Ebert v. Fort Pierre Moose Lodge No. 1813, s. 13259

CourtSupreme Court of South Dakota
Citation312 N.W.2d 119
Docket Number13276 and 13278,Nos. 13259,s. 13259
PartiesF. Lucille EBERT, Plaintiff, v. FORT PIERRE MOOSE LODGE # 1813, acting by and through its officers and governing body, to-wit: Louis Caldwell, Governor, Charles Sullivan, Junior Governor; Leon Aasby, Junior Past Governor; Ron Murphy, Prelate; O. Vern Horsley, Treasurer; Rueben Christmann, Two-Year Trustee; Charles Carroll, Three-Year Trustee; and Clifford Withers, Manager and Secretary, Defendants and Third-Party Plaintiffs, v. Ed ARNDT, (# 13278) Third-Party Defendant and Appellant, and Randall WRIGHT and Wright-Way Agency, Ltd., a South Dakota corporation, (# 13276) Third-Party Defendants and Appellants, v. IOWA MUTUAL INSURANCE COMPANY, an Iowa Corporation, (# 13259) Third-Party Defendant and Appellant.
Decision Date04 November 1981

Thomas M. Maher of Maher, Gors & Dean, Pierre, for third-party defendant and appellant, Ed Arndt.

James Robbennolt of Duncan, Olinger, Srstka, Lovald & Robbennolt, P. C., Pierre, for third-party defendants and appellants, Randall Wright and Wright-Way Agency, Ltd.

Acie W. Matthews of Willy, Pruitt, Matthews, Farrell, Frankman & Johnson, Sioux Falls, for third-party defendant and appellant, Iowa Mutual Insurance Co.



This is an insurance case originating from a worker's compensation award. Appeal is

taken from the trial court's judgment adjudicating Ed Arndt, Wright-Way Agency, and Iowa Mutual Insurance Company liable unto the Fort Pierre Moose Lodge # 1813 for $7,232.97; this amount represents the worker's compensation liability of Moose Lodge to employee F. Lucille Ebert, as adjudged pursuant to a bench trial between the two parties. Arndt, Wright-Way, and Iowa Mutual all appeal, each with contentions addressed and treated below. We reverse and remand.


Ed Arndt : A licensed insurance agent for American Family Insurance who also brokers insurance with Wright-Way Agency.

Wright-Way Agency : An insurance agency that represents Iowa Mutual Insurance in the Hughes County, South Dakota area. Wright-Way's president and sole shareholder is Randall Wright.

Iowa Mutual Insurance Company : An insurance company based in DeWitt, Iowa, which is represented by Robert M. Barkley as general agent for South Dakota; Barkley's office is located in Sioux Falls, South Dakota.

Fort Pierre Moose Lodge # 1813 : A fraternal organization doing business in Fort Pierre, South Dakota.

F. Lucille Ebert : An employee of Moose Lodge who sustained a work-related injury on December 6, 1977.


This case originated with a worker's compensation claim filed by F. Lucille Ebert against Moose Lodge in August of 1978. The trial court entered judgment on June 11, 1980, in favor of Ms. Ebert in the amount of $7,232.97.

In November of 1978, Moose Lodge filed a third-party complaint against Arndt and Wright-Way. Thereafter, Arndt filed a third-party complaint against Wright-Way and Iowa Mutual. Wright-Way then filed a third-party complaint against Iowa Mutual. Arndt, Wright-Way, and Iowa Mutual were all designated third-party defendants. On March 5, 1980, Ms. Ebert's claim against Moose Lodge was severed from the claim of Moose Lodge against the third-party defendants.

On June 11 and 12, 1980, Moose Lodge's claim against the respective third-party defendants was tried before a jury. The jury rendered a verdict which expressly recited: 1) Moose Lodge is entitled to be indemnified by Arndt for its liability to Ebert; 2) Arndt, in turn, is entitled to indemnification from both Wright-Way and Iowa Mutual; and 3) Wright-Way is entitled to be indemnified by Iowa Mutual. The verdict apportioned the damages as follows: Arndt-five percent; Wright-Way-fifteen percent; and Iowa Mutual-eighty percent.

The trial court entered judgment on September 5, 1980, which provided for the identical liability apportionment as the jury verdict, but did not, however, allow indemnification recovery between the third-party defendants.


In July of 1972, Iowa Mutual issued a worker's compensation policy to Moose Lodge; this policy was brokered by Arndt through Wright-Way. The policy was renewed annually, with the final date of effectiveness being July 1, 1977. Ms. Ebert's injury occurred in December of 1977, from which Moose Lodge became liable under state compensation law.

At trial, Iowa Mutual maintained that it had mailed Wright-Way a notice of non-renewal dated May 11, 1977. Wright-Way contended, however, that it never received this notice.

