393 (1964).

The principal question here is whether the witnesses offered by plaintiff qualified as experts.

Plaintiff contends that even if these two witnesses, Dabb and Scorfar, were not qualified to give expert opinion, their lack of qualifications affects the weight, not the sufficiency, of the evidence. Testimony as to the reliability of scientific apparatus, and the qualifications of the operator of such apparatus, is a sine qua non to the admission of expert opinion evidence. People v Krulikowski, 60 Mich App 28, 32; 230 NW2d 290 (1975).

We find the testimony of these witnesses was erroneously admitted. Record evidence appears as to the inaccuracy of the instruments used in making the necessary measurements. Testimony was also provided as to the internal inconsistencies of the measurements taken by these instruments. Both witnesses were unable to answer simple questions regarding the definition of basic navigational terms. Each witness testified that his training had been rudimentary at best. The problem with the measurements taken by these witnesses is even recognized by the trial court in its decision. On the basis of this record, we do not find the proper basis was laid for admission of this testimony.

Further, even were we to find the Department of Natural Resources’ witnesses competent to testify as experts, we would find the evidence they presented inadequate to sustain so extreme a penalty. Defendant in this case was liable to lose the very basis of his livelihood. In order to sustain such a penalty, the evidence of measurement presented by department witnesses would need to be much more accurately and scientifically determined than was presented in this case. For instance, though the department represented in its complaint that its measurements were based upon VOR air navigation instrument readings and sonar tests, only testimony relating to compass bearings, depth readings and time-speed calculations was actually admitted at trial.

In fact, the Department of Natural Resources’ officers first attempted to compute the position of defendant’s nets by measuring the depth of the water. They found a buoy depth of 460 feet near the supposed point of infraction. Charts admitted as evidence indicated depths varying from 438 feet to more than 500 feet in Michigan waters while only 250 to 396 feet in Wisconsin waters. This is mathematically a differential of only 42 feet between the extreme figures on both sides, assuming the accuracy of the charted numbers. Bottom drift might itself make such figures even less reliable. Add to this variable the probability that the anchor line may have drifted or bent in the water current and we find little left to recommend this first system of measurement.

Plaintiffs next approach involved time-speed calculations using fixed land and water points of reference. Compass bearings and fixed speed were employed in this manuever, the validity of which was neither adequately authenticated by verifying plaintiffs individual compass accuracy nor thoroughly substantiating the Department of Natural Resources’ motor craft’s miles per hour ratio to its revolutions per minute.

The trial court refused to admit evidence of sonar readings, though we would note that such evidence by itself would not verify questions regarding physical position to the state boundary. In short, the sum of plaintiffs methods of placing defendant in Michigan waters lacked substance and credibility. The witnesses’ lack of necessary expertise certainly added no luster to the evidentiary presentation.

The court noted that the Department of Natural Resources woefully underequips its officers. This Court’s holding today is not intended to indicate a lax attitude to proven illegal fishing in Michigan waters. What we do intend to do is put the Department of Natural Resources on notice that persons such as defendant may not be successfully prosecuted in our courts where the penalty for violation is seizure without more accurate and substantial support for any poaching charges made.

We thus would recommend use of more reliable equipment like the Loran "C” radio signal system, which inexpensively measures distances by employing time delay in micro-seconds in order to pinpoint objects within 50 feet of true position. No great expertise or experience is required to operate such a device. We would recommend such a system to the Department of Natural Resources. We will require this degree of accuracy before utilizing the extreme kind of penalty prescribed here.

We find these errors sufficient basis upon which to reverse the trial court.

Having reviewed defendant’s remaining claims of error, we find them unnecessary to address at this time, except for the comment that no denial of equal protection exists in the statutory distinction between mandatory confiscation of the property when the value exceeds $300 and discretionary confiscation when the value is equal to or less than $300. See Alexander v Detroit, 392 Mich 30, 35-36; 219 NW2d 41 (1974).

