Land & Associates, Inc. v. Simmons
| Decision Date | 22 December 1989 |
| Citation | 562 So.2d 140 |
| Parties | LAND & ASSOCIATES, INC. v. Brad L. SIMMONS. Willie FOSTER v. Brad L. SIMMONS. GENERAL AMERICAN LIFE INSURANCE COMPANY v. Brad L. SIMMONS. Brad L. SIMMONS v. GENERAL AMERICAN LIFE INSURANCE COMPANY, et al. 87-1313, 87-1320, 87-1331 and 87-1339. |
| Court | Alabama Supreme Court |
Peter V. Sintz of Sintz, Campbell, Duke, Taylor & Cunningham, Mobile, for appellant Land & Associates, Inc.
Norman J. Gale, Jr., and James H. Lackey of Clay, Massey & Gale, Mobile, for appellant Willie Foster.
William M. Lyon, Jr., and Charles S. Willoughby of McFadden, Lyon, Willoughby & Rouse, Mobile, for appellant/cross-appellee General American Life Ins. Co.
Robert T. Cunningham, Jr., and Andrew T. Citrin of Cunningham, Bounds, Yance, Crowder & Brown, Mobile, for appellee/cross-appellant Brad L. Simmons.
This action comes before this Court on consolidated appeals involving alleged fraud in the sale of a life insurance policy insuring the life of Jane Simmons, plaintiff's deceased wife. The jury returned a verdict against the defendants, General American Life Insurance Company ("General American"), Land & Associates, Inc., and Willie Foster, in the amount of $2.5 million dollars, which was remitted by the trial judge to $600,000. We affirm in part, reverse in part, and remand.
On May 7, 1986, Willie Foster, while visiting his brother at work, met with the plaintiff, Brad Simmons, to discuss burial insurance for his wife. Foster operated Foster Insurance Agency and was licensed to sell life and health insurance policies for several companies. Foster told Simmons that he could not provide a policy for burial insurance, but that he could offer a $10,000 policy with General American, and that the proceeds could provide funds for burial expenses.
Foster told Simmons what the amount of the annual premium would be and gave him an application for his wife to complete and sign. Simmons left the application in his briefcase and did not return it to Foster until May 30, 1986.
At the time Simmons returned the application, he gave Foster an annual premium. Foster looked at the application for completeness, but did not give it much attention in detail. Simmons also received a "conditional receipt and interim insurance application," which specified the conditions under which interim insurance was afforded. Simmons admitted that he did not read that application.
Foster also told Simmons that his wife would be required to undergo a medical examination. Simmons contends that after paying the premium he asked Foster at what point his wife would be insured. Foster allegedly replied, "Just as soon as I get that check, if it's any good."
After receiving the material from Simmons, Foster delivered the application and annual premium to Land & Associates. Land & Associates served as a geographical brokerage agency for General American. Land & Associates, in turn, forwarded the application and annual premium to General American's home office.
A medical examination was later performed in the Simmons home by a nurse, who met with Jane Simmons. General American then wrote to Jane Simmons's primary physician and requested her medical records. These records were not received until July 10, 1986.
On July 4, 1986, Jane Simmons died of a massive heart attack. Brad Simmons notified Foster of his wife's death, and Foster in turn notified Land & Associates. Land & Associates apprised General American of Mrs. Simmons's death on July 7.
On July 10, 1986, General American received the medical records from Mrs. Simmons's primary physician. On July 15, 1986, the underwriting department of General American made its formal decision that Jane Simmons had not been a "standard risk" when she applied for insurance coverage.
Although General American claimed that Jane Simmons had made numerous misrepresentations on her application, it did not deny coverage for that reason. General American claimed that the determination that Jane Simmons was not a "standard risk" was made due to her history of peptic ulcer disease, drug abuse and dependency, and abnormal EKG's indicative of ischemia or heart disease.
On August 21, 1986, Simmons sued General American and Willie Foster, alleging breach of contract, bad faith, and fraud. Simmons later amended his complaint to add Land & Associates as a defendant. The trial court entered summary judgment in favor of the defendants as to Simmons's claim for bad faith, and the case proceeded to trial on the remaining claims for breach of contract and fraud.
The jury returned a verdict against all the defendants and assessed damages in the amount of $2.5 million. The defendants timely filed motions for a new trial, judgment notwithstanding the verdict, and remittitur. One of the grounds for defendants' motion for new trial was that during voir dire three jurors had failed to disclose that they had been parties to previous litigation.
After submission of briefs and argument, the trial court denied the motions for new trial, conditioned upon Simmons's acceptance of a remittitur of damages in the amount of $1.9 million. Simmons filed an acceptance of the trial court's remittitur within the time prescribed by the court's order. General American, Land & Associates, and Foster appealed; Simmons cross-appealed as to the trial court's remittitur of damages.
The parties raise several issues for our review on appeal. We have consolidated several of the issues for clarity.
Simmons has conceded that Foster had no actual or apparent authority as an agent, but argues that General American and Land & Associates are liable under the doctrine of respondeat superior. Therefore, the threshold question to be determined at this point is whether Foster made the allegedly fraudulent statement--that coverage would be effective as soon as he received a check for the premium--while acting within the line and scope of his employment. This theory of liability depends not only upon the status of Foster, but also upon the status of Land & Associates.
In National States Insurance Co. v. Jones, 393 So.2d 1361 (Ala.1980), we stated:
" "
393 So.2d at 1367 (citations omitted) (quoting Old Southern Life Insurance Co. v. McConnell, 52 Ala.App. 589, 296 So.2d 183, 186 (1974)).
The contract between General American and Land & Associates was headed "Corporate General Agent's Contract." However, the body of the contract provided in part:
"The General Agent shall have no power with respect to any contract to which the Company is, or purports to be a party, to make, alter or discharge such contract, or to waive any forfeiture or the performance of any of the terms or conditions of such contract."
The contract between General American and Foster was headed "Producer Agent's Contract." However, the body of the contract provided in part:
In Washington National Insurance Co. v. Strickland, 491 So.2d 872 (Ala.1985), Justice Houston, writing for the majority, set forth a discussion of the distinctions between brokers, agents, and soliciting agents:
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