Finstad v. Steiger Tractor, Inc., 9841

Decision Date23 January 1981
Docket NumberNo. 9841,9841
Citation301 N.W.2d 392
PartiesJohn A. FINSTAD, Plaintiff and Appellant, v. STEIGER TRACTOR, INC. and Stuyvesant Life Insurance Company, Allentown, Pennsylvania, a corporation, Defendants and Appellees. Civ.
CourtNorth Dakota Supreme Court

Herschel Lashkowitz, Fargo, for plaintiff and appellant.

Nilles, Hansen, Selbo, Magill & Davies, Fargo, for defendant and appellee Steiger Tractor.

Tenneson, Serkland, Lundberg, Erickson & Marcil, Fargo, for defendant and appellee Stuyvesant Life Insurance Company; argued by Jack G. Marcil, Fargo.

ERICKSTAD, Chief Justice.

This is an appeal by the plaintiff, John A. Finstad, from the summary judgment of the District Court of Cass County, dated February 15, 1980, dismissing with prejudice Finstad's action against the defendant, Stuyvesant Life Insurance Company (Stuyvesant). We reverse and remand for a trial on the merits.

Finstad filed a complaint dated September 24, 1976, against Steiger Tractor, Inc., alleging that he sustained injuries on July 12, 1975, during the course of his employment with Steiger. In his complaint, Finstad sought benefits from Steiger under a Salary Continuation Plan provided within a collective bargaining agreement executed between Steiger and the labor union representing Steiger's production and maintenance employees.

Finstad alleges that he did not have knowledge of the existence of a group accident indemnity insurance policy written by Stuyvesant for Steiger's employees until November, 1978. Finstad further alleges that upon learning of the existence of such policy he promptly, through legal counsel, sent notice of claim to Stuyvesant, and on August 6, 1979, he joined Stuyvesant as a party defendant in his lawsuit against Steiger.

On November 21, 1979, Stuyvesant made a motion for summary judgment, under Rule 56, N.D.R.Civ.P., requesting the trial court to dismiss Finstad's action against Stuyvesant on the ground that Finstad failed to serve Stuyvesant with notice of claim within the period set forth in the group insurance policy.

In a memorandum opinion, dated April 10, 1980, the trial court determined, as a matter of law, that privity of contract did not exist between Finstad and Stuyvesant and that Finstad's notice of claim to Stuyvesant three years and four months after the date of the alleged occurrence was "presumptively prejudicial, unreasonable and detrimental" to Stuyvesant. The trial court further determined that there was no genuine issue of material fact, and, accordingly, the trial court granted Stuyvesant's motion for summary judgment.

The trial court's grant of a summary judgment motion will be upheld on appeal only if, after viewing the evidence most favorable to the party against whom summary judgment was granted, it appears that there are no genuine issues of material fact and that the party seeking summary judgment is entitled to it as a matter of law. Rule 56(c), N.D.R.Civ.P.; Jacob v. Hokanson, 300 N.W.2d 852 (N.D.1980); Zuraff v. Empire Fire & Marine Insurance Co., 252 N.W.2d 302 (N.D.1977).

The group insurance police executed between Stuyvesant and Steiger provides an accident indemnity benefit for employees who are disabled as a result of injury occurring during their employment with Steiger. Consequently, each insured employee is a third-party beneficiary under the group insurance policy, and, as such, is entitled to enforce the policy to receive the benefits provided thereunder. 1 Section 9-02-04, N.D.C.C.

With regard to giving written notice of claim, the insurance policy provides:

"Written notice of claim must be given to the Company (Stuyvesant) within twenty (20) days after the occurrence or commencement of any loss covered by this policy, or as soon thereafter as is reasonably possible."

Finstad asserts that although the alleged accident occurred on July 25, 1975, he was not aware of the existence of the Stuyvesant insurance policy until November, 1978, at which time he promptly served notice of claim to Stuyvesant. Therefore, asserts Finstad, he provided written notice of claim to Stuyvesant as soon as "reasonably possible" in compliance with the insurance policy. Stuyvesant asserts that the collective bargaining agreement executed between Steiger and the employee's union contains a section which should have put Finstad on notice that a group accident indemnity insurance policy existed. That section of the collective bargaining agreement provides as follows:

"SALARY CONTINUATION PLAN

"The Salary Continuation Plan as presently paid for by the Company (Steiger) will remain in effect throughout the life of this Agreement.

"To be eligible for benefits under this plan, the employee must have been off work for ninety (90) days and have been an employee of the Company for ninety (90) days.

"Benefits will be based on one-half ( 1/2) the employee's monthly salary rate, up to a maximum of one thousand dollars ($1,000.00) per month. Benefits will be paid for up to five (5) years or until age 65, whichever is shorter." (Emphasis added.)

