Swedeen v. Swedeen

Decision Date02 April 1965
Docket Number39013,Nos. 39009,s. 39009
Citation134 N.W.2d 871,270 Minn. 491
PartiesJanice SWEDEEN, a minor by Elizabeth Olson, her guardian ad litem, Appellant, v. James Wilmar SWEDEEN, Defendant and 3rd-Party Plaintiff, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY OF BLOOMINGTON, ILLINOIS, 3rd-Party Defendant, Respondent.
CourtMinnesota Supreme Court

Syllabus by the Court

1. Where a person represents as true material facts susceptible of knowledge to one who relies and acts thereon to his injury, the one making the representations cannot defeat recovery by showing that he did not know his representations were false or that he believed them to be true.

2. A directed verdict should be granted only in those unequivocal cases where, in the light of the evidence as a whole, it would clearly be the duty of the trial court to set aside a contrary verdict as being manifestly against the evidence or contrary to the law in the case.

3. Evidence of a representation by the agent of defendant insurance company to the effect that the policy sold contained broader protection than one which plaintiff previously had with another company presented a fact question as to fraudulent representation, under circumstances where defendant insurance company denied liability under a household exclusion clause which the former policy did not contain.

4. Where an insured is ignorant of a defect in an insurance policy and has no special competence in insurance matters, he is privileged to rely upon the representations of the agent without reading or being charged with the contents of the policy.

5. Evidence tending to show that a household exclusion clause upon which insurer denied coverage was a provision, not in current use and not found in policies of other insurance companies was relevant as bearing upon the issue of insured's reliance upon insurer's representations and the asserted negligence of insured in failure to read the terms of the policy.

6. Principles of law with relation to the construction of insurance contracts are not controlling in the instant case, which is predicated upon fraudulent representations.

Robins, Davis & Lyons, and Stanley E. Karon, St. Paul, for appellant-plaintiff.

Dablow & Johnson, Cambridge, for appellant-defendant and third-party-plaintiff.

Palmer, Hood, Crassweller & McCarthy, Duluth, for respondent.

MURPHY, Justice.

This matter is before us on appeal from a denial of a motion for judgment notwithstanding the verdict or in the alternative for a new trial by plaintiff and third-party plaintiff. The trial court directed a verdict for third-party defendant. The issue turns on the sufficiency of the evidence to create a fact question for the jury as to whether defendant insurance company and its agent made false representations of material facts relating to coverage contained in a public liability policy sold to James Swedeen.

From the record it appears that on September 27, 1957, Swedeen was involved in an automobile accident while driving his 1957 Chevrolet automobile. As a result of this accident, a judgment was recovered against him by his sister Janice, who was a passenger in his car. Public liability insurance on his automobile was carried with the State Farm Mutual Automobile Insurance Company of Bloomington, Illinois. This company refused to defend or pay the judgment asserting that the risk was not covered by the terms of the policy. Swedeen, who will be referred to herein as plaintiff, then brought a separate third-party claim against the company, referred to herein as defendant. Janice intervened. There is no dispute as to the terms of the policy. Under the exclusionary provisions it recites that the insurance does not apply under--

'(f) coverage A, (1) to any obligation for which the insured or his insurer may be held liable under any workmen's compensation, unemployment compensation or disability benefits law, or under any similar law; or (2) to bodily injury to the insured or any member of the family of the insured residing in the same household as the insured.'

Plaintiff contends that he was induced to purchase the policy through the representations by defendant's agent that it contained no such exclusionary clause. From the record it appears that James Swedeen was 21 years old at the time of the accident, had completed the ninth grade in high school, and lived with his parents in Cambridge, Minnesota. He had been employed as a farm laborer, but at the time of the accident was engaged in construction work. Victor Nelson, the agent of defendant, resided in Cambridge and was well acquainted with plaintiff and his family. He had been an agent for defendant since 1949 and had completed its training program. Prior to purchasing the insurance through Nelson, plaintiff had carried insurance with Casualty Underwriters, Inc., of St. Paul. This policy, which was about to expire on April 24, 1957, did not include the household exclusion clause. About this time plaintiff purchased a new car, and on the suggestion of his mother went to see Nelson about insurance on it. The mother was prompted to recommend Nelson because of numerous advertisements she had heard and read to the effect that the State Farm Mutual Automobile Insurance Company provided better insurance coverage at lower rates and because of her acquaintance and friendship with Nelson. Swedeen told Nelson that he desired 'full coverage' liability insurance and Nelson assured him that he could provide better insurance than he had before at a lower premium. Swedeen informed the agent that he needed 'full coverage' insurance to protect his driver's license under the Safety Responsibility Act, and Nelson gave him literature on this subject. Nelson represented to him that he would give him the same or greater protection than he previously had. Swedeen did not apply at first, but returned to Nelson's office another time, and on assurance that he would be provided with broader coverage than he formerly had and at a lower premium, the application was completed and the full premium was paid. The insurance became effective on April 24, 1957.

