Trepanier v. Bankers Life & Casualty Co.

Trepanier v. Bankers Life & Casualty Co.  (96-507); 167 Vt. 590; 706 A.2d 943

[Filed 2-Dec-1997]


                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 96-507

                               JUNE TERM, 1997



Clemence Trepanier, Executrix of the  }   APPEALED FROM:
Estate of Gaston Trepanier            }
                                      }
     v.                               }     Washington Superior Court
                                      }
Bankers Life & Casualty Co.           }
                                      }     DOCKET NO. S536-93 Wnc



       In the above-entitled cause, the Clerk will enter:


       Plaintiff Clemence Trepanier appeals from a summary judgment order of
  the Washington Superior Court in favor of defendant Bankers Life and
  Casualty Co.  She contends the trial court erred in concluding as a matter
  of law that her authority to accept a contract on behalf of her husband,
  Gaston Trepanier, terminated when he lapsed into a coma.  We agree that the
  court erred, and therefore reverse.

       In reviewing a decision to grant summary judgment, we apply the same
  standard as the trial court; we regard all allegations made in opposition
  to the motion as true, and affirm only if there is no genuine issue of
  material fact and the moving party is entitled to judgment as a matter of
  law.  Peters v. Mindell, 159 Vt. 424, 426, 620 A.2d 1268, 1269 (1992).

       In reviewing the summary judgment in favor of Bankers Life, we
  therefore accept the facts as advanced by Clemence Trepanier in her
  affidavit.   On March 2, 1993, Bankers Life proposed in a letter addressed
  to Gaston Trepanier that he accept a lump sum settlement of $20,000 in
  exchange for release from a disability income policy that paid Mr.
  Trepanier a $400-a-month benefit.  The letter stated that should Mr.
  Trepanier decide "to accept our offer," he could "jot a note at the bottom
  of this letter and return it."  Bankers Life sent a follow-up letter on
  April 2, 1993, reminding Mr. Trepanier of the "lump sum offer" and urging
  him to make a timely response if he wished to "accept the offer." 
  According to Mrs. Trepanier, she discussed the idea with Mr. Trepanier, who
  decided to accept the offer and directed her to write a note on the bottom
  of the March letter as directed.  She did so on April 6, and placed the
  letter in an envelope, intending to send it the following day.  On April 7,
  Mr. Trepanier was hospitalized and the letter was not mailed.  Mr.
  Trepanier fell into a coma on April 8.  On April 12, Mrs. Trepanier
  purported to accept the offer by mailing the letter to Bankers Life.  On
  April 14, Mr. Trepanier died.  Bankers Life subsequently revoked the offer
  and issued a final disability payment.

       Clemence Trepanier thereupon filed this breach-of-contract and bad
  faith action against Bankers Life on behalf of her husband's estate,
  alleging that a valid contract had been formed when she accepted the
  $20,000 offer on her husband's behalf, and that Bankers Life had breached
  the contract in bad faith and in violation of its fiduciary duties.  Mrs.
  Trepanier moved for  partial summary judgment on the issue of whether a
  binding contract had been formed.

 

  Bankers Life, in response, filed a cross-motion for summary judgment,
  arguing (1) that the March 2 letter was not an offer; (2) that even if it
  was, Clemence Trepanier was not authorized to accept it; (3) that even if
  she was authorized to accept the offer, she failed to perform a required
  "condition precedent" by executing a release agreement to extinguish the
  company's liability under the policy; and (4) that even if Bankers Life had
  breached a valid contract, there was no evidence of bad faith to support
  the punitive damage claim.  In a supplemental memorandum, Bankers Life made
  the additional argument that Clemence Trepanier's authority to act as agent
  for her husband terminated when he lapsed into a coma on April 8, four days
  before she mailed the acceptance.

       Following a hearing, the trial court ruled in favor of Bankers Life. 
  The court assumed, for purposes of the decision, that Bankers Life had made
  a valid offer, that Clemence Trepanier was authorized to act on her
  husband's behalf, and that mailing the letter on April 12 was legally
  sufficient to accept the offer.  The court concluded, nevertheless, that
  Mrs. Trepanier's agency had terminated as a matter of law when Gaston
  lapsed into a coma four days earlier, on April 8, and therefore that no
  contract had been formed.  Accordingly, the court denied Clemence
  Trepanier's motion, and entered summary judgment in favor of Bankers Life. 
  This appeal followed.

       The sole issue on appeal is whether Mrs. Trepanier's agency terminated
  when Mr. Trepanier lapsed into a coma on April 8.  The general rule is that
  an agency terminates with the death or permanent incapacity of the
  principal.  See Restatement (Second) of Agency §§ 120, 122 cmt. b (1958). 
  Mrs. Trepanier argues that her power of agency was coupled with an
  "interest," an exception to the general rule which allows the agency to
  survive the death or permanent incapacity of the principal.  See D'Amato v.
  Donatoni, 105 Vt. 496, 500, 168 A. 564, 565 (1933).  We need not decide
  whether Mrs. Trepanier's agency fits within this exception, however, for an
  individual in a comatose state is generally not considered to be
  permanently incapacitated under general agency principles.

       The agency rule has been stated as follows:  "A comatose person is
  mentally incompetent while his coma continues and . . . when an agent under
  a power of attorney acts during the mental incapacity of a principal who
  has not been adjudicated incompetent and for whom no court-appointed
  committee or conservator has been designated, the act is at most voidable,
  and not void."  United States v. Manny, 645 F.2d 163, 166 (2d Cir. 1981);
  accord United States v. Price, 514 F. Supp. 477, 479-80 (S.D. Iowa 1981);
  Silver v. United States, 498 F. Supp. 610, 612 (N.D. Ill. 1980).  This rule
  is predicated on the view that comatose individuals are only temporarily
  incapacitated, as they may recover, and acts by individuals temporarily
  incapacitated are at most voidable.  See Restatement (Second) of Contracts
  § 15 cmt. d (1981); 5 R. Lord, Williston on Contracts § 10:3, at 234 (4th
  ed. 1993).  With respect to such voidable contracts, the power to affirm or
  disaffirm rests solely with the principal or an authorized representative,
  which can include the estate of the principal.  See Manny, 645 F.2d  at 167;
  Silver, 498 F. Supp.  at 612; 5 Williston on Contracts, supra, § 10:5, at
  249-55.  The contract here was not voided by Mr. Trepanier, and there is no
  claim or evidence that he would have done so prior to his death.

       We hold, therefore, that the trial court erred in concluding as a
  matter of law that  Mrs. Trepanier's agency terminated when Mr. Trepanier
  lapsed into a coma, and in entering summary judgment on this basis.

       Additional issues remain to be decided, however.  As noted, the trial
  court assumed, without deciding, that Bankers Life had made a valid offer,
  that Mrs. Trepanier was authorized

 

  to accept the offer, and that mailing the letter on April 12 was
  sufficient, without more, to constitute a valid acceptance.  Because the
  trial court never reached these issues, or the issue of bad faith, all of
  which were raised in the cross-motion for summary judgment, we remand for
  further proceedings.


       Reversed and remanded.


                              BY THE COURT:



                              _______________________________________
                              Jeffrey L. Amestoy, Chief Justice

                              _______________________________________
                              Ernest W. Gibson III, Associate Justice

                              _______________________________________
                              John A. Dooley, Associate Justice

                              _______________________________________
                              James L. Morse, Associate Justice

                              _______________________________________
                              Denise R. Johnson, Associate Justice