Johnson v. Minnesota Mut. Life Ins. Co., 88-1582

• Decision Date: 26 July 1989
• Docket Number: No. 88-1582,88-1582
• Citation: 151 Wis.2d 741,445 N.W.2d 736
• Parties: Rhoda L. JOHNSON, Plaintiff-Respondent, v. The MINNESOTA MUTUAL LIFE INSURANCE COMPANY, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

Page 736

445 N.W.2d 736

151 Wis.2d 741

Rhoda L. JOHNSON, Plaintiff-Respondent, v. The MINNESOTA MUTUAL LIFE INSURANCE COMPANY, Defendant-Appellant.

No. 88-1582.

Court of Appeals of Wisconsin.

Submitted on Briefs May 5, 1989.

Opinion Released July 26, 1989.

Opinion Filed July 26, 1989.

Thomas J. Sobota, and Boardman, Suhr, Curry & Field, on briefs, Madison, for defendant-appellant.

Robert H. Consigny, John W. Holzhuter and Louis D. Gage, and Consigny, Andrews, Hemming & Grant, S.C., on brief, Janesville, for plaintiff-respondent.

Before GARTZKE, P.J., and DYKMAN and EICH, JJ.

GARTZKE, Presiding Judge.

Minnesota Mutual Life Insurance Company appeals from an award of summary judgment granted pursuant to sec. 802.08(6), Stats., to Rhoda Johnson for approximately $45,000 in benefits under a supplemental group life insurance policy the company issued to the employer of her husband, Curtis Johnson. We conclude that the company's motion for summary judgment establishes a prima facie defense that Curtis had cancelled his supplemental coverage and that Rhoda failed to show that a trial is necessary or that she is entitled to judgment. We therefore reverse and remand with instructions to dismiss the complaint.

The purpose of summary judgment is to avoid trials if nothing must be tried. Hunter of Wisconsin, Inc., v. Hamilton, 101 Wis.2d 460, 470, 304 N.W.2d 752, 757 (1981). Summary judgment methodology has been described in many cases, such as In re Cherokee Park Plat, 113 Wis.2d 112, 116, 334 N.W.2d 580, 582-83 (Ct.App.1983), and we need not repeat it. Whether summary judgment should be granted is a question of law which we review ab initio. Green Spring Farms v. Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816, 820 (1987).

We first examine the pleadings to determine whether a claim has been stated and a material factual issue presented. In re Cherokee Park Plat, 113 Wis.2d at 116, 334 N.W.2d at 582-83. Rhoda alleges in her complaint that she is the widow of Curtis, who died on July 27, 1986. Before he died, Minnesota Mutual issued a group policy to his employer insuring his life for $45,000, and a policy of supplemental coverage with benefits of an additional $45,000. She was named beneficiary. Curtis and Rhoda paid Minnesota Mutual premiums for both basic and supplemental coverage. Shortly after his death, Minnesota Mutual paid her $45,000 for the basic coverage proceeds, but refused to pay the $45,000 in supplemental benefits. Instead, it sent her a check for $110.25 representing a refund of seven months of premiums for the supplemental coverage that it claimed had been collected as an oversight. Rhoda alleges she is entitled to the $45,000 in supplemental benefits. The complaint states a claim. In its answer, Minnesota Mutual denies knowledge or information sufficient to form a belief as to the facts alleged in the complaint. The answer raises material issues of fact.

Because Minnesota Mutual moved for summary judgment dismissing the complaint, we examine its affidavits for facts admissible in evidence to determine whether it made a prima facie case for a defense which would defeat Rhoda's claim. In re Cherokee Park Plat, 113 Wis.2d at 116, 334 N.W.2d at 583.

The company's motion is supported by an affidavit of James Lodholz, an employee of the Wisconsin department of employe trust funds ("the department"). Lodholz states that on November 11, 1985 the department received a form signed by Curtis stating he wanted to cancel his supplemental life insurance coverage. Curtis retired from state employment on December 6, 1985. The department mistakenly deducted the monthly premiums for the supplemental insurance from his retirement benefits from January 1986 through July 1986, ¹ forwarded the withheld amounts to Minnesota Mutual to cover the premium on the supplemental coverage, and failed to give Minnesota Mutual notice of the cancellation until August 1, 1986.

