AMERICAN FELLOWSHIP MUTUAL V DIANE FERENCE
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STATE OF MICHIGAN
COURT OF APPEALS
AMERICAN FELLOWSHIP MUTUAL
INSURANCE COMPANY,
UNPUBLISHED
Plaintiff-Appellant,
v
DIANA L. FERENCE as Guardian-Conservator of the
Estate of JASON FERENCE,
No. 190910
Livingston Circuit Court
LC No. 95-014066 CK
Defendant, Counterplaintiff,
Third-Party Plaintiff,
and
AUTO CLUB INSURANCE ASSOCIATION,
Third-Party Defendant-Appellee.
Before: White, P.J., and Bandstra and Smolenski, JJ.
BANDSTRA, J. (dissenting).
I respectfully dissent. The “innocent third party” doctrine relied upon by the majority found its
genesis in Morgan v Cincinnati Ins Co, 411 Mich 267; 307 NW2d 53 (1981). However, Morgan
involved a standard fire insurance policy prescribed by statute. Id. at 276. Our Supreme Court
construed the statutory language as meaning that “the claim of any insured under the policy who is
innocent of fraud” cannot be barred. Id. at 277. This holding, required by the statute,1 was specifically
limited to apply only “whenever the statutory clause limiting the insurer’s liability in case of fraud by the
insured is used.” Id. at 277.
This limiting clause from Morgan was not quoted or considered when a panel of our Court
extrapolated the innocent third party rule into the no-fault context in Darnell v Auto-Owners Ins Co,
142 Mich App 1, 10; 369 NW2d 243 (1985). Accordingly, I consider Darnell to be wrongly
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decided.2 Further, I agree with appellant that there is no good public policy reason to prevent rescission
of the insurance policy issued as a result of Diana Ference’s misrepresentations regarding her son.
I would reverse the decision granting summary disposition in favor of Auto Club.
/s/ Richard A. Bandstra
1
The statute interpreted in Morgan has since been amended. See Williams v Auto Club Group Ins
Co (On Remand), 224 Mich App 313, 320-321; 569 NW2d 403 (1997) (Bandstra, P.J., dissenting).
2
The majority also cites Katinsky v Auto Club Ins Ass’n, 201 Mich App 167; 505 NW2d 895
(1993), and Ohio Farmers v Michigan Mutual Ins Co, 179 Mich App 355; 445 NW2d 228 (1989).
However, these cases are factually distinguishable. Both involved a claim by a person who was not a
member of the household of the insurance applicant and who was, thus, truly an “innocent third party.”
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