State Ins. Fund v. Feldgreber, 37584

• Decision Date: 22 October 1957
• Docket Number: No. 37584,37584
• Citation: 317 P.2d 203,1957 OK 249
• Parties: STATE INSURANCE FUND, Plaintiff in Error, v. Jake FELDGREBER, doing business as Sapulpa Pipe and Supply Company, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 203

317 P.2d 203

1957 OK 249

STATE INSURANCE FUND, Plaintiff in Error, v. Jake FELDGREBER, doing business as Sapulpa Pipe and Supply Company, Defendant in Error.

No. 37584.

Supreme Court of Oklahoma.

Oct. 22, 1957.

Syllabus by the Court.

1. Where the State Insurance Fund receives an application for insurance, together with the premium thereon, an implied promise or contract is created on the part of the State Insurance Fund to act upon said application within a reasonable time and if rejected to notify plaintiff thereof within a reasonable time and its failure to do so will constitute a breach of such implied contract and the applicant may under the provisions of 85 O.S.1951, section 133, maintain an action against the State Insurance Fund to recover damages sustained by reason of such breach.

2. The Legislature of this state by the enactment of 85 O.S.1951 section 133 waived the sovereign immunity of the State Insurance Fund from all suits arising out of any act, deed, matter or things made, omitted, entered into, done or suffered in connection with the State Insurance Fund and in the administration and management of the business and affairs of said Fund.

3. The question as to whether the State Insurance Fund after having rejected plaintiff's application for compensation insurance notified him thereof within a reasonable time under the evidence in this case presented a question for the determination of the jury and its finding on such issue and judgment rendered thereon will not be set aside on appeal where reasonably supported by the evidence.

4. Record examined. Held, the court did not err in instruments given to the jury nor in refusing instructions requested by defendant.

Appeal from the District Court of Creek County; Kenneth Hughes, Judge.

Action by Jack Feldgreger, doing business as Sapulpa Pipe and Supply Company Against the State Insurance Fund to recover damages for breach of an implied contract. Judgment for plaintiff and defendant appeals. Affirmed.

Mont R. Powell, Fred Albert, Oklahoma City, Moraul Bosonetto, Sapulpa, for plaintiff in error.

Collins & Moore, Sapulpa, for defendant in error.

DAVISON, Justice.

The parties to this appeal will be referred to as they appeared in the trial court, that is, plaintiff in error will be referred to as defendant and defendant in error as plaintiff.

The record in this case discloses that plaintiff, Jack Feldgreber, doing business as Sapulpa Pipe and Supply Company, was on and prior to May 15, 1955, engaged in the scrap into and metal business in the City of Sapulpa, Oklahoma, and on that day made application to the State Insurance Fund for a Workmen's Compensation Insurance Policy covering his employees. A check for $250 was inclosed to pay the premium. The Fund on this application declined to issue the policy and on December 5, 1955, notified plaintiff in a letter written by an employee of the Insurance Fund returning to plaintiff his check for the premium and stated that it was unable to write the policy until he had employed in his business two or more employees and when he had obtained sufficient employees to come within the provisions of the Compensation Act it would be glad to mail him an application.

On the 22nd day of December, 1955, plaintiff made a second application to defendant State Insurance Fund for a Workmen's Compensation Policy and inclosed a check for $250 therewith to pay the premium which application was received by defendant on the 22nd day of December 1955, and was by the State Insurance Fund Commissioner rejected on that date on the ground that the annual payroll of plaintiff was only $18,000 which made the risk an unsafe risk for the Fund to carry. The Commissioner then forwarded the application to the underwriters department with instructions to notify plaintiff of such action. This was during the Christmas Holiday Season and the office of the State Insurance Fund closed on the morning of December 23, 1955, and remained closed until the 27th day of December 1955. On December 29, 1955, an employee of the underwriters department wrote a letter to plaintiff notifying him of the rejection of his application but the letter was not mailed until the 30th day of December and was received by plaintiff on the 31st day of December, 1955.

In the meantime and on December 28, 1955, one Richard Willis Fagen, an employee of plaintiff, while engaged in the course of his employment sustained an accidental injury resulting in his death. On January 10, 1956, Pauline Fagen, surviving widow of deceased, filed a claim against plaintiff herein, Jake Feldgreber, employer of deceased, for compensation under the death benefit provisions of the Workmen's Compensation Act.

