First Equity Sec. Life Ins. Co. v. Keith

• Citation: 164 Ind.App. 412,329 N.E.2d 45
• Decision Date: 10 June 1975
• Docket Number: No. 1--774A107,1--774A107
• Parties: FIRST EQUITY SECURITY LIFE INSURANCE COMPANY et al., Defendant-Appellant, v. Lillian I. KEITH, Plaintiff-Appellee.
• Court: Court of Appeals of Indiana

Page 45

329 N.E.2d 45

164 Ind.App. 412

FIRST EQUITY SECURITY LIFE INSURANCE COMPANY et al., Defendant-Appellant, v. Lillian I. KEITH, Plaintiff-Appellee.

No. 1--774A107.

Court of Appeals of Indiana, First District.

June 10, 1975.

John H. Heiney, Rothberg, Gallmeyer, Fruechtenicht & Logan, Fort Wayne, for defendant-appellant.

J. Lloyd Fitzpatrick, Fitzpatrick, Chambers & Waller, Washington, for plaintiff-appellee.

LOWDERMILK, Judge.

This is an appeal from the trial court's refusal to reform the terms of a life insurance policy. The cause was initiated by the filing of a 'Complaint on a Life Insurance Policy' by appellee, Lillian Keith. The defendant in that action, First Equity Security Life Insurance Company (First Equity), filed an Answer and 'Cross-Complaint for Reformation of Contract' on October 18, 1971. The Cross-Complaint for Reformation was tried to the trial court on October 30, 1973, and the original claim of Mrs. Keith is still pending in the Daviess Circuit Court. The trial court entered judgment against First Equity on its cross-complaint for reformation. First equity herein appeals the overruling of its timely filed motion to correct errors.

First Equity is a stock company authorized to write life insurance in the State of Indiana. It issued a life insurance policy on April 24, 1969, to Samuel E. Keith, husband of the appellee. That policy, termed by the company as an 'Ambassador 500', was issued pursuant to an application made by Samuel Keith and a subsequent medical examination. The application was completed by Harry Scheid, a sales agent for First Equity.

Samuel Keith died on June 6, 1971, of coronary thrombosis, and the policy was submitted to First Equity for payment. First Equity introduced evidence showing that it was discovered at the time the policy was submitted for payment that a mistake had been made in the preparation of the policy for issuance. The terms of the policy as issued provided that the 'initial amount' was $8,250.00 and the 'ultimate amount' was $16,500, whereas the alleged proper provisions would have reversed these figures. Mrs. Keith was advised of this alleged error, but brought suit to recover on the policy as it was written.

The significance of the transposition of these two figures is that it results in a doubling of the payment owed to Mrs. Keith. The policy provides that:

'In addition to the Ultimate Amount, the company agrees to pay to the beneficiary an additional sum equal to the Ultimate Amount, specified in the Policy Specifications, if your death occurs during the first ten policy years.'

Since the parties stipulated that Mr. Keith did die during the first ten years of the policy, the discrepancy which First Equity here asserts is that the Policy as it reads provides that Mrs. Keith should recover $33,000 (twice the Ultimate Amount), whereas it is asserted that the intention of the parties was that the Ultimate Amount should be $8,250.00, and that Mrs. Keith is therefore entitled to only $16,500.

First Equity contends that the trial court's refusal to reform the life insurance policy was contrary to the evidence and to the law. An additional issue, not raised by the parties on appeal, is whether this judgment is properly reviewable at this time, in light of the provisions of Ind.Rules of Procedure, Trial Rule 54(B).

Although the issue is not raised by Mrs. Keith, it is apparent from the record that this appeal presents a procedural defect. This defect involves the propriety of pursuing an appeal from a judgment which disposes of less than all of the claims presented to the trial court. TR. 54(B) provides, in pertinent part, as follows:

'When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim . . . the court may direct the entry of a final judgment as to one or more but fewer than all of the claims . . . only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates fewer than all the claims . . . shall not terminate the action as to any of the claims or parties, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims . . .. A judgment as to one or more but fewer than all of the claims . . . is final when the court in writing expressly determines that there is no just reason for delay, and in writing expressly directs entry of judgment, and an appeal may be taken upon this or other issues resolved by the judgment; but in other cases a judgment, decision or order as to less than all the claims . . . is not final.'

The explicit language of this rule indicates that a judgment as to less than all of the issues is an interlocutory judgment, and does not become final and appealable until the trial court (1) in writing expressly determines that there is no just reason for delay, and (2) in writing expressly directs the entry of judgment thereon. See Harvey, Ind.Practice § 56.9; Moore, Federal Practice § 54.28; Wright & Miller, Federal Practice & Procedure § 2654. This interpretation was recently applied by this court in Geyer v. City of Logansport, (1974), Ind.App., 317 N.E.2d 893. That case involved an involuntary dismissal as to less than all of the parties, and this court reviewed several federal decisions and authorities and concluded that:

'In looking at the order of dismissal which City urges us to consider as a final judgment, we note that it is not accompanied by an express determination that (1) there is no just reason for delay and (2) an express direction of entry of judgment. Therefore, in view of Rule TR. 54(B), the federal case law interpreting federal rule 54(B), and the comments of Dean Harvey, we must conclude that the order of dismissal as to the City was not a final judgment, that it would not have been appealable at the time it was made, and was not appealable until judgment was entered disposing of the entire case as to all issues and all parties . . ..' 317 N.E.2d at 896.

In the instant case, the trial court failed to make the required express determination, and instead made only the following entry of judgment:

'The Court having had under consideration the Cross-Complaint for Reformation filed by the defendant First Equity Security Life Insurance Company and the plaintiff's answer thereto and having duly considered the evidence and the exhibits presented by the parties at trial on October 30, 1973, and now being duly advised in the premises finds that the defendant has failed to meet the burden of proof and that the prayer thereof should be denied.

IT IS, THEREFORE, CONSIDERED, ORDERED AND ADJUDGED that the prayer of defendant's Cross-Complaint for Reformation be and hereby is denied.'

In view of the trial court's failure to make the two express determinations required by TR. 54(B), this judgment as to less than all of the claims before the trial court constituted an interlocutory judgment, and is not appealable at this time.

However, Ind.Rules of Procedure, Appellate Rule 4(E) provides that:

'No appeal will be dismissed as of right because the case was not finally disposed of in the court below as to all issues and parties, but upon suggestion or discovery of such a situation the appellate tribunal may, in its discretion, suspend consideration until disposition is made of such issues, or it may pass upon such adjudicated issues as are severable without prejudice to parties who may be aggrieved by subsequent proceedings in the court below.'

In order to facilitate the speedy disposition of this case, we will consider the merits of the case at this time. The adjudicated substantive issue has been fully briefed and argued, and since it is clearly severable, no prejudice will result to the parties.

The only issue to be decided is whether the trial court properly refused to reform the life insurance policy as requested by the appellant, First Equity. The propriety of reforming a contract is controlled by several recognized rules, in addition to the general equitable principles which apply whenever a court is requested to invoke its equity jurisdiction.

In Indiana, a trial court is permitted to reform written documents only in cases in which one party mistakenly executed a document which did not express the true terms of the agreement, and the other party has acted under the same mistake, or has acted fraudulently or inequitably while having knowledge of the other party's mistake. This rule is recognized in Pearson v. Winfield (1974), Ind.App., 313 N.E.2d 95, in which the following comments are made:

'In Indiana, equity has jurisdiction to reform written documents in only two well defined situations:

(1) Where there is a mutual mistake,--that is, where there has been a meeting of the minds, and agreement actually entered into, but the contract, deed, settlement, or other document, in...