Vanover v. Kansas City Life Ins. Co.

• Decision Date: 27 March 1989
• Docket Number: No. 880213,880213
• Citation: 438 N.W.2d 524
• Parties: Edward D. VANOVER, Plaintiff and Appellant, v. KANSAS CITY LIFE INSURANCE COMPANY, a corporation, and James B. Slusher, Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 524

438 N.W.2d 524

Edward D. VANOVER, Plaintiff and Appellant, v. KANSAS CITY LIFE INSURANCE COMPANY, a corporation, and James

B. Slusher, Defendants and Appellees.

Civ. No. 880213.

Supreme Court of North Dakota.

March 27, 1989.

Vinje Law Firm, Bismarck, for plaintiff and appellant; argued by Ralph A. Vinje.

Pearce & Durick, Bismarck, for defendants and appellees; argued by Lawrence A. Dopson.

MESCHKE, Justice.

Edward D. Vanover appealed from a summary judgment dismissing his defamation suit against Kansas City Life Insurance Company and James B. Slusher, its associate general counsel. We reverse and remand.

Vanover was a general agent for Kansas and for Armour Life Insurance Company, a subsidiary of Kansas, until terminated in 1983. This suit is over statements allegedly made by Kansas and Slusher about the reason for Vanover's termination. We consider the effect of two prior proceedings between Vanover, Armour and Kansas.

In 1984, Vanover started a proceeding against Armour with the Commissioner of Insurance to impose penalties and to suspend or revoke its certificate of authority to do business in this state. Vanover claimed, among other things, that Armour agents had falsely stated to others, in violation of Sec. 26.1-04-03(3), N.D.C.C. ¹ , that Vanover was terminated for lack of production. In his findings, the Commissioner stated: "Lack of production was a reason for termination of the Complainant by the Respondent." In his conclusions, the Commissioner stated:

"The respondent company determined that one of the reasons for termination of the complainant as its general agent in North Dakota was lack of production. The respondent company's officers informed their employees and agents that this was the reason for termination and it instructed their agents and employees to respond to any inquiries with that phrase. The evidence is insufficient to support a conclusion that the statement was false since there was no increase in production by the complainant if you compare January to August of 1982 with the same period in 1983. This was a part of the basis for the respondent company's position...."

In 1985, Vanover sued Kansas for breach of contract. The trial court determined that Vanover's contract was terminable at will and that "[p]oor performance of the agency in 1982 and 1983 was a legally sufficient cause for termination of the general agent's contract, in the event cause was required." Vanover's complaint was dismissed and Vanover did not appeal.

In 1987, Vanover sued Kansas and Slusher for defamation in this action. He alleged that they had made unprivileged statements by letter and telephone to others in April 1986, saying falsely that Vanover "was terminated from Armour Life and Kansas City Life for cause." Kansas and Slusher moved for summary judgment, contending that "the underlying issues have been previously determined such that [Vanover] is precluded from relitigating them." Vanover resisted the motion, contending that there was a disputed issue about whether he had been, in fact, "fired for cause." The trial court ruled that the prior lawsuit and proceeding before the Commissioner of Insurance had already decided that he had been "fired for cause." The trial court granted summary judgment to Kansas and Slusher.

Vanover appealed, contending that the finding of cause in the first lawsuit was dictum, that the Commissioner of Insurance did not find that Vanover had been terminated for lack of production, and that the doctrine of res judicata does not apply to decisions of the Commissioner.

At the outset Kansas and Slusher moved to strike two affidavits in the appellate appendix submitted by Vanover. Rule 10(a), N.D.R.App.P., specifies the record on appeal: "The original papers and exhibits filed in the trial court, three copies of the transcript of proceedings, if any, and a certified copy of the docket entries prepared by the clerk of the trial court shall constitute the record on appeal in all cases." The affidavits were not filed in the trial court. Generally, we must decide an appeal on the evidence submitted to the trial court. City of Minot v. Freelander, 368 N.W.2d 514 (N.D.1985). "Important policy considerations on finality of judgments require that new or additional evidence not be considered on appeal." Id., at 518. See also Svihla v. Svihla, 126 N.W.2d 135 (N.D.1964). Therefore, we strike the affidavits.

