*1
Dorothy OVERFIELD, Plaintiff Appellant, LIFE
AMERICAN UNDERWRITERS COMPANY, Defendant
INSURANCE Appellee.
No. 21211.
Supreme Court South Dakota. May on Briefs
Considered July
Decided
Dennis C. McFarland McFarland and Weidenaar, Falls, Attorney plain- appellant. tiff and Costello, Porter, Donald Porter of Hill, Heisterkamp, & Carpenter, Bushnell Rapid City, Attorneys for defendant and appellee. 1.] Justice Robert Amundson de- opinion
livers as to result of the of the decision Court. Richard W. deliv- Sabers opinion
ers the as to the rationale decision of the Court.
AMUNDSON, Justice. (Dorothy) ap- Overfield peals the trial court’s refusal to her regarding ambi- guity. We affirm.
FACTS Craig (Craig) Overfield was em- Falls, ployed City of Sioux South (City) superintendent Dakota as light department. September On retirement, part of his upcoming required by package his retirement City to undergo physical. an extensive pres- suffered from blood early sure since the 1970’s had been blood taking pressure medication. The physical examination revealed that Craig *2 815 and or must not be under the care of a electrocardiogram he disabled an abnormal cardiologist. any injury a for physician to or sickness.” thereafter referred was Craig signed February on September or around [¶ 5.] On paid premium 1995 and a $545.03. Backes, peri cardiologist, a Dr. Richard Craig and discov- on formed a stress test of 1995 heart con- Craig’s June a suffering from heart Craig was Craig eventually ered dition deteriorated. de- Craig diagnosed with re- condition. was veloped ischemic heart disease and died to to a 20 to flow his heart due duced blood syndrome August sudden death on As a of the percent result blockage. 40 wife, Dorothy, made a claim Craig’s informed, by Dr. diagnosis, Craig was for to American the credit life insurance of sud- at a risk Backes that was policy proceeds. American denied the advised Dr. Backes further den death. claim claiming and rescinded the contract options treatment included: Craig that his Craig a misrepresentation made material (1) therapy changes; life-style medical and in his for application. American’s basis its (2) angioplasty, undergo to provision in deniál was the the Disclosure open up to an ar- procedure balloon-type under stating Statement “must not be (3) undergo bypass surgery. tery; or to care of a sick- therapy suggested medical and Dr. Backes ness.” Dr. life-style changes. Craig followed declaratory [¶ 9.] initiated placed on suggestion Backes’ and was judgment action to against American encouraged improve to his medication and contractu- termine whether American was smoking.1 Craig was diet and discontinue ally to obligated pay Dorothy insur- activities, limit not told to his recreational proceeds. Dorothy ance later fishing. Craig was hunting and such complaint to moved amend her add a to any follow-up ap- also not scheduled faith, count bad bifurcate the issues as his pointments for heart condition. faith, coverage request bad 1995 decided to February 6.] In jury trial. The motion amend com- pickup. Craig a new financed purchase court plaint granted was trial al- purchase pickup through of the tried coverage lowed the issue be before Union Empire Federal Credit Dorothy at The issue raised Union). (Credit to the loan In addition provision that the “must be was Union, Craig elect- agreement with Credit any inju- under the care of a purchase a term ed to credit ambiguous and should ry sickness” policy in the amount of the loan. American, interpreted be therefore provision. The poli- of the case The credit term life insurance drafters 22-23, to a on June through Under- was tried cy issued American - (Ameri- trial, Dorothy At conclusion of Insurance Company writers Life can). through proposed jury instructions eleven policy application contained a ambiguity and effect provision regarding “I sixteen Disclosure Statement with the The trial on a contract.2 age and must not be must be arising ambiguity of placed pres- Any doubts from lan- a different blood guage in contracts resolved September due to sure medication in against the of the drafter contract. newly diagnosed heart Proposed Jury No. 14 [Dorothy’s] Instruction The Defendant drafted were as follows: 2. The Insurance, Group Credit includ- ' [Dorothy’s] Proposed Jury Instruction No. 12 contained in Disclosure Statement Language in a be said contract application. reasonably capable ambiguous Proposed Jury when it is [Dorothy’s] Instruction policy is provision one sense. of an insurance being understood in more than susceptible fairly to different [Dorothy's] Jury Proposed Instruction No. added) application provision court found the (emphasis (citing Kuper was 480 v. Lin , rejected coln-Union Elec. Dorothy’s pro- Co. d748, 758)). This N.W.2 Court has instructions.3 stated repeatedly “‘[a] trial court jury ultimately returned only present those instructions to the *3 verdict in favor of American. supported by competent which are appeals, now raising following the issue: applicable evidence and set forth the the trial erred in reject- Whether court ” 131, law.’ v. Atkins 1999 Stratmeyer, Dorothy’s ing proposed jury instructions ¶ 55, 891, J., (Amundson, 600 N.W.2d 903 on ambiguity. Sundt, 91, dissenting) (quoting 1997 SD ¶ 22, 566 N.W.2d 481 State v. STANDARD OF REVIEW Johnson, (S.D.1982))). N.W.2d 142, 320 147 [¶ 11.] Our standard of review for the [¶ We have often 12.] stated that con- rejection trial court’s of a tract construction is a question of law “ instruction is well settled. We have often which review pre- de novo ‘no stated, sumption in favor of the trial court’s deter- ” supported On by competent Burden, issues evi- mination.’ v. Fox 1999 SD ¶ 154, 12, record,
dence in the
916,
the trial court
920 (quotation
N.W.2d
omitted);
jury.