Reversed.


author: Bronson, J.

text:
    PEOPLE v CUMMINGS
    Docket No. 77-2013.
    Submitted May 2, 1978, at Detroit.
    Decided July 6, 1978.
    Warren Cummings entered a plea of guilty to a charge of attempted breaking and entering an occupied dwelling with intent to commit larceny. The prosecution moved to set aside the plea on two bases: (1) in his plea, the defendant stated that he did not know that it was an occupied dwelling, and (2) the prosecutor was not made aware of the defendant’s extensive record for breaking and entering. The trial court set aside the plea on both bases. Subsequently, the defendant pled guilty to breaking and entering an occupied dwelling with intent to commit larceny. On the sentencing date the defendant moved to withdraw the plea, but that motion was denied, Detroit Recorder’s Court, Samuel H. Olsen, J. Defendant appeals. Held:

    1. The trial court’s first basis for setting aside the original plea was improper since it is not an element of the offense that the defendant know that the building he entered was an occupied dwelling house. However, the second basis for setting aside the plea was proper because defense counsel had concealed material information during plea bargaining.
    2. The trial court did not abuse its discretion in refusing to allow the defendant to withdraw his subsequent plea since the defendant offered no reason for wanting to withdraw it and the trial court reviewed the plea and found that it was knowingly and voluntarily made.
    3. The trial court was not required to inform the defendant of the possibility of consecutive sentences prior to accepting the defendant’s guilty plea.
    4. The defendant was not prejudiced by the substitution at sentencing of one attorney from the Detroit Defender’s Office for another from the same office.
    Affirmed.
    References for Points in Headnotes
    [1] 13 Am Jur 2d, Burglary §§ 1, 24.
    [2-3] 21 Am Jur 2d, Criminal Law §§ 503-506.
    [4] 21 Am Jur 2d, Criminal Law §§ 547-551.

      1. Burglary — Larceny—Elements—Occupied Dwelling — Defendant’s Knowledge — Plea of Guilty — Withdrawal of Plea— Prosecutor’s Motion — Statutes.
    A defendant’s knowledge that a dwelling is occupied is not an element of the offense of breaking and entering an occupied dwelling with intent to commit larceny; therefore, it was improper for a trial court to set aside a defendant’s plea of guilty to attempted breaking and entering an occupied dwelling with intent to commit larceny based on the fact that the defendant, in his plea, stated that he did not know that it was an occupied dwelling (MCL 750.110; MSA 28.305).
    2. Criminal Law — Plea of Guilty — Plea Bargains — Setting Plea Aside — Prosecutor’s Motion — Breaking and Entering — Discretion.
    As a general rule, even unwise plea bargains are binding on the prosecutor; however, it was not an abuse of the trial court’s discretion to set aside a defendant’s plea of guilty to a charge of attempted breaking and entering an occupied dwelling with intent to commit larceny, on the prosecutor’s motion, where the trial court found that defense counsel had concealed material information regarding the defendant’s extensive record for breaking and entering and where there was evidence to support this finding.
    3. Criminal Law — Plea of Guilty — Motions—Withdrawal of Plea —Discretion.
    A trial court did not abuse its discretion in denying a defendant’s motion to withdraw his guilty plea where the defendant offered no reason for wanting to withdraw his plea and the trial court had reviewed the plea and found it knowingly and voluntarily made.
    4. Criminal Law — Plea of Guilty — Consecutive Sentences — Informing Defendant.
    A trial court is not required to inform a defendant of the possibility of consecutive sentences prior to accepting the defendant’s guilty plea.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, William L. Cahalan, Prosecuting Attorney, Edward R. Wilson, Principal Attorney, Appeals, and Andrea L. Solak, Assistant Prosecuting Attorney, for the people.

      Bruce R. Saperstein, for defendant on appeal.
    Before: M. F. Cavánagh, P. J., and Bronson and D. F. Walsh, JJ.
   Bronson, J.

The primary issue in this guilty-plea appeal is whether a plea may be set aside before sentencing on the prosecutor’s motion on the basis that defense counsel concealed material facts during plea bargaining.

