Bankers & Shippers Ins. Co. of N. Y. v. Blackwell

• Decision Date: 08 February 1951
• Docket Number: 2 Div. 281
• Citation: 51 So.2d 498,255 Ala. 360
• Parties: BANKERS & SHIPPERS INS. CO. OF NEW YORK v. BLACKWELL.
• Court: Alabama Supreme Court

Page 498

51 So.2d 498

255 Ala. 360

BANKERS & SHIPPERS INS. CO. OF NEW YORK v. BLACKWELL.

2 Div. 281.

Supreme Court of Alabama.

Feb. 8, 1951.

Rehearing Denied March 29, 1951.

F. W. Davies and Davies & Williams, all of Birmingham, for appellant.

Edgar P. Russell, Jr., and Wilkinson & Wilkinson, all of Selma, for appellee.

FOSTER, Justice.

This is a suit by appellee against appellant on a transportation policy of insurance as later amended by parol agreement. It was tried on counts 3 and 4. Demurrer to those counts was each overruled. The first contention made by appellant is their sufficiency against the demurrer.

Count 3 alleged the issuance on August 25, 1948 of a transportation policy by appellant to appellee in the amount of $8,000.00 to cover the lawful goods and merchandise belonging to appellee. That during the first week in November, 1948, said contract of insurance was amended by parol agreement, by which the coverage was amended so as to include lawnmowers hauled by plaintiff for hire, while in transit, against loss to said goods by overturning, the consideration being the reliance by plaintiff on such amended policy and the noncancellation of it by defendant and the nonpayment by defendant of the unearned portion of the premium.

The first contention as to the demurrer to this count is that it does not allege a sufficient consideration for the added feature to it. The necessity for such consideration is of course admitted. But it is claimed by appellee that the count is sufficient in that respect, measured by the rule declared by this Court in Hartford Fire Ins. Co. v. Aaron, 226 Ala. 430, 147 So. 628, 630. We there referred to the principle that 'if the contract is bilateral in its advantages and obligations, it may be modified by mutual agreement before a breach without any other consideration than the mutual assent of the parties, to its continued binding effect upon both of them.' Cowin v. Salmon, 244 Ala. 285, 13 So.2d 190; Commercial Credit Co. v. Perkins, 236 Ala. 616, 184 So. 178; Spencer v. Richardson, 234 Ala. 323, 175 So. 278.

It is next insisted that the count does not show an insurable interest in plaintiff as to the lawnmowers. The complaint alleges that the coverage includes lawnmowers hauled by plaintiff for hire while in transit. The rule is that plaintiff, while carrying the goods for hire, creates by law a certain responsibility to the owner for their safe delivery, either as a carrier or bailee, and therefore that he has an insurable interest to the extent of the full value of the property for his own benefit and that of the owners interested. Snow v. Carr, 61 Ala. 363, 371; 44 Corpus Juris Secundum, Insurance, p. 919, § 217(e); 29 Am.Jur. 295, section 324; Phoenix Ins. Co. v. Erie & Western Transp. Co., 117 U.S. 312, 6 S.Ct. 750, 29 L.Ed. 873, 876; Goldstein v. Harris, 24 Ala.App. 3, 130 So. 313.

This principle is not affected by section 126, Title 7, Code, requiring the beneficial owner to sue on certain claims. The carrier or bailee is here a beneficial owner and sues by that right. That admits that after a loss the claim is within the statute. Capital City Ins. Co. v. Jones, 128 Ala. 361, 30 So. 674; Life & Casualty Ins. Co. v. Crow, 231 Ala. 144, 164 So. 83; Goldstein v. Harris, supra.

Appellant also insists the allegations are not sufficient to show such a verbal contract of insurance as is necessary to be valid in alleging the terms of it. But the complaint alleges that the coverage of the outstanding policy was extended by agreement to include lawnmowers hauled by plaintiff for hire while in transit against loss to said goods by overturning. The policy, to which this was added, contains with the addition all that is necessary as to detail and complies with the requirements of Commercial Fire Ins. Co. v. Morris, 105 Ala. 506, 18 So. 34.

The next contention made by appellant is based on the sufficiency of pleas 5, 6, 10, 11, 12, 14, 15, 16, 17, 22, 23 and 24 against the demurrer which was sustained to them. Those pleas all set up the terms of the usual and customary policy issued by appellant and other insurance carriers to cover the risk, which it is alleged appellant assumed by virtue of the verbal coverage. The argument is based on the principle that a venbal contract of insurance is governed by the terms and provisions of the usual and customary policy issued to cover such risks; that such verbal contracts can only be thus sustained by then providing the details intended to be included. Hartford Fire Ins. Co. v. King, 106 Ala. 519, 17 So. 707; Cherokee Life Ins. Co. v. Brannum, 203 Ala. 147, 82 So. 175.

