Title: Moore v. Farm & Ranch Life Ins. Co.

State: kansas

Issuer: Kansas Supreme Court

Document:

211 Kan. 10 (1973)
505 P.2d 666
ROBERT AARON MOORE, and THELMA RUTH MOORE, Appellees,
v.
FARM & RANCH LIFE INSURANCE COMPANY, INC., Appellant.
No. 46,470

Supreme Court of Kansas.
Opinion filed January 20, 1973.
Joseph W. Kennedy, of Morris, Laing, Evans & Brock, Chartered, of Wichita, argued the cause, and Robert I. Guenthner, of the same firm was with him on the brief for appellant.
Donald Vsetecka, of Corley, Braun & Smith, of Garden City, argued the cause, and Lelyn J. Braun, of the same firm, was with him on the brief for appellees.
The opinion of the court was delivered by
FATZER, C.J.:
This was an action to recover premiums paid on insurance policies alleged to have been sold by misrepresentations of the company agent as to the benefits to be received under the policies.
The case was tried to the court without a jury. Judgment was rendered in favor of the plaintiffs and the defendant has appealed.
The appellant, Farm & Ranch Life Insurance Company, Inc. (insurance company), contends the district court erred in granting judgment for the appellees, Robert Aaron Moore and Thelma Ruth Moore, husband and wife (hereafter referred to as the Moores, the appellees, Robert or Thelma), because the testimony shows as a matter of law their claim for relief is barred by the applicable *11 statute of limitations; that appellees have waived any right to relief, and that they have ratified all of the transactions on which they base their claim. The appellant also objects to certain findings of the district court as not being supported by the evidence.
While the appellant claims as error the failure of the district court to grant summary judgment on the pretrial depositions, there is no material conflict between the depositions and the oral testimony, and it would serve no useful purpose to make a separate presentation of that particular issue.
The posture of the case now before us presents factual questions. The appellees reside near Ulysses, in Grant County. Robert was 46 years of age, a high school graduate and a farmer who owns and operates his own farm. Thelma was 39 years of age, a high school graduate, and assisted her husband in the farming operation. The appellees were at all times material hereto familiar with the operation of corporations as business entities and understood that dividends are paid out of the profits of a corporation as determined by the board of directors thereof.
The appellant is a Kansas corporation duly licensed and qualified to carry on the insurance business within the state of Kansas.
Prior to January 12, 1966, John Foster, an agent of the appellant, called Robert late one evening and told him he had been recommended by Howard Phifer, a resident of Ulysses, who thought he would be interested in what the agent had to sell, and asked if he would like to make some money. Robert said he was interested and they arranged a meeting. On January 12, 1966, Foster called on Robert and Thelma at their farm home and presented them with a letter of introduction from Howard Phifer. Foster spent between three and four hours with the Moores that evening. Thelma testified:
Based upon the above representations, the Moores purchased seven policies covering each of them and each of their five children, ranging in ages from five to fourteen years. The annual premiums totaling $2,345.57 were paid. The seven policies were later delivered to the Moores and placed in a filing cabinet. They did not read the policies, but took Foster's word as to what they stated.
After hearing a conversation relative to a newspaper article to the effect that persons buying Farm & Ranch Life Insurance Company's policies were not getting what they thought, Thelma, on July 28, 1966, wrote to the Insurance Commissioner of the State of Kansas, and enclosed for his analysis one of the policies purchased on January 12, 1966.
In that letter Thelma complained of the policies having been misrepresented to them by Foster and stated they had been led to believe they were purchasing stock with guaranteed dividends. Shortly after July 28, 1966, the Insurance Commissioner wrote Thelma explaining that a life insurance policy was not stock in the life insurance company and that all dividends paid on such a policy were subject to the discretion of the board of directors of such life insurance company.
In January, 1967, when the second annual premium came due on the seven policies purchased by the Moores, they determined not to pay the premiums. As a result of non-payment of the premiums, the policies lapsed. On July 7, 1967, Merle Hoppe and Bill Quillen, agents of the appellant, visited the Moores' home. At that time Hoppe and Quillen spent several hours with the Moores going over the policies and particularly the provisions relating to dividend benefits. They told the Moores that no doubt they would get their premiums back, that the dividends were so very good that they could not afford to drop the policies. Based upon those statements, the Moores paid the second annual premium. Later, they were told *13 by their neighbors that before a return of premium would be available on those policies of insurance, the insured had to die before the age of 65. More letters were then written by Thelma attempting to secure explanations from the company.
Prior to January 18, 1968, the Moores received notice from the appellant that dividends on their policies had been declared but in accordance with instructions from the Moores the dividends were being used to purchase additional insurance. On January 18, 1968, Thelma wrote the appellant seeking clarification of the basis upon which dividends were paid. On January 23, 1968, the appellant responded and explained that the company paid a dividend of 11% in 1967. Thereupon, the Moores paid the third annual premium.
