Alfa Mut. Ins. Co. v. Northington

• Decision Date: 16 March 1990
• Citation: 561 So.2d 1041
• Parties: ALFA MUTUAL INSURANCE COMPANY v. Steven Lee NORTHINGTON. 88-1154.
• Court: Alabama Supreme Court

Page 1041

561 So.2d 1041

ALFA MUTUAL INSURANCE COMPANY v. Steven Lee NORTHINGTON.

88-1154.

Supreme Court of Alabama.

March 16, 1990.

Rehearing Denied April 27, 1990.

Harry Cole and Terry A. Sides of Hill, Hill, Carter, Franco, Cole & Black, Montgomery, for appellant.

Jere L. Beasley and Thomas J. Methvin of Beasley, Wilson, Allen, Mendelsohn & Jemison, Montgomery, for appellee.

HOUSTON, Justice.

Alfa Mutual Insurance Company ("Alfa") appeals from a judgment entered on a $303,057.60 jury verdict in favor of Steve Northington, in this action for damages for breach of contract and fraud. After carefully reviewing the record and the excellent briefs of the parties, we affirm.

The evidence, viewed in a light most favorable to Northington, reveals the following material facts: Northington purchased from Alfa a homeowner's insurance policy covering a mobile home. The insurance application that Northington signed specifically stated that he was applying for $30,000 coverage on his mobile home, for a premium of $309. The application did not reflect that Northington had applied for a policy that would cover a loss due to theft of personal property from his mobile home. However, Nancy Bush, an agent for Alfa, assured Northington that the policy that he was applying for would "automatically" provide coverage for such a loss in an amount not exceeding one-half of the coverage on the mobile home, or $15,000. The policy that Northington later received stated that insurance was provided only with respect to the coverages that were indicated on the declarations page by a specific premium or policy limit applicable thereto. The declarations page of Northington's policy did reflect that a premium of $309 had been paid for, and that a policy limit of $30,000 was applicable to, coverage for damage done to the mobile home. The declarations page did not reflect that a specific premium had been paid for, or that a policy limit was applicable to, coverage for a loss due to theft of personal property from the mobile home. Northington telephoned Ms. Bush to confirm that he did have coverage on his personal property, and she reassured him that he did. Thereafter, someone burglarized Northington's mobile home, causing damage to a door. Certain items of personal property were also stolen during the burglary. Shortly after discovering the break-in, Northington spoke with Ms. Bush and advised her of the structural damage to the mobile home and of the theft of his personal property. Ms. Bush informed Northington that the structural damage was covered under his policy. However, Ms. Bush told Northington that, contrary to what he believed, the policy that he had purchased did not cover the loss of his personal property. Northington filed suit against Alfa eight days after the burglary. As of the date that the suit was filed, Northington had received no payment from Alfa.

With regard to his contract claim, Northington alleged that Alfa had breached its contract with him by failing to pay him for the structural damage that was done to his mobile home. He also alleged that Ms. Bush, in her capacity as an agent for Alfa, had orally bound Alfa in contract to cover the loss of his personal property and, therefore, that Alfa had breached its contract by refusing to pay him for the loss of his personal property. With regard to his fraud claim, Northington alleged that Ms. Bush had misrepresented to him at the time he purchased the policy that his personal property was covered and that he had The following issues are presented for our review:

relied on that misrepresentation to his detriment. Northington sought to recover compensatory damages for breach of contract, including damages for mental anguish. He sought to recover both compensatory and punitive damages for fraud. Prior to the submission of the case to the jury, Alfa had moved for a directed verdict as to each of Northington's claims. The motion was denied. After hearing much conflicting evidence, largely concerning the oral negotiations that took place between Ms. Bush and Northington prior to Northington's purchasing the policy, the jury returned a general verdict for compensatory damages in the amount of $3,057.60 and a special verdict for punitive damages in the amount of $300,000. Alfa's motion for a judgment notwithstanding the verdict or, in the alternative, new trial, as to each claim was later denied.

