Nofziger v. Kentucky Cent. Life Ins. Co.

• Jurisdiction: Oregon
• Parties: Brenda NOFZIGER, now known as Brenda Kaufman, Appellant, v. KENTUCKY CENTRAL LIFE INSURANCE COMPANY, a Kentucky corporation, Defendant, and L. Ray Fisher, an individual, Respondent. 85-10-218; CA A44698.
• Citation: 758 P.2d 348,91 Or.App. 633
• Court: Oregon Court of Appeals
• Decision Date: 30 August 1988

Page 348

758 P.2d 348

91 Or.App. 633

Brenda NOFZIGER, now known as Brenda Kaufman, Appellant, v. KENTUCKY CENTRAL LIFE INSURANCE COMPANY, a Kentucky corporation, Defendant and L. Ray Fisher, an individual, Respondent.

85-10-218; CA A44698.

Court of Appeals of Oregon.

Argued and Submitted March 25, 1988.

Decided June 22, 1988.

Reconsideration Denied Aug. 5, 1988.

Review Denied Aug. 30, 1988.

[91 Or.App. 634] Steven Schwindt, Canby, argued the cause for appellant. With him on the briefs was Thomas E. Kranovich and Rief and Rief, Canby.

Christopher A. Rycewicz, Portland, argued the cause for respondent. With him on the brief was Bullivant, Houser, Bailey, Pendergrass & Hoffman.

Before BUTTLER, P.J., and ROSSMAN and DEITS, JJ.

ROSSMAN, Judge.

Plaintiff appeals a summary judgment for defendant Fisher. She sought recovery against defendant, an insurance agent, on three theories: (1) breach of contract to procure insurance; (2) negligent failure to procure insurance; and (3) negligent misrepresentation. We affirm.

Most of the facts are not in dispute. ¹ On March 19, 1985, defendant came to the home of plaintiff and her husband at their request and made a presentation about insurance. Plaintiff and her husband then filled out similar applications for life insurance. The applications stated, in part:

"I understand and agree that only an authorized officer of the company can make, waive, alter or modify any provision of this application and then only in writing. * * *

" * * * I understand and agree that, unless insurance shall take effect as provided in and subject to the terms of a Conditional Receipt bearing the same date and number as this application, no insurance shall take effect unless and until (a) a policy has been issued, (b) the full first premium thereon paid, and (c) the policy is delivered to the Policyowner while the health condition of each Proposed Insured and the other factors affecting insurability, are as stated in this application."

Plaintiff and her husband read that portion of the application and asked no questions about it before signing. Plaintiff stated in a deposition:

"Q. Did you read this part right above your signature on the application?

"A. I'm sure I did. I always do.

"Q. Is that something [your husband] always does is read anything before he signs them [sic]?

"A. Yes, he does and he's one to ask questions.

"Q. Did you have any questions concerning this information above your signature?

"A. No, I don't believe I did.

"Q. Do you recall if [your husband] had any questions of Mr. Fisher concerning this portion of the application?

"A. I don't recall."

Neither plaintiff nor her husband paid any money for the insurance; no conditional receipt was ever issued. Plaintiff states in her affidavit ² that defendant promised that the policy would take effect that evening:

"After discussing his proposal for life insurance and before taking information for the application, Mr. Fisher indicated that we were going to fill out the application for the insurance and that he would mail it and that the insurance would be in effect that night."

Plaintiff also states that defendant refused an offer of payment by plaintiff, saying that no payment was necessary, because he would set up an automatic checking account withdrawal procedure. Plaintiff stated that she assumed that the insurance company had the right to, and would, use the cash withdrawals for payment. Plaintiff does not assert that any withdrawals were made. Defendant denies making any statement that the policy would be effective immediately and claims that he told plaintiff and her husband that their medical problems might prevent issuance of policies at the quoted rate. He also contends that the automatic withdrawal forms were not completed. Plaintiff said that defendant made "no indications regarding the health of either of us as presenting any problem for temporary coverage." Plaintiff also stated:

"At no time did I realize nor do I have any knowledge of my husband realizing that Mr. Fisher's method of handling the application and payment constituted a waiver, or modification of the applications provisions.

"At all times we complied with [defendant's] request and thought that what we were doing was in compliance with the insurance company's requirements.

"At no time prior to [my husband's] death did I realize nor do I have any knowledge that [my husband] realized that an 'agent' was something other than 'an officer of the company.'

"Neither [my husband] nor myself have had any legal training and at the time of the application we did not understand the technical implications behind the term 'authorized officer of the company.'

