Barnett v. Aetna Life Insurance

DONALDSON, Justice.

In 1963 the City of Twin Falls was considering retirement programs for its employees. Sometime in late August or early September 1963, two meetings were held to explain the Aetna retirement program to the city employees. These meetings were attended by some of the named plaintiffs, city employees, and representatives from Aetna Insurance Company. At these meetings, concern was expressed as to the disposition of the contributions paid in should the city later join the state’s retirement plan. According to testimony, the Aetna representative assured the employees that their contributions would be returned to them. The city did enter into a contract with Aetna establishing a retirement program.

By January of 1971 the city changed to the state retirement program and the city employees became eligible to join the state program. After the change, Aetna refused to return the contributions of the employees. Aetna chose to follow the terms of the contract and pay retirement benefits when they accrued. Some of the employees, the plaintiffs here, contacted an attorney to help them get their money back. In April and May of 1971, the attorney wrote Aetna demanding return of the moneys. Aetna replied in a letter on May 14, 1971 refusing the demand. On October 21,1971 the plaintiffs’ attorney informed them by letter of this refusal. On that same date the plaintiffs wrote letters to their Congressman and to the State Insurance Commissioner about the problem.

Plaintiffs filed this action against Aetna on June 3, 1974. Trial was held in district court and the plaintiffs presented the testimony of thirty witnesses. At the close of the plaintiffs’ case in chief, Aetna moved to dismiss the claim pursuant to I.R.C.P. 41(b) and 50(a). In this oral motion, the grounds given were: (1) many of the plaintiffs did not directly receive any promises from Aetna agents; (2) many of the plaintiffs enrolled in the plan as a mandatory condition of employment and therefore did not rely upon any representations from Aetna; (3) all causes are barred by the Statute of Limitation of three years; (4) essential plaintiffs are absent, the wives of the plaintiffs, etc.; (5) plaintiffs have not established that they are entitled to any damages; (6) the contract between the city and Aetna was not introduced in evidence.

The court granted this motion and dismissed the causes of action on September 7, 1976. Although no reasons were given in the order, the judge believed the Statute of Limitations had run.

The plaintiffs appeal from this dismissal, listing six assignments of error. Because we hold that the Statute of Limitations had run only that issue is addressed.

The Statute of Limitations for an action for relief on the ground of fraud or mistake is three years. I.C. § 5-218. The trial court below applied this three year Statute of Limitations. Plaintiffs-appellants contend that the court below should have applied the five year Statute of Limitations that governs an action based on a written contract. I.C. § 5-216.

The plaintiffs-appellants argue that Aetna “made certain fraudulent misrepresentations which induced them to enter into the written agreement by way of approving the retirement program and authorizing the deductions from their paychecks.” This theory is not supported by the evidence.

The plaintiffs-appellants have not shown what part, if any, they played in approving the contract between the City of Twin Falls and Aetna Life Insurance Company. The contract was neither offered nor admitted into evidence below and is not in the record. The burden is on the appellants to show this connection and they have not met this burden. Holman v. Sorenson, 556 P.2d 499 (Utah 1976); Close v. Rensink, 95 Idaho 72, 501 P.2d 1383 (1972).

The substance, not the form, of the action controls and determines the applicable Statute of Limitations. Stewart v. Hood Corp., 95 Idaho 198, 506 P.2d 95 (1973); Thomas v. Gordon, 68 Idaho 254, 192 P.2d 856 (1948).

“The test ... is not whether the fraud or mistake occurred in a contract or independently of contract, but the test rather is whether the action seeks relief from or on account of fraud or mistake.” Hillock v. Idaho Title and Trust Co., 22 Idaho 440, 450, 126 P. 612, 616 (1912).

Even though the plaintiffs-appellants have amended the complaint to include the contract theory, the action still sounds in fraud. Count I states the basis for plaintiffs’ claim.

That sometime prior to the first day of September, 1963, defendant, or defendant’s agent, in order to induce certain plaintiffs to enter into a certain retirement insurance program with said defendant, did falsely and fraudulently represent to certain plaintiffs that should a state funded retirement program become available to the Twin Falls City employees, and should said employees wish to transfer to said state funded program, that all funds paid into defendant’s retirement insurance program prior to said employees’ request for transfer, would immediately be refunded at no additional cost.

The basis of plaintiffs-appellants’ claim for relief is the fraudulent misrepresentations of Aetna. In holding the three year fraud Statute of Limitations applied to an action based on fraudulent misrepresentation concerning a mortgage contract, this Court said:

It is true that plaintiff may either sue in tort or may waive the tort and sue on the implied contract for money had and received. The election is immaterial so far as an application of the appropriate statute of limitations is concerned, since the substance of the action governs the latter consideration and not the form.

Common School Dist. No. 18 v. Twin Falls Bank & Trust Co., 52 Idaho 200, 202, 12 P.2d 774, 775 (1932).

The plaintiffs-appellants are attempting to recover on a contract to which it is not shown they were a party. The fact that appellants did not enter the contract into the record below amplifies the fact that they are seeking relief from the alleged fraud. The appellants had not shown any contractual duty owed them by Aetna. The trial court was correct in applying the three year fraud Statute of Limitations.

Affirmed. Costs to respondent.

SHEPARD, C. J., McFADDEN and BISTLINE, JJ., concur.