Berger Chevrolet, Inc. - Page 7

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            single dealership or related dealerships and are normally owned                             
            by a relative of the shareholders of the dealership.                                        
                  For the entire year of 1990, Berger and Classic each                                  
            employed a finance and insurance manager and certain                                        
            salespersons.  The responsibilities of the managers and                                     
            salespersons included offering group credit insurance to                                    
            installment buyers.  If an installment buyer purchased credit                               
            insurance, the manager and/or salesperson calculated the amount                             
            of the premiums, completed insurance disclosures on the                                     
            installment sale contract, obtained the buyer's signature,                                  
            explained the coverages, ensured that enrollment certificates                               
            were provided to the buyer, and documented the transaction for                              
            Western or American Way.                                                                    
                  Berger paid manager commissions of $38,490 for selling                                
            credit insurance.  Classic paid manager commissions of $26,060 in                           
            1989 and $29,025 in 1990 for selling credit insurance.  Neither                             
            Berger nor Classic paid commissions to salespersons other than                              
            managers for selling credit insurance.                                                      
                  Under Michigan law, motor vehicle installment sellers are                             
            prohibited from receiving, directly or indirectly, any portion of                           
            the credit insurance premiums.  Mich. Stat. Ann. sec. 23.628(31)                            
            (Law. Co-op. 1991).  Because of this law, insurance agencies were                           
            created to collect the commissions paid by the insurance                                    
            companies.  Such agencies, although closely related to the                                  
            dealerships, were legally separate from them under Michigan law.                            

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Last modified: May 25, 2011