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Swartzenberg v Auto Club Insurance Association and Continental Insurance Company; (COA-UNP, 3/30/1993; RB #1606)


Michigan Court of Appeals; Docket Nos. 139238 and 139239; Unpublished  
Judges Doctoroff, Wahls, and Weaver; Unanimous; Per Curiam  
Official Michigan Reporter Citation:  Not Applicable; Link to Opinion alt   

Definition of Owner [§3101(2)(h)]   
General Rule of Priority [§3114(1)]  
Exception for Employer Provided Vehicles [§3114(3)]

Legislative Purpose and Intent    

In this unanimous per curiam unpublished Opinion, the Court of Appeals interpreted the provisions of §3101(2)(g) which defines what constitutes ownership of a motor vehicle as that definition would apply to the priority provisions of §3114(3) which state that an employee injured in a vehicle owned by his employer would collect no-fault benefits from the insurance company insuring the employer's vehicle.  

The provisions of §3101 (2)(g) state:

g. "Owner" means any of the following: i. A person renting a motor vehicle or having the use of a motor vehicle under a lease or otherwise, for a period that is greater than 30 days.

ii. A person who holds the legal title to a vehicle, other than a person engaged in the business of leasing motor vehicles who is the lessor of a motor vehicle pursuant of a lease providing for the use of the motor vehicle by the lessee for a period that is greater than 30 days.

iii. A person who has the immediate right of possession of a motor vehicle under an installment sale contract.

In this somewhat unusual factual circumstance, the vehicle being operated by Mr. Swartzenberg at the time that he was injured in the motor vehicle accident, was insured by his employer's fleet insurance company through Continental. The determinative issue in this case was whether Mr. Swartzenberg's employer, Splane Electric Supply Company, was the owner of the vehicle at the time of the accident.  

Swartzenberg was an officer, director, employee and 97% stock owner of Splane. It was Splane's custom to include within its fleet of vehicles an automobile for Swartzenberg's business and personal use, for which Swartzenberg paid a monthly user fee. Prior to the purchase of the vehicle involved in this accident, the car normally furnished to Swartzenberg was titled and registered in Splane's name and insured under Splane's fleet policy with Continental. Splane decided to purchase a new car, and because Swartzenberg was eligible through his son-in-law for a special incentive program allowing him to purchase the vehicle at a discount, the vehicle was purchased through that plan. However, the plan required that the sale be to an individual, and that the individual own the vehicle for at least six months before transferring or selling it. Because of the significant discount, the vehicle was indeed purchased on those terms and registered in Swartzenberg's individual name. The vehicle owned by Splane was traded in as part of the purchase agreement, Splane paid for the balance, and the car was then insured by Splane's fleet insurance through Continental. However, to comply with the discount plan, the car was titled and registered in Swartzenberg's individual name. Continental issued a certificate of no-fault insurance for the new car under Splane's policy, but in accordance with the title and registration, named Swartzenberg as the insured. Splane listed the car as a company asset in its audit books, paid its maintenance costs, and made plans to have the title and registration transferred after the six-month waiting period under the discount plan.  

Prior to the transfer of title to Splane, Swartzenberg was severely injured, incurring substantial no-fault benefits. Continental refused to pay those benefits based upon language in its policy restricting PIP coverage to automobiles owned by the insured named in the policy. Auto Club, which insured a vehicle owned by Swartzenberg's wife, likewise denied benefits and relied upon the priority provisions of §3114(3) in support of its argument that the employer of Swartzenberg was indeed the owner of the vehicle and therefore its insurance company owed the no-fault benefits.   

On motions for summary disposition, Continental argued that under the ownership definitions of the no-fault statute, §3101(2)(g), Swartzenberg, not Splane, owned the vehicle, and therefore, the vehicle was not covered under the fleet policy of Swartzenberg's employer. Therefore, Continental argued that since Splane did not own the vehicle, Continental could not be held liable under §3114(3) which applies only when an employee is injured in a vehicle owned or registered by the employer.  

The Court of Appeals held that the trial court properly granted summary disposition against Continental on the ownership issue. The statutory provisions of §3101(2)(g) do not limit the term "owner" to the person who holds legal title to the vehicle. Rather, one who has the use of a vehicle for a period of more than 30 days may also be an owner. Case law has also repeatedly recognized that one can be an owner without having legal title. In this case, it was undisputed that Swartzenberg undertook the purchase of the vehicle for his employer's benefit, and titled the vehicle in his own name only in order to comply with the requirements of the discount purchase plan. Splane intended to and did have the right to use the vehicle, whose purchase price, insurance premiums and maintenance it paid for a period exceeding 30 days. It also listed the car among its corporate assets. The court felt that had Swartzenberg refused to convey title to Splane at the end of six months, or had he died and his estate sought to assert ownership of the vehicle, the courts would surely recognize an ownership right in Splane under the undisputed facts of this case. Having determined that Splane was an owner, the trial court did not err in determining that Continental was liable under the priority provisions of §3114(3).  

Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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