"At no time did I realize nor do I have knowledge that [my husband] realized that what we were doing at [defendant's] request was a contradiction to the requirements of the insurance application."

No policy was delivered before the husband's death on May 1, 1985.

Plaintiff brought an action against KCL and defendant. The claim against KCL was also dismissed, but plaintiff does not appeal that.

BREACH OF CONTRACT

There are two possible contracts here which could have been breached. The first would be represented by the application. As to that, defendant prevails. When an insurance application plainly and unambiguously states limitations on the insurance agent's power, those limits bind both parties to the contract. Lundquist v. Fox, 51 Or.App. 183, 188, 624 P.2d 667, rev. den. 291 Or. 151, 634 P.2d 1345 (1981).

The other possibility is a contract to procure insurance to take effect on the night of application. Under that contract, defendant would have to be the agent of plaintiff and her husband for her to prevail. Defendant contends that he was the exclusive agent of KCL and, therefore, that contract cannot exist. He relies on ORS 744.165. ³

Whatever the legal effect of defendant's relationship to KCL would be by statute or in agency law, it does not appear that plaintiff has shown enough to permit a factfinder to conclude that a separate contract to procure temporary insurance existed. Plaintiff states in her affidavit that "[a]fter discussing his proposal of life insurance and before taking information for the application, [defendant] indicated that we were going to fill out the application for the insurance and that he would mail it and that the insurance would be in effect that night." The only mention of temporary insurance in the record is this statement in plaintiff's affidavit: "[Defendant] made no indications regarding the health of either of us as presenting any problem for temporary insurance." Those statements are not enough to support an inference that defendant contracted to procure temporary insurance. Nothing in the record suggests that the parties were concerned with any contract other than the one represented by the application. Accordingly, we affirm the dismissal of the contract claim.

NEGLIGENT FAILURE TO PROCURE INSURANCE

Plaintiff contends that defendant is liable for negligence in failing to procure insurance under Precision Castparts v. Johnson, 44 Or.App. 739, 607 P.2d 763 (1980). She argues that, once defendant stated that he would procure insurance, he incurred a duty to do so. ⁴

The facts in the record do not permit an inference that the failure to deliver the policy that plaintiff and her husband applied for was due to the negligence of defendant. We know only that the policy was applied for but was not delivered before husband's death. However, plaintiff also contends that defendant's failure to procure temporary insurance, combined with his assurance that plaintiff and her husband were covered, constitutes negligence. Defendant claims that, under ORS 744.165, he owes no duty to plaintiff.

Whether that statute applies raises two questions. First, it has never been held to divest brokers of their responsibilities as agents of the insured, at least as far as their failure to obtain insurance is concerned. ⁵ As noted above, the record does not tell us whether defendant is a broker or not. Second, even if defendant is an exclusive agent of KCL, there is some question as to whether the statute applies to this situation. It creates an agency, apart from the common law, for limited purposes when one "solicits or procures" an application for insurance. Paulson v. Western Life Insurance Co., 292 Or. 38, 61, 636 P.2d 935 (1981). The agency is limited to matters relating to an application for insurance and the policy issued. We have previously applied the statute only to misstatements on applications for insurance and interpretations of policy language. C.I.S. Northwest v. Berjac of Portland, 87 Or.App. 233, 237, 742 P.2d 618 (1987), adhered to as clarified, 89 Or.App. 117, 119, 747 P.2d 406 (1987), rev. den. 305 Or. 433, 753 P.2d 1380 (1988); Hiransomboon v. Unigard Mutual Ins. Co., 46 Or.App. 493, 497, 612 P.2d 306 (1980). The statute has never been read to limit liability of an agent for his own actions.

The facts in the record do not support the contention that defendant undertook to provide temporary insurance. There is no evidence that plaintiff and her husband requested immediate coverage. Defendant's statement that "the insurance would be in effect that night," if made, can only be understood as a statement construing or misconstruing the policy application that plaintiff and her husband had filled out.

At oral argument, plaintiff's counsel argued that the failure to provide immediate coverage was simple negligence, because unexpected death is precisely the kind of risk reasonably forseeable by life insurance salespeople or that the pleading at least, presents a jury question. Plaintiff states that the issue is "whether that conduct unreasonably created a forseeable risk to a protected interest of the kind of harm that befell the plaintiff." Fazzolari v. Portland School District No. 1J, supra, n. 4. That is incorrect; defendant's liability for...