Progressive Cas. Ins. Co. v. Blythe

Decision Date19 October 1977
CourtAlabama Court of Civil Appeals
PartiesPROGRESSIVE CASUALTY INSURANCE COMPANY, a corporation, et al. v. Ralph A. BLYTHE, Jr., d/b/a Blythe Insurance & Investments. Civ. 1199.

Richard A. Ball, Montgomery, for appellants.

W. Scears Barnes, Jr., Alexander City, for appellee.

HOLMES, Judge.

This is an insurance case.

The original suit was filed by Barbara Sue McClure against appellant, Progressive Casualty, seeking proceeds from an insurance policy. Progressive filed a third-party complaint seeking indemnity against appellee, Ralph A. Blythe, Jr., d/b/a Blythe Insurance & Investments. The basis of the third-party action was that Blythe had wrongfully signed the name of Bobby Jean McClure to the portion of an insurance application dealing with rejection of uninsured motorist coverage.

The case between McClure and Progressive was settled for $7,500. On January 27, 1977, the third-party suit was tried in the Circuit Court of Tallapoosa County before a jury resulting in a verdict and judgment for Blythe. During the trial of the case, Progressive requested a directed verdict which was denied. Progressive then filed a motion for judgment n. o. v. or, in the alternative, for a new trial, both of which were denied. Appellant is now seeking relief from this court alleging error in the trial court's denial of appellant's motion for a directed verdict and judgment n. o. v.

The pertinent facts as revealed by the record disclose the following:

Since January, 1965, Allyson Blythe has operated an independent insurance agency and has dealt in real estate and automobile financing. In financing automobiles, he customarily made application for insurance in connection with the financing contract. In October of 1975, Curtis Mann called Blythe, stating that he wanted to sell a motorcycle to Bobby McClure and wanted Blythe to finance it. As part of the financing arrangement, Mann and Blythe agreed on an insurance policy for the motorcycle which covered liability and physical damage. Mr. Blythe never discussed the policy with the named insured, McClure, although the cost of the insurance was added to the financing contract and included in the selling price of the motorcycle. Mr. Blythe signed the name of Bobby J. McClure to the application and also signed McClure's name to the part of the insurance application which rejects uninsured motorist coverage. Appellee Blythe testified that he intended the purported signature of the applicant to appear as the genuine signature of the applicant.

A short time after the insurance was taken out, Barbara Sue McClure was involved in an accident with an uninsured motorist and attempted to recover from Progressive under the policy. As set out above, a settlement was made because the signing of McClure's name was not effective to reject the uninsured motorists coverage. See State Farm Mutual Automobile Ins. Co. v. Martin, 292 Ala. 103, 289 So.2d 606 (1974).

Appellant contends that appellee-Blythe is liable to appellant for the amount which appellant had to pay as a result of the rejection being ineffective by virtue of Blythe signing McClure's name. Appellant argues, therefore, that the trial court was in error in denying his motions for directed verdict and judgment n. o. v.

Appellee, in turn, argues that there is a fatal variance between the pleadings and the proof in that appellant did not elect as to which alternative he would rely under Tit. 7, § 108, Code of Alabama 1940. Appellee contends that this alone is sufficient to affirm the trial court and jury verdict. We cannot agree.

In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. See Rule 9(b), ARCP. This rule is designed to qualify the generalized notice pleading permitted by Rule 8(a).

"But this special requirement as to fraud and mistake does not require every element in such actions to be stated with particularity. It simply commands the pleader to use more than generalized or conclusory statements to set out the fraud complained of. The pleading must show time, place and the contents or substance of the false representations, the fact misrepresented, and an identification of what has been obtained. . . ." 1 Lyons, Alabama Practice, at 130.

After a careful review of the record, this court finds that the third-party complaint, in the original and amended version, is sufficient to allege a good cause of action in fraud. All the pertinent facts on which the cause of action was based were set out as required by the Alabama Rules of Civil Procedure. We therefore find no merit to appellee's contention that an election must be made. This is due to the fact appellant's complaint was adequate to support a cause of action in fraud, whether the fraud was willfully to deceive, recklessly without knowledge or by mistake and innocently. All parties were informed as to the issues; the proof was confined to the issues; and there is, therefore, no variance between the pleadings and proof so as to preclude a review of the trial court's action.

The question now for answer by this court is whether a soliciting insurance agent is liable for damages arising from his misrepresentations to an insurance company. Should that question be answered in the affirmative, the next question is whether the trial court erred in denying appellant's motion for directed verdict and/or judgment n. o. v.

Appellant contends appellee-Blythe should have to indemnify Progressive for the loss sustained by reason of appellee's misrepresentation that McClure's signature was authentic. Tit. 7, § 108, Code of Alabama 1940, provides that:

"Misrepresentation of material fact, made wilfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or if made by mistake and innocently, and acted on by the opposite party, constitute legal fraud." (Emphasis supplied.)

As is clear from the undisputed evidence, appellee admitted that he signed the rejection and did so with the intent that the insurer (appellant-Progressive) would believe that it was the genuine signature of the insured. It is a clear proposition of law that a misrepresentation of a material fact, whether intended to deceive or not, may create a right of action if the other party reasonably relied thereon and it formed an inducement to his prejudice. See Hall Motor Co. v. Furman, 285 Ala. 499, 234 So.2d 37 (1970).

In light of State Farm Mutual Automobile Ins. Co. v. Martin, supra, it is obvious that appellant was induced to rely to his prejudice by reason of the misrepresentation. In that case, the court said that a rejection of uninsured motorist coverage will be effective only if signed in writing by the named insured. Therefore, as in the present case, if the named insured didn't sign the rejection, the insurer would still be forced to pay under that portion of the policy even if someone attempted to sign for the applicant....

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    ...including the fact misrepresented or the promise made with no intention of performing it. See Progressive Casualty Insurance Co. v. Blythe, 350 So.2d 1062 (Ala.Civ.App.1977). We do agree with Winn-Dixie that the cause must be reversed and remanded because the evidence supports neither the a......
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    ...of uninsured motorist coverage will be effective only if signed in writing by the named insured." Progressive Cas. Ins. Co. v. Blythe, 350 So. 2d 1062, 1065 (Ala. Civ. App. 1977). See also State Farm Mut. Auto. Ins. Co. v. Martin, 292 Ala. 103, 106, 289 So. 2d 606, 609 (1974) (explaining th......
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  • More Uninsured/underinsured Motorist Coverage—an Addition to the Lawyers' Desk Reference
    • United States
    • Alabama State Bar Alabama Lawyer No. 74-2, March 2013
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