Ridgway v. Shelter Ins. Companies, s. 73063

• Decision Date: 05 April 1996
• Docket Number: Nos. 73063,73686,s. 73063
• Citation: 22 Kan.App.2d 218,913 P.2d 1231
• Parties: Tommy Ray RIDGWAY, Appellant, v. SHELTER INSURANCE COMPANIES, Appellee.
• Court: Kansas Court of Appeals

Page 1231

913 P.2d 1231

22 Kan.App.2d 218

Tommy Ray RIDGWAY, Appellant, v. SHELTER INSURANCE COMPANIES, Appellee.

Nos. 73063, 73686.

Court of Appeals of Kansas.

April 5, 1996.

Review Denied June 11, 1996.

Syllabus by the Court

1. The Kansas insurance code, K.S.A. 40-101 et seq., permits a named insured to give a legal agent the authority to reject the respective coverage provisions in K.S.A. 40-284(c), concerning uninsured motorist coverage, and K.S.A. 40-3107(f), concerning personal injury protection benefits.

2. It is the duty of every contracting party to know the contents of a contract before signing it. As a result of this duty, a person who signs a written contract is bound by its terms regardless of his or her failure to read and understand its terms.

Appeal from Cherokee District Court; David F. Brewster, judge.

Patrick C. Smith, of Spigarelli, McLane & Short, of Pittsburg, for appellant.

Mark E. Fern, of Fern & Angermayer, L.L.C., of Pittsburg, for appellee.

Before BRAZIL, C.J., MARQUARDT, J., and RICHARD M. SMITH, District Judge, Assigned.

BRAZIL, Chief Judge:

Tommy Ridgway appeals two cases involving his coverage under a motorcycle insurance policy issued by Shelter Insurance Company (Shelter). We affirm.

The cases arose out of an accident in which Ridgway was struck by a car while on his motorcycle. Ridgway suffered personal injury and property damage, but the driver of the car that struck him was uninsured. Ridgway sued Shelter in one of the cases for failure to pay personal injury protection (PIP) benefits under his motorcycle insurance policy. In the other case, Ridgway sued Shelter, the driver of the car which struck him, and the driver of another vehicle involved in the accident, alleging negligence by the two drivers and alleging uninsured/underinsured motorist (UM) coverage under the motorcycle insurance policy. Shelter defended in each case on the ground that Ridgway, through his agent Billie Lewis, had rejected in writing the coverages he sought to recover; the trial court granted Shelter summary judgment in each case.

On appeal, Ridgway asserts the following reasons why the trial court erred in finding valid rejections of the PIP and UM coverages: (1) the pertinent Kansas insurance code statutes do not permit an agent of the named insured to reject the coverages at issue; (2) if the statutes do permit an agent to reject the coverages at issue, either (a) Lewis lacked authority from Ridgway to effect the rejections or (b) Lewis' rejections were ineffective under common-law waiver principles.

At the time of the accident, Ridgway had been living with his girlfriend, Billie Lewis, for almost 5 years, and the two had a daughter together. The three lived in a house owned by Lewis.

Approximately a year before the accident, Ridgway acquired a motorcycle and instructed Lewis to get insurance on the motorcycle for him. Lewis went to Shelter for the insurance because Ridgway told her to get the insurance at the same place that insured his car. According to Lewis, Ridgway told her to get liability insurance but said nothing to her about policy limits. Ridgway stated he "[j]ust told her to get insurance, go by and get me some insurance on the motorcycle so I could ride it." In addition, Ridgway was questioned at his deposition:

"Q. [By Shelter's counsel] Did you tell her anything specifically about getting insurance when she went?

"A. No, just to purchase insurance.

"Q. Did you tell her whether to get comprehensive, where everything is covered, or liability only or anything like that?

"A. I figured, you know, she would just get liability because I didn't even know if they would cover a motorcycle that old, a 77. Because I had a car or something before, and it seems like they told me I couldn't get insurance when it was so old, full coverage insurance or something.

"Q. Did you talk to Billie about that at all before she went over?

"A. No. I just told her to get it and she was going to get it."

Ridgway further stated he gave Lewis money to get the insurance.

Lewis went to Shelter and negotiated a policy with Chuck Sirratt. Sirratt stated he originally knew Lewis from having written insurance for her on another policy, then came to know Ridgway through Lewis, and then wrote another insurance policy for Ridgway as well. Sirratt stated that Lewis handled most of Ridgway's insurance needs, including the signing of documents.

Lewis stated that when she went to see Sirratt about the motorcycle insurance, she signed Ridgway's signature to two "waivers" but did not read the waivers or know what they were:

"Q. [By Shelter's counsel] And did Chuck have you sign anything when you were there?