1. Whether the trial court erred in denying Alfa's motion for a directed verdict and its motion for a judgment notwithstanding the verdict on Northington's claim for breach of contract;

2. Whether the trial court erred in denying Alfa's motion for a directed verdict and its motion for a judgment notwithstanding the verdict on Northington's fraud claim;

3. Whether Alfa was entitled to a new trial on the ground that the trial court erred in instructing the jury that damages for mental anguish were recoverable upon its finding that Alfa was guilty of a breach of contract;

4. Whether Alfa was entitled to a new trial on the ground that the verdict is inconsistent as a matter of law;

5. Whether Alfa was entitled to a new trial on the ground that the award of punitive damages was in violation of the Due Process Clause of the Fourteenth Amendment to the United States Constitution and Article I, § 13, of the Alabama Constitution;

6. Whether Alfa was entitled to a new trial on the ground that the award of punitive damages was excessive.

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1. Whether the trial court erred in denying Alfa's motion for a directed verdict and its motion for a judgment notwithstanding the verdict on Northington's claim for breach of contract.

Alfa contends that it was entitled to a judgment as a matter of law on Northington's claim for breach of contract because, it says, the undisputed evidence showed that it did not breach its contract. Alfa argues that Northington never submitted to it a sworn proof of loss, as required under the policy, and, therefore, that it was never under any obligation to make a payment under the policy for the structural damage to the mobile home. Alfa also argues that any oral negotiations that may have occurred between Ms. Bush and Northington concerning coverage for personal property were merged into the written policy and, consequently, that there was "no legal evidence of any oral contract upon which [Northington could] base a claim for the breach thereof."

Our review of the record reveals that Alfa did not move for a directed verdict on the ground that Northington had failed to comply with a condition precedent under the policy (i.e., that Northington had failed to provide Alfa with a sworn proof of loss). Accordingly, Alfa waived its right to have this issue considered on appeal. Great Atlantic & Pacific Tea Co. v. Sealy, 374 So.2d 877 (Ala.1979).

The record does show that Alfa moved for a directed verdict and for a judgment notwithstanding the verdict on the ground that any oral negotiations that might have occurred between Ms. Bush and Northington concerning coverage for loss of personal property were merged into the written policy and, therefore, that there was "no legal evidence" to support Northington's claim that Alfa was contractually bound to cover the loss of his personal property. The record also shows, however, that Northington sought to introduce the testimony concerning the oral negotiations for the purpose of proving the terms of his contract with Alfa and that the testimony In Hibbett Sporting Goods, Inc. v. Biernbaum, 375 So.2d 431, 434 (Ala.1979), this Court, quoting 3A Corbin, Contracts, § 573 at 357 (1960), stated as follows:

was admitted into evidence without any objection.

" 'When two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing.' 3A Corbin, Contracts, § 573, at 357 (1960), cited in Richard Kelley Chevrolet Co., Inc. v. Seibold, 363 So.2d 989, 993 (Ala.Civ.App.1978)."

The parol evidence rule is based upon the idea that a completely integrated writing, executed by the parties, contains all of the stipulations, engagements, and promises that the parties intended to make, and that all of the previous negotiations, conversations, and parol agreements are merged into the terms of the instrument. Hibbett Sporting Goods, Inc. v. Biernbaum, supra. In Alabama, however, it has been generally recognized that parties to a lawsuit may try their case on evidence that would otherwise be inadmissible upon proper objection and that where evidence violative of the parol evidence rule is admitted without objection, it may be considered and allowed such force and effect as its weight entitles it in construing the agreement of the parties. See State ex rel. Elmore v. Leveson, 207 Ala. 638, 93 So. 608 (1922); Vinyard v. Duck, 278 Ala. 687, 180 So.2d 522 (1965); Mersereau v. Whitesburg Center, Inc., 47 Ala.App. 146, 251 So.2d 765 (Ala.Civ.App.1971). But see Annot., 81 A.L.R.3d, Modern Status of Rules Governing Legal Effect of Failure to Object to Admission of Extrinsic Evidence Violative of Parol Evidence Rule, 249 (1977), for a collection of cases from other jurisdictions holding differently. Because the testimony concerning the oral negotiations between Ms. Bush and Northington was admitted into evidence without objection, the trial court did not err in denying Alfa's motion for a directed verdict and its motion for a judgment notwithstanding the verdict.

2. Whether the trial court erred in denying Alfa's motion for a directed verdict and its motion for a judgment notwithstanding the verdict on Northington's fraud claim.

Alfa contends that it was entitled to a judgment as a matter of law on Northington's fraud claim because, it says, the undisputed evidence showed that Northington...