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FRASHER v. LIFE INVESTORS INS. CO. OF AMERICA

July 27, 1990.

MARY FRASHER, Personal Representative for The Estate of STEVEN G. FRASHER, Appellant,
v.
LIFE INVESTORS INSURANCE COMPANY OF AMERICA, Appellee.



Mary Frasher, administrator of Steven G. Frasher's estate, appeals the district court's decision granting summary

[14 Kan. App. 2d 584]

      judgment to Life Investors Insurance Company of America. The trial court held that a Missouri statute barring suicide as a defense to paying life insurance benefits did not apply in this case and that there was no coverage under the terms of a policy issued by Life Investors. We reverse and remand.

On January 12, 1988, Steven G. Frasher made an installment purchase of a vehicle from John Wallace Dodge, Inc., (Dodge) a car dealer in Overland Park, Kansas. Dodge is a Delaware corporation authorized to do business in Kansas. Frasher was a resident of Missouri. He applied for and received credit life insurance available under a group credit life policy issued to Dodge. Dodge acted as an agent for Life Investors pursuant to a contract between the two formed in 1982. The master policy, delivered to Dodge in Kansas, allowed Dodge to solicit debtors to purchase the insurance and provided for a percentage commission to Dodge on each policy of insurance sold. Each debtor received a certificate of insurance that was first sent to Dodge by Life Investors and then mailed to the debtor by Dodge.

The coverage was decreasing term insurance amortized evenly over 60 months, the term of the installment purchase contract. Premiums were paid monthly by Frasher to Dodge, which then forwarded them to Life Investors. Dodge was the designated beneficiary of the policy.

  Frasher died of an apparent self-inflicted gunshot wound. Dodge's assignee of the installment purchase agreement, Chrysler Credit Corporation, repossessed and sold the vehicle. Policy proceeds, if owed, were to be paid to Frasher's estate. However, Life Investors tendered only premiums paid, contending the following policy exclusion was applicable: "SUICIDE: If an Insured Obligor or spouse dies by self destruction within one year from the Effective Date of coverage, whether sane or insane and while the Certificate is in force, the death benefits payable hereunder shall be limited to the amount of the premium paid."

  Frasher's estate brought this lawsuit, asserting Missouri law was applicable and precludes suicide as a policy defense. Appellant relies upon this statute:

  "In all suits upon policies of insurance on life hereafter issued by any company doing business in this state, to a citizen of this state, it shall be no defense that the insured committed suicide, unless it shall be shown to

[14 Kan. App. 2d 585]

      the satisfaction of the court or jury trying the cause, that the insured contemplated suicide at the time he made his application for the policy, and any stipulation in the policy to the contrary shall be void." Mo. Rev. Stat. § 376.620 (1986).

 The trial court, in granting summary judgment for Life Investors determined that, absent a valid choice of law provision in the policy, Kansas law would govern as the place of the making of the contract. The court also found that, even assuming the choice of law provision in the policy pointed to Missouri law, the Missouri statute did not apply because the policy was not "`issued . . . to a Missouri resident.'"

  There are general rules regarding the construction of insurance policies this court must follow. "The construction and effect of insurance contracts are questions of law to be determined by the court." Farm Bureau Mut. Ins. Co. v. Horinek, 233 Kan. 175, 177, 660 P.2d 1374 (1983). The construction given the insurance policy should give effect to the parties' intent. The test is what a reasonable person in the position of the insured would understand the policy to mean. 233 Kan. at 179-80.

  For choice of law purposes where the issue is contract construction, Kansas applies the rule of lex loci contractus, i.e., the place of the making. Fagan v. John Hancock Mutual Life Insurance Company, 200 F. Supp. 142 (D. Kan. 1961). In group life policies, "[i]t is generally held that such contracts are made where the master policy and the individual certificate are delivered." 200 F. Supp. at 143. In the instant case, the master policy was delivered to Dodge in Kansas; thereafter, the car agency delivered the individual certificate to Frasher. Whether Frasher's certificate was mailed to him in Missouri or delivered to him at the car agency's office in Kansas is not clear.

  In Simms v. Metropolitan Life Ins. Co., 9 Kan. App. 2d 640, 644, 685 P.2d 321 (1984), the court held: "As a matter of conflict of laws doctrine we find the majority rule to be that the interpretation of a group insurance contract is governed by the law of the state where the master policy is delivered." In the instant case, this would result in enforcement of the suicide clause within the policy. However, this ...


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