Bekken v. Equitable Life Assur. Soc. of U.S.

• Decision Date: 16 May 1940
• Docket Number: No. 6553.,6553.
• Parties: BEKKEN v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.
• Court: North Dakota Supreme Court

70 N.D. 122

293 N.W. 200

BEKKEN

v.EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.

No. 6553.

Supreme Court of North Dakota.

May 16, 1940.

Syllabus by the Court.

1. A life insurance company which solicits an application for a life insurance policy and induces the person so solicited to make payment of premium on the policy applied for, on the representation or agreement on the part of the company that the insurance shall take effect as of the date of the receipt given for such premium, if a satisfactory report of medical examination is furnished, and if applicant is on the date of the receipt, in the opinion of the company's officers, an insurable risk under its rules and the application is otherwise acceptable on the plan and for the amount and at the rate applied for, is placed under a legal duty to act promptly upon such application, and the failure of the company to perform such duty renders it liable in damages.

2. Where the application for life insurance so solicited provides that the policy shall be made payable to a certain named beneficiary and the company is informed, or it is apparent to it from facts and circumstances brought to its knowledge, that the primary purpose sought to be accomplished by the insurance applied for is to insure payment to such proposed beneficiary of the amount of insurance applied for, in event of applicant's death, the duty of the insurance company concerning such application extends to such proposed beneficiary as well as to the applicant, and in event applicant dies before the company acts upon the application, and the company has breached its duty to act promptly upon the application, such beneficiary has a right of action against the insurance company for the breach of its duty to her.

3. The question whether there has been negligent delay on the part of an insurer in acting upon an application, like other questions of negligence, is generally one of fact for the jury. It becomes a question of law only where the facts and circumstances are such that reasonable men, in the exercise of reason and judgment, can reach only one conclusion.

4. The evidence is examined and, for reasons stated in the opinion, held sufficient to sustain a verdict in favor of the plaintiff.

5. Where the beneficiary named in the application for life insurance has a right of action against the insurance company for its breach of duty in failing to act promptly upon the application, and she sues in her representative capacity as the administratrix of the estate of the deceased applicant, a judgment obtained in such action will be sustained against an objection that she is not the proper party plaintiff, as in such case the judgment is a bar to any further action either by the beneficiary individually or in behalf of the estate and the defendant cannot possibly be prejudiced by the procedure that was followed.

Appeal from District Court, Stutsman County; Fred Jansonius, Judge.

Action by Ethel M. Bekken, administratrix of the estate of Oscar H. Bekken, deceased, against the Equitable Life Assurance Society of the United States, to recover damages because of defendant's failure to accept or reject the application of Oscar H. Bekken, deceased, for insurance on his life. From an adverse judgment and order, the Equitable Life Assurance Society of the United States appeals.

Judgment and order affirmed.

J. A. Coffey, of Jamestown, for plaintiff and respondent.

Pierce, Tenneson, Cupler & Stambaugh, of Fargo, for defendant and appellant.

CHRISTIANSON, Judge.

The plaintiff is the widow of Oscar H. Bekken, and the administratrix of his estate. Bekken was killed in an automobile accident on June 26, 1934, without any fault on his part. On June 1st preceding his death, he had made written application to the defendant for insurance on his life in the sum of $2,000 payable to his wife, the plaintiff; but the defendant failed to accept or to reject the application, and, in this action, plaintiff seeks to recover from the defendant damages in the amount of $2,000.

