Fox v. Burden

Decision Date15 December 1999
Docket NumberNo. 20811.,20811.
Citation1999 SD 154,603 N.W.2d 916
PartiesShanna M. FOX, Plaintiff and Appellee, and Michael D. Fox, Plaintiff, v. Kathleen R. BURDEN f/k/a Kathleen R. Fox, Defendant and Appellant.
CourtSouth Dakota Supreme Court

Gary P. Thimsen and Ms. Jayna M. Voss of Woods, Fuller, Shultz & Smith, Sioux Falls, South Dakota, Attorneys for plaintiffs and appellees.

Peter J. Horner of Christopherson, Bailin & Anderson, Sioux Falls, South Dakota, Attorneys for defendant and appellant.

AMUNDSON, Justice.

[¶ 1.] Kathleen Burden, a/k/a Kathleen Fox (Kathleen), appeals the trial court's award of a portion of Jerald Fox's (Jerald) life insurance policy proceeds to her daughter, Shanna Fox (Shanna). We affirm in part, reverse and remand in part.


[¶ 2.] Kathleen and Jerald were originally married on November 29, 1975. While married, the couple had two children: Michael and Shanna. On August 7, 1990, the couple was granted a divorce pursuant to a judgment and decree of divorce. Pursuant to a stipulation and agreement (agreement) signed by the parties on August 3, 1990, and later incorporated into the divorce decree, Jerald agreed to change the name of the beneficiary on his $100,000 life insurance policy from Kathleen to his minor children. The agreement was drafted by Kathleen's attorney. Jerald was not represented by counsel during the divorce proceeding or the drafting of the agreement.

[¶ 3.] Unexpectedly, Jerald died in a car accident ten days after the divorce decree was entered. He had not drafted a will, nor made the change of beneficiary on his life insurance policy. At the time of his death, Michael and Shanna were his only two children. After Jerald's death, Kathleen applied for and received the $100,000 proceeds from Jerald's $100,000 life insurance policy with Old Line Life through the Kouri Agency in Sioux Falls, South Dakota. The Old Line Life policy was originally purchased in June 1983 and named Kathleen as the designated beneficiary.

[¶ 4.] Prior to receiving the insurance proceeds, Kathleen never informed anyone of the insurance provision in the divorce agreement. In addition to the life insurance proceeds from Old Line Life, Kathleen received a small death benefit from an auto insurance policy with Allied Life Insurance. When Jerald originally obtained his life and auto insurance policies from the Kouri Agency, Kouri only sold Allied auto insurance, not Allied life insurance. The life insurance was covered by Old Line Life.

[¶ 5.] Nearly eight years later, Kathleen decided to sell her residence. The original agreement required certain equity to go to Jerald. Therefore, Kathleen contacted her daughter, Shanna, to arrange for settlement of Jerald's equity in the home. Kathleen had offered Jerald's share of the proceeds from the sale of the house to Shanna and Michael.

[¶ 6.] Before responding to her mother's offer, Shanna went to the county courthouse and obtained a copy of the agreement. Under the document, in paragraph nine, the "insurance provision" read as follows:

That the Defendant [Jerald Fox] agrees to name his minor children as beneficiary on his $100,000 life insurance policy with Allied Insurance Company. The Defendant agrees to show proof of insurance to Plaintiff [Kathleen Burden] whenever requested by the plaintiff.

Upon discovering the provision, Shanna contacted her attorney and, subsequently, Michael and Shanna filed suit against their mother for misapplication of the life insurance proceeds and fraudulent concealment.1

[¶ 7.] On April 7, 1998, pursuant to Shanna's motion, the trial court entered a temporary restraining order restraining Kathleen from selling, transferring, secreting, conveying or otherwise disposing of or parting with possession of any property, real or personal, except for minor funds as may be necessary for maintenance of life until further order or the parties agreed in writing to the contrary.

[¶ 8.] At trial, Kathleen argued she first noticed the discrepancy with regards to the insurance company name in the complaint and the name of the company which paid her proceeds. She immediately informed the court and attempted to amend her answer and discovery responses to reflect that the $100,000 life insurance policy was not issued by "Allied Life," but "Old Line Life." The court reserved its ruling on this motion until after the parties had submitted additional briefs on this issue.

[¶ 9.] The trial court found that Kathleen and Jerald agreed that he would name their children as beneficiaries of his "$100,000 life insurance policy" and the children's equitable rights in the proceeds prevailed over Kathleen's rights. Further, the court found that the reference to "Allied Life" instead of "Old Line Life" was the result of a mutual mistake between Kathleen and Jerald, and it clearly was the intent of the parties that the only existing $100,000 life insurance policy on the life of Jerald was the "Old Line Life" policy. Shanna was awarded one-half the proceeds of the $100,000 insurance policy, plus interest.