1,
should instruct
Reynolds,
trial court
Chord v.
1999 SD
¶ 13,
729,
Further,
is"
587 N.W.2d
not'required to instruct
issues lack-
of a
language
‘[w]hether
support'
contract is
record.
'Failure to
ambiguous is
question
of
give
requested
[also]
law for
instruction that cor-
”
Campion
court.’
v.
Apart-
rectly
forth
prejudicial
sets
the law is
Parkview
¶
ments,
10, 25,
897,
1999 SD
588 N.W.2d
Jury
error.
instructions are reviewed
902 (quoting Production Credit Ass’n v.
as a whole and
if théy
are' sufficient
(S.D.1991)
Wynne,
735,
correctly 'state the law and inform the
Wilburn,
(quoting Baker v.
456 N.W.2d
jury. Error is not reversible unless it is
(S.D.1990)
304,
(citations omitted))).
prejudicial. The burden of demonstrat-
ing prejudice in
failure to
a pro-
DECISION
party
instruction is on the
con-
tending "error.
court
Whether
erred in
rejecting Dorothy’s proposed jury in-
Bank,
Buxcel v. First Fidelity
1999 SD
ambiguity.
structions on
126, 13,
601 N.W.2d
596 (quoting
Sundt
v.
Corp.
South
Dep’t
Dakota
developed
This Court
“special
14.]
has
of
¶91, 19,
Transp.,
1997 SD
566 N.W.2d
rules of
apply
construction that
when in-
tions,
interpretation
most favorable
cited
[American]
an
is not
adopted.
insured should be
simply
of itself
parties
created
because the
[Dorothy's] Proposed Jury Instruction No. 16
to the interpretation
differ as
of the con-
ambiguous provision
An
ain
is con-
tract and that an insurance contract must
’strued
favor
insurance
according
plain
construed
to the
one who drafted the contract and caused
ordinary meaning, and
Court
cannot
uncertainty
to exist.
force a construction
or create
new con-
parties.
tract for the
instructions,
denying Dorothy's
In
language
this case the
that is
court held:
at issue is
part
of a sentence which states “and must
[in
Court
Alverson Northwestern
Co.,
not be under the
care of a
Nat'l
Cos.
