Thu v. American Family Ins. Co., 12524

• Decision Date: 07 May 1980
• Docket Number: No. 12524,12524
• Citation: 292 N.W.2d 109
• Parties: Russell A. THU, Plaintiff and Appellee, v. AMERICAN FAMILY INSURANCE CO., Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 109

292 N.W.2d 109

Russell A. THU, Plaintiff and Appellee, v. AMERICAN FAMILY INSURANCE CO., Defendant and Appellant.

No. 12524.

Supreme Court of South Dakota.

Argued Oct. 10, 1979.

Decided May 7, 1980.

John E. Burke, Sioux Falls, for plaintiff and appellee; John N. Gridley, III of Gridley, Nasser & Arneson, Sioux Falls, on the brief.

Edwin E. Evans of Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendant and appellant.

WOLLMAN, Chief Justice.

Plaintiff sued appellant for money allegedly due him under a health insurance policy, for punitive damages, and for attorney's fees. The trial court directed a verdict in favor of plaintiff on the issue of appellant's liability on the policy and submitted the issue of punitive damages to the jury, which returned a verdict in the amount of $8,000. The trial court thereafter granted plaintiff's application for $1,000 attorney's fees. We reverse and remand.

FACTS

In September of 1973, plaintiff met with one of appellant's agents to purchase a health insurance policy. Plaintiff filled out an application, indicating, among other things, that he had undergone a hernia operation in January of 1973. On September 19, 1973, appellant issued a policy to plaintiff. The policy consisted of a notice of waiver, benefit schedule, copy of the medical history portion of the application signed by plaintiff, and a waiver that read "This policy does not cover any condition of which the following is the sole, primary, or secondary cause, anything in the policy to the contrary notwithstanding. 'TREATMENT OF RUSSEL FOR HERNIA, ANY COMPLICATION THEREOF.' "

The agent received the original policy from appellant, but the fact of delivery to plaintiff is disputed. The agent testified that it was his customary practice to deliver the original of insurance policies to the policyholders and that to the best of his recollection he had delivered to plaintiff a copy of the insurance policy in question, together with the attached documents. Plaintiff denied ever receiving the policy. He maintained that he was never told of any waiver.

Plaintiff changed the policy three times: in December of 1973, he increased the maximum benefit from $10,000 to $20,000; in October of 1975, he removed his first wife's name from the policy following her death; and upon his remarriage in March of 1976, he added the names of his new wife and her children as beneficiaries.

In November of 1976, plaintiff underwent a double hernia operation. Appellant declined to pay any medical benefits on the basis of the hernia waiver.

The policy contains the following provision:

GENERAL PROVISIONS

ENTIRE CONTRACT; CHANGES. This policy, including the endorsements and the attached papers, if any, constitutes the entire contract of insurance. No change in this policy shall be valid until approved by an executive officer of the Company and unless such approval be endorsed hereon or attached hereto. No agent has authority to change this policy or to waive any of its provisions; provided, that any rider, endorsement, or application which modifies, limits, or excludes coverage thereunder must be signed by the insured to be valid. ^*

In directing a verdict in favor of plaintiff on the question of coverage, the...