Rickborn v. Liberty Life Ins. Co.
| Citation | 321 S.C. 291,468 S.E.2d 292 |
| Decision Date | 02 November 1995 |
| Docket Number | No. 24378,24378 |
| Parties | Harold O'Neal RICKBORN, Personal Representative of the Estate of Rodney Rickborn, Respondent, v. The LIBERTY LIFE INSURANCE COMPANY, Appellant. . Heard |
| Court | United States State Supreme Court of South Carolina |
Clarke W. Dubose, of Sinkler & Boyd, P.A., Columbia; and R. David Black, Greenville, for Appellant.
George K. Kefalos, of Claypoole, Kefalos, Waggoner & Barrow, North Charleston; and Andrew K. Epting, Jr. and W. Andrew Gowder, Jr., both of Wise & Cole, P.A., Charleston, for Respondent.
In this life insurance coverage case, Appellant (Liberty Life) appeals from the special referee's final order dated December 22,
1994, which granted Respondent judgment in the face amount of the policy totaling $100,000 plus interest from May 1, 1985, until the date of the order. In addition, Liberty Life appeals the amended final order dated February 8, 1995, which basically affirmed the special referee's previous rulings, but revised the judgment to include an accidental death benefit in the amount of $75,000, and provided for recalculation of prejudgment interest with the principal amount being $175,000. The two appeals were consolidated. We affirm.
Respondent Harold O'Neal Rickborn brought this action for life insurance benefits after his son, Rodney Rickborn (Rodney), was seriously injured in an automobile accident on March 23, 1985, and died from those injuries on May 1, 1985. Rodney lived with his father after his parents were divorced. Rodney's mother, Patricia Glasser, remarried Robert Glasser (Glasser), a sales agent for Liberty Life.
During a family gathering in February 1985, nineteen-year-old Rodney asked Glasser for advice on insurance and savings. Glasser recommended that Rodney apply for a universal life insurance policy which would provide insurance as well as savings. The following week after a nighttime high school basketball game, Glasser presented Rodney an application and conditional receipt and informed him that the policy would provide the coverage as discussed. However, Glasser did not review the application or conditions with Rodney, but merely told him to sign the documents. Without reading them, Rodney signed the documents on the hood of a car in the parking lot at the high school. Rodney did not receive a copy of either document. Because Rodney did not have his checkbook with him to pay the initial premium, Glasser said he would "take care of it", and Rodney could give a check to his mother. Glasser's statement that he would "take care of it" indicated to Rodney that the initial premium would be paid ensuring him immediate coverage. Rodney's mother testified that Glasser told Rodney he was covered. On March 1, 1985, Glasser wrote a personal check in the amount of $50.00 to Liberty Life for Rodney.
Glasser submitted an incomplete application to Liberty Life which was not accepted. Moreover, because Glasser did not have an insurable interest in Rodney, according to Liberty Life's guidelines, his check would not bind coverage. Consequently, the application was returned to Glasser, and Liberty Life instructed him to complete and resubmit it. Glasser never informed Rodney that he was not covered as represented, nor did he resubmit the application prior to Rodney's automobile accident on March 23, 1985. Liberty Life failed to further supervise Glasser regarding Rodney's application.
The application signed by Rodney required information concerning his prior driving record, which was incomplete. Rodney's four-year driving record included five (5) accidents, nine (9) moving violations, and two (2) suspensions. Liberty Life argued to the special referee that even had the application been properly completed and submitted, under its guidelines Rodney was uninsurable.
I. Did the special referee err in concluding that Liberty Life clothed Glasser with apparent authority making it liable in negligence for his acts?
II. Did the special referee err in finding the elements of contract between Rodney and Liberty Life?
III. Did the special referee err in assessing the award of prejudgment interest?
In an action at law, tried without a jury, the judge's findings will not be disturbed unless they are without evidentiary support. Townes Associates Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976). A judge's findings are equivalent to those of a jury in an action at law. Id.