Robert M. Barkley, state agent for Iowa Mutual, testified that he received the May 11, 1977, letter of non-renewal from Iowa Mutual sometime during the middle of May 1977. Barkley also testified that he discarded this letter approximately six months later. Barkley further testified that Randall Wright of Wright-Way Agency contacted him in June of 1978 (after the question of insurance coverage arose) and requested Randall Wright testified that it was customary for insurance companies to continue their coverage even though a renewal policy was not timely issued. Arndt testified that he never had any direct contact with Iowa Mutual and did not expect to receive any direct notice of non-renewal regarding the Moose Lodge policy; further, he did not know of any custom or arrangement as to Iowa Mutual's notifying him of non-renewals. Arndt further testified that if the policy in question was not renewed, he would expect to receive notice to that effect from Wright-Way.

a copy of the non-renewal letter. Barkley's discarding of the letter required him to obtain a copy from Iowa Mutual's home office.


Did the trial court err in not allowing indemnification between the third-party defendants by entering a judgment that was inconsistent with the jury's verdict? We hold that it did.


Did the trial court err in instructing the jury and receiving evidence concerning past conduct and custom between the parties? We hold that it did not.


Did the trial court err by not instructing the jury on the legal presumption that a letter duly mailed must be presumed to have been received by the addressee? We hold that it did not.


Is there sufficient evidence in the record to uphold a) the trial court's denial of Iowa Mutual's motions for a directed verdict and judgment n. o. v. and b) the verdict of the jury? We hold that there is.


Both Wright-Way and Arndt contend that, under the evidence presented at trial and the verdict of the jury, they are entitled to be indemnified by Iowa Mutual for their respective liabilities to Moose Lodge. As previously mentioned, the jury found that Arndt was entitled to indemnification from Wright-Way and Iowa Mutual for his five percent apportionment of the damages. The jury also found that Wright-Way was liable for fifteen percent of the damages. The trial court's judgment, however, did not provide for Arndt's right of indemnification from either Wright-Way or Iowa Mutual, nor did it provide for Wright-Way to be indemnified by Iowa Mutual.

It is a general rule of law in South Dakota that "(t)he (trial) court is empowered to amend the (jury's) verdict, correcting manifest errors of form, to make it conform to the intention of the jury." Lewis v. Storms, 290 N.W.2d 494, 498 (S.D.1980). Here, however, the inconsistency between the judgment and the verdict is not a result of an inherently erroneous verdict; in fact, none of the parties so contend. Rather, the judgment is defective due to its failure to fully reflect the verdict's indemnification provisions.

Absent an inherently erroneous verdict, a trial court's judgment is required to be based upon the verdict. See SDCL 15-6-58. A trial court cannot substitute its verdict for the verdict of the jury. Walters v. Gilham, 52 S.D. 82, 216 N.W. 854 (1927).

Indemnity is a remedial measure which is invoked to secure the right of the first party to be reimbursed by the second party for the discharge of a liability which, as between the parties, should equitably be discharged by the second party. 1 Hartford Accident and Indemnity Company v. R. Herschel Manufacturing Company, 453 F.Supp. 1375 (D.N.D.1978). As was expressed in Parker v. Stetson-Ross Machine Company, Inc., 427 F.Supp. 249, 251 (D.S.D.1977):

In South Dakota, indemnity is an "all-or-nothing" proposition. Highway Construction Co. v. Moses, 483 F.2d 812, 817 (8th Cir. 1973). To be entitled to indemnity, one must show "a proportionate absence of contributing fault." Degen v. Bayman, 86 S.D. 598, 200 N.W.2d 134, 137 (1972). The result of such a showing is to shift the entire liability to the party against whom indemnity is sought. Degen, supra, (200 N.W.2d) at 136; Hendrickson v. Minnesota Power & Light Co., 258 Minn. 368, 104 N.W.2d 843 (1960). Thus, indemnity is not a means by which a portion of liability, comparative with the proportion of fault, can be shifted to another party.

"(A) joint tortfeasor may recover indemnity where he has only an imputed or vicarious liability for damage caused by the other tortfeasor." Degen v. Bayman, 86 S.D. 598, 603, 200 N.W.2d 134, 137 (1972).

In Degen, this Court adopted the viewpoint of the Minnesota Supreme Court as espoused in Hendrickson v. Minnesota Power & Light Co., 258 Minn. 368, 104 N.W.2d 843 (1960). The court in Hendrickson held that although indemnity is not necessarily precluded per se among joint tort-feasors, the situations in which indemnity is allowed are exceptional and limited. Summarized, these situations were stated in Hendrickson as: (1) derivative or vicarious liability; (2) action at direction of, and for, another; (3) breach of duty to indemnify; (4) failure to discover negligence of another; and (5) express contract. We believe that only situation (3) is applicable here.

The thrust of Moose Lodge's complaint against Arndt and Wright-Way was a breach of contract to procure worker's compensation insurance coverage. In turn, the...

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