Sharkey v. Washington Nat. Ins. Co.

• Decision Date: 25 October 1984
• Docket Number: No. 14517,14517
• Citation: 373 N.W.2d 421
• Parties: Michael J. SHARKEY, Plaintiff and Appellee, v. WASHINGTON NATIONAL INSURANCE COMPANY, Defendant and Appellant. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 421

373 N.W.2d 421

Michael J. SHARKEY, Plaintiff and Appellee, v. WASHINGTON NATIONAL INSURANCE COMPANY, Defendant and Appellant.

No. 14517.

Supreme Court of South Dakota.

Considered on Briefs Oct. 25, 1984.

Decided Aug. 21, 1985.

Charles Rick Johnson of Johnson, Eklund & Davis, Gregory, for plaintiff and appellee.

Dudley R. Herman of Herman & Wernke, Gregory, for defendant and appellant.

WOLLMAN, Justice.

This is an appeal by Washington National Insurance Company (Company), defendant, from a judgment entered on a jury verdict in favor of plaintiff, Michael J. Sharkey. We affirm.

Plaintiff's son Leo Sharkey (Sharkey), a native of Winner, South Dakota, obtained employment as an oil field worker in Gillette, Wyoming, on July 21, 1977. He became acquainted with another young South Dakotan, Marvin Schumacher, who was employed by the same firm, and the two roomed together for a time.

As oil field workers are apparently wont to do, Sharkey and Schumacher stopped for a beer after work one day during the late summer of 1977. Upon entering the Center Bar in Gillette, they came to the rescue of a previously unknown individual who had been knocked to the floor and was being beaten up by a third party. The victim turned out to be one Carl McCoun, who was one of Company's agents. Grateful to his rescuers, McCoun would thereafter buy Sharkey and Schumacher a beer when he saw them from time to time in Gillette.

McCoun, who had been employed by Company since 1972, later sold Schumacher a life insurance policy with Company, of which more later.

Although McCoun was living in Billings, Montana, during this time, he also apparently kept a post office box in the small town of Decker, Montana, which he characterized as his agency headquarters.

After he had sold a policy to Schumacher, McCoun asked Schumacher if he knew of any of his friends who might be interested in obtaining life insurance. Schumacher then referred Sharkey to McCoun.

On the night of October 10, 1977, Schumacher and Sharkey visited with McCoun at the Center Bar in Gillette. Sharkey expressed an interest in obtaining a life insurance policy from McCoun. Inasmuch as McCoun did not have the necessary documents with him, he suggested that the three meet the following day at the Country Kitchen restaurant in Gillette.

In accordance with their agreement of the night before, the three men met in the Country Kitchen sometime after noon the Schumacher testified that he heard no discussion between McCoun and Sharkey regarding November 1, 1977, as being the date of the life insurance policy. Schumacher also testified that after all of the paperwork had been completed and the three men were getting ready to leave the restaurant, McCoun told Sharkey that "he was insured because if he got hit by a car on the way out he was insured...." (At trial, McCoun did not deny making this statement.)

next day, October 11. According to Schumacher's testimony, Sharkey signed several documents, including one that appeared to be similar to the application that ultimately was submitted to Company for approval. Schumacher, who was sitting next to Sharkey at the small table throughout the one to two hours that the three were in the Country Kitchen, further testified that he saw Sharkey remove two check blanks from his checkbook and give them to McCoun. The first check blank was left blank. The second was filled out by Sharkey before he gave it to McCoun.

McCoun testified that during the meeting with Schumacher and Sharkey on October 11 he entered the necessary information on a blank application form. He testified that although Sharkey signed several documents, including an authorization to disclose medical information, a form authorizing an automatic premium withdrawal from his bank account, and a counter check for $30 for the amount of the first month's premium, he did not sign the application itself. McCoun testified that Sharkey did not give him personalized check blanks from his checkbook because he did not have it with him on the 11th. McCoun then went on to testify that he couldn't remember whether Sharkey had signed the application on October 11. He stated that he and Sharkey agreed to meet in Sheridan, Wyoming, the next day.

McCoun further testified that he gave the completed application form to his wife in Billings so that she could transfer the information to a new application blank in her handwriting, which he described was more legible than his.