Liberty Life does not dispute that it employed Glasser as a sales agent or that he Any policy issued as a result of this application shall together with this application constitute a single and entire contract of insurance. Only the President, a Vice President, the Secretary, or an Assistant Secretary of the Company may make a contract on its behalf. No waiver or modification of a contract provision or of any of the Company's rights or requirements shall be binding upon the Company unless it is in writing signed by one of such officers. Neither the agent whose signature appears below, nor any other agent or broker, nor any medical examiner is authorized to accept risks, pass on insurability, make or modify contracts, or waive any of the company's rights or requirements.
mishandled Rodney's application for insurance. However, Liberty Life contends that under S.C.Code Ann. § 38-43-10 (1989), Glasser was not an agent for all purposes, and in light of the following language in the documents signed by Rodney, the extent of Glasser's authority was restricted to taking applications and collecting premiums:
Liberty Life also asserts the conditional receipt portion of the application provides that agents are not authorized to waive the requirement that the applicant must be an acceptable risk to Liberty Life under its standards for the proposed plan of insurance or the requirement that the applicant must pay in full the first premium. Consequently, Liberty Life maintains that by signing the application and conditional receipt, Rodney knew Glasser did not have the authority to complete the application without Rodney's input, to pay premiums on behalf of Rodney, to make underwriting decisions, to waive application requirements, or to bind the company to coverage. We disagree.
The special referee determined that Glasser was an agent of Liberty Life according to § 38-43-10, and as such he had the duty to meet the following standards generally accepted in the industry: to properly complete applications for insurance; to properly explain the terms and limitations of coverage; and to assure that the initial premium is properly tendered and handled. He further concluded that Liberty Life clothed Glasser with apparent authority and, therefore, Liberty Life was bound by Glasser's representations to Rodney that his insurance coverage commenced the night he signed the application. The special referee, relying upon Cauthen v. Metropolitan Life Ins. Co., 1 held that the limiting provisions in the application and conditional receipt were waived because Glasser failed to bring them to Rodney's attention.
The doctrine of apparent authority focuses on the principal's manifestation to a third party that the agent has certain authority. Accordingly, the principal is bound by the acts of its agent when it places the agent in such a position that persons of ordinary prudence, reasonably knowledgeable with business usages and customs, are led to believe that the agent has certain authority and they in turn deal with the agent based upon that assumption. Fernander v. Thigpen, 278 S.C. 140, 293 S.E.2d 424 (1982); Vereen v. Liberty Life Ins. Co., 306 S.C. 423, 412 S.E.2d 425 (Ct.App.1991). Moreover, a general agent's authority is determined by the nature of the business, and is coextensive with his scope of employment, as he has the right to do not only what is customary in obtaining business, but whatever is reasonably incidental thereto. Noisette v. Ismail, 299 S.C. 243, 384 S.E.2d 310 (Ct.App.1989), rev'd on other grounds, 304 S.C. 56, 403 S.E.2d 122 (1991). Those dealing with such an agent, without notice of restrictions upon his authority, have a right to presume that his authority is coextensive with its apparent scope, and as broad as his title indicates. Id.
One seeking insurance from a general agent is not bound to inquire as to the precise instructions he has received from his company. The restrictions and limitations existing upon the authority of a general agent as between such agent and the company are not binding upon policyholders in their dealings with such agent, in Noisette v. Ismail, 299 S.C. at 250, 384 S.E.2d at 314, (citing J. Appleman and J. Appleman, Insurance Law and Practice § 8693 at 259-61 (1981)).
the absence of knowledge of [sic] their part of such limitations. Thus, a limitation upon the authority of a general agent, having power to make contracts of insurance, would not relieve the insurer from liability on a policy issued by such agent, though in violation of the limitation, where the insured had neither actual nor constructive notice of such limitation....
By employing Glasser as a sales agent, Liberty Life placed him in a position whereby he had the express authority to solicit purchasers for its insurance products, to write applications, and to transmit premium payments. The scope of Glasser's employment included the inherent authority as well as the duty to clearly explain the terms and limitations of Liberty Life's products. The record establishes that Glasser advised Rodney to obtain a universal life insurance policy, presented him with the application and conditional receipt for such policy in a parking lot at night, and told him to sign the documents without explaining either the limitations of his authority or the requirements for...
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