Defendant originally pled guilty to attempted breaking and entering an occupied dwelling with intent to commit larceny on June 28, 1976, pursuant to a plea bargain.

On July 6, 1976, before sentencing, the prosecutor moved to set aside this plea on two bases: (1) in his plea, defendant stated that he did not know it was an occupied dwelling, and (2) the prosecutor was not made aware of defendant’s extensive record for breaking and entering. The trial court granted the motion on both bases.

Subsequently, defendant pled guilty to breaking and entering an occupied dwelling with intent to commit larceny, MCL 750.110; MSA 28.305. He moved on the sentencing date to withdraw the plea, but that motion was denied. He now appeals of right.

Defendant first contends that the trial court erred in setting aside his original plea to attempted breaking and entering. The trial court’s first reason for setting aside the plea was insufficient. It is not an element of MCL 750.110; MSA 28.305 that defendant know the building he entered was an occupied dwelling house.

However, we hold that the trial court’s second reason was sufficient to justify setting aside the plea.

As a general rule, even unwise plea bargains are binding on the prosecutor. Santobello v New York, 404 US 257; 92 S Ct 495; 30 L Ed 2d 427 (1971), People v Reagan, 395 Mich 306; 235 NW2d 581 (1975). However, People v Reagan, supra, indicates that there may be situations in which a plea agreement may be held not to bind the prosecutor:

"We are not confronted with the situation where the prosecutor is misled by force of defendant’s connivance into a disadvantageous agreement or where facts not within the fair contemplation of agreement have come to light.” People v Reagan, supra, at 318.

See State v Lord, 109 NJ Super 80; 262 A2d 244 (1970).

In the case at bar, the lower court found that defense counsel had concealed material information during plea bargaining. There was evidence to support this finding. On these facts, the trial court did not abuse its discretion in setting aside defendant’s first guilty plea.

Defendant next contends that the trial court abused its discretion in not allowing him to withdraw his second guilty plea on the date of sentencing. At sentencing, defendant stated that he wanted to withdraw his guilty plea, but offered no reason for wanting to withdraw it. The trial court denied his motion, stating that it had reviewed the plea and found it knowingly and voluntarily made. We hold that the trial court did not abuse its discretion. People v Stewart, 23 Mich App 589; 179 NW2d 193 (1970). See People v Zaleski, 375 Mich 71; 133 NW2d 175 (1965).

Defendant also challenges his second guilty plea on the basis that the trial court failed to inform him of the possibility of consecutive sentences. This, however, is not required. People v Bennett, 76 Mich App 264; 256 NW2d 459 (1977), People v Larkins, 59 Mich App 199; 229 NW2d 378 (1975).

Finally, we hold that defendant was not prejudiced by the substitution of one attorney from the Detroit Defender’s Office by another from the same office at sentencing. Defendant fails to even allege prejudice from that substitution. See People v Edwards, 18 Mich App 526; 171 NW2d 592 (1969).

Affirmed.

       In return for the plea, the prosecutor agreed not to proceed under the habitual offender act, MCL 769.10-769.13; MSA 28.1082-28.1085.

       See, e.g., People v Benevides, 71 Mich App 168, 171-172; 247 NW2d 341 (1976), holding that the elements of breaking and entering an occupied dwelling are: (1) a breaking and entering, (2) of an occupied dwelling, (3) with felonious intent.
      The statute reads in part:
      "Any person who breaks and enters any occupied dwelling house, with intent to commit any felony or larceny therein, shall be guilty of a felony punishable by imprisonment in the state prison for not more than 15 years. For the purpose of this section 'any occupied dwelling house’ includes one that does not require the physical presence of an occupant at the time of the breaking and entering but one which is habitually used as a place of abode.” MCL 750.110; MSA 28.305.

       GCR 1963, 785.7(6) does not state when a plea may be withdrawn on the prosecutor’s motion.

         Defendant told the court that he had informed his attorney of his record. It is undisputed that the prosecutor was not informed of it.

       The record supports this finding.