Vanover contended that because the judgment in the breach-of-contract action against Kansas determined that Vanover's contract was terminable at will, the further conclusion in that case, that "[p]oor performance of the agency in 1982 and 1983 was a legally sufficient cause for termination of the general agent's contract, in the event cause was required," was dictum, and so could not be res judicata. In our view, the first judgment stated alternative grounds, either of which was sufficient to support dismissal of Vanover's suit for breach of contract. However, that does not preclude Vanover from litigating the reason for his termination nor from disputing the effect of the statements that he was terminated for cause. See Restatement (2d) of Judgments, Sec. 27 (1982) and comment i thereto:

"Sec. 27. Issue Preclusion--General Rule

"When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.

* * * * * *

"i. Alternative determinations by court of first instance. If a judgment of a court of first instance is based on determinations of two issues, either of which standing independently would be sufficient to support the result, the judgment is not conclusive with respect to either issue standing alone. See Illustration 14. Cf. Sec. 20, Comment e."

Compare comment o, id., dealing with the effect of an appellate decision based on alternative determinations.

Thus, the alternative determination in the first judgment that "[p]oor performance of the agency in 1982 and 1983 was a legally sufficient cause for termination" does not preclude Vanover from litigating the reason for his termination or whether he was defamed by statements that he was terminated for cause.

Relying on our statement in Peacock v. Sundre Township, 372 N.W.2d 877, 878 (N.D.1985), that "[r]es judicata means that a valid, existing final judgment from a court of competent jurisdiction is conclusive," Vanover contended that the Commissioner's decision did not bind the trial court because the Commissioner was not a "court of competent jurisdiction." Vanover also contended that the Commissioner did not find that there was a lack of production or that he was terminated for cause.

Although an administrative agency is not a court, an administrative agency decision may be res judicata. See Amerada Hess Corp. v. Furlong Oil & Minerals Co., 348 N.W.2d 913 (N.D.1984). In that case, the Industrial Commission authorized Furlong to enter a nonproducing well drilled by Amerada and Amerada sued to enjoin Furlong. This court stated that "the trial court would have been justified in treating [the Industrial Commission's] Order No. 2970 as res judicata, and dismissing Amerada's suit for an injunction as an improper collateral attack on the order." Id., at 916. See also United States v. Karlen, 645 F.2d 635, 638 (8th Cir.1981) (doctrines of res judicata and collateral estoppel "apply to appropriate administrative actions").

Reading all of the Commissioner's findings and conclusions together, however, we conclude that it is far from clear that the Commissioner actually determined that Armour terminated Vanover because of a lack of production, as distinguished from reciting assertions made by Armour. We, therefore, do not deem the Commissioner's decision to be conclusive on the reason for Vanover's termination by Armour.

We conclude that neither the judgment in Vanover's breach-of-contract action, nor the Commissioner's decision, precludes Vanover from litigating the issues of the reason for his termination or of the defamatory nature of statements about his termination. The trial court, therefore, erred in granting the motion for summary judgment on the ground that these issues had already been litigated and decided. The summary judgment is reversed.

Because the trial court ruled that the issues had already been litigated and decided, the court did not address the issue of whether or not the allegedly false statements might have been defamatory.

In Moritz v. Medical Arts Clinic, P.C., 315 N.W.2d 458, 460 (N.D.1982), this court said:

"... There is no question that summary judgment is not warranted if the letter is capable of two meanings--one defamatory and the other innocent. McCue v. Equity Coop Pub. Co. of Fargo, [39 N.D. 190, 167 N.W. 225 (1918) ] supra.

"If an innuendo is involved, the question of whether the alleged defamation is fairly warranted by the writing is one of law for the court...