Bingham's Estate v. Nationwide Life Ins. Co. of Columbus, Ohio, 52480

• Decision Date: 17 December 1981
• Docket Number: No. 52480,52480
• Citation: 638 P.2d 352,7 Kan.App.2d 72
• Court: Kansas Court of Appeals
• Parties: ESTATE OF Clifford E. BINGHAM, Deceased, Alta L. Bingham and William H. Bingham, Jr., Plaintiffs and Appellees, v. NATIONWIDE LIFE INSURANCE COMPANY OF COLUMBUS, OHIO, Defendant and Appellant.

Page 352

638 P.2d 352

7 Kan.App.2d 72

ESTATE OF Clifford E. BINGHAM, Deceased, Alta L. Bingham and

William H. Bingham, Jr., Plaintiffs and Appellees, v. NATIONWIDE LIFE INSURANCE COMPANY OF COLUMBUS, OHIO,

Defendant and Appellant.

No. 52480.

Court of Appeals of Kansas.

Dec. 17, 1981.

Syllabus by the Court

1. The requirement in a group life insurance policy that an insured be "regularly employed" and "for at least 30 hours each week" does not preclude recovery for the death of a managerial employee sick and absent from the employee's place of business, but who performs his usual function through the assistance of another employee with the approval of the head of the company while receiving full pay.

2. A representation made in an employee's Supplemental Enrollment Card will be given no evidentiary significance when it is not executed until after a group policy is in effect.

Lee M. Smithyman, of Weeks, Thomas & Lysaught, Chartered, Kansas City, for defendant and appellant.

Patrick D. McAnany, of McAnany, Van Cleave & Phillips, P. A., Prairie Village, for plaintiffs and the appellees.

Before FOTH, C. J., Presiding, TERRY L. BULLOCK, District Judge, and FREDERICK WOLESLAGEL, District Judge Retired, Assigned.

FREDERICK WOLESLAGEL, District Judge Retired, Assigned:

Defendant Nationwide Life Insurance Company appeals from a grant of summary judgment to the plaintiffs-appellees on their claim for death benefits under a group life insurance contract paid for by Clifford E. Bingham's employer. Plaintiffs, the Binghams, are the named beneficiaries under the policy. Nationwide also appeals from the allowance of attorney fees pursuant to K.S.A. 40-256 upon a finding that it had "refused without just cause or excuse to pay the full amount" of benefits provided by the policy.

The estate of Clifford E. Bingham originally was one of the plaintiffs, but the final order entered by the trial court held it was not an entity entitled to any benefits as the only beneficiaries designated by the decedent are the two individual plaintiffs. It is therefore not a party to this appeal.

We affirm the trial court both as to its finding regarding benefits and as to its allowance of attorney fees to the Binghams' attorneys.

The issues, as stated by Nationwide, are:

1. "At the time of his death, was Mr. Bingham eligible for coverage under the Nationwide group life and health insurance policy?" (This issue turns on whether he was "regularly employed" at the time the policy went into effect.)

2. "Did Mr. Bingham's representation of health and eligibility void any claim of Nationwide insurance coverage which he might have otherwise had?"

3. "In its decision to award attorney fees, did the trial court err in finding that Nationwide denied benefits 'without just cause or excuse' pursuant to K.S.A. 40-256?"

We note first that in passing on the validity of a summary judgment, the record must be read in the light most favorable to the party who resisted the motion. Collier v. Operating Engineers Local Union No. 101, 228 Kan. 52, Syl. P 2, 612 P.2d 150 (1980). While our determination must give due regard for the principle just stated, the controlling facts are based on pleadings, depositions, and other written evidence. This results in our being afforded the same opportunity as the trial court to consider the evidence and determine what the facts establish. J & W Equipment, Inc. v. Weingartner, 5 Kan.App.2d 466, Syl. P 2, 618 P.2d 862 (1980); Clark Equip. Co. v. Hartford Accident & Indemnity Co., 227 Kan. 489, 491, 608 P.2d 903 (1980).

