American Life Ins. Co. of Alabama v. Aladdin Temple Ben. Ass'n, D.O.K.K., 6 Div. 526.

CourtSupreme Court of Alabama
Writing for the CourtFOSTER, Justice. FOSTER, Justice.
Citation191 So. 903,238 Ala. 512
Docket Number6 Div. 526.
Decision Date15 June 1939

191 So. 903

238 Ala. 512

ASS'N, D. O. K. K.

6 Div. 526.

Supreme Court of Alabama

June 15, 1939

Rehearing Denied Oct. 26, 1939.

Further Rehearing Denied Nov. 23, 1939.

Appeal from Circuit Court, Jefferson County; John Denson, Judge.

Action for money had and received and for breach of a special contract by Aladdin Temple Benefit Association, D. O. K. K., against the American Life Insurance Company of Alabama. From a judgment for plaintiff, defendant appeals. Transferred from Court of Appeals under Code 1923, § 7326.

Affirmed conditionally. [191 So. 905]

J. L. Drennen, of Birmingham, for appellant.

Graham Perdue, of Birmingham, for appellee.

FOSTER, Justice.

This is a second appeal in this suit. See, 235 Ala. 431, 179 So. 243. It was tried on counts B, C and D there referred to. No question is here raised as to their sufficiency.

The questions now are whether they have been proven so as to justify a recovery, and whether demurrers to defendant's special pleas were properly sustained.

There are two aspects of the right to recover (not now considering the amount); one is under count B for money had and received, and the other is under counts C and D, for breach of a special contract.

The theory of count B is that if the special contract, called a binder, is void for the reason set up by defendant, plaintiff is due to recover on this count the amount paid by them to defendant; that defendant cannot retain the amount paid as a feature of the consideration of the contract and repudiate it as binding. This form of action lies to recover money paid under a contract which is void for certain reasons, as where there is a want of mutuality or where the statute of frauds is a good defense. 4 Amer.Jur. 517, 518, section 27, notes 15 and 16; Allen v. Booker, 2 Stew. 21, 19 Am.Dec. 33; West v. Holman, 223 Ala. 114 (cases cited on page 116), 134 So. 667; Flinn v. Barber, 59 Ala. 446; Id., 64 Ala. 193; 59 A.L.R. 258; 13 Corpus Juris 244; 7 Corpus Juris Secundum, Assumpsit, Action of, p. 114, § 9 (c).

The defendant claims that the contract as contended for by plaintiff was not made by an agent with due authority, and offered to restore the consideration of $500 when plaintiff demanded its performance. Plaintiff declined to receive the money, but defendant has not pleaded a tender nor brought the money into court, but offered to prove that it had this amount to its credit for that purpose in an Avondale bank, which failed, and resulted in a loss to defendant of that amount. This was immaterial to any issue in the case, and was properly excluded.

Plaintiff had the right to proceed on both theories, as set out in the complaint, though they were inconsistent, and to recover on that which may be supported by the evidence. Louisiana Oil Co. v. Green, 230 Ala. 470, 161 So. 479; Bankers' Mortgage Bond Co. v. Rosenthal, 226 Ala. 135, 145 So. 456 (6); Southern B. & L. Ass'n v. Bartee, 24 Ala.App. 555, 139 So. 293, certiorari denied, 224 Ala. 276, 139 So. 294.

So that according to the admission in the defendant's evidence, plaintiff was entitled to recover at least the $500, with interest, unless the special pleas set up good matter of defense. We will discuss them later.

With reference to the second aspect of plaintiff's claim, set out in counts C and D, plaintiff must prove a valid contract with defendant, and that it was breached. It will be noticed that the "binder" does not specify the amount of the premium to be paid by plaintiff to defendant for the group policy. But a premium charge of $500 was paid for the "binder" with the stipulation that "the premium specified in the contract less this binding premium is to be paid upon the delivery of the contract." Count C sets out in full the binder, and then alleges that as a part of said contract defendant's agent in the line and scope of his authority agreed that in case the age of plaintiff's members should average fifty-three years the semiannual premium for each of said members would be $5.045: that their average was, to-wit, fifty-three years, and plaintiff offered to pay the premium on that basis.

It developed that it was this premium rate that caused defendant to repudiate the binder as a contract to issue a policy of insurance for that such rate was one which would not support the proposed insurance.

We pretermit a consideration of whether such a stipulation, if verbal, would modify or add to the terms of the binder as written, in contravention of the rule.

Although policy contracts of insurance must be plainly expressed in writing as required by section 8371, Code, this does not apply to informal temporary contracts, such as binding slips or memoranda. Sun Ins. Co. v. Mitchell, 186 Ala. 420, 65 So. 143.

The term "binder" has a well known significance in the parlance of insurance contracts. For a full discussion, see Cherokee Life Ins. Co. v. Brannum, 203 Ala. 145 (7), 82 So. 175. [191 So. 906]

The evidence for defendant was that O'Bear had no connection with the company other than that of soliciting agent on a commission basis; and had no authority to fix premium rates; that this is a highly technical procedure done by experts called actuaries.

There was admitted in evidence a certified copy of the license issued to O'Bear by the Superintendent of Insurance of Alabama declaring that O'Bear is agent of defendant "authorized to take risks and transact the business of life insurance for said company during the year 1929, subject to revocation." There is no question of revocation here. It was observed with respect to such a certificate issued by authority of section 8353, Code, that it was admissible as prima facie proof of general agency. Sun Ins. Co. v. Mitchell, 186 Ala. 420, 65 So. 143. The certificate in that case was in the same form, using "fire" there for "life" here. It was also noted there that a "general agent's authority must be determined by the nature of the business, and is prima facie co-extensive with its requirements. See United Burial & Ins. Co. v. Collier, 24 Ala.App. 546, 139 So. 104; Act of February 10, 1927, page 34, as amended by Act of September 14, 1935, page 1115.

It is also said that an agent duly authorized to bind his company by contracts for insurance may make valid binder agreements, " 'and a general authority to solicit insurance, receive premiums, and issue and deliver policies is sufficient to cover an executory contract to insure.' " Sun Ins. Co. v. Mitchell, supra [186 Ala. 420, 65 So. 145]. When this Court in that case stated that such certificate was prima facie evidence of general agency, with authority to make a binder, it was with reference to agencies of fire insurance companies who issue and execute policies of insurance. There is a distinction between a general agent of a fire insurance company, and a soliciting agent for a life insurance company. 32 Corpus Juris 1065, section 142.

We do not think the Court meant that such a certificate as to a life insurance agent was prima facie evidence that he had authority to issue life insurance policies, or to make binders, or collateral agreements in that connection. The language used in that opinion must be construed in the light of its connection.

But agents for life insurance companies to solicit...

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