Michigan Court of Appeals; Docket # 348651; Unpublished
Judges Gleicher, Stephens, and Cameron; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals reversed the trial court’s denial of defendant Meemic Insurance Company’s motion for summary disposition, in which Meemic asserted that, because plaintiff Arlita Collins endorsed and deposited a refund check for the full amount of premiums paid on her mother’s automobile insurance policy, Collins and her mother consented to Meemic’s rescission of Collins’s mother’s policy. Therefore, no insurance coverage existed at the time of the subject motor vehicle crash, and plaintiff’s claims against Meemic should have been dismissed.
Green had power of attorney that allowed to her enter into contracts, sign documents, and cash checks on her mother’s behalf, and four months prior to the subject crash, Green procured automobile insurance for her mother’s vehicle through Meemic. The application for insurance required Green to identify “all household members—regardless of age,” but Green did not provide the name of John Collins, an individual that lived with her. Green testified that she was instructed by her insurance agent to withhold Collins’s name on the application, because Collins would not be driving the car. Regardless, after the subject crash involving both Green and Collins, and after Green and Collins filed the underlying lawsuit seeking payment of overdue no-fault PIP benefits, Meemic sent a letter to Green’s mother notifying her that it was rescinding her policy because Green’s failure to disclose Collins as a household resident constituted a material misrepresentation warranting rescission. Meemic also enclosed a check for the total amount of premiums paid under the policy plus interest, which Green cashed before consulting an attorney. Meemic moved for summary disposition, arguing that Green’s acceptance, endorsement, and depositing of the check constituted a consent to the policy’s rescission, thereby meaning that no coverage was maintained at the time of the collision. The trial court disagreed, and denied Meemic’s motion.
The Court of Appeals reversed the trial court’s denial of Meemic’s motion for summary disposition, despite noting that there were questions of material fact that precluded summary disposition as to whether Green’s failure to list Collins as a household resident constituted a material misrepresentation. However, the Court of Appeals noted that, “[b]y signing the premium refund check, Green signaled her acquiescence to the policy’s rescission.” Furthermore, “[t]his evidence compels the conclusion that Green and Meemic mutually agreed to rescind the no-fault policy under which plaintiffs sought benefits, extinguishing their claims.”
The other party’s acceptance of the return of the consideration it paid toward the contract creates a “mutual agreement” or mutual “assent” to rescind the contract and excuses all the duties and rights flowing from that contract. 13 Corbin, Contracts (rev ed), § 67.8, pp 47-49; 29 Williston, Contracts (4th ed), § 69:50, pp 119-121, § 73:15, pp 48-49. The endorsement and cashing of a check represents one party’s acceptance of the other party’s terms. See Puffer v State Mut Rodded Fire Ins Co of Mich, 259 Mich 698, 702; 244 NW 206 (1932) (“The failure of the parties to make a verbal agreement of settlement, separate from the indorsement on the check, is not of consequence.”); DMI Design & Mfg, Inc v ADAC Plastics, Inc, 165 Mich App 205, 210; 418 NW2d 386 (1987) (“In this case, plaintiff’s action in negotiating the check speaks louder than plaintiff’s words.”); Fuller v Integrated Metal Tech, Inc, 154 Mich App 601, 614; 397 NW2d 846 (1986) (in which the plaintiff’s claims were precluded because he endorsed and cashed a check tendered by the defendant in settlement of the parties’ disagreement).
By refunding the premiums Green or her mother had paid, Meemic restored the status quo. As the contract was legally and mutually rescinded, plaintiffs no longer had any ground to pursue their lawsuit against Meemic.