This provision expressly refers to the Salary Continuation Plan as being "presently paid for by the Company" which language, at the very least, implies that Steiger is itself paying the benefits available under such plan. We conclude that the foregoing provision in the collective bargaining agreement does not, in itself, put any employee on notice of the existence of an insurance policy to provide salary continuation benefits.

There is substantial authority in support of the proposition that a beneficiary's ignorance of the existence of an insurance policy, which is not due to his own negligence or fault, excuses his failure to provide notice of claim to the insurer within the time period set by the policy. Thompson v. Equitable Life Assurance Society of the United States, 447 Pa. 271, 290 A.2d 422 (1972); Solano v. Federal Title and Insurance Corp., 229 So.2d 312 (Fla.Dist.Ct.App.1969); Central Surety & Insurance Corporation v. Anderson, 446 S.W.2d 897 (Tex.Civ.App.1969); Spradlin v. Columbia Insurance Company of New York, 34 Tenn.App. 17, 232 S.W.2d 605 (1950); Joyce v. New York Life Insurance Co., 190 Minn. 66, 250 N.W. 674, rev'd on reh. on other grounds, 190 Minn. 72, 252 N.W. 427 (1933); See also, annot., 28 A.L.R.3d 292 (1969). In the instant case, the group insurance policy provides that notice of claim must be given to Stuyvesant "within twenty (20) days after the occurrence or commencement of any loss covered by this policy, or as soon thereafter as is reasonably possible." (Emphasis added.) Assuming, for purposes of this appeal, the truth of Finstad's assertion that through no fault of his own he was unaware of the existence of the insurance policy until November, 1978, such fact would be relevant to the determination of whether or not Finstad gave notice of claim to Stuyvesant as soon as "reasonably possible" in compliance with the policy.

Finstad, in further support of his assertion that his notice of claim was given as soon as reasonably possible, has alleged that he did not receive a Certificate of Insurance as required by the following provision of the insurance policy:

"CERTIFICATE OF INSURANCE

"The Company (Stuyvesant) will issue to the Employer (Steiger) for delivery to each Insured Employee an individual certificate describing the benefits to which the Insured Employee is entitled under this policy and to whom payable and limitations and requirements of this policy pertaining to the Insured Employee and where this policy may be inspected."

The question of whether or not Finstad received a Certificate of Insurance is relevant to a determination of whether or not he had knowledge, or reason to know, the existence of the insurance policy. We conclude that the question of whether or not Finstad received a Certificate of Insurance is a genuine issue of material fact for which Finstad is entitled to a hearing on the merits.

Finstad asserts that the question of whether or not he received a Certificate of Insurance is relevant for yet another purpose. He alleges that, for the limited purpose of delivering the Certificates of Insurance to each insured employee, Steiger was acting as the agent of Stuyvesant. Therefore, asserts Finstad, Steiger's failure to deliver a Certificate of Insurance to him is imputed to Stuyvesant, as Steiger's principal, and constitutes a breach of the insurance contract which excuses Finstad's delay in providing written notice of claim to Stuyvesant. 2

Although a principal-agent relationship generally does not arise between the insurer and the employer when a group insurance policy is issued, Boseman v. Connecticut General Life Insurance Company, 301 U.S. 196, 57 S.Ct. 686, 81 L.Ed. 395 (1937); Sorenson v. Hartford Accident and Life Insurance Company, 585 P.2d 440 (Utah 1978), such a relationship may arise under the facts of a particular case. Elfstrom v. New York Life Insurance Company, 67 Cal.2d 503, 63 Cal.Rptr. 35, 432 P.2d 731 (1967). In Elfstrom, supra, the California Supreme Court held that the employer was acting as the agent of the insurer in undertaking certain responsibilities in administering a group insurance policy and that the employers' errors in administering the policy were attributable to the insurer. With regard to the principal-agent issue, the California Supreme Court stated:

"A substantial number of cases have considered the question of whether an employer acts as the agent of the insurer or of the employees in administering a policy of group insurance but their holdings are hopelessly in conflict.

"A number of decisions hold that an employer acts as the agent of its employees in administering the group policy. (Boseman v. Connecticut General Life Insurance Co. (1937) 301 U.S. 196, 204-205, 57 S.Ct. 686, (690-91), 81 L.Ed. 1036; Metropolitan Life Ins. Co. v. Quilty (7th Cir. 1937) 92 F.2d 829, 832; Leach v. Metropolitan Life Ins. Co. (1927) 124 Kan. 584, 261 P. 603, 605-606; Equitable...

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