“If a fair reading of the entire contract of insurance leads one to understand that there is coverage under particular circumstances and another fair reading of it leads one to understand that there is no coverage under the same circumstances the contract is ambiguous and should be construed against its drafter and in favor of coverage.”
How later courts described this case
- “If a fair reading of the entire contract of insurance leads one to understand that there is coverage under particular circumstances and another fair reading of it leads one to understand that there is no coverage under the same circumstances the contract is ambiguous and should be construed against its drafter and in favor of coverage.”
- equating an insurance contract with a contract of adhesion
- “[T]he expectation that a contract will be enforceable other than according to its terms surely may not be said to be reasonable.”
- “Yet if a contract, however inartfully worded or clumsily arranged, fairly admits of but one interpretation it may not be said to be ambiguous or, indeed, fatally unclear.”
Written by the judges who cited it.
Later courts went against this
Overruled on other grounds by Smith v. Globe Life Insurance, 460 Mich. 446 (1999)
412 Mich. 355, 314 N.W.2d 440, 441 (1982), overruled on other grounds by Smith v. Globe Life Ins. Co., 460 Mich. 446, 597 N.W.2d 28 (1999);
The opinion
Kavanagh, J.
(for affirmance). This case involves the validity of an exclusionary clause in a pre-no-fault automobile insurance policy.
Any clause in an insurance policy is valid as *362 long as it is clear, unambiguous and not in contravention of public policy.
Although plaintiffs here assert that this "owned automobile” exclusion clause violates public policy, they cite us no public policy touching the area. Their argument is concentrated on the "obscurity” of the drafting on account of the placement of the clause in the policy, and the technicality of language used — both of which touch not on public policy but rather on the clarity or ambiguity of the words.
The only pertinent question, therefore, is whether the exclusionary clause in this contract is ambiguous, for if it is not ambiguous we are constrained to enforce it.
A contract is said to be ambiguous when its words may reasonably be understood in different ways.
If a fair reading of the entire contract of insurance leads one to understand that there is coverage under particular circumstances and another fair reading of it leads one to understand there is no coverage under the same circumstances the contract is ambiguous and should be construed against its drafter and in favor of coverage.
Yet if a contract, however inartfully worded or clumsily arranged, fairly admits of but one interpretation it. may not be said to be ambiguous or, indeed, fatally unclear.
Plaintiffs also assert that as drafted the policy did not meet their "reasonable expectations”. Still the expectation that a contract will be enforceable other than according to its terms surely may not be said to be reasonable. If a person signs a contract without reading all of it or without understanding it, under some circumstances that person can avoid its obligations on the theory that *363 there was no contract at all for there was no meeting of the minds.
But to allow such a person to bind another to an obligation not covered by the contract as written because the first person thought the other was bound to such an obligation is neither reasonable nor just.
The capitalized reference at the bottom of the first page and the capitalized heading "Exclusions” on the second page of the endorsement involved here persuade me that a fair reading of the entire policy should leave no doubt that use of a vehicle not named in the policy which is either owned by the insured or furnished for his or her regular use is excluded from coverage.
I would affirm.
Coleman, C.J., and Fitzgerald and Ryan, JJ., concurred with Kavanagh, J.