*1 felony judgments and The of conviction and principal sentences consecutive- affirmed. ly to another. sentence are one sentencing hearing, Stahl’s MILLER, Justice, Chief judge stated that he had read the SABERS, AMUNDSON, KONENKAMP Therefore, he presentence report. had the GILBERTSON, Justices, Stahl, char- requisite acquaintance with his participating. history, previous criminal acter and Bonner, him. record to sentence 580; Chase in
Winter,
informed Stahl charges are severe and the are ex-
him] today. I think that
tremely unpopular
people
absolutely
up
are
fed
with the
on each of the four distribution noted, previously As all of these sentences Supreme Court of South Dakota. consecutively. run were ordered to It is lack presumed findings from the of written Argued April 2000. in the record that sentencing court Reassigned 2000. Oct. mitigating found no circumstances in this Decided Dec. case.7 Given Stahl’s lack of remorse or acknowledgment guilt, lengthy even his
criminal record and the limited discretion sentencing
offered the the legisla court 22-42-19,
tive mandates in SDCL no abuse
of discretion is shown under this record. 24-year sentence Stahl received was grossly disproportionate to the severi
ty involving of the crimes the distribution 1,000 drugs elementary within feet of an
school, statutorily drug-free defined
zone. sentencing finding mitigating cir-
7. SDCL allows a court’s ''[t]he 22-42-19 depart statutory by this and the from the sentence man- cumstances allowed section upon by mitigating the court shall be dates if the court finds that circum- factual basis relied however, writing.” requires, stances exist. The statute *2 Patten, Vermillion, SD, K.
Jonathan Van Firm, Law Robert J. Burns Robert Christenson, SD, Falls, Attorneys A. Sioux for plaintiff appellant. Riter, Jr., Riter, Mayer,
Robert C. Hofer, Brown, Pierre, SD, Wattier & Ste- Weathers, ven K. Huffer of Huffer & In- IN, dianapolis, Attorneys for defendants Casualty American Life and appellees Company. Woods, Fuller, E. John Simko Shultz Smith, Falls, SD, Attorneys & Sioux appellee defendant and Ennis E. Lund. (on GILBERTSON, reassign- Justice ment). McGill, Michael J. as Conservator
and Guardian for Bernice G.J. Compa- Life Casualty sued American negligence, ny and two of its fraud, deceit, negligent misrepresentation, and breach fiduciary relationship breach of granted The circuit of contract. summary judgment in favor of American law, a matter of finding that as were barred the statute McGill’s claims remand for limitation. We reverse and trial. AND PROCEDURE
FACTS September American (American Casualty Company Life and (Nordseth) Life) agents Dean Nordseth (Lund) on Bernice and Ennis Lund called (Bernice), 79-year-old widow. Thissell Bernice to persuaded and Lund “universal life” insurance purchase policy required a from American Life. The $100,000 and payment of $200,000.1 These a death benefit of liquid represented approxi- well over of her assets. half 1. This initial mately net worth and one-half of Bernice’s generating the initial suf- generat- payment the interest policies depend pay premi- pay premiums. ed the initial ficient returns to time, Before Ameri- policy.2 ums due under the McGill was not aware of the required can Life would issue subsequent unilateral reclassification and undergo a medical examination. Bernice to performed by *3 possible revealed heart This examination inquired pol- Life. also whether this McGill result, policy the was re- problems. As icy “paid-up could be converted to cover- “special rated and issued as class.” This age” policy and what the amount of that caused an reclassification increase specifically requested would be. He Nord- $49,111 premiums required keep in the to seth to comment on the raised in issues policy performing represented the letter, but Nordseth did not do so. re-rating subsequent Bernice. The 24, 1989, July [¶ 4.] On Bonnie premiums in was not revealed to Advocate, Specialist/Consumer family. or her American Life is- Bernice son, Charles, wrote a letter to Bernice’s 13, policy sued the re-rated on November reviewing policy after at issue. She 1986. shared McGill’s concerns as to the future 1988, By apparent it became funding policy and the effects of generated by premi- the interest the initial lower interest rates. giving When um covering was not the cost of opinion, she was not aware of the unilater- attempt insurance. In an to correct the re-rating accompanying premium al Nordseth, Bernice, problem, and her attor- increase American Life. ney, agreed McGill the death benefit at- [¶ 5.] Bernice’s sons were named as $190,000. would lowered to The lower torneys in February fact for Bernice on premi- death benefit would decrease the 1990. In a letter to Charles required keep policy ums current. warned that mail McGill Bernice’s April again reviewed the McGill annual report should be watched for the policy due to increased concerns of Bern- necessary American from Life. This was review, family.3 ice’s After this McGill “determine whether the return on the Bernice, wrote letter to sons and cy paying premium without con- [was] Nordseth, setting forth his observations as suming an amount val- excessive of cash performance policy.4 to the In that 13, 1990, ue.” assigned On letter, expressed his belief that the policy question to her sons. McGill policy paying itself due to appointed guardian and conservator decrease interest rates the life of in September, for Bernice policy an overly