Although McCoun could not remember what time of day it was when he met Sharkey in Sheridan on October 12, he testified that he, his wife, Sharkey, and a young woman named Linda, whose last name McCoun could not remember, stopped at two bars in Sheridan and then went to Decker, Montana. Upon arriving in Decker, although at what hour neither McCoun nor his wife was able to recall, the four repaired to the local post office cum grocery store cum bar cum restaurant, where, according to McCoun, Sharkey indicated that he wanted the policy to become effective on November 1, 1977, because he was paid twice a month and it would be easier for the premium to be deducted from his account on the first of the month. McCoun inserted "Date Policy Nov. 1, 1977," on the application, and Sharkey then signed the application form in the several required places.

McCoun testified that on October 13, 1977, he went to Sharkey's apartment in Gillette, where Sharkey gave him two checks from his checkbook. Check number 103 was left blank and was marked "Void" so that Company could use it to establish the pre-authorized monthly check withdrawal account. Check number 104, dated October 11, 1977, in the amount of $30, was made payable to, and was ultimately deposited by, Company in payment of the first monthly premium on the policy. McCoun testified that upon receiving these two checks from Sharkey, McCoun returned the counter check that Sharkey had given him on October 11.

According to the testimony, Sheridan, Wyoming, is approximately 130 miles north of Gillette, Wyoming. Decker, Montana, is approximately 20 miles north of Sheridan.

Company records reveal that Sharkey worked for thirteen and one-half hours on October 12, 1977.

Sharkey was killed in an automobile accident in eastern Wyoming on October 30, 1977, his twenty-second birthday.

McCoun acknowledged that he had inserted "Decker, Montana" on a number of policies that he had written in Gillette, including the policy that he sold to Schumacher. An attorney from Company's home office testified that for a number of reasons, including the desire to evade the information required by the medical information report section of an application, Company's agents sometimes insert on an application a place of execution other than that at which the application in fact was signed. Schumacher testified that although he had signed the application for his policy in the Center Bar in Gillette, he inserted "Decker, Montana" as the place of execution at McCoun's direction, McCoun explaining to him that the reason for doing so "was for medical reasons so they wouldn't run a check on you if you ever had a DWI or anything, he said they wouldn't insure you."

Company's corporate counsel testified that had the policy's effective date been the same as the date of execution of the application, Sharkey would have been charged a premium based upon his then attained age of 21. Indeed, after reviewing Sharkey's application, one of Company's underwriters wrote to the Company's general agent in Great Falls, Montana, on November 2, 1977, stating, "You have requested a policy date of 11/1/77. The applicant's birth date is 10/30--would you want us to date before 10/30 to save the age? Please advise." The general agent responded, "Issue as requested. This is the one I called you on, deceased, killed in auto accident 10/30/77."

Corporate counsel testified that it is legal in all states to back-date the effective date of a policy for a period up to six months, and that Company routinely tries to give the best break to the policyholder with respect to the attained age that will be used for the purposes of calculating the premium. In Sharkey's case, the difference in the premium between an attained age of 21 and of 22 would have amounted to only some twenty-nine cents the first year. McCoun, as the writing agent, would have been entitled to a commission of 65% of the first year's premium, 10% of the second year's premium, and 5% of the premium for the third through tenth years of the policy.

Plaintiff contended before the jury that the signatures on the back of the application were made with a pen having ink of a color different from that used to insert the signatures on the front of the application, arguing that someone other than Sharkey had added his purported signatures on the back of the application after discovering that the application was incomplete. Also, Sharkey's mother testified that in her opinion the signatures on the back of the application did not appear to be her son's. McCoun himself admitted that the signatures on the back of the application looked different and that they had been made with a pen different from that used to write the signatures on the front of the application.

The policy application signed by Sharkey indicated that it was to be a non-medical application, which meant that Sharkey would not be required to undergo a medical examination as a prerequisite to having the application approved. The policy that would have been issued to Sharkey had a dispute not arisen regarding the effective date would have provided under "General Provisions,"

This policy is issued in consideration of the application and the payment of premiums as provided herein. The Policy together with the application therefor, a copy of which is attached and made a part hereof, shall constitute the entire contract between the parties hereto.

The application signed by Sharkey contained the following section:

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