[¶ 10.] Kathleen appeals the trial court's determination and raises the following issues:

1. Whether the trial court erred in sua sponte reforming the stipulation and agreement substituting Old Line Life for Allied Life Insurance Company.

2. Whether the trial court erred in determining that Shanna had a superior right to the life insurance proceeds of the Old Line Life insurance policy upon which Kathleen was named beneficiary. 3. Whether Shanna's complaint which sought damages based upon asserted contract rights is barred by the statute of limitations.

4. Whether the trial court erred in refusing to permit a jury trial upon the request of Kathleen.

5. Whether the trial court erred in failing to find that Kathleen, as the natural guardian and conservator of Shanna during her minority, was entitled to a setoff against such proceeds for amounts expended on Shanna's behalf for her care and welfare.

6. Whether the trial court erred in refusing to grant Kathleen's motion to amend her answer and discovery responsive pleadings to conform with the evidence that she never received proceeds from Allied Life Insurance Company.


[¶ 11.] 1. Whether the trial court erred in sua sponte reforming the stipulation and agreement substituting Old Line Life for Allied Life Insurance Company.

[¶ 12.] It is well settled that "[d]ivorce stipulations are governed by the rules of contract; their interpretation is a matter of law for the courts to decide." Hisgen v. Hisgen, 1996 SD 122, ¶ 4, 554 N.W.2d 494, 496 (citing Houser v. Houser, 535 N.W.2d 882, 884 (S.D.1995)). Because construction of a contract is a question of law, our standard of review is de novo. See Alverson v. Northwestern Nat'l Cas. Co., 1997 SD 9, ¶ 5, 559 N.W.2d 234, 235. Further, due to the fact that "`we can review the contract as easily as the trial court, there is no presumption in favor of the trial court's determination.'" Singpiel v. Morris, 1998 SD 86, ¶ 8, 582 N.W.2d 715, 717 (quoting Commercial Trust & Sav. Bank v. Christensen, 535 N.W.2d 853, 856 (S.D.1995) (citations omitted)). See also Baker v. Wilburn, 456 N.W.2d 304, 306 (S.D.1990) (noting that "effects and terms of a contract are questions of law to be resolved by the court ... without a presumption in favor of the trial court's determination.").

[¶ 13.] To determine "`the proper interpretation of a contract the court must seek to ascertain and give effect to the intention of the parties.'" Singpiel, 1998 SD 86, ¶ 10, 582 N.W.2d at 718 (quoting Malcolm v. Malcolm, 365 N.W.2d 863, 865 (S.D.1985) (citations omitted)). In Cole v. Melvin, 441 F.Supp. 193 (D.S.D.1977), the court held that in interpreting the contract,

[w]e are fully aware that the Court must avoid rewriting the contract; rather, it will be this Court's endeavor to establish the intention of the parties at the time the agreement was made. We cannot pierce the parties' mental processes to find out what images were on their brains, but must be content to examine the words which were used in the business context in which they were used in order to objectively establish the parties' intentions. Looking at the words of the contract in the business setting in which they were written, the Court will try to answer the primary questions upon which a resolution of the controversy turns.

Id. at 199 (citations omitted). To interpret the intent of the parties in forming a contract, we "`must look to the language that the parties used.'" Singpiel, 1998 SD 86, ¶ 10,582 N.W.2d at 718 (quoting Malcolm, 365 N.W.2d at 865 (citations omitted)). The plain and ordinary meaning of the contract language will ordinarily be followed unless the language is ambiguous or a different intention is manifested. American State Bank v. Adkins, 458 N.W.2d 807, 809 (S.D.1990) (citing Restatement (Second) of Contracts § 203(3) (1981)). "Whether the language of a contract is ambiguous is a question of law for the court." Baker, 456 N.W.2d at 306 (citing Enchanted World Doll Museum v. Buskohl, 398 N.W.2d 149 (S.D.1986)). It is well settled that "[a] contract is ambiguous when application of rules of interpretation leave a genuine uncertainty as to which of two or more meanings is correct." Id.. (citations omitted).

[¶ 14.] In interpreting the agreement, the use of the name of the wrong insurance company in the provision is not critical, nor is it significant, compared to the type and the amount of the insurance owned by Jerald, since the clear intent of the parties was to provide financial security to Jerald's children in the unlikely event that he should succumb to an early death. See, e.g., Evans v. Evans, 1997 SD 16, ¶ 25, 559 N.W.2d 240, 246 (noting that the parties originally agreed to set aside the insurance policies for the children to protect the children's financial needs should the insured die before his children were raised). Specifically, the...

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