Í
Id. our con- apply at To liberal N.W.2d Q. Somebody interpret could that contract, the con- an insurance struction to questionnaire example, they —for ambiguous and “must be tract sitting right have a broken arm susceptible to one or more injured I being probably? there as (cita- Id., 15, at tions.” you going don’t know. Are write omitted). tion if he’s there sitting saying that risk fine, wrist in the arm works break ‘[a] have held that 15.] We often right here? application of ambiguous when contract is genuine a un- leave rules (Helsel): Well, yes, or more mean- I I certainty guess. as to which of two A. ” Alverson, mean, 1997 SD comes in—I
ings is correct.’ when claim (quoting City mean, at totally disabled at if he Dakota, & E. Minnesota to that broken arm Watertown the time due disability filing for a R.R. and he was omitted)). (citations no, it, the policy— Whether claim then ambiguity is contains ‘the as a “by reviewing termined do have to with Q. my questions All of its plain meaning and effect of whole and that credit life. Let’s assume ¶1, 15, 587 words.’” in, away day from day walks one he Family American N.W.2d at 732 arm, cast taken off this having the Elliot, Ins. Mut. Co. pro- in the middle stops (S.D.1994)). injured I says gee, cess and am not? we Dorothy argues that must de- I under- procedure application provision Under termine whether described, per- have you stand that under the care of “must not be son, at the credit person is is whoever any injury ambiguous. or sickness” whoa, union, say, wait a supposed also review the agree, We but sign I need to can’t that. “competent evi- minute. You record and determine and we need to you application, give presented dence” they’re out if it to Kansas find send support person you. And in- write those and whether failure says gee, coming got cast is off this assistant you cian’s said in some procedure afternoon. That’s still the you Have been out want I tramping yes. followed? said brush? drawer, Reached over took out (Helsel): A. A arm life broken is not a them, pills. some didn’t take but either. situation given were to me. Something, Q. your application say Does life I guess, to control itch or what- threatening, ma'am? Now, doctor give ever. did that me (Helsel): No, A. not. prescription? drugs He me Q. pregnancy injury? Is an illness or go that I couldn’t to the store and (Helsel): say A. I would no. buy. Q. it be threatening? Can (Helsel): If it was a medication that (Helsel): Yes, it can. to be prescrip- obtained tion, guess giv- that’s the same as Q. under the language, So could be ing you sample prescription. aof taking on some horrendous risks that that medicating that state- if I were So for that and cover, taking pills make doesn’t those and I bought ment correct? and if I pickup person told *5 that, the credit union would (Helsel): suppose, A. I yes. not write the but would— Q. one time Craig .At had—I think the but ap- would instead me that record would indicate had a plication? you saying Are that’s the groin injury. I think you And saw way company works? the doctor diagnosed continued to (Helsel): A. No. work, off, didn’t take time probably him Q. pain right. some medicine. I All They would write the happened. insurance, don’t know if that Is they? wouldn’t the kind of information It want? isn’t certainly life threat-
ening. (Helsel): condition, A. As far as the it’s (Helsel): ongoing not an going A. not to be On the it —it’s ongoing an ivy condition. Poison would—if is he had been treated with- something going
in last to be years five for that and by maybe treated on doctor on that listed the— day and will be released once— Q. exhibit, ma'am, says under the days fewa when the itching care of a for sickness or stops. You’re not to be injury. i year scheduled six or a months (Helsel): A. At the time that this was to come back follow-up for a for that signed, he’s under the care of a So, no, you would not physician, then yes. be considered under care for Q. though clearly Even it’s poison ivy threatening, your to use term? Q. what says? Is that the exhibit (Helsel): Well, A. depends on the (Helsel): term, I guess, as far as under the Q. you’re But that’s getting what at. care and what the condition is. what person supposed That’s is Boy, couldn’t with you understand, correct? more, ma'am: Tell me this. A cou- (Helsel): Well, guess. ple weeks ago I had this terrible my itch on arm. I went to see a previously [¶ We have held that doctor, described it—or physi- may ‘[a]n ... estopped insurer Drier, particular meaning of Falls to the reference omitted) (citations by (noting its own 599-60 in one of its contracts term ” Rumpza appellant on interpretation of that term.’ burden is to show “[t]he Inc., that, Enterprises, prejudicial error and under the evi- Donalar R. presented, jury might prob- Lee 14 581 N.W.2d dence In Segalla, on ably Russ & Thomas F. Couch would have returned different ver- (3dEd. 1996)). § In surance Couch dict if the been Insurance, the noted: given”). on authors also a contract Although construction of determining court, is matter for look at all prejudiced, case the court take into proper Liere, Sporleder v. instructions. See Van which the the construction consideration ¶ 14; Ku have made. themselves parties per, 1996 SD have, parties by certain acts of their trial, following At conclusion the. own, doubtful placed construction given jury, instruction was a contract of this terms of assigned appeal: has not'been error generally adopted will construction Jury Instruction 13 least, At the courts them. as by you issues to be determine[d] used in a is of where this case are these: issuing com- meaning, doubtful First, that [Craig] statement same, such con- pany has construed the care of a very must be considered struction misrepresen- either sickness persuasive, especially it favorable to tation, omission, concealment of the insured. statement? incorrect *6 (3dEd. § 21:7 on Insurance Couch question in you If answer that the testimony Helsel’s reveals [¶ 19.] negative, you plain- then will return a is no there established damages tiffs verdict for the amount of the care of for “must instructions. set these or illness sickness.” testimo Second, it you answer in the affir- uncertainty as to the ny clearly establishes mative, you have a to deter- second issue have phrase. As we often meaning of mine, namely: stated, party ‘a cannot claim benefit of Was the statement fraudulent ma- his
version of the facts more favorable to
acceptance
to the defendant’s
of
terial
than he
in his own sworn
contentions
”
or material to
policy,-
the risk under
¶1,
19,
testimony.’
