Medley v. Salvation Army, Rapid City Corps, 11960

• Decision Date: 15 June 1978
• Docket Number: No. 11960,11960
• Citation: 267 N.W.2d 201
• Parties: Joy J. MEDLEY, Claimant, v. SALVATION ARMY, RAPID CITY CORPS, Employer, and Aetna Life & Casualty Company, Insurer and Appellant, and Western Surety Company, Insurer and Respondent.
• Court: South Dakota Supreme Court

Page 201

267 N.W.2d 201

Joy J. MEDLEY, Claimant, v. SALVATION ARMY, RAPID CITY CORPS, Employer and Aetna Life & Casualty Company, Insurer and Appellant and Western Surety Company, Insurer and Respondent.

No. 11960.

Supreme Court of South Dakota.

June 15, 1978.

William G. Taylor, of Woods, Fuller, Shultz & Smith, Sioux Falls, for appellant.

Gene McDonnell, Sioux Falls, for respondent.

RAMYNKE, Circuit Judge.

The Salvation Army maintains a division headquarters in Omaha, Nebraska, which supervises the various Salvation Army operations throughout South Dakota, Nebraska, and Iowa. Some time prior to October, 1970, the commanding officer of the Western Division of the Salvation Army contacted Foster-Barker Insurance Agency in Omaha, Nebraska, regarding the proposed purchase of a worker's compensation policy providing coverage for Salvation Army personnel in various locations throughout these states.

The Aetna Life & Casualty Company ultimately issued a policy through the Foster-Barker Insurance Agency for the policy year October, 1970, through October, 1971, providing coverage for all Salvation Army employees in Nebraska and South Dakota. An advance premium was collected in gross when the policy was issued subject to a premium audit and adjustment of premium at the end of the policy period.

Following the expiration of the 1970-71 policy year, an audit was made by an agent of the company and Captain Caldwell of the Salvation Army in order to determine the exact amount of the premium for that year. In the course of completing the audit, Captain Caldwell of the Salvation Army advised the Aetna agent that the Rapid City area was already covered by a separate policy of insurance with Western Surety Company and no coverage for that area by Aetna was needed. Consequently, there was no charge made for a premium for the Rapid City area.

Another policy was issued by Aetna to the Salvation Army for the year from October, 1971, to October, 1972. This policy provided coverage for South Dakota employees at the following locations: Aberdeen, Huron, Rapid City, Sioux Falls and Watertown. Again at the end of the year an audit was made to determine the actual amount of premium due and owing. In the course of that audit, Major Wier of the Salvation Army Division Headquarters in Omaha advised the Aetna agent that the Salvation Army had worker's compensation insurance coverage with Western Surety Company for the Rapid City area and that they did not intend to pay a premium for coverage they did not desire and had not desired the previous year. Again no premium was charged for the Rapid City location for the 1971-72 policy period.

On June 9, 1972, G. William Medley, an employee of the Salvation Army, was killed in the flood in Rapid City. Western Surety admits coverage of the claim but contends that Aetna Life & Casualty Company also has coverage and should contribute on this claim.

The written policy of insurance between Aetna and the Salvation Army shows the policy to cover the Rapid City area. The question as to where liability lies between Aetna and Western Surety was submitted to the deputy director of Labor and Management Relations. The deputy director found that Aetna had been advised by the Salvation Army that they did not want Aetna to provide coverage for either the 1970-71 policy year or the 1971-72 policy year on the Rapid City location and that in consideration of that advice, Aetna did not charge a premium and the Salvation Army did not receive coverage for the Rapid City area.

Western Surety appealed the deputy director's decision to the circuit court of the Second Judicial Circuit. The circuit judge on appeal reversed the decision of the deputy director and ordered contribution by Aetna. That decision has now been appealed to this court.

This is a dispute between appellant, Aetna Life & Casualty Company, and respondent, Western Insurance Company, as to who is to reimburse the widow of G. William Medley. No question has been raised by the widow of the employee, who has been receiving the full amount of her entitlement, and no question is raised by the employer, Salvation Army. The employer does not dispute its liability to the claimant under the worker's compensation laws. The dispute is between the two insurers.

SDCL 62-7-12 states:

If the employer and injured employee or his representative or dependents fail to reach an agreement in regard to compensation under this title, either party may notify the commissioner and...