Streich v. American Family Mutual Insurance Co.
358 N.W.2d 396
Minn.
1984
Check Treatment

Leila STREICH, et al., Respondents, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, et al., Appellants.

No. C0-83-577

Supreme Court of Minnesota

Nov. 30, 1984.

358 N.W.2d 396

later, does it necessarily follow that any bad faith intent of First State towards Town & Country was also directed at Heritage. We cannot say that the trial court erred in refusing to apply collateral estoppel.

B.

At the Town & Country trial, the trial court ruled as a matter of law that First State had not breached any of its warranties of presentment on the checks presented by First State to Town & Country. We affirm this ruling.

Under Minn.Stat. § 336.4-207 (1982) a presenting bank warrants to the payor bank that it “has no knowledge that the signature of the maker or drawer is unauthorized.” An unauthorized signature is “one made without actual, implied or apparent authority and includes forgery.” Minn.Stat. § 336.1-201(43) (1982). Town & Country argues that “fraud can never be authorized” and therefore the check signatures were not authorized. There is no merit to this claim. The checks were signed by Freitag and Donald England, persons authorized to sign checks on behalf of the companies involved. Whatever may have been wrong with the checks, it was not with the signatures.

Finally, Heritage claims it was excused from sending a notice of dishonor within the midnight deadline because Minn. Stat. § 336.3-511(2)(b) excuses “presentment or notice or protest” if “such party * * has no reason to expect or right to require” that an item be paid. Here again appellant seeks to insinuate an Article 3 provision into the check collection process established by Article 4. Article 4 already provides a defense to the duty to account if there is delay in dishonoring—namely, if the delay is due to circumstances beyond the bank‘s control. Article 3 would, therefore, conflict with Article 4, and this is not permitted. Moreover, section 336.3-511(2)(b) clearly refers to “such party“—i.e., “the party to be charged,” which normally is the drawer or endorser who would be liable on the instrument itself. First State is not such a party. See

;
. See also C. Edwards, Recovery of Final Payments Under the Uniform Commercial Code, 6 Ohio N.U.L. Rev. 341, 353 n. 66 (1979). The trial court correctly ruled that section 336.3-511 does not excuse Heritage‘s failure to timely dishonor the checks.

Affirmed.

Thomas W. Newcome, Victoria Newcome Johnson, J. Richard Bland, Robert E. Salmon, Minneapolis, for appellants.

Mark Reinhardt, Timothy J. Leer, St. Paul, for respondents.

Douglas J. Franzen, Richard L. Evans, Minneapolis, amicus curiae for Nat. Ass‘n of Ind. Insurers, Alliance of American Insurers, American Insurers Ass‘n and Ins. Fed. of Mn.

V. Owen Nelson, Kay N. Hunt, Minneapolis, amicus curiae for League Ins. Cos. Grinnell Ins. Co. and Goodville Mut. Ins. Co.

WAHL, Justice.

This case raises the issue of whether our decision in

, allowing stacking of income-loss benefits under no-fault insurance policies, should be applied retroactively. The Ramsey County District Court held that it should. American Family Mutual Insurance Company (American Family) appeals that judgment. We affirm.

Leila Streich sustained a gross weekly income loss of $357.43 as a result of injuries she received in an automobile accident on September 9, 1981. At the time of the accident she was insured by American Family under two separate no-fault automobile insurance policies. Pursuant to its interpretation of Minn.Stat. § 65B.44, subd. 3 (1982), American Family paid Streich $200 per week in income-loss benefits. On February 12, 1982, we held in

that income-loss benefits under two or more applicable no-fault policies of the same priority level may be stacked to the extent that the insureds receive 85% of their actual gross weekly wages. Five days later, Streich demanded that American Family pay her an extra $103.82 per week to bring the total amount of her income-loss benefits up to 85% of her gross weekly income. American Family refused her demand.

Streich then brought this class action seeking retroactive application of

. Both parties moved for summary judgment on the retroactivity issue. The trial court granted Streich‘s motion and ordered payment of the difference between income-loss benefits already paid and 85% of her weekly gross wage, plus 15% interest on overdue payments.

The question before us is whether

should be applied retroactively. The general rule is that “absent special circumstances or specific pronouncements by the overruling court that its decision is to be applied prospectively only, the decision is to be given retroactive effect.”
. We did not in any way limit the application of
or indicate that it should have a prospective effect only.

