Hockemeyer v. Pooler, s. 38904

• Citation: 130 N.W.2d 367,268 Minn. 551
• Decision Date: 24 July 1964
• Docket Number: Nos. 38904,38941,38936,38905,s. 38904
• Parties: Albert HOCKEMEYER, as trustee for heirs of Elsie Hockemeyer, decedent, Respondent, v. Homer Boyd POOLER, Defendant, and Third-Party Plaintiff, Respondent, v. MOTORS INSURANCE CORPORATION, James Goetz, et al., Third-Party Defendants, Appellants.
• Court: Minnesota Supreme Court

Page 367

130 N.W.2d 367

268 Minn. 551

Albert HOCKEMEYER, as trustee for heirs of Elsie Hockemeyer, decedent, Respondent, v. Homer Boyd POOLER, Defendant, and Third-Party Plaintiff, Respondent, v. MOTORS INSURANCE CORPORATION, James Goetz, et al.,

Third-Party Defendants, Appellants.

Nos. 38904, 38905, 38936, 38941.

Supreme Court of Minnesota.

July 24, 1964.

Syllabus by the Court

1. The evidence conclusively establishes that no employee or licensed agent of the third-party defendants had actual, implied, or apparent authority to provide defendant and third-party plaintiff with automobile liability insurance.

2. The record conclusively establishes that the physical damage policy issued to defendant and third-party plaintiff was the insurance contract the parties intended to secure; that there was no evidence of fraud or mutual mistake; and that there was no evidence sufficient to warrant admission of parol evidence to justify reformation of the policy.

3. The sellers of an automobile under a conditional sale contract complied fully with Minn.St. 168.71(c) by sending to the buyer, within the designated statutory period, a copy of the physical damage insurance policy he was required to furnish under the contract.

4. The record is without proof that an insurer against physical damage clothed its agents with apparent authority to solicit or write public liability insurance by reason of its granting to them express authority to solicit only physical damage insurance. The record does not contain evidence of the elements necessary to establish such apparent authority.

5. The conception of legal relations between an applicant for insurance and the insurance company is essentially and fundamentally the same as between parties negotiating other contracts and, as such, is purely contractual.

6. An agent cannot create in himself an authority to do a particular act merely by its performance; the extent of his authority depends upon the will of the principal, who will be bound by the acts of the agent only to the extent of the authority, actual or apparent, which has been conferred upon him.

7. There is no authority unless there is power to affect the legal relations of the principal. Thus, there is no authority unless the principal has capacity to enter into the legal relation sought to be created by the agent.

8. To reform a written contract mere preponderance of the testimony is not sufficient. The facts upon which one seeking reformation relies must be established by competent evidence which is consistent, clear, and convincing.

9. There is no evidence in the record to establish mutual mistake or fraudulent misrepresentation going either to the inception or to the completion of the contracts here involved and therefore no basis for application of any exception to the parol evidence rule.

10. The evidence so overwhelmingly preponderates in favor of the third-party defendants as to leave no doubt as to the factual truth and they were, therefore, entitled to a directed verdict at the close of proof.

Carl W. S. Peltoniemi, Wadena, Meagher, Geer, Markham & Anderson, and O. C. Adamson II, and Mary Jeanne Coyne, Minneapolis, for Goetz and Everson.

Horman H. Nelson, Moorhead, Carroll, Cronan, Roth & Austin and Frank X. Cronan, Minneapolis, Walter S. Buehler, New York City, of counsel, for Motors Ins. Corp.

Charles R. Kennedy, Wadena, Don E. Kennedy, Staples, Scow & Gray, Long Prairie, for respondents.

NELSON, Justice.

This appeal arises out of a collision between an automobile in which decedent, Elsie Hockemeyer, was a passenger and an automobile owned and operated by defendant and third-party plaintiff, Homer Boyd Pooler. Plaintiff, Albert Hockemeyer, brought an action for death by wrongful act against Pooler, who admitted his negligence, and recovered a verdict of $25,000. In a third-party action Pooler demanded indemnity from Motors Insurance Corporation (hereinafter referred to as MIC), James Goetz and Ronald Everson, copartners doing business as Goetz-Everson Motors, and Goetz, individually. Pooler claimed that the third-party defendants had negligently failed to provide him with liability automobile insurance and also sought reformation of a policy issued him by MIC to provide such coverage.