But such is not the nature of the verbal matter added to the written agreement. It does not purport to stipulate for a contract whose terms are not expressly agreed upon in detail, but it adds a coverage to an outstanding contract whose terms are fully set forth in the policy to which the new feature is added. That is sufficient to comply with the rule. Commercial Fire Ins. Co. v. Morris, supra; Home Ins. Co. v. Adler, 71 Ala. 516.

The same legal status applies to the rulings of the court in sustaining objection to the testimony offered by appellant to prove what were the terms and provisions of the usual policy issued to cover risks on cargoes carried by carriers embracing the risk included in the amendment added to the policy. For the reason stated, supra, there was no error in those rulings.

Appellant also assigns error in respect to the judgment of the court sustaining plaintiff's demurrer to pleas 8, 21 and 25. We adopt in respect to them the following statement in appellant's brief:

'All of said pleas were grounded on the general proposition that at the time the loss occurred, appellee was engaged in hauling said lawnmowers in interstate commerce and appellee had not secured any permit or certificate of convenience and necessity from the I. C. C. to haul said lawnmowers, as required by the laws of the United States; and that said hauling was illegal and in violation of the laws of the United States; and that said acts constituted a criminal offense in violation of the laws of the United States; and that such acts were contrary to the public policy of the United States. It was also alleged that the alleged contract which appellee had to haul said lawnmowers was illegal and unenforceable and null and void. This is the substance of plea 25.

'The trial court took the view that regardless of all of these allegations, and regardless of the fact that appellee was operating in violation of the law, that this did not invalidate the insurance.'

The decisions of this Court have, through a long line of cases, given consideration to a principle analogous to that here involved. It is thus expressed, with the authorities cited, in Knight v. Watson, 221 Ala. 69, 127 So. 841, 842:

'A statute imposing a license tax as a revenue measure merely, although declaring the doing of business without such license unlawful and affixing a penalty as a method of enforcement, does not render void and unenforceable contracts made without such license. Sunflower Lumber Co. v. Turner Supply Co., 158 Ala. 191, 48 So. 510, 132 Am.St.Rep. 20; Morgan v. Whatley & Whatley, 205 Ala. 170, 87 So. 846; Smith v. Sharpe, 162 Ala. 433, 50 So. 381, 136 Am.St.Rep. 52.

'But an act under the police power, designed to regulate the business, to protect the public against fraud and imposition, requiring a license as evidence of qualification and fitness, and prohibiting any act of business under penalty, unless such license is first obtained, does render such contracts illegal, void, and unenforceable in actions for the recovery of compensation and the like. Bowdoin v. Alabama Chemical Co., 201 Ala. 582, 79 So. 4; Sunflower Lumber Co. v. Turner Supply Co., supra; Woods v. Armstrong, 54 Ala. 150, 25 Am.Rep 671.' See, also, Ellis v. Batson, 177 Ala. 313, 58 So. 193; Gill Printing Co. v. Goodman, 224 Ala. 97, 139 So. 250; Marx v. Lining, 231 Ala. 445, 165 So. 207.

An exhaustive annotation on the subject, specifically with reference to insurance contracts, is given in 132 A.L.R. 125, with the supporting case of Northwestern Amusement Co. v. Aetna Casualty and Surety Co., 165 Or. 284, 107 P.2d 110, 132 A.L.R. 118. See, also, 29 Am.Jur. 208 et seq.; 44 Corpus Juris Secundum, Insurance, p. 1007, § 242; Rainer v. Western Union Tel. Co., Mo.App., 91 S.W.2d 202; Roddy v. Hill Packing Co., 156 Kan. 706, 137 P.2d 215.

A distinction which runs through some of the insurance cases is that 'If insurance on property does not encourage or promote an unlawful use or business it is not void, although it may be collaterally connected therewith; but, if it directly protects or encourages the unlawful act or business, the policy will be invalid.' 44 Corpus Juris Secundum, Insurance, § 242, p. 1007; 132 A.L.R. 125. Again, it is said that if the effect of the insurance 'is to promote the illegal use, the contract is void as against public policy; but, if the contract does not promote the illegal use, it is not void though it may have a collateral connection with the illegal use.' Demary v. Royal Indemnity Co., La.App., 182 So. 389.

Another statement by this Court is 'that contracts specially prohibited by law, or the enforcement of which violated a law, or the making of which violated the law which was enacted for regulation and protection, as distinguished from a law created solely for revenue purposes, is void and nonenforceable * * * (and) Whenever a party requires the aid of an illegal transaction to support his case, he cannot recover.' Ellis v. Batson, supra, 177 Ala. at page 317, 58 So. at page 194; Pope v. Glenn Falls Ins. Co., 136 Ala. 670, 34 So. 29. See, also, 9 A.L.R.2d 184.

Plaintiff's contract of insurance was not prohibited by law. While the Motor Transportation Act is for regulation and protection, the insurance here involved did not violate that Act. But we think plaintiff could not establish...