high addition to mortality charge. It was belief On .McGill filed a McGill’s rates, complaint, because of the lower interest on behalf of policies extremely popular mortality charge 2. These were dur- had decreased and the ing early premium high. 1980’s when interest rates were was too fell, digits. in double As interest rates so did popularity policies. My of these two concerns on the and Mr. Nordseth is free to comment on these in response he letter that has in to this sons, James, 3. Bernice’s and David Charles payable what is the interest [are] are the and defen- beneficiaries of possible it is to convert this whether pursuant dants in this to SDCL 15—6— action paid-up coverage in a certain face 19(a) feasible). (persons joined to be amount so that there would be no further mortality charge premiums due on the portions quoted 4. Relevant of the letter are possible paid- If it is it to convert herein: up, my question next would be what would originally paid-up The death benefit in value in death benefit on that [be] this $200,000.00.... paid up policy? 1988 the it were converted to insur- June $190,000.00. ance, death would benefit was reduced to be no risk in charge consuming principal. The reason for this was because interest rates (7). 58-30-106(6), alleg- ness. SDCL See Kent Nordseth and Lund American negligent misrepresenta- 131, ¶29, negligence, ing Lyon, v. deceit,
tion, fraud, fiduciary rela- breach 106, 113. Nondisclosure to a client of a contract. It was and breach of tionship, in a "within change material falls this filed that the complaint only after “All prohibited conduct. Id. increase was dis- re-rating implicit contracts contain an contractual claims that the re- McGill now covered. good to act or deal in faith.” Id. increase was the rea- rating brought forth [¶ 10.] The up perform did son following testimony expert opinion from Life, Lund and expectations. Larry opposition R. to defen- Swenson summary judg- filed motions for summary judgment: dants’ motion for ment, limita- asserting that the statute of *4 the blatant probably This is one of abus- trial McGill’s claims. The tions barred ap- es that I’ve seen of universal life. Not the motion and McGill granted old, only lady years 79 peals. was the but there’s evidence the file that she real- OF STANDARD REVIEW ly her financial posi- didn’t understand reviewing a trial court’s de When [¶ 7.] tion, agent what and the manag- summary judgment, we will grant cision opportunity her an in a er did was take been legal questions if all have affirm good, strong investment and her genuine no correctly and there are decided high risk investment unless she died. fact. Dakota of material Holzer v. issues 65, ¶8, 610 N.W.2d Speedway, 2000 SD greed, greed I think it was sold on omitted). (citations The nonmov- agent’s part manager’s part and the of all ing party will receive the benefit commissions, greed for the on the com- drawn inferences that can be reasonable pany’s part for the cost inher- responsibility . It the facts. Id from limiting ent in the and their moving party to demonstrate risk.... fact. issues of material genuine absence of Only if that burden is met Id. at 791-92. moving party judg be entitled to
will the My opinion is that Mrs. Thissell would ment as a matter of law. Id. at 792. hadn’t bought never have she summary will be Additionally, judgment to or defrauded. I as- have been lied any if it correct for reason. Id. affirmed that the fraud can be assumed to sume just leaving have out some of the been AND DECISION ANALYSIS information, if it that had been pertinent or The issue is whether Bernice that relayed to her or her advisers knew of fraud or fraudulent any transaction would not have been prior concealment time. particular made at that questions of fact con- There are numerous the affidavit of The estate also submitted cerning existence of fraud and fraudu- Brick, attorney, who reviewed James period and the of time lent concealment depositions of this case files limi- statute of applicable tolled under Lund, concluded, defendants, Nord- “the summary judgment in- tation which makes Casualty and American Life and seth appropriate. nature, need, misrepresented the to have of an insurance of the universal life risks and benefits by towards a client is set forth stat Mrs. Thissell to cy persuade order to prohibited are “material Specifically ute. purchase it.” any in misrepresentation of the terms of 15-2-3 states that SDCL proposed contract or surance ac not deemed to have fraud “shall contract,” prac “fraudulent or dishonest discovers, aggrieved party tices,” crued until the incompetence and untrustworthi- of, testimony actual or constructive notice the McGill’s is re-inforced has constituting testified, the fraud.” McGill did facts who “that if perti- [the Swenson guardian and conser- not become Bernice’s relayed nent had been to her information] vator until of 1997. Prior to September or her advisers that there would not have attorney. that time he acted as her particu- been transaction made at that period It was of time that he lar time.” upon by authored the letters relied Ameri- Thus, the issue of constructive knowledge can Life as evidence of his of notice should primarily upon focus Bern- Therefore, activity. fraudulent before ice, 79-year-old who in 1986 awas widow “aggrieved party” and housewife. The record establishes attorney McGill testified as to his McGill. Bernice’s mental state was opinion of limited repre- nature of his such