## Facts

- Equitable issued George E. Stark a $2,500 life insurance policy that promised premium waiver and a $25 monthly annuity if he became wholly and permanently disabled before age 60.
- The policy instructed the insured to write to the company or contact the nearest authorized agent, whose duty was to facilitate settlements without charge.
- Stark alleged he was generally illiterate, unable to read and write intelligently, and inexperienced in business; Equitable and its local agent allegedly knew this.
- Stark alleged he became totally and permanently disabled in October 1926 while the policy was in force.
- Stark consulted Equitable’s local agent about disability benefits; the agent allegedly (knowing it was false) told Stark his condition was not covered and that he had no claim.
- Relying on the agent’s representation and the policy’s direction to consult the agent, Stark did not submit a disability claim and allowed the policy to lapse.
- In 1935 Stark allegedly learned from another insurance agent that his disability was covered, sought reinstatement and benefits, and Equitable refused.
- Stark sued for disability benefits; Equitable demurred, asserting failure to state a claim and the statute of limitations. The trial court overruled the demurrers and the insurer appealed.

## Issues

1. Whether a complaint states a claim for fraud or equitable relief when an insurer’s agent allegedly misrepresents the insured’s rights under the policy (commonly characterized as a misrepresentation of law).
2. Whether, on the face of the complaint, the action is barred by the statute of limitations where the alleged misrepresentation occurred years before suit but was allegedly undiscovered due to reliance on an agent in a relationship of trust and confidence.

## Decision

- The Minnesota Supreme Court affirmed the orders overruling the demurrers.
- The court held the complaint sufficiently alleged actionable fraud based on the agent’s knowingly false statements about coverage in light of the alleged relationship of trust and reliance.
- The court held the statute-of-limitations defense could not be resolved against Stark on demurrer because the alleged confidential relationship and delayed discovery prevented a time bar as a matter of law at the pleading stage.

## Legal Principles

- A statement about legal rights under a contract may support a fraud claim where the speaker has induced or invited trust and confidence, and the hearer reasonably relies due to a confidential or fiduciary-type relationship.
- Policy language directing the insured to rely on an insurer’s authorized agent for claim assistance can support an inference of a relationship of trust and confidence for fraud analysis.
- In fraud cases involving a confidential or fiduciary-type relationship, limitations may be treated under a discovery rule; delayed discovery may defeat a limitations defense at the pleading stage.
- A statute-of-limitations defense generally cannot be sustained on demurrer unless the complaint shows the claim is time-barred as a matter of law.

## Conclusion

The court permitted the insured’s action to proceed because the complaint plausibly alleged that an insurer’s agent, positioned as a trusted adviser to an illiterate insured, knowingly misrepresented coverage to deter a claim, and the delayed discovery allegations prevented dismissal on limitations grounds at the demurrer stage.


Stark v. Equitable Life Assurance Soc'y of the U.S., 205 Minn. 138, 285 N.W. 466 (Minn. 1939)