The jury in a special verdict found that third-party defendants had been negligent in failing to provide liability insurance and the court, trying the issue of reformation, determined that issue in Pooler's favor also. These appeals are from orders denying third-party defendants' motions for judgment notwithstanding the verdict or a new trial and from the judgment entered against them jointly and severally.

The essential facts may be stated as follows: Goetz-Everson Motors is a partnership engaged in the business of selling new and used cars in Wadena, Minnesota. Both partners devote their full time to the business. The two partners and their office manager, Howard Walther, are licensed insurance agents and represent MIC, which limits its activities entirely, both in the State of Minnesota and nationally, to the writing of physical damage insurance on automobiles. MIC does not issue policies which provide bodily injury and property damage liability insurance, or any other coverage for which a specific premium charge is not made, and does not comply with any financial responsibility law. Neither the agency agreement nor the insurance licenses authorized Goetz, Everson, or Walther to write or accept applications for any type of automobile insurance except physical damage coverage.

Goetz and Everson apply for collision policies only in connection with their own selling of automobiles and they are permitted to add to the collision policies, comprehensive, glass breakage, fire, theft, and windstorm coverages--that is, full coverage as to physical damage to automobiles. If the partnership makes a sale on credit, the transaction is usually financed through General Motors Acceptance Corporation or local banks. A conditional sale contract is executed and discounted by whatever agency chooses to buy it from the seller. This method of financing is an essential element in the sale of automobiles and when employed a purchaser is required to furnish collision insurance. The purpose of collision and comprehensive insurance is to protect the buyer of the contract so that if the security is lost the contract will be paid, any part of the insurance over the balance due on the contract being paid to the buyer. Thus, both the purchaser and lender are protected.

The partners do not require purchasers to obtain the necessary physical damage insurance from them but will accept a policy written by any authorized insurance company. If a customer requests automobile liability insurance, he is advised that Goetz-Everson cannot make it available and he must obtain it elsewhere. None of the salesmen of the partnership attempt to sell automobile liability insurance.

If a sale is to be financed through General Motors Acceptance Corporation, a customer's statement is made up in order to determine the financial ability of the buyer. This also contains an application for physical damage insurance. After the sale is completed, the statement is sent to the Fargo office of MIC. The policy is issued at the Fargo office and forwarded to the partnership which, in turn, mails it to the customer within a week to 10 days. While the partnership cannot issue the policy, nevertheless the insurance is made effective as of the date of the purchase of the automobile.

Mr. Pooler, the defendant and third-party plaintiff, 31 years of age at the time of trial, had had an eighth-grade education and was employed at the Eagle Bend Produce Company. On July 3, 1958, he bought the 1957 Oldsmobile involved in the accident from the partnership, the fatal accident occurring December 6, 1958. On the day he purchased the car his wife and he came to the Goetz-Everson garage about 1:30 p.m. He talked to salesman Leland Schumaker about making a deal involving his 1954 Buick and drove the Oldsmobile on a trial run out into the country. Pooler said at the trial that it was difficult for him to remember all conversations had on the day of the purchase, but that he remembered those parts of them concerning the price of the car, the allowance for the Buick, the payments, and closing the deal. He testified that to the best of his recollection Schumaker asked him about his insurance, if he wanted $100 deductible, and that he said that he did not but wanted 'full coverage'--that he had had 3 years' experience with $100 deductible and did not want any more of it. He testified that Schumaker said, 'Okay.' After talking further with Schumaker, Pooler then executed the necessary customer's statement and conditional sale contract. He said the papers were handed to him, spread out on the counter, where the sale had been discussed, and that no one read their contents to him. He remembers Schumaker's going over the figures with him relating to the payment schedules and the insurance requirements of the contract. He admits signing both the customer's statement and contract and taking his copies with him, but claims that he really did not read either, although he looked at the figures. He did not read a provision in the contract, set forth in bold type, stating that no liability insurance was being furnished. He testified that he and his wife spent more than 2 1/2 hours at Goetz-Everson Motors and that he was not rushed into making the deal. He did not recall talking to anyone but Schumaker concerning insurance.

He received the MIC insurance policy in the mail within 10 days, opened it to see what it was, and told his wife to put it away. He said he knew it was the policy on his car because he saw the name Motors Insurance Corporation on the face of the policy, but did not read it because he believed he had 'full coverage.'

There was printed at the top of the first page of the MIC...