Werthman v. Catholic Order of Foresters
| Decision Date | 09 February 1965 |
| Docket Number | No. 51608,51608 |
| Citation | 133 N.W.2d 104,257 Iowa 483 |
| Parties | Carol Jean WERTHMAN and Lori J. Werthman, Joseph D. Werthman and Sheila Ann Werthman by their next friend, Carol Jean Werthman, Appellees, v. CATHOLIC ORDER OF FORESTERS, a Corporation, Earle V. Ulrich and C. J. Kearney, Appellants. |
| Court | Iowa Supreme Court |
James R. Hamilton, of Edson, Hamilton & Connell, Storm Lake, for appellants.
Justus R. Miller, of Miller, Miller & Miller, Cherokee, for appellees.
In this case the plaintiffs, as the widow and heirs of Joseph Dale Werthman, brought their declaratory judgment action against the defendant Catholic Order of Foresters, a corporation engaged in the business of selling and providing life insurance, and its agents, seeking to recover the sum of $9,000.00. The first count of their petition was based on contract; but this was dismissed by the trial court and since no appeal has been taken from this ruling we are not here concerned with it.
The recond count was based on the alleged negligence of the defendant company and the other defendants, its agents. It is claimed that after Joseph Dale Werthman had made written application for insurance on his life in the amount of $9,000.00, the defendants negligently delayed processing the application and advising the applicant of their acceptance or rejection of it, so that when Werthman died no contract was in effect and his estate was damaged in the amount of the insurance applied for. The case was tried to the court, which found negligence on the part of the defendants and entered judgment for the plaintiffs on Count II of their petition for the amount asked, with interest. No appeal was taken by the plaintiffs from the dismissal of Count I, but the defendants have asked a review of the adverse judgment on Count II, assigning several errors.
The estate of Joseph Dale Werthman had been closed before the commencement of this action. The trial court held that in view of this fact, the plaintiffs, the surviving spouse and children of the decedent, were the proper parties to maintain the suit. No complaint is made of this ruling.
The chronology of the various dealings and actions of the parties in the period from July 18, 1962, when Werthman signed his application for insurance in the defendant company, with the other two defendants as the soliciting agents, until August 11 next, when he was killed in an automobile accident, is of controlling importance upon the question of negligence. Our problem is not to decide whether there was actually negligence on the part of the defendants, but whether there was sufficient competent evidence before the trial court to permit it to so find. If there was such evidence, its finding of fact upon the point is binding upon us. While the suit was brought as a declaratory judgment case the action is clearly at law. Henderson v. Hawkeye-Security Ins. Co., 252 Iowa 97, 100, 106 N.W.2d 86, 88.
On July 18, 1962, the defendants Ulrich, an insurance agent and field man, and Kearney, a district supervisor, both representing the defendant company, called at the Werthman home about three miles south of Cherokee. As a result of their call, Mr. Werthman signed an application for insurance on his life, and paid the first premium. While the amounts stated in the application require some computation the trial court found the damages to be $9,000.00 and there is no complaint as to this amount, if anything is due.
The application provided that the insurance would not be in effect until the applicant had been examined by a medical examiner for the company, and until it had been approved by the High Medical Examiner. Werthman appeared for his medical examination on July 24 next. He was found to be overweight and to have higher blood pressure that the company's rules permitted for a standard policy, or certificate, and the medical report, which reached the company's offices in Chicago on July 26, so showed. Mrs. Werthman testified that at the time the application was taken one of the agents expressed some doubt that Mr. Werthman's weight had been correctly stated, and told him that if he was found to be overweight he might be 'rated up'; that is, a higher premium would be required; and that Mr. Werthman said that would be all right.
The chief medical officer of the company examined to local doctor's report on July 27, but no action was taken on that date or on July 28 or 29, which were a Saturday and Sunday. On July 30 a preliminary notice of acceptance of the application, but on a Class 'B' basis, requiring a premium 'mark up' was sent to the agent Ulrich at Sheldon, where he resided. No notice was sent to Werthman, and nothing further was done until August 2, when a letter was sent to Ulrich enclosing a waiver for Werthman's signature. This waiver was, in effect, an agreement on the part of Werthman to pay 37cents per month additional per thousand of insurance above that specified in his application.
Ulrich received this on either August 3 or 4. On August 5, which was Sunday, he was in Cherokee, but did not attempt to contact Werthman. On the 6th and 7th other appointments occupied his time. On August 8 Ulrich and Kearney, who were both in Remsen, testified they attempted to call Werthman, but got no answer at his home. Kearney drove through Cherokee that evening, but did not have the waiver with him and made no effort to contact Werthman. On the 9th Ulrich went to Sioux City. On August 10 he was in Cherokee, and tried several times to call Werthman, but he was out of town and neither his wife nor his employer knew where he could be reached. Ulrich waited for several hours, but finally returned to Sheldon. A call on August 11 brought the word that Werthman had been killed that morning in an automobile accident on his way home from Kingsley, where he had spent the night with a sister.
I. That an insurer may be compelled to respond in damages for negligence in accepting or rejecting an application for insurance is settled by several Iowa cases. The leading case in Iowa, and perhaps in jurisdictions in the United Fire and Lightning Insurance Association, Association, 160 Iowa 19, 139 N.W. 1087, 46 L.R.A.,N.S., 25. This has been recognized in Johnson v. Farmers' Insurance Company, 184 Iowa 630, 168 N.W. 264; Winn v. John Hancock Mutual Life Insurance Company, 216 Iowa 1249, 250 N.W. 459; Bemisdarfer v. Farm Property Mutual Insurance Company, 217 Iowa 770, 252 N.W. 551; and Mortimer v. Farmers' Mutual Fire and Lightning Insurance Asscoaition, 217 Iowa 1246, 249 N.W. 405. In the Winn case we held there was no sufficient showing of negligence, and also that there was a failure to prove the terms of the proposed policy and so the actual damages sustained. Recoveries by the plaintiffs on the ground of the negligence of the proposed insurers were upheld in the other cases.
In Kukuska v. Home Mutual Hail-Tornado Insurance Co., 204 Wis. 166, 235 N.W. 403, 404, the Wisconsin Supreme Court said: .' The Wisconsin court also said: 'What constitutes a reasonable time must in this, as in all other cases where the question is involved, except in clear cases, be a question of fact.' Loc. cit. 235 N.W. 405. So, in Glendy v. National Travelers' Benefit Association, 180 Iowa 572, 163 N.W. 352, our holding was that it was an exceptional case in which the evidence entirely failed to show any substantial evidence of negligence. It appeared that the proposed insured paid the required deposit on his application on Saturday evening; the applicant was injured on the following Monday; so that there was an entirely insufficient time for the insurer to act upon the application.
The Duffie case, supra, holds: Loc. cit. 160 Iowa 27, 28, 139 N.W. 1090.
Appleman, Insurance Law and Practice, Vol. 12, page 327, says: 'The more liberal and probably the better rule is to the effect that an insurance company obtaining an application for insurance is under duty to accept it or reject it within a reasonable time, and is liable if it delays unreasonably in acting thereon, * * * and even though it appears the insurer may have rejected the application, if it delays unduly in notifying the applicant of such rejection it may be held liable as if it had accepted the risk.'
The theory of the Duffie and other cases holding to the same rule is that...
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