Opinion ID: 901809
Heading Depth: 1
Heading Rank: 4

Heading: Tschetter as an agent with authority to bind Wellmark

Text: [¶ 24.] Next, Coles argue Tschetter had ostensible authority to bind Wellmark with her actions and statements. They further argue Tschetter's statements that Coles were all set, and good to go, constituted a verbal approval of coverage on behalf of Wellmark. Based on these statements, Coles argue Wellmark, through its agent Tschetter, gave verbal approval of the coverage. [¶ 25.] The trial court, without addressing the issue of whether Wellmark's conduct created apparent or ostensible authority in Tschetter to bind it, concluded no duty existed on the part of Wellmark as a consequence of Coles submitting their application. In rendering its decision, the trial court focused on the Coles' deposition testimony that they signed the form, which bound them to the terms of the application including the language describing when coverage would be in effect. The trial court also found Tschetter's comments that Coles were all set, and good to go, were either Tschetter's opinion or referred to the completion of the application. It further found Tschetter's statements did not constitute approval of the application by Tschetter as Wellmark's agent. [¶ 26.] Based upon this Court's holding in Worden, 349 N.W.2d at 41, we agree with the trial court that Tschetter's words were at best an expression of her opinion and not verbal approval of the policy on behalf of Wellmark. Coles also have acknowledged in their brief that the holding in Worden generally precludes their argument. However, they argue there was much more here than Tschetter's words to show authority. Coles offer the fact that Wellmark provided Tschetter with preprinted forms, marketing materials, and the ability to select an effective date for coverage under Option 1 as evidence of Wellmark cloaking Tschetter with authority to verbally approve policies. [¶ 27.] Even if we were to assume such apparent or ostensible authority existed, Wellmark argues that it and Tschetter had no duty or obligation to Coles based on the terms of the application. It bases its argument on the language in the application form immediately above the signature line, which it contends indicates the document was not an offer of insurance by Wellmark. It further argues the language made it clear coverage would be in effect only when two conditions were satisfied: either Wellmark or its underwriter USAL approved the coverage, and written notice of that approval was provided to Coles. Because neither condition was satisfied, coverage never took effect. [¶ 28.] We agree with Wellmark that even if we were to find that Tschetter's ambiguous comments constituted verbal approval by Wellmark under an agency theory, the second required condition for coverage to be in effect was never met. That is, no written approval of Coles' application was ever received by Coles from either Tschetter or Wellmark. Thus, Coles' argument that coverage was in effect due to Tschetter's verbal approval fails. [¶ 29.] We previously so held in a factually similar case in Kent v. Assoc. Life Ins. Co., 84 S.D. 8, 166 N.W.2d 429 (1969). As noted above, Coles point to the following facts to support their claim of authority: Wellmark provided Tschetter with preprinted application forms, Wellmark permitted Tschetter to select an effective date under Option 1, and the line in the application form that stated WELLMARK UNDERWRITES COVERAGE UP TO THE EFFECTIVE DATE OF THE POLICY REGARDLESS OF WHEN THE APPLICATION WAS APPROVED. The facts in the instant case go no further than the facts in Kent. They are insufficient to show that Wellmark cloaked Tschetter with authority to approve coverage. As the Kent Court held, these facts are not sufficient to show the agent had authority to verbally approve coverage. Id. In the instant case, Tschetter was an insurance agent authorized to solicit applications but without authority to bind Wellmark upon her verbal approval. [¶ 30.] Coles argue Tschetter was Wellmark to them and authorized by Wellmark to approve coverage. However, the undisputed fact remains that Coles signed the application and in doing so agreed to all the terms and conditions within that application. Included in those terms, was the statement that the policy would not go into effect until it was approved by Wellmark and written notice was received by Coles. In addition, there was nothing contained in the preprinted forms that indicated Tschetter had authority to verbally approve coverage. Thus, there was no duty running from Wellmark to Coles based on Tschetter's all set, and good to go comments.