Minnesota Mutual also submitted an affidavit by William Schiefelbein, Jr., its general agent in Madison. He furnished copies of the group life insurance policy Minnesota Mutual had issued to the state of Wisconsin and the cancellation form Curtis had signed. The policy provides in material part that Minnesota Mutual,

in consideration of the acceptance of this policy by the Group Insurance Board of the State of Wisconsin and the payment of premiums as stated herein, hereby agrees to insure certain employes of the State of Wisconsin who are or become entitled to insurance under the administrative rules and the terms and conditions of this policy and agrees to pay the amount for which any employe is insured hereunder at the date of his death to the person or persons entitled thereto after receipt of due written proof of such death, in accordance with and subject to the provisions of this policy.

....

Premiums shall be computed as hereinafter provided and are payable by the Policyholder. Premiums shall become due on the first day of the month while the policy is in force.

The cancellation form is dated October 29, 1985, and purports to be signed by Curtis Johnson and to have been received the same day by his employing office, the department of administration. The form bears a November 11, 1985 time-stamp by the department of employe trust funds. Schiefelbein states that on August 4, 1986 his office received the cancellation form from the department of employe trust funds. On August 14, 1986 his office received a claim for benefits from Rhoda. Minnesota Mutual paid her the full amount of the basic coverage. To correct the erroneous payment of premiums for the cancelled supplemental coverage, the company issued a check to her for $110.25, covering the premiums for January 1986 through July 1986.

Whether Minnesota Mutual has established a prima facie defense turns on the effect of sec. 40.70(8), Stats., and the relationship between Curtis as a covered employee, the department and Minnesota Mutual.

Section 40.70(8), Stats., provides that an insured state employee

may at any time cancel the life insurance by filing a waiver of coverage with the employing office. An insured retired employe may at any time cancel the life insurance by filing a waiver of coverage with the office of the retirement system. The waiver shall be transmitted immediately to the department. The waiver shall be effective and the insurance shall cease at the end of the calendar month which begins after the waiver is received by the appropriate office. ²

The trial court concluded that sec. 40.70(8), Stats., makes the department, as the group life policyholder for state employees, the insurer's agent to receive cancellation notices. The court also found "compelling evidence" that the department is the insurer's agent by "practice for procuring and administering" the group policy. Because the insurer, through the department as its agent, continued to withhold premiums seven months after receiving the cancellation, the court concluded that Minnesota Mutual waived its right to cancel coverage. We disagree.

The policy itself shows on its face that the policyholder is the group life insurance board. This is consistent with sec. 40.03(6)(a)1., Stats., which provides that the group insurance board shall contract with insurers for group insurance plans. Minnesota Mutual is, of course, the insurer, and Curtis is the insured, presumably by virtue of sec. 40.70(1), which provides generally that "each eligible employe of an employer shall be insured under the group life insurance provided in accordance with [ch. 40, subch. VI]." The question remains whether the department is nevertheless the agent of Minnesota Mutual to receive cancellation notices. We conclude it is not.

Whether an actual principal-agent relationship exists usually turns on facts concerning the understanding between the alleged principal and agent. Soczka v. Rechner, 73 Wis.2d 157, 163, 242 N.W.2d 910, 913 (1976). The relationship exists "only if there has been a manifestation by the principal to the agent that the agent may act on his account, and consent by the agent so to act." Restatement (Second) of Agency sec. 15 (1957). No such manifestation or consent can be inferred from the facts stated in the affidavits supporting Minnesota Mutual's motion for summary judgment.

One may also be the statutory agent for another. The question is therefore whether sec. 40.70(8), Stats., creates that relationship between the department and the group life insurer. Since sec. 40.70(8) does not expressly denominate the department as the agent and no other statute expressly creates that relationship, we examine the statutes regarding group life insurance to determine whether that relationship can or should be implied. This is a question of statutory construction, a matter which we decide without deference to the view of the trial court. Richards v. Young, 145 Wis.2d 322, 324, 426 N.W.2d 117, 118 (Ct.App.1988). We conclude that the relationship cannot be implied from the statutes.

Each eligible employee of an employer participating in the...