Consumers Insurance Co. v. Cimoch

Mary Ann and Norman Cimoch (defendants), a married couple, owned Northwest Underwriters (NWU), an insurance company that acted as the general agent for Consumers Indemnity Company (CIC), a subsidiary of Consumers Insurance Company (Consumers) (plaintiff). Norman told Mary Ann that he planned to purchase CIC from Consumers in exchange for $1.5 million of community stock that Norman held in Consumers’ parent company. However, in the final purchase agreement, Norman agreed to pay $2.95 million for CIC, payable in $14,000 monthly installments. Mary Ann was not informed that the purchase agreement involved cash outlays and debt in addition to the stock exchange. After Norman failed to make the required monthly payments, Consumers filed a breach-of-contract action against Norman, Mary Ann, and the marital community. Consumers argued that Mary Ann and the marital community (collectively, Mary Ann) should be held liable because the purchase agreement was a community liability and because Mary Ann ratified the agreement by accepting its benefits. The trial court entered uncontested findings that Mary Ann did not consent to the purchase agreement, that she was unaware of its terms, and that the purchase was outside the ordinary course of business for NWU. After trial, the trial court held that (1) Norman was individually liable for breaching the purchase agreement and (2) Mary Ann was not liable because the agreement was entered into without her consent or ratification. Consumers appealed.