On January 11, 1956, plaintiff herein gave written notice to the State Insurance Fund of the accident sustained by its employee, Fagen, and of his resulting death and at the same time demanded of the State Insurance Fund that it assume liability for such accident and that it proceed to defend the claim as against him. Thereafter plaintiff received a letter from the State Insurance Fund denying liability and refusing to defend claimant's claim.

On February 1, 1956, an award was entered by the State Industrial Commission awarding Mrs. Fagen compensation in the sum of $13,500. No appeal has been taken from this award.

On the 9th day of February 1956, plaintiff brought an action against State Insurance Fund to recover damages because of the failure of defendant to notify him of the rejection of his application for insurance within a reasonable time after its rejection.

Plaintiff in substance pleads the above state of facts and in addition thereto alleged that by reason of the failure of defendant to defend the compensation case against him he was obligation to employ counsel to defend the action and incurred other expenses in relation thereto in the sum of $500; that he was further damaged in the sum of $13,500 by virtue of the award rendered against him by the State Industrial Commission and prays judgment against defendant Fund in the sum of $14,000.

Defendant thereafter filed a motion to dismiss the case on the ground that the court had no jurisdiction over its person and the subject-matter of the action for the reason that it is a department of the State and is therefore not liable in tort for the negligence of its officers and employees, which motion was overruled.

Defendant also filed a motion to strike paragraph 4 of plaintiff's petition and subparagraphs 2 and 3 of paragraph 5 of plaintiff's petition for the reason that the allegations contained in said paragraphs stated no cause of action against it. The court also denied this motion.

Defendant assigns these rulings as error. We shall discuss these assignments later in this opinion.

At the close of the evidence a controversy arose as to whether plaintiff's petition stated a cause of action in tort to recover damages because of negligence of defendant's employees in failing to give plaintiff notice of the rejection of his application within a reasonable time or whether it pleaded a cause of action based on breach of an implied agreement or contract on the part of the defendant State Insurance Fund to do so.

The trial court stated that in his opinion the petition stated a cause of action on either theory and suggested that plaintiff should be required to elect upon which theory he would rely to recover.

The attorney for State Insurance Fund, defendant, then moved the court to require plaintiff to elect upon which theory he would rely for recovery which the court did. Plaintiff then stated that since he was required by the court to elect he would elect to recover on the theory of breach of an implied contract and the case was submitted to the jury on the theory and a verdict returned in favor of plaintiff for the full amount claimed. Judgment was entered on the verdict.

Defendant appeals. Its first proposition is that the State Insurance Fund is a department of the State of Oklahoma and as such is not liable for the torts of its officers and employees and the court therefore should have sustained its motion to dismiss. In support of such contention it cites Ford v. State, 183 Okl. 386, 82 P.2d 1045; Wright v. State, 192 Okl. 493, 137 P.2d 796; Mountcastle v. State, 193 Okl. 506, 145 P.2d 392.

These cases hold that the state in the absence of an express statute creating liability therefor is not liable in civil actions for damages for the neglect of its officers or employees performing or failing to perform their duties as such employees.

As applied to the State Insurance Fund in State ex rel. State Insurance Fund v. District Court of Oklahoma County, Okl., 278 P.2d 841, the court held:

'The provisions of 85 O.S.1951 § 133(1) authorizing the State Insurance Fund Commissioner to 'sue and be sued in all courts of the state's refers only to matters arising under the insurance contracts made by the Fund. Such provision does not waive the sovereign immunity of the State from suits for damages arising from the torts of its officers and employees and from liability therefor.'

That action was one in prohibition whereby the State Insurance Fund sought to prohibit the court and the plaintiff in the action, Ella Bone, from prosecuting a personal injury damage action against the State Insurance Fund arising out of an automobile collision allegedly caused by the negligence of the employees of the Fund. The court held that such action could not be maintained against the Fund. Neither this case nor the cases above cited are applicable here.

This action arises out of the administration of the State Insurance Fund and the conduct and management of the business and affairs of the Fund. We think plaintiff may maintain this action against the State Insurance Fund on the ground stated in his petition under the provisions of 85 O.S.1951 § 133. This section so...