Farmers Ins. Exchange v. Nagle

• Decision Date: 06 October 1971
• Docket Number: No. 8686,8686
• Parties: FARMERS INSURANCE EXCHANGE, an Inter-insurance Exchange, by Farmers Underwriters Association, its Attorney in Fact, Plaintiff and Respondent, v. Douglas E. NAGLE, Defendant and Appellant, and Shirley Lommen, Individually and as Statutory Beneficiary of William A. Lommen, Deceased, Defendant. Civ.
• Court: North Dakota Supreme Court

Page 758

190 N.W.2d 758

FARMERS INSURANCE EXCHANGE, an Inter-insurance Exchange, by

Farmers Underwriters Association, its Attorney in

Fact, Plaintiff and Respondent, v. Douglas E. NAGLE, Defendant and Appellant, and Shirley Lommen, Individually and as Statutory Beneficiary of

William A. Lommen, Deceased, Defendant.

Civ. No. 8686.

Supreme Court of North Dakota.

Oct. 6, 1971.

Syllabus by the Court

1. When declaratory relief is sought, all persons who have or claim to have any interest which could be affected by the declaration shall be made parties.

2. Where the plaintiff brings an action against an insured and a prospective claimant against such insured, for a declaration that a policy of insurance is void because of misrepresentations in the application, and where, if such policy is found to be void, the State's Unsatisfied Judgment Fund may be exposed to liability, the State should be made a party to such declaratory-judgment action.

3. Where a State officer takes an appeal from a judgment of the district court in a purely official capacity, no undertaking for costs need be given.

4. Where an appellant, under the North Dakota de novo statute prior to repeal thereof by Chapter 311 of the 1971 Session Laws, demands trial de novo in an action tried to the court without a jury the findings of the trial court must be given appreciable weight, especially where the judgment is based on conflicting evidence and testimony of witnesses who appeared in person before the court.

5. Misrepresentations in an application for insurance, made with intent to deceive, where such misrepresentations increase the risk of loss, are material and ground for avoidance of the policy which is issued in reliance thereon.

6. Misrepresentations on the matter of driving convictions by applicant increase the risk of loss under the policy, and such misrepresentations are held to be material.

7. Where a policy of automobile insurance was issued on July 28, 1969, and rescinded on August 28, 1969, for misrepresentations in the application, the provisions of Section 26--02--33, North Dakota Century Code, do not apply.

8. The finding of the trial court of material misrepresentations in the application being supported by substantial evidence, the judgment appealed from is affirmed.

Conmy, Conmy, Rosenberg & Lucas, Bismarck, for plaintiff and respondent.

David L. Peterson, Sp. Asst. Atty. Gen., Unsatisfied Judgment Fund, Bismarck, for defendant and appellant.

STRUTZ, Chief Justice, on reassignment.

Farmers Insurance Exchange, an inter-insurance exchange (hereinafter referred to as the Insurance Company), by Farmers Underwriters Association, its attorney in fact, commenced this action naming as the only defendants Douglas E. Nagle and Shirley Lommen, the latter individually and as statutory beneficiary of William A. Lommen, deceased. The Insurance Company sought a declaratory judgment against the defendants adjudging that a certain policy of liability insurance issued by it to Nagle was based upon a fraudulent application and therefore was void from its inception. Shirley Lommen is the widow of William A. Lommen, who was killed in an automobile accident subsequent to the issuance of the liability policy in question. Nagle was involved in the accident as the driver of the automobile which collided with the Lommen vehicle.

The State of North Dakota was not joined as a party in the declaratory-judgment action. When the case came on for trial, however, the North Dakota Unsatisfied Judgment Fund appeared by the Special Assistant Attorney General assigned to defend the Fund, and a request was made by the attorney for the defendant Lommen that the Special Assistant Attorney General be permitted to participate in the trial amicus curiae since the State's Unsatisfied Judgment Fund might become exposed to liability in the event the Insurance Company prevailed in the action. Permission was granted, and the Special Assistant Attorney General, on behalf of the State's Unsatisfied Judgment Fund, participated in the trial of the action.

The defendants answered the complaint of the insurance company, appeared at the trial, and defended. The two defendants were represented by separate attorneys, and both participated in the trial.

Upon completion of the trial, judgment was entered declaring that the policy of liability insurance was rescinded and cancelled Ab initio, and, further, that the Insurance Company had no obligation thereunder to the defendant Nagle or to anyone claiming benefits by virtue of such policy of insurance.

