Life Investors Insurance Company of America v. Estate of John M. Corrado and Federal City Region, Inc.
2013 Iowa Sup. LEXIS 110
Iowa2013Background
- In 1993 LICA and Corrado (John Corrado and Federal City Region) had a settlement agreement reducing a large disputed debt; LICA received a signed copy it believed bore Corrado’s signature and sent that copy to Corrado.
- From 1993–2000 both parties operated under the settlement terms (payments/credits made accordingly) and Corrado did not challenge the signature.
- In 2001, when larger payments were due, Corrado challenged the validity of the signatures, asserting he never signed the agreement.
- LICA sued; the federal district court granted summary judgment finding ratification, the Eighth Circuit reversed (faulting authentication and Iowa law application) and remanded.
- The district court then certified two Iowa-law questions on (1) whether Corrado’s conduct constituted ratification and (2) whether Corrado was estopped from denying the signature.
- The Iowa Supreme Court answered only the ratification question: yes — adopting Restatement (Third) of Agency §4.03’s approach that a principal may ratify an act even if it is uncertain who signed on the principal’s behalf.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a party who receives an executed contract bearing its signature, does not object, and accepts benefits/obligations under it for ≥6 years, has ratified the contract | LICA: Corrado’s long acquiescence and benefit acceptance ratified the agreement and binds him | Corrado: He never signed the document; without proof who signed, he cannot be bound or have ratified it | Held: Yes. Iowa adopts Restatement (Third) rule — a principal may ratify an act even if it is not shown who signed, so long as the principal manifests assent or conduct implying assent |
| Whether ratification requires the actor to have purported to act as agent at the time of signing | LICA: Ratification can follow even if signer’s agency was not established; acceptance of benefits is controlling | Corrado: Under prior Iowa caselaw/Restatement (Second), ratification requires the actor to have purported to act as agent | Held: Iowa abandons the stricter "purported to act" requirement from Restatement (Second) in favor of Restatement (Third) — agency need not be proved at signing for later ratification |
| Whether equitable defenses (laches) or other factual gaps preclude answering the certified question | LICA: Not raised as bar to answering ratification question on provided facts | Corrado: Laches, illegality (ERISA), and unresolved factual issues mean the court should decline certification | Held: Court may answer; laches and ERISA not shown in certified facts so they do not prevent answering the ratification question |
| Whether the estoppel question must be decided after ratification | LICA: Estoppel is redundant if ratification applies | Corrado: Estoppel may be a separate ground to bar denying signature | Held: Court declined to answer estoppel question because the ratification answer was dispositive for the certifying court |
Key Cases Cited
- Ross v. Gordon, 252 Iowa 899 (Iowa 1961) (ratification found where party observed signature, did not object, and accepted benefits)
- Mayrath Co. v. Helgeson, 258 Iowa 543 (Iowa 1966) (corporation ratified employee’s act by accepting benefits with knowledge)
- In re Johnson’s Estate, 210 Iowa 891 (Iowa 1930) (bank directors ratified cashier’s unauthorized signature by later acceptance)
- Abodeely v. Cavras, 221 N.W.2d 494 (Iowa 1974) (definition of ratification and relevant factors)
- Life Investors Ins. Co. of Am. v. Fed. City Region, Inc., 687 F.3d 1117 (8th Cir. 2012) (Eighth Circuit reversed district court, prompting certified questions)
- Nichols v. City of Evansdale, 687 N.W.2d 562 (Iowa 2004) (distinguishing voidable contract/avoidance principles)