There is one final approach required of us in looking at one of the parts of the record in this case. Nationwide seeks to ameliorate the possible significance of a letter written by one of its claims managers by claiming it was written pursuant to settlement negotiations. This is disputed by the Binghams. We cannot consider the bare assertions of either counsel. Rather, we observe that while Supreme Court Rule 3.02 (228 Kan. xl) requires the clerk of the district court to compile the basic record on appeal, if Nationwide had anything of record to support its position in this regard, it would be additional to the items that the clerk is directed to include as enumerated in Rule 3.02. Under this circumstance, it would appear that it was incumbent on Nationwide to designate sufficient record to support its claim. This is so if a claim of error is being made, Farmers Ins. Exchange v. Schropp, 222 Kan. 612, Syl. P 8, 567 P.2d 1359 (1977); Frevele v. McAloon, 222 Kan. 295, 299, 564 P.2d 508 (1977). It would seem to follow that the same obligation would fall on one seeking to support a favorable contention as would fall on one seeking to support a claim of error. We will therefore consider the letter for what it appears to us to show upon its face. That will be discussed in the final part of this opinion which deals with the question of allowance of attorney fees.

Undisputed Facts

Clifford E. Bingham died of cardiac arrest on November 16, 1977. He had worked for Merriam Motors continuously since 1964, serving as its business manager since about 1966. John M. Garlich was president of the company, and he, with a St. Louis, Missouri, partner, owned a number of car dealerships.

It had been Mr. Garlich's practice to arrange for group health and life insurance on employees of the dealerships and he sometimes changed insurance companies if comparative terms favored a change when a policy was about to expire. A policy with Capital Life was to expire on November 1, 1977. Through the efforts of an insurance broker, he had arranged for that policy to be replaced with a policy providing the same coverages and sold by Nationwide. This transaction was completed in early October, 1977. Mr. Garlich understood the new policy would continue the coverage that had been provided by Capital Life with four classifications of certificate holders: one for presidents and managers, one for salesmen and service advisers, with the last two classifications based solely on amount of annual earnings. The policy did provide those classifications, and the first classification specified $40,000 of life insurance for presidents and managers. The premium was nonparticipating as to individuals covered, and on October 26 the company paid the Nationwide premium. It was Mr. Garlich's understanding that the new policy would automatically cover all employees on November 1 and that no one would have to furnish proof of insurability.

Mr. Bingham had had a heart attack on August 24, 1977, and was in a hospital until September 27. He then recuperated at home until about October 26. Throughout this two-month period Mr. Garlich expected him to give advice and information through phone calls and personal visits with another employee, who did the balance of the managerial work at the company office. Mr. Garlich's expectations as to this handling of the managerial business were carried out by these two employees.

About October 26 Mr. Bingham started spending a part of his days at the office and was spending full days there no later than November 7. During all this period, and until his death nine days later, Mr. Garlich considered Bingham to be on the job and paid him full salary as a regular employee occupying the position of manager.

While the insurance broker knew about Mr. Bingham's heart attack and absence from the office, there is nothing in the record to indicate this was passed on to Nationwide by anyone. The record does not indicate for which party he was agent, and we make no supposition in this regard. Nationwide had a practice of having certificate holders sign group enrollment cards and they were delivered to Merriam Motors on October 19. An employee filled out and signed the one for Mr. Bingham. No claim of either benefit or prejudice is made by either party as to the handling of this card.

Nationwide had an additional practice of having employees designated "Class A," those insured for $40,000.00 or more, sign "Supplemental Enrollment Cards." The St. Louis representative of Nationwide who submitted the bid for this policy overlooked getting these cards signed by November 1. On November 7 he drove to Merriam Motors with the intent of getting them signed. Of this class, only Mr. Bingham was in the office that day and he signed it. Nationwide contends it contained significant misrepresentation and the language of it will appear in the part of this opinion under the heading Policy Provisions and Supplemental Enrollment Card.

Nationwide's first claim of either irregularity or limitation as to Mr. Bingham's coverage was made on November 18, two days after his death. On January 6, 1978, Mr. Garlich submitted Nationwide's form for proof of death. On March 24, 1978, a claims manager for Nationwide forwarded to Mr. Garlich its draft for $15,000.00 payable to Mr. Bingham's estate. The draft was never negotiated for payment. The letter mentioned earlier accompanied this draft.

Policy Provisions and Supplemental Enrollment Card.

The material provisions of Nationwide's policy are:

" 'Insured Person', with respect to each benefit provision hereunder, means either a Certificateholder or a Dependent for whom the Schedule of Benefits indicates that coverage under that benefit provision is provided, but only during the period he is insured thereunder as determined under all other applicable provisions of the Policy.

....

" 'Regularly Employed' means continuously employed by the Policyholder for at least 30 hours each week.

....

"The effective date of insurance for an eligible person will be the first of the policy month coinciding with or next following the date he becomes an eligible person.

"If an eligible person is not actively at work on the date his insurance would otherwise become effective, his insurance will not become effective until the date he returns to active work.

....

"INCONTESTABILITY.... No statement made by a Certificateholder...