she could not be relied prior sentation Bernice this matter recognize significance of her own mail. 1997: year, of that McGill wrote her son my Bernice Thissell never asked me for “we must watch Bernice’s mail for the opinion at the time that she annual report life as whether was a wise knew, policy.” What Bernice investment or not. I invest- when she knew it and whether she was ment advisor or financial counselor *5 able to understand the effect of that 1986 when she policy. knowledge questions are of fact to be de- investigate asked me to it She whether by jury. termined a was true what Dean Nordseth stated growth in tax [¶ 13.] Defendant’s counter that even if free and that there was no inheritance assumed, fraud is the Thissell sons and upon taxes her death. She asked me McGill had access to facts that would ex- stability about the of the company. She pose the fraud during period of 1986- thought did not ask me if I that was a point 89. Defendants out that the Thissell So, too, good investment. in 1989 when sons became of in owners 1990.5 setting I wrote the I was forth knew, they What the sons when knew my observation as a matter of fact. I likewise, it are questions of fact to be was not her financial advisor or invest- by jury. determined by is clear that rely upon ment advisor and she did not 1989-90, McGill and the Thissell sons were me as such. She did not consult with aware of the “interest-sensitive nature of my opinion me and ask me for in 1989 at policy.” They the insurance that knew the time that I wrote the letter about premium payment interest from the whether she had a cause of action for covering not the cost of insurance. How- negligence and fraud in connection with they, ever as well as were not Nordseth’s and Lund’s investment ad- re-rating premium aware of the in- they vice at the time sold the to crease, which the argues is the real Bernice. problem reason for the policy. with the A lawyer’s acceptance employment of alleges The estate also that the unilateral corresponding charges therefore cannot premium without disclosure scope employment exceed the of the impact of the same or the it would have on agreed Discipline to the client. In re the cash value of the constituted 493; Dorothy, 2000 605 SD N.W.2d “bait and switch” scheme. McGill summa- Schuldt, Matter Estate 428 N.W.2d why, rized (S.D.1988). opinion, his he and the This- 251 Clearly, prior to sells did not pursue matter upon legal relied guardian period: advice and not as of her 1986-89 finances. assignment previously
5. This also becomes an issue of fact as the As noted complaint charges incompe- year upon that Bernice was in the same she could not be relied recognize significance tent in when she executed the to of her own mail. 1990 decreasing I did not been due to interest rates and I wrote the letter In 1989when of action existed think that a cause expressly requested Nordseth to comment be- fraud connection with Nordseth, however, on the situation. anything fraud- I not aware of cause was silent, to remain revealing chose never misleading that was done ulent or re-rating increase. a stat- at the time that the Nordseth or Lund utory duty misrepresent exists not know that was sold. I did fraudulent, prohibits terms of a steps to cash Dean Nordseth took dishonest, incompetent untrustworthy to secure other investments Bernice’s 58-30-106(6) (7), practices via SDCL price, such as the cash for clearly then an under a letters the other investment writing Kent, practices. speak avoid these liquidate assets. houses SD 113. Whether to have In order for a cause of action case is a question occurred this Bernice Thissell and been discovered fact. specifically, More whether Nord- had to know three sons would have seth’s nondisclosure rose to the level of damages as a they had sustained question fraudulent concealment is a wrongful conduct and result of another’s fact. Whether the extent of reliance they identity per- knew justified, Nordseth was is an addi- that caused those dam- son or entities question tional of fact. As of 1989 it would have been ages. jury may It could be that a view children, impossible for Bernice or the documents and evidence and con- other I, know that as well as clude there was no fraud or fraudulent artificially high. people concealment, was, ifor that the This- rate were knew about the non standard Likewise, sells McGill were constructive Defendants. it was not years ago than that fraud conservatorship cre- notice more six until the estate was *6 and the lawsuit started that the or fraudulent concealment existed. How- ated ever, family importance and I learned of the A jury may jury not. should be properly funding policy allowed to determine the nature of the know these facts in outset. We did not Nordseth, McGill, relationship between they well what and her sons as Moreover, I known, in 1989 when wrote the all or have and when knew should her sons and to letter to Bernice and Therefore, the circuit they knew it. Nordseth, my I on observa- passing summary judgment granting court’s order asking guidance tions and advice in favor of the defendants is reversed (Nordseth) expert from the insurance remanded for trial. policy begin that sold the with. Bern- upon relied and trusted Nordseth as ice MILLER, Justice, Chief [¶ 16.] evident made KONENKAMP, AMUNDSON litigation pur- as the policy well Justices, concur. from Nord- policies chase of additional ECKRICH, Judge, Circuit single premium policy. seth after the dissents. Thus, relied had Bernice fiduciary expert on this Nordseth as the ECKRICH, Judge, Circuit matter, attorney, so did her but Justice, SABERS, disqualified. sitting McGill, and her sons.6 ECKRICH, (dissenting). Judge Circuit The 1989 letter of McGill I dissent. respectfully had expressed his belief that the shortfall argument argues present We find this to be that because lawsuit. 