Calvert Fire Ins. Co. v. Green, 4 Div. 233

• Decision Date: 18 November 1965
• Docket Number: 4 Div. 233
• Citation: 278 Ala. 673,180 So.2d 269
• Parties: CALVERT FIRE INSURANCE COMPANY v. W. G. GREEN.
• Court: Alabama Supreme Court

Page 269

180 So.2d 269

278 Ala. 673

CALVERT FIRE INSURANCE COMPANY v. W. G. GREEN.

4 Div. 233.

Supreme Court of Alabama.

Nov. 18, 1965.

Preston C. Clayton, Eufaula, for appellant.

Jere L. Beasley, Clayton, for appellee.

MERRILL, Justice.

This is an appeal by Calvert Fire Insurance Company from a judgment of $1,800 rendered against it in favor of W. G. Green, the owner of a hay baler which was damaged by collision on September 1, 1964, and which had been insured by appellant against direct physical loss or damage. The policy was issued to Commercial Credit Equipment Corporation, which financed the purchase of the hay baler by Green from Beaty Motor Company, but the policy covered the interest of the finance company and the purchaser. A motion for new trial was overruled.

Appellee's complaint, filed September 29, 1965, consisted of two counts. Count Two charged breach of contract in failing to pay the damage to the hay bailer, but on the day of the trial, Count Two was dismissed by appellee because he had been paid the damages due under the policy on the same day suit was filed. The cause was submitted to the jury on Count One.

Count One sought damages based upon the negligence of appellant in the adjustment of appellee's claim under the policy of insurance. Appellee alleged that his hay baler was damaged in a collision on September 1, 1964, that appellant was notified of the loss on September 2, 3, 9 and 14, that 'he was led to believe by Defendant that his claim would be adjusted immediately due to the nature of the loss,' that appellant 'negligently failed to take action and adjust the property loss caused to said Hay Baler by collision within a reasonable time,' that as a proximate consequence of this negligence, he lost a considerable amount of peanut hay which was ruined and destroyed by heavy rainfall on September 10 and 13, 1964.

This case is one of first impression in Alabama, and presents the question of whether an insurer of personal property against loss or damage by upset or collision is liable to the insured for failure to adjust and pay a claim within a period of less than thirty days.

The documentary evidence shows that the loss occurred on September 1, was reported September 3, and received by the adjuster for appellant on September 9. There is evidence that he had some thirty other claims to settle, that he may have mislaid the claim in the instant case, and that he devoted seven hours to the adjusting and settlement of it on September 29, 1964. The channel of notification went from the owner-insured to the dealer to Commercial Credit Corporation to appellant, and there was no direct communication between the owner and appellant until September 29.

The hay baler was damaged as it was being towed along a road and the right side of the baler collided with a parked truck on the side of the road. The dealer 'patched it up' once or twice so that it would bale hay but did not repair it completely because he had not been authorized by the insurer to repair it. The dealer told the man he reported to at Commercial Credit Corporation that the situation was an emergency because the insured had hay lying in the field.

Pertinent provisions of the policy which was introduced in evidence are:

'CONDITIONS

'4. Valuation. Unless otherwise provided in form attached, this Company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs and the loss or damage shall be ascertained or estimated according to such actual cash value with proper deduction for depreciation, however caused, and shall in no event exceed what it would then cost to repair or replace the same with material of like kind and quality.

'5. Settlement of Claims. All adjusted claims shall be paid or made good to the Assured within sixty (60) days after presentation and acceptance of satisfactory proof of interest and loss at the office of this Company. No loss shall be paid hereunder if the Assured has collected same from others.

'16. Changes. Notice to any agent or knowledge possessed by any agent or by any other person shall not effect a waiver of a change in any part of this policy or estop the Company from asserting any right under the terms of this policy, nor shall the terms of this policy be waived or changed, except by endorsement issued to form a part of this policy.

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'2. INTEREST AND PROPERTY INSURED:

This policy covers the following interests and property:

(a) The interest of the Assured and the interests of purchasers in property consisting principality of far(m) implements and machinery in which the Assured has a financial interest through retail installment sales contracts owned by the Assured during the term of the policy, * * *

'3. ATTACHMENT AND TERMINATION OF RISK:

This insurance attaches with respect to the property described in Sub-paragraph (a) of Paragraph 2 above from the time such property is sold to a purchaser having executed a retail installment sales contract that is purchased by Assured until termination of the Assured's financial interest therein, * * *

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'5. PERILS INSURED:

This policy insures against all risks of direct physical loss or damage to the insured property from any external cause except as hereinafter excluded.

'6. PERILS EXCLUDED:

This policy does not insure against:

(a) Loss or damage caused by or resulting from delay, loss of market, loss of use, * * * rain, * * *.

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'8. VALUATION:

The Company shall not be liable for more than the actual cash value of the property at the time any loss or damage occurs, * * * and in no event for more than what it would then cost the Assured or dealer to repair or replace the same with material of like kind and quality, * * *.

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'14. PAYMENT OF LOSS:

Loss, if any, payable to Assured or order. All adjusted claims shall be paid or made good within sixty (60) days after presentation and acceptance of satisfactory proofs of interest and loss at the office of the Company. * * *.'

Some states impose upon an insurance company, as a condition of doing business within the state, the obligation to pay damages and attorney's fees in case of default or vexatious delays in payment of their policies. 3 Appleman, Insurance Law and Practice, § § 1601-1605. But Alabama has no such statute.

In 6 Appleman, Insurance Law and Practice, § 4031, it is stated: 'It has been held that, in the absence of statutes, the insured cannot recover damages beyond legal interest because of the insurer's delay or refusal to pay the amount of a loss. And even where the insurer's action was wilful, such as refusing to pay a loss in order to take advantage of the insured's need for ready money wherewith to re-establish his business, it did not constitute a tort so as to entitle the insured to damages beyond interest.' Cited in support of these statements are New Orleans Insurance Co. v. Piaggio, 83 U.S. 378, 16 Wall. 378, 21 L.Ed. 358, and Baumgarten v. Alliance Assurance Co., C.C.Cal., 159 F. 275. The Piaggio case has been cited many times for the principle that a claim for damages for the mere nonpayment of money due under a contract, above or in addition to interest, cannot be recovered.

In De Rossett Hat Co. v. London Lancashire Fire Ins. Co., 134 Tenn, 199, 183 S.W. 720, it was held that where the policies did not require payment until sixty days after furnishing proof of...