In the complaint it is alleged that the plaintiff is the administratrix of the estate of Oscar H. Bekken, deceased; that the defendant is a foreign corporation authorized to do life insurance business in North Dakota; that during the month of April, 1933, Oscar H. Bekken applied to the defendant, through its agent Sundahl, for insurance upon his life in the sum of $2,000; that he was examined by the defendant's physicians and found to be in good health and was approved and accepted as an insurable risk and that defendant thereupon issued an ordinary life policy taking effect May 3, 1935, preceded by a two year term policy taking effect May 3, 1933, and continuing in force upon the payment of premiums until the ordinary life insurance policy became effective May 3, 1935; that the said two year term policy was put into effect but that about the first of the year 1934 it was declared lapsed by the defendant company for non-payment of premiums; that soon after said Bekken became aware that said policy had lapsed he applied to the defendant company for re-instatement or for a new policy and that on or about June 1, 1934, at the instance and upon the advice of said defendant's agent he made application for a new policy; that said application was prepared by Sundahl, said agent of said defendant company, and contained the following provision: “I have paid to Halvor H. Sundahl (the soliciting agent for defendant) $8.26 to cover the first quarterly premium on the policy applied for above, in accordance with the provisions of the receipt of date and number corresponding to this application, which I hereby accept, and agree to the conditions thereof”; that the receipt referred to in said application was as follows:

“No. Q570294

Received of Oscar H. Bekken Eight & 26/100 dollars, the first quarter annual premium on proposed insurance for $2000. T-5 on the life of ------ for which Part I of an application bearing a corresponding number as above is this day made to the Equitable Life Assurance Society of the United States. Insurance, subject to the terms and conditions of the policy contract, shall take effect as of the date of this receipt, provided satisfactory Part II of the application is furnished to the Society and provided the applicant is on this date in the opinion of the Society's authorized officers in New York, an insurable risk under its rules and the application is otherwise acceptable on the plan and for the amount and at the rate of premium applied for; otherwise the payment evidenced by this receipt shall be returned on demand and the surrender of this receipt.

Dated at Jamestown, N. D. 6/1/1934. Halvor Sundahl, Agent.

This receipt must not be detached unless first premium is collected.”

That as a part of the said application there was a statement entitled “Agent's certificate as to insurability of applicant” that was executed by the said agent Sundahl to the effect that he had personally solicited and secured the application and that he knew of nothing against the risk which was not fully set forth in the application papers. That the application that was made on or about June 1, 1934, was submitted with the knowledge that there was no material change in the condition of applicant's health, since he had been approved as an insurable risk and policy issued to him in May, 1933; that the acts and conduct of the defendant company and its agent led applicant to believe, and justified him in believing, that his insurability as a risk had been established and that the representations of the agent of the defendantled him to believe that he was an insurable risk under the rules, examination, and investigation of defendant company and that as a consequence he was induced and influenced to forego seeking insurance with other companies. That during the month of June, 1934, and from June 1st to June 26th, the applicant Bekken was in good health and an insurable risk and that his physical condition had undergone no change prejudicial to his acceptance as a risk since his examination and acceptance by the defendant as an insurable risk in May 1933. That Bekken, at the time of executing the application, on June 1, 1934, made settlement and payment of the premium fixed and required in accordance with the demand of the agent of the defendant and that applicant complied with all the directions and requirements of the company and its agent in connection with the application, but that the defendant, after receiving the application, was dilatory and negligent in having a physical examination made and in forwarding the report to the head office of the company and in acting upon said application. That applicant was instantly killed in an automobile accident on June 26, 1934, without any fault on his part; that if the defendant company had acted upon the application within a reasonable time, the applicant would have been found to be an insurable risk, the policy would have been issued and in force at the time of his death, but that the defendant was negligent and dilatory and failed to act upon the same within reasonable time as required by law. That the plaintiff is the widow of Oscar H. Bekken, and that her name “was inserted and appeared in the application as beneficiary”, and that she would have been the beneficiary in the policy had the company acted in timely manner and issued the policy.

The defendant demurred to the complaint on the grounds:

(1) “That the court has no jurisdiction over the person of the defendant or the subject of the action”, and,

(2) “That the complaint does not state facts sufficient to constitute cause for action.”

The demurrer was overruled, and the defendant interposed an answer.

In the answer it is denied that the defendant was negligent and that there was any undue delay on its part in any action required by it; and it is alleged that if there were any unreasonable delay, the same was occasioned by the negligence of said Bekken....