"A. Now, when this accident happened, yes, I remember signing this paper, a waiver, but I don't know what it is. I signed more than just that. I signed two pieces of paper, I paid him, and then I left.

....

"Q. Do you remember signing Tommy's signature to two documents at the insurance agency that day?

"A. Yes.

"Q. Did you try to call Tommy to talk to him about the things you were signing?

"A. No.

"Q. Did they tell you what they were at the agency, the things you were signing?

"A. Not that I recall. I just thought it was insurance.

"Q. Did you read the things you signed?

"A. No.

"Q. Would that be a common practice for you to sign your name or somebody else's name to something you wouldn't have read?

"A. Yes."

The policy which Lewis procured for Ridgway listed coverage for bodily injury as $50,000 per person, $100,000 per accident, with $25,000 property damage coverage (50/100/25). The policy listed UM coverage as $25,000 per person and $50,000 per accident (25/50). Attached to the application form is a "NOTICE OF REJECTION OF PERSONAL INJURY PROTECTION BENEFITS," which Lewis admitted signing, bearing Ridgway's name. Lewis also signed, in Ridgway's name, a "REDUCED LIMITS ELECTION" rejecting UM coverage equal to the limits of bodily injury liability coverage on the policy and instead selecting a UM coverage limit of $25,000 per person and $50,000 per accident.

Lewis stated that, after she procured the insurance, she and Ridgway never discussed the insurance in detail or what the policy covered. On checks drawn on her account, Lewis later paid renewal premiums on the policy in November 1991, February 1992, and June 1992.

At issue are two provisions of the Kansas insurance code, K.S.A. 40-101 et seq. Under K.S.A. 40-3107(f), every motor vehicle liability insurance policy issued to a Kansas insured shall

"include personal injury protection benefits to the named insured, relatives residing in the same household, persons operating the insured motor vehicle, passengers in such motor vehicle and other persons struck by such motor vehicle and suffering bodily injury while not an occupant of a motor vehicle, not exceeding the limits prescribed for each of such benefits, for loss sustained by any such person as a result of injury. The owner of a motorcycle, as defined by K.S.A. 8-1438 and amendments thereto or motor-driven cycle, defined by K.S.A. 8-1439 and amendments thereto, who is the named insured, shall have the right to reject in writing insurance coverage including such benefits for injury to a person which occurs while the named insured is operating or is a passenger on such motorcycle or motor-driven cycle; and unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy when the named insured has rejected the coverage in connection with a policy previously issued by the same insurer. Thefact that the insured has rejected such coverage shall not cause such motorcycle or motor-driven cycle to be an uninsured motor vehicle." (Emphasis added.)

In addition, K.S.A. 40-284(c) provides: "The insured named in the policy shall have the right to reject, in writing, the uninsured motorist coverage required by subsections (a) and (b) which is in excess of the limits for bodily injury or death set forth in K.S.A. 40-3107 and amendments thereto."

Ridgway contends that the written rejections signed by Lewis in this case are ineffective under the above statutes because they were signed by someone other than the named insured. Shelter contends the trial court correctly found the relevant statutes contain no language which undermines the application of common-law agency principles to determine whether valid rejections occurred in this case.

Although this appeal is from an entry of summary judgment, this issue is purely one of statutory interpretation, which is a question of law. As to this issue, therefore, this court's review of the trial court's decision is unlimited. See State v. Donlay, 253 Kan. 132, 133-34, 853 P.2d 680 (1993).

Ridgway argues that this issue is controlled by Larson v. Bath, 15 Kan.App.2d 42, 801 P.2d 1331 (1990), rev. denied 248 Kan. 996 (1991). He argues that Larson requires rejection of PIP benefits and of the higher UM limits by the named insured only. He cites particularly the Larson court's emphasis in its holding upon rejection by the named insured and also the requirement of a narrow and strict construction of the rejection provisions of K.S.A. 40-284(c), which arguably would apply equally to the rejection provisions of K.S.A. 40-3107(f). Shelter argues that Larson is factually distinguishable because in Larson no rejection was ever signed or attached to the policy. Shelter also argues that the inference from Larson is that, had the rejection been properly signed by the employer's agent who procured the insurance, the rejection would have been effective.

Larson is not controlling in the present case. Larson did not address the pivotal issue here of whether the insurance code permits an authorized agent of the insured to reject the respective coverage provisions in K.S.A. 40-284(c) and K.S.A. 40-3107(f).

There is a sizable body of case law, however, involving the procurement of insurance...