Washington National Insurance Company v. Strickland

Bruce Palmer (defendant) was a licensed agent for Washington National Insurance Company (Washington National) (defendant). On January 15, 1981, Palmer met with Carol Strickland (plaintiff) to discuss medical insurance possibilities. Palmer told Strickland about four different insurance companies’ insurance plans. Strickland selected a plan from Washington National, and Strickland filled out Washington National’s insurance application. Strickland gave the completed application to Palmer, along with a check for $100. On a conditional receipt attached to the application, Palmer wrote that the medical insurance was effective as of January 15, 1981. Palmer then tore off the conditional receipt and gave the conditional receipt to Strickland. On that date, Strickland’s height was five feet, two inches and she weighed 180 pounds. Palmer did not immediately submit Strickland’s application to Washington National. While Palmer still had the application, Strickland cancelled a pending application that Strickland had submitted to another insurance company. A short time later, Strickland was injured in a fall. Palmer still had not given the application to Washington National. Once Washington National received Strickland’s application, Washington National declined coverage because Strickland was not physically fit for coverage. Strickland sued Washington National and Palmer, alleging fraud and misrepresentation. The case proceeded to a jury trial. At trial, Strickland testified that Palmer told her that the insurance coverage was effective as of the date Strickland met with Palmer. In contrast, Palmer testified that he told Strickland the insurance coverage would be effective as of the meeting date if everything was in order. A witness from Washington National testified that that Palmer was a broker, not an agent. Palmer and the Washington National witness both testified that Palmer had no authority to approve applications or to bind Washington National to coverage. Palmer’s insurance license and application were admitted into evidence, as was the conditional receipt that Palmer gave Strickland. The conditional receipt included a printed statement that declared that the receipt did not create insurance coverage until Washington National decided that the applicant was insurable. The jury returned a verdict in favor of Strickland, including compensatory and punitive damages. Washington National appealed.