Matthews v. New York Life Ins. Co.

Decision Date05 July 1968
Docket NumberNo. 10115,10115
PartiesR. H. MATTHEWS, Plaintiff-Respondent, v. NEW YORK LIFE INSURANCE CO., a corporation, Defendant-Appellant.
CourtIdaho Supreme Court

Moffatt, Thomas, Barrett & Blanton, Boise, for appellant.

Hepworth, Nungester & Felton, Buhl, for respondent.

SMITH, Chief Justice.

This is an appeal from a summary judgment granted in favor of respondent (plaintiff) Matthews, in an action to recover the proceeds of a $10,000. group life insurance policy issued in the name of Rufus D. Moore. Respondent Matthews is president and principal stockholder of Peacock Beauty College and Salon, an Idaho corporation having its principal place of business in Nampa, Idaho. The corporation is the named employer in the group policy in issue; respondent is the sole beneficiary named in the policy issued in the name of Rufus D. Moore, now deceased.

Decedent, Rufus D. Moore, was a public accountant with his own independent business office in Nampa. Respondent Matthews became acquainted with Moore in 1946 when Moore commenced to perform income tax work for respondent. Moore continued to do accounting work for Matthews and for various business concerns in which Matthews had an interest. In 1954 Moore made a loan of approximately $3,700. to Matthews. Until the time of his death, Moore was issued one share of stock in the corporation as an incorporator. The only other shareholders of the corporation were respondent and his wife; the percentage of ownership of the three shareholders is not indicated by the record.

Moore, until 1964, took care of the tax returns and end-of-year accounting for Peacock Beauty College and Salon and other related corporations in which respondent was interested, for which work Moore received, until 1964, 'probably $1,500. to $2,000. a year.' Moore performed all his work, except in rare instances, at his own accounting office; he at no time maintained an office at the place of business of the corporation. Respondent Matthews stated that he was uncertain as to the number of hours spent by Moore on corporation matters in any week during their continued relationship. After 1964 Moore did no accounting work for the corporation because his work was taken over by a firm of certified public accountants.

Prior to August 1, 1965, Peacock Beauty Salon carried its group insurance with appellant insurance company. The policies were written by one Duane Thueson, Deceased, agent for appellant New York Life Insurance Company. In 1965, Thueson and respondent Matthews discussed the possibility of writing a more comprehensive type of group insurance, to amend by replacement group policy No. GS-11945 then in effect. Rufus Moore, as public accountant, also discussed the matter with Thueson and helped negotiate the replacement policy, No. G-20782-0.

The amended group policy was written to be effective August 1, 1965, with subsequent anniversary dates on August 1 of each ensuing year. The policy provided, in pertinent part, as follows:

'Employee to be Insured.-Eligible Class or Classes of Employee: All active full-time employees of the Employer, except temporary and seasonal employees. . . . For purposes of this policy, employees who work less than 30 hours per week at the usual location or locations where the business is transacted shall not be considered full-time employees.'

August 12, 1965, Rufus Moore signed a document entitled 'enrollment card' which, immediately above his signature, recited:

'Request for Group Insurance.-I hereby declare that the above information is correct, that I regularly work and at present am working at least 30 hours a week for the Group Policyholder at the policyholder's place or business or other locations to which I am required to travel to perform the regular duties of my employment and that to the best of my knowledge and belief I am eligible for insurance under the terms of the Group Policy or Policies issued to the Group Policyholder by New York Life Insurance Company. I hereby request the insurance thereunder to which I may become entitled, and authorize the deduction from my earnings of any contribution I am required to make toward the cost of this insurance.'

The beneficiary on Moore's enrollment card was indicated as 'Matthews, Richard,' which fact was known to respondent from the time of commencement of the term of the policy. The relationship indicated on the enrollment card by decedent Moore was 'friend.' The group insurance policy No. GS-11945 (replaced by group policy No. G-20782-0) was obtained by Peacock Beauty College and Salon in 1961, and it was maintained continuously from that time. Rufus Moore was covered under that group from November, 1961.