Subsequently, the Moores became dissatisfied with their policies and wrote to the appellant on March 26, and March 30, 1968, complaining primarily of the fact that they did not own stock in the company and that the dividends were not guaranteed. They stated they had been led to believe they would receive the return of all premiums paid on their life insurance no matter when they died, and that they had not been advised they would have to die prior to the contract anniversary date nearest their 65th birthdate in order to receive the benefits.
On May 29, 1968, Hoppe again visited with the Moores in an attempt to get them to reinstate the policies or in the alternative to secure other insurance. When informed they had sought legal counsel he encouraged them not to continue to seek legal aid but rather to write the president of the company, which Thelma did.
On January 7, 1969, this action was brought to recover the three annual premiums paid on the seven policies in the total amount of $7,042.71; mental anguish, pain and suffering, $5,000, and punitive damages including attorney fees in the further sum of $7,500. On January 13, 1969, Mr. Leland J. Braun, the Moores' attorney, wrote the appellant at their request, and demanded payment of all accrued interest and dividends. The letter reads:
"Gentlemen:
*14 On January 10, 1969, the appellant issued seven checks, one on each of the insurance policies, representing the dividends earned during the year 1968. The checks were mailed to Mr. Braun, and on January 21, 1969, they were endorsed and cashed by the Moores. The proceeds from the checks and the seven insurance policies were retained by the Moores. Thelma testified:
"A. Yes, we had paid our premium.
"A. I imagine, we paid our premiums.
"A. It was in February or March.
"Q. February or March?
"A. Yes.
"A. Pardon?
"A. Yes.
"Q. You retained possession of them, didn't you?
"A. Yes.
"A. Yes.
"A. No.
"A. Yes.
The district court made findings in harmony with the facts stated, and concluded, in part:
The district court deducted the dividend payment made for 1968, in the amount of $553.47, and rendered judgment for the plaintiffs, appellees here, in the amount of $6,489.24.
We now turn to the specific questions raised by the appellant.
It will suffice to state that the question as to the sufficiency of the evidence to support the district court's findings, and the question of when the fraud was discovered starting the running of the statute of limitations, require the weighing of evidence, the consideration of the credibility of witnesses, and inferences to be drawn from the testimony. These are matters which an appellate court may not consider on appeal.
Without detailed consideration of the above questions, we turn to the next issue on which there is no conflict in the testimony or dispute as to the facts. Did the appellees waive any right to relief and ratify all transactions on which the action was brought?
Appellees testified to three distinct representations which they claimed to be fraudulent  (1) appellees would own stock in the company; (2) the dividends would be guaranteed, and (3) that a return premium benefit would be paid even though the insured died after the age 65.
As early as the summer of 1966, the Moores learned through correspondence with the Kansas Insurance Commissioner that they owned no stock in the company and that the dividends were not guaranteed. They based this action on the alleged false representation that there would be a return of premiums as well as the payment of $5,000 face value of each policy, even though the insured died after age 65.
The appellees admit the discovery in February or March, 1968, that there would not be a return of premiums if the insured died after age 65. Yet they waited until January 7, 1969, to file an action for the return of the premiums paid over the three-year period. They did so to reap the full benefit available under the seven policies. Although repetitious, we quote again Thelma's testimony on the point:
"A. Yes, we had paid our premium.
"A. I imagine, we paid our premiums."
Even after filing this action, they demanded and received the dividends due under the policies for the year 1968.
This court is compelled to agree with the appellant's contention that the appellees by their conduct waived any right to relief they may have had because of misrepresentations in the sale of the insurance contracts and their purchase thereof.
In Cleaves v. Thompson, 122 Kan. 43, 251 Pac. 429, this court held:
If a party be silent and continue to treat a contract as valid until he has received all of the benefits thereunder, he will be held to have waived any claim of fraud. Morse v. Kogle, 162 Kan. 558, 178 P.2d 275, is one of the leading cases on the issue here presented. There it was held:
The rule stated in Morse was also followed in Curry v. Stewart, 189 Kan. 153, 368 P.2d 297. In Nichols Co. v. Meredith, 192 Kan. 648, 391 P.2d 136, it was said:
It does not matter whether the court is dealing with waiver, ratification, or equitable estoppel, a party will not be permitted to accept the benefit of a contract, with full knowledge of all of the facts, and then deny his own responsibility thereunder. (Bank v. Jesch, 99 Kan. 797, 163 Pac. 150.) See, also, Pattison v. State Farm Fire & Casualty Co., 209 Kan. 167, 172, 495 P.2d 975, and Thompson v. Anderson, 209 Kan. 547, 556, 498 P.2d 1.
The judgment is reversed with instructions to the district court to enter judgment for the appellant.
KAUL, J., dissenting:
Essentially, the issues in this case are factual. In my view of the record there was evidence supporting the trial court's findings; therefore I would affirm the judgment.