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| | Monday, October 18, 2004 @ 12:00 PM EDT
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Read more archived articles about Law and Legal Issues
Vermont resident Gaston Trepanier made a claim under his long-term disability insurance policy with Bankers Life & Casualty Co. In the event of disability he was entitled to $400 per month, apparently for life.
On March 2, 1993, Bankers Life proposed in a letter to Trepanier that he accept a lump sum payment of $20,000 in exchange for a release of further claims under his policy. The letter said that should Mr. Trepanier decide "to accept our offer," he could "jot a note at the bottom of this letter and return it."
Having received no reply, on April 2, 1993 Bankers Life sent another letter reminding
Trepanier of the offer and urging a timely response if he wanted to "accept the offer."
According to Clemence Trepanier, Mr. Trepanier's wife, she and Mr. Trepanier discussed the offer and he decided to accept it. He instructed he to write a note on the bottom of the March 2 letter and return it. Clemence wrote the note on April 6 and placed it in an envelope, intending to mail it the next day. But on April 7 Mr. Trepanier was hospitalized and the letter didn't get mailed.
Mr. Trepanier lapsed into a coma on April 8. On April 12 Clemence mailed the letter to Bankers Life--accepting the offer. On April 14, Mr. Trepanier died.
When Bankers Life learned of Mr. Trepanier's death, it revoked the offer of a lump sum payment and instead issued a final payment based on the monthly policy benefit of $400.
Clemence Trepanier filed suit on behalf of her husband's estate, claiming that Bankers Life breached its contract to pay the lump sum amount, acting in bad faith and in violation of fiduciary duties to its insured. Bankers Life answered that (1) the March 2 letter was not an offer, (2) even if it was, Clemence was not authorized to accept it, (3) even if she was, she failed to perform a condition precedent by signing a release of the insurer's liability under the policy, (4) there was no evidence of bad faith, and (5) in any event, Clemence'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 letter.
So...how do you decide this?
On cross-motions for summary judgment, the trial court assumed (without deciding) that there was an offer, Clemence was authorized to accept, and that mailing the letter on April 12 was legally sufficient for acceptance--but the judge ruled that as a matter of law Clemence's agency terminated when her husband became comatose, so no contract was formed by the mailing on April 12.
The Vermont Supreme Court reversed. Mindful of the general rule that an agency terminates with the death or incapacity of the principal, the Court said an individual in a comatose state is "generally not considered to be permanently incapacitated under general agency principles."
The Court explained that acts done on behalf on individuals who are temporarily incapacitated are, at most, voidable. In this case, the actions directed by Mr. Trepanier (assumed legally sufficient to form a contract) were not "voided" by him before his death, and there was no evidence he would have done so before he died.
The case was remanded for further proceedings on issues "assumed" but not decided in the summary judgment (ie., whether there was a valid offer, whether Clemence was authorized to accept, and whether the mailing was a valid acceptance.) From here on, I'm betting with Clemence.
The official citation is Trepanier v. Bankers Life & Casualty Co. (Vt.Sup.Ct. 1997) 706 A.2d 943.
Not to argue with the result, but if a comatose person who doesn't regain consciousness before death isn't "incapacitated," do we need a new word here? The Court didn't cite authority for its views in this regard--and maybe there are some cases out there--but it's still a dicey issue.
By Bert Rush------------------------------------------
Word Cloud:
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the mailing letter even coma decide incapacitated sufficient terminated clemence court authorized this lapsed life decided didn't bottom accept, comatose authority accept
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