Moore died April 9, 1966. Thereafter appellant company initiated an investigation of the claim presented by respondent as beneficiary. The company denied the claim on the basis that Moore was not an eligible employee within the meaning of the policy because he did not work 30 hours per week for the group policyholder.

Duane Thueson, agent for appellant company, died July 24, 1966.

Donald W. Merrill, appellant's home office group representative stated in his deposition that he had no knowledge concerning the status of Rufus Moore or of any of the employees submitted on the enrollment cards. Merrill further stated that the agent Thueson had knowledge of the restriction contained in the enrollment card pertaining to the number of hours required to qualify for insurance, and that such restriction had been specifically discussed between himself and Thueson. Merrill stated that both Mr. and Mrs. Thueson seemed to be well acquainted with the decedent Moore and appeared to be personal friends; Merrill presumed thereby that the Thuesons knew of the status of Moore.

The district court on July 7, 1967, entered its order granting summary judgment for respondent. The court held, in pertinent part:

'(1) That there are no issues of material fact for submission to a jury; (counsel for defendant advised the Court at the time of hearing said motion, in response to a question directed by the Court, that the only evidence not before the Court that they might have or would likely produce at a latter time would be the work records of the plaintiff's business to show that at the time of the death of Mr. Rufus D. Moore he was not working thirty hours per week at the usual location or locations where the business of the employer is transacted. This fact is not disputed by the plaintiff either in argument or by the record, so, in the opinion of the Court it is not a factual issue that needs determination.)

'(2) That at the hearing of said motion defendant did not produce or tender to the Court any affidavits or other documents to contradict plaintiff's showing of estoppel, waiver and ratification by the defendant corporation. (Idaho Rules of Civil Procedure Rule 56E). (Citation of authorities) Nor was there any showing by the defendant of why affidavits or documentary evidence could not or was not available to them to meet the plaintiffs' showing. (Idaho Rules of Civil Procedure 56F).

'The above cited cases substantiate plaintiff's showing of estoppel, waiver and ratification on the record before the Court as well as the need for defendant to refute the facts set forth therein or show cause why he could not.

'(3) That while the incontestability clause and eligibility provision of the contract in question are distinguishable as argued by defense counsel and that under ordinary circumstances would provide that one could become ineligible under said policy by failing to work the thirty hours required even after the policy became incontestable on other grounds, this is not the issue before the Court in the absence of counter affidavits filed by the defendant as above stated; the case before the Court as it stands is whether or not an agent of the defendant insurance corporation with full knowledge of existing facts at the time of issuing said policy and thereafter can waive a provision within the contract and the defendant corporation be bound by it. (see record) This essentially is a legal question and the only real question before the Court since the facts otherwise are not disputed. (Citation of authorities)' The trial court awarded $2,500 attorney's fees to respondent in the summary judgment proceedings.

Appellant company, since the inception of Moore's policy coverage in 1961, had accepted the insurance premiums paid on behalf of Moore, and under the insurance policy, had made payments on claims for medical and hospital expenses incurred by him.

After Moore's death, and appellant's refusal to pay the proceeds of the policy, respondent commenced this action against appellant company alleging that Moore was included within the group and that appellant had insured his life for $10,000. Appellant, in its answer, alleged its tender back to the beauty salon of all premiums paid on behalf of Moore, and further alleged the decedent Moore 'wilfully, knowingly and fraudulently' declared and certified that he regularly worked and was presently working at least thirty hours a week for the group policyholder at the policyholder's regular place of business.

The depositions of Merrill, Mrs. Thueson, and respondent R. H. Matthews, and affidavits of Matthews and of three other persons were submitted to the court. Both parties moved for summary judgment.

Appellant contends that the trial court erred in granting summary judgment for respondent, for the reason that there were genuine unresolved issues of material fact. See I.R.C.P. 56(e). 1 In support of its argument, appellant maintains that certain evidence contained in the depositions and affidavits submitted by respondent in support of his motion for summary judgment was inadmissible because it was not based upon the personal knowledge of deponents.

Appellant contends that certain portions of respondent's affidavits were inadmissible to show that agent...

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