Dasen v. Frankenmuth Mutual Insurance

Per Curiam. This is a case of first impression involving the issuance of a policy of fire insurance, of which not all copies comply with the statutory requirements. On July 18, 1969, a fire totally destroyed plaintiffs’ home. There was in effect at the time of the fire a fire insurance policy issued by defendant in the face amount of $50,000. Having settled with respect to the contents destroyed, a dispute arose as to the actual cash value of the home itself. Plaintiffs claimed $50,000, whereas defendant argued that the value was substantially less. After protracted, futile negotiations, defendant demanded formal appraisal proceedings, as set forth in the statutory standard fire insurance policy. MCLA 500.2832; MSA 24.12832. Plaintiffs refused to engage in such proceedings, claiming that the policy they received did not incorporate any such provision. Plaintiffs filed suit May 27, 1970, seeking enforcement of the policy of insurance. Defendant responded, moving for accelerated judgment on the basis that plaintiffs refused to comply with a condition precedent to suit: formal appraisal proceedings. Having heard arguments, the trial court rendered its opinion, indicating that whether or not there was delivery of the mandatory statutory standard form, *584 the provisions were to be impressed upon every fire policy, including the instant one. The court went further and imposed upon defendant a $250 penalty, as provided in MCLA 500.2866; MSA 24.12866. Upon defendant’s motion for rehearing, the trial court reiterated its former holding. Plaintiffs appeal as of right and defendant cross-appeals. On appeal, there are two issues: (1) whether the trial court erred in impressing upon the policy of fire insurance, delivered by defendant to plaintiffs, all provisions of the Michigan standard fire policy, where such provisions did not appear in the policy received by plaintiffs, and (2) whether the trial court erred in imposing sua sponte the penalty provided in MCLA 500.2866; MSA 24.12866, for defendant’s failure to deliver a copy of the statutory standard fire policy to plaintiffs. Plaintiffs assert that the policy they received was the entire contract and that the court was not free to rewrite it. While, generally, this proposition is supported, in the instant case the Legislature has provided that no policy of fire insurance shall be issued which fails to comply with the statutory form. MCLA 500.2806(2); MSA 24.12806(2). In Wendel v Swanberg, 384 Mich 468, 478 (1971), the Court held that: “Mandatory statutory provisions are read into insurance contracts though they be omitted by the parties. Galkin v. Lincoln Mutual Casualty Co. (1937), 279 Mich 327; Chrysler Corporation v. Hardwick (1941), 299 Mich 696.” We affirm this portion of the trial court’s holding. Defendant asserts that clear error attends the imposition of the penalty provided in MCLA 500.-2866; MSA 24.12866. This statute provides in part: *585 “Any person that shall, either as principal or agent, wilfully issue or cause to be issued, any policy or contract of fire insurance on property situated within this state, contrary to the provisions of this chapter, shall forfeit the sum of $250.00 for each policy or contract so issued.” However, it is provided elsewhere, in MCLA 500.230; MSA 24.1230: “Every penalty provided for by this code, if not otherwise provided for, shall be sued for and recovered in the name of the people by the prosecuting attorney of the county in which the insurer or the agent or agents so violating shall be situated; and shall be paid into the treasury of said county; such penalties may also he sued for and recovered in the name of the people, by the attorney general, and, when sued for and collected by him, shall he paid into the state treasury.” In the instant situation, it was error for the trial court to impose a penalty upon defendant, and we reverse this part of the trial court’s holding. Remanded for action consistent with this opinion. No costs are awarded.