As a basis for his assertion that he was fraudulently induced to purchase the insurance contract, plaintiff levels numerous claims and arguments against the insurance company. They range from charges of unethical business conduct, by way of loose and misleading advertising, to actual fraud. He argues at some length that defendant, through its nationwide advertising campaign, has urged upon the public that its policies give to the insured greater protection at lower rates. He asserts that the company spends between two and three million dollars annually on advertising in national media, including magazines, radio, and television programs, and that such programs are participated in by nationally known entertainers, such as Red Barber and Jack Benny. In this advertising, defendant holds out that its policy 'represents the Broadest protection ever packed into a single State Farm automobile policy. Fifty-four valuable extra protection features available in one policy! And, Only State Farm offers all of them.' In the Red Barber program, the announcer states:

'It's a policy developed to meet the changing needs of the modern motorist like yourself. * * * This Star Features policy will provide you with unequaled protection from State Farm, world leader in automobile insurance.'

In another television program, the announcer states:

'When you buy insurance, you buy Promises.

'When you buy your Antomobile insurance from State Farm Mutual * * * you're buying promises from promise-keepers of long standing and broad reputation.'

Plaintiff argues that if the defendant were selling goods or merchandise the advertising would become part of the contract and constitute both express and implied warranties of the fitness of the policies for the purpose of the protection which plaintiff hoped to get when he bought his policy.

While it may well be that the statements contained in the insurance company advertisements brought plaintiff to its agent and made him receptive to the assurances given, we must agree with the trial court that the representations contained in those advertisements were too general and indefinite to constitute actual misrepresentations of fact. Plaintiff would have us find in the advertisements a basis for applying the policy and principles enunciated by this court in product liability cases. Beck v. Spindler, 256 Minn. 543, 99 N.W.2d 670. However, the assertions of plaintiff as to want of good taste or ethical propriety of defendant's advertising under the circumstances in this case are beyond the reach of judicial action. Nevertheless, the actual misrepresentations of fact alleged to have been made by defendant's agent may be viewed in the context of the advertising to which plaintiff was exposed. It would have a bearing on the issue of plaintiff's reliance upon the assurances given by the agent and the asserted negligence of plaintiff in failing to discover the presence of the exclusionary clause in the policy when it was delivered to him.

1. The precise issue presented is whether plaintiff was deceived by representations that the policy sold to him gave him the same or greater protection than he had under his former policy with Casualty Underwriters. In reviewing this issue we are controlled by the principle of law that if a person represents as true material facts susceptible of knowledge to one who relies and acts thereon to his injury, the one making the representations cannot defeat recovery by showing that he did not know his representations were false or that he believe them to be true. In Swanson v. Domning, 251 Minn. 110, 115, 86 N.W.2d 716, 720, we said:

'Fraudulent intent may be proved by showing that the party knew his statements to be false; or that, having no knowledge of their truth or falsity, he did not believe them to be true; or...

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    ...conceal the other half." Newell v. Randall, 32 Minn. 171, 173, 19 N.W. 972, 973 (1884). As the court elaborated in Swedeen v. Swedeen, 270 Minn. 491, 134 N.W.2d 871 (1965), if a party conceals a fact material to the transaction, and peculiarly within his own knowledge, knowing that the othe......
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    ...neither opinions nor statements that are "general and indefinite" are representations of fact. See, e.g., Swedeen v. Swedeen, 270 Minn. 491, 495, 134 N.W.2d 871, 875 (1965). For the same reason that respondents have failed to state a claim as to which relief can be granted in their assertio......
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