See
by
the hazard assumed
defendant?
733;
at
v. Federated
587 N.W.2d
Julson
in the
you
question
If
answer that
Mut.
Ins.
affirmative, you will return a verdict for
such,
As
American is
the defendant.
sup
testimony
to Helsel’s
bound
Third,
negative,
it in
you
answer
phrase
ports Dorothy’s contention that
determine,
to
have a third issue
subject
and
to various inter
good
in
namely:
the defendant
Would
However,
the same
pretations.
finding
not
issued the insur-
faith either
have
finding
supported
that the record
and
the insur-
ance
have issued
instructions does
giving
ambiguity
premium
policy at the same
rate?
ance
nor
inquiry,
our
relieve
end
in
question
prejudice
to
If
answer that
Dorothy of her burden
show
affirmative, you will
a verdict for
to
return
by
caused
the trial court’s failure
submit
If
it in the
you answer
the defendant.
her
instructions to
Buxcel,
second and third
negative
at
to both the
issues, plaintiffs
then will return a
in
also
Natl Bank
596. See
First
damages
rejection
pro-
amount
trial court’s
her
verdict
set
jury instructions.
in
forth
these instructions.
22.] We affirm.
A review of the record shows that substan-
tial
existed to
evidence
allow
MILLER,
Justice,
[¶ 23.]
Chief
misrepresentation
determine the
issue.
SABERS, KONENKAMP and
supporting
The evidence
determi-
Justices,
GILBERTSON,
concur
result.
Craig’s
nation is that
at
history questionnaires,
medical
a time
SABERS,
concurring in
result
pressure
only
when he was
blood
delivering
opinion
to the ratio-
medication,
he
Craig noted that
was “un-
nale of the decision
the Court.
Further,
der a
he
doctor’s care.”
I with the trial court
questionnaire
noted in the
that he “had
purchas
that under the
circumstances
pay
been refused life insurance or
asked
credit
lan
higher
premiums.”
than
normal
While
stated,
guage was not
As
ambiguous.
record does not
reveal
Craig’s medical condition was not a minor
required
been refused life insurance or
ailment,
but a life
pay
higher
premium, based
“high
He
risk of
death”
sudden
response
questionnaire, Craig
the 1989
policy,
under the
should
higher
was on notice that he was a
risk
have disclosed his condition.
1994, Craig
diagnosed
insured.
Therefore, I
concur in result.
heart
condition and was informed
“high
risk
sudden
If
this court were to conclude that
diagnosis
death.” His
also indicated that
then it
language was
previous
he had had a
small heart attack.
to give
reversible error
refuse
Finally, he was informed of three treat-
ambiguity.
instructions on
options;
ment
two of which were signifi-
Bank,
See Buxcel v.
Fidelity
First
surgical procedures. Clearly,
cant
(stating
“[fjailure
was on notice that his health
requested
condition was
quite
correctly
prejudi
forth
a bit more severe than a broken arm
sets
the law is
(citations omitted));
*7
cial error.”
Delzer
Construction Co. v. SD State Bd. Trans
previously
This Court has
noted
(SD 1979)
portation,
275 that an
“duty
insured has the
to disclose
(providing that
an ambigu
“when there is
all facts material to the risk.” See Opper
contract,
ous
evidence
be introduced
Heritage
man v.
Mut. Ins.
1997 SD to
...
par
determine
the intentions
¶85, 9,
43 ties ... and ...
such evidence creates
(1982
§
Am.Jur.2d Insurance
& 1996
question of
which must be resolved
Supp)). Craig’s medical condition was not
Gabriel,
jury.”).
also Clements
ailment,
a minor
but a
life
(S.D.1991) (hold
482-83
malady.
Based
Craig’s medical his
ing that
the trial court
not err in
did
tory
proximity
and the close
between his
instructing
an ambig
construe
diagnosis
purchase
draftsman);
uous
against
contract
Del
should have disclosed his condition on
zer,
tion on the KONENKAMP, joins prejudiced has failed show that she was in result. concurrence (concurring in MILLER, Chief Justice
result). Although
[¶28.] join writing, cannot special
Sabers’ of the cred- paragraph.
last ambiguous, therefore in result.
I concur GILBERTSON, Justice, joins this in result.
concurrence Hoekman, and Bette
Alvin HOEKMAN Appellants,
Plaintiffs and Express
Timothy and Federal NELSON
Corporation, Defendants
Appellees. Dakota.
Supreme of South Court
Argued May July
Decided