In

, we adopted the analysis of
, to determine when an exception to the general rule of retroactivity is appropriate. Chevron listed three factors to be considered. Analysis of the first factor, that “the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied* * * or by deciding an issue of first impression whose resolution was not clearly foreshadowed,”
, is dispositive of the case before us.

did not overrule clear past precedent, nor was it a case of first impression so that American Family would have relied on anything other than its own interpretation of section 65B.44, subd. 3. See
. Cases prior to
foreshadowed the holding in that case. In
, we determined that section 65B.44 did not preclude stacking economic-loss benefits. “This premise has survived the test of consideration by subsequent sessions of the state legislature. [Defendant] presents us with no evidence of a legislative intent to treat the rate-of-payment ceiling in section 65B.44, subd. 3, differently from the other limits set forth in section 65B.44.”
. Thus,
itself points to precedent that it followed rather than overruled. We also have decided other cases prior to
that foreshadowed the result in that case. See, e.g.,
(stacking of basic economic-loss benefits requires the injured person to be insured under two or more policies applicable at the same priority level);
(underinsured motorist coverage may be stacked); and
(pre-no-fault insurance, uninsured motorist benefits could be stacked).

The cases cited by American Family for the proposition that

was an unexpected overruling of precedent,
, and
, dealt with determining the relative liability between two insurers. The stacking issue in
dealt with coordination between workers’ compensation benefits and no-fault benefits. These cases were far less relevant to the issue before us in
than those cited above. We hold that the decision in
is to be applied retroactively because it did not overrule clear past precedent, was foreshadowed by earlier cases, and did not adopt a new rule of law.

Our determination that

was foreshadowed by earlier decisions also answers appellant‘s assertion that to apply it retroactively is unconstitutional. American Family argues that retroactive application of
would unconstitutionally impair its contract with Streich and deny it due process.
, cited in support of American Family‘s position, stated that a contract is impaired when a decision construing a statute is applied retroactively where that decision overturned an earlier decision construing the same statute differently. The Hoven court concluded, however, that the case there in question,
, did not overrule any prior decision but was in fact consistent with prior decisions.
. That is precisely the case here. Since
did not overrule any prior case and we have determined above that it was foreshadowed by earlier cases, there was no impairment of contract. There is also no unconstitutional taking of property in violation of due process. The only property taken from American Family by applying
retroactively is its asserted contractual right to pay less income-loss benefits to Streich. American Family does not have that contractual right. Its contract with Streich necessarily incorporated the provisions of Minnesota‘s No Fault Automobile Insurance Act, including section 65B.44, subd. 3, as interpreted in
. The extent of an insurer‘s liability is governed by the contract between the parties only as long as coverage required by law is not omitted and policy provisions do not contravene applicable statutes.
.
was not a drastic change in legal rules resulting in disruptive impact on the defendant as in
, but only an interpretation of one of the terms of a no-fault insurance contract as to the payment of income-loss benefits that was consistent with prior interpretations of similar terms of the same statute.
construed section 65B.44, subd. 3, and thereby interpreted one of the terms of a no-fault insurance contract. Applying
retroactively results in the interpretation of all no-fault contracts uniformly where the payment of income-loss benefits is at issue. There is nothing unconstitutional in the retroactive application of
to no-fault insurance contracts.

American Family finally argues that the retroactive application of

will result in an administrative and financial burden for insurance companies and a windfall for insureds, especially in light of the trial court‘s imposition of the statutory penalty, 15% interest, on overdue payments. Minn.Stat. § 65B.54, subd. 2 (1982). This issue was settled in
:

We are not persuaded by MTC‘s position. The present case does not involve a situation where this court will overturn a common-law rule or change a longstanding interpretation of a statute. In deciding the amount of no-fault income loss benefits owed to plaintiff, MTC did not rely upon any decision of this court. MTC simply relied upon how it believed the no-fault act would be interpreted. Since the inception of the no-fault act, MTC could have prepared for the liabilities exemplified in this case either by setting its insurance reserves or by seeking declaratory judgment.

The legislature has determined that when overdue no-fault benefits are paid, they are to include 15% per annum interest. In this case, the difference between what American Family paid in income-loss benefits after Streich‘s demand for stacking under

and what she should have received given the interpretation of section 65B.44, subd. 3 in that case, is overdue and must carry the statutory 15% penalty.

We affirm the judgment of the Ramsey County District Court and remand for further proceedings.

Affirmed and remanded.

COYNE, J., took no part.

KELLEY, Justice (dissenting).

I dissent from that part of the opinion that the appellant must pay the statutory interest payments from the time of the accident. At best, it should only have to pay the penalty on those unpaid benefits from the time of Streich‘s demand—five days after

. In my view, at least to that point, appellant was justified on relying on information received from the Minnesota Department of Commerce.

In the Matter of the Petitioner of CONTINENTAL TELEPHONE COMPANY OF MINNESOTA, INC., for Authority to Change its Schedule of Telephone Rates for Customers within the State of Minnesota.

Nos. CX-84-1035, C7-84-1168

Court of Appeals of Minnesota.

Nov. 13, 1984.