Subsequent to the entry of judgment in favor of the Insurance Company, a notice of appeal from the judgment, signed by the Special Assistant Attorney General, was served upon the attorney for the Insurance Company. The notice of appeal states that the defendant Nagle appeals from the judgment of the district court granting the plaintiff the relief prayed for in its complaint. The appeal is taken from the whole judgment, and trial de novo is demanded. The notice of appeal is signed by the Special Assistant Attorney General as attorney for the State's Unsatisfied Judgment Fund. The private attorneys for the defendants did not sign the notice of appeal, nor did they serve separate notices of appeal.

Subsequent to service of the notice of appeal on behalf of the State's Unsatisfied Judgment Fund, the private attorneys of the respective defendants signed a stipulation for settlement of the statement of the case. This stipulation also was signed by the Special Assistant Attorney General for the Unsatisfied Judgment Fund and by the attorney for the Insurance Company. The attorneys for the two defendants have appeared in no other manner in this appeal.

The Insurance Company claims that the notice of appeal is defective because it was not signed 'by the appellant or his attorney,' as required by statute. Section 28--27--05, North Dakota Century Code, provides:

'An appeal must be taken by serving a notice in writing signed by the appellant or his attorney on the adverse party * * *'

The Insurance Company also claims that the appeal is ineffectual because no undertaking was executed and filed. Section 28--27--09, North Dakota Century Code, provides:

'To render an appeal effectual for any purpose, an undertaking must be executed on the part of the appellant by at least two sureties to the effect that the appellant will pay all costs and damages which may be awarded against him on the appeal not exceeding two hundred fifty dollars.'

In rebuttal, the State argues that when the trial court adjudged the liability insurance policy void Ab initio, Nagle became an uninsured motorist; and that because he had been involved as the driver of a motor vehicle in an accident in which William A. Lommen was killed, the State's Unsatisfied Judgment Fund became exposed to liability for an amount up to the statutory limits for wrongful death. It argues that the State therefore is, in reality, a party in interest and that the Attorney General, through his Special Assistant, is entitled to take this appeal as attorney for Nagle as well as for the Unsatisfied Judgment Fund. It also argues that the Attorney General, in taking this appeal, is doing so in a purely official capacity as attorney for the State's Unsatisfied Judgment Fund, and that the requirement that an undertaking for costs be supplied is waived. It therefore concludes that the appeal is not defective and that it is effectual.

The first question for us to consider, therefore, is whether this court has jurisdiction in this appeal. The notice of appeal was not signed by the defendant Nagle or by his private attorney. The Special Assistant Attorney General does not claim to be the private attorney for the defendant Nagle.

The duties of the Attorney General are set forth in the law, and include a provision that he shall:

'1. Appear for and represent the state before the supreme Court in all cases in which the state is interested as a party.' Sec. 54--12--01, N.D.C.C.

Under our law, we believe it is not necessary for the State to be named as a party to an action in order to be considered an interested party. The State may be an interested party so as to authorize the Attorney General to appear for and to represent it even in cases where the State is not named as a party. The State was directly interested in this action, and in fact participated in the trial.

The action was brought for the sole purpose of determining the validity of the insurance policy which the plaintiff had issued to the defendant Nagle. It named as defendants its claimed insured, Nagle, and the prospective claimant against the insured, Mrs. Lommen. It did not join the State of North Dakota as a party defendant although it was obvious from the outset that if the policy in question were found to be invalid--as the plaintiff contends it is--and if the claimant recovers judgment, which cannot be collected from the defendant, the State would become exposed to liability under the Unsatisfied Judgment Fund law.

The action, as stated above, is an action for declaratory judgment, requesting declaratory relief. Our law providing for the bringing of declaratory-judgment actions reads, in part:

'When declaratory relief is sought, all persons who have or claims any interest which would be affected by the declaration, shall be made parties * * *' Sec. 32--23--11, N.D.C.C.

If Nagle should be unable to pay a judgment recovered in the case against him, and if his insurance policy is found to be void, the rights of the State would be affected by the declaratory judgment holding the policy invalid, because the Unsatisfied Judgment Fund then would be asked to pay. Thus the State does have an interest in the matter in controversy. The State, as such interested party, therefore was entitled to have the Attorney General appear and represent it, under Section 54--12--01, Subsection 1, North Dakota Century Code. Even though the State was...