6. American Life also assigned policy to her sons in without merit. proper party bring she is not the 13, 1986, you pursue disciplinary If action McGill want [¶ On November 20.] against agent I will to examine regarding poli- to American Life need wrote financial information about the code for Dakota. the sale cy. sought He South any coverages to better “enable of these was fraudulent company [him] high all or made duress or prudence investing pressure, her of the under advise involved, your compa- twisting you may or is be of her assets into companies. to involve It ny.” able one would seem clear to me the actual course of the next two [¶ 21.] Over damages pursuant to the sale of the years, half McGill read the insur- and one very products health insurance are not statement, policy, ance received high may your worth not be time Thissell and met with Mrs. energy. The life insurance sale is and communicated regarding might interesting another matter. regarding Mrs. son Charles with Thissell’s opinion for an from the ask South policy. department Dakota of insurance on the April'26, McGill wrote [¶22.] On merits of that sale. a letter to Mrs. her three sons [¶ The insurance was as- 24.] provided, pertinent Nordseth that signed to Mrs. Thissell’s sons in 1990. On part: 19, 1990, February Mrs. Thissell named On June 1988 the death benefit of attorneys in fact her sons as “to deal with $190,000.00. policy was reduced to 16, 1990, life insurance.” On The reason for this was because interest wrote to Charles: “we must watch Mrs. mortality rates decreased and report Thissell’s mail for the annual on the charge too life insurance We My on high.... two concerns have to determine whether the return on and Mr. Nordseth is free to comment on is paying without these in letter that he has re- consuming an amount excessive of cash sponse to this is what the inter- value.” payable est and whether [¶ McGill filed a 25.] possible paid- to convert this complaint on Mrs. Thissell’s behalf up coverage in a certain face amount so alleg- Nordseth and Lund would be no further ing negligence, negligent misrepresenta- charge premiums due on the *7 tion, fraud, deceit, fiduciary breach of rela- ... cy. paid-up If it were converted to and tionship, breach of contract. insurance, there would be no risk mortality charge consuming princi- The substance of McGill’s claims pal. 1) is two-fold: product entirely Mrs. Thissell was an copy The letter included a of American inappropriate risky and investment consid- policy report. Life’s 1988 ering age; her modest and advanced July Bonnie 2) that American Life and its Specialist/Consumer an Advo- risky, did not disclose the interest-sensi- cate, wrote a letter to Mrs. Thissell’s son .&, i investment, tive nature Charles, attorney, following an her review “could self-destruct interest of Mrs. several Thissell’s rates continued to decline.” cies. The letter reiterated the asso- risks fact, early In it appears 27.] ciated with the American Life as [¶ 1986, a month after the suggested funding plan the “future of this within made, actively investigated deserves and ... serious consideration was By experience appropriateness attention of someone with more of the investment. no than than were the the field of life insurance later [she had] addition, principals Ms. aware that the could self- planning.” financial destruct, of a claim possibility Burns advised: may and American Life which re- things) Thissell (among fraud other policy- quire an affirmative to disclose the one of the new suggested to was $49,111 owners, underfunding, himself an attor- the statute Charles com- had sufficient notice of McGill had been tolled until McGill and with whom ney, him that his causes of put facts to on alert municating. clear from the record action existed. begins limitation statute of than McGill was in no later aware of facts McGill became to toll when him put facts to on possession sufficient notice to sus- actual or constructive giving supporting the causes notice facts Strassburg v. Citizens State pect a fraud. oversold, action that was was Bank, 581 N.W.2d self-destruct, sensitive, interest could knew argues that Nordseth 514. McGill investment, inappropriate risky $49,111 was underfunded self-sustaining, misrepresented dufy to disclose an affirmative that he had potential causes of existed so, legal inquiry is the this fact. ultimately pled. he For near- action which enough know when did McGill same: facts, possessing after those ly eight years a case? Fraudulent con- suspect he had genuine no McGill was idle. There is issue limitations tolls the statute of cealment in possession material fact that he was might have is disclosed or until the claim him actual of sufficient facts to diligence. reasonable discovered with been suspect fraud or constructive notice ¶ 14, Id., at 515. The dis- in his com- other cause of action asserted $49,111 additional doesn’t covery of the plaint. causes of action. best original alter the theory that only supports original risky inappropriate. Furthermore, if a confidential exist Mrs. relationship is found to between