Clinton v. State Farm Mut. Auto. Ins. Co., 40802

CourtUnited States Court of Appeals (Georgia)
Citation110 Ga.App. 417,138 S.E.2d 687
Docket NumberNo. 3,No. 40802,40802,3
Decision Date25 September 1964

Syllabus by the Court

1. Representations of an insurance adjuster to one having a claim against the company that at a time in the future the company would 'make him a fine settlement' or 'would take care of him,' being representations as to matters in the future and not as to a presently existing or past fact, do not constitute actionable fraud.

2. (a) Representations or statements of opnion as to a matter of law or as to the legal effect of a contract are not actionable, though false, unless a fiduciary relationship exists between the parties.

(b) There is no relationship of principal and agent between an insurer and an insured who may have a claim under his own policy; as to that the insured deals at arm's length with the insurer. Nor is there a relationship of principal and agent betweeen an insurer and one who has a claim against an insured, for again the dealing is at arm's length.

3. Actionable fraud is necessary to toll the running of the statute of limitation.

Christopher C. Clinton brought suit for damages against State Farm Mutual Automobile Insurance Company and J. T. Walker alleging that he had received an injury on September 11, 1959 when the automobile of Walker was negligently driven into the rear of his pickup truck. He concedes that more than two years had elapsed between the time of his injury and the bringing of the suit, but sought a tolling of the statute of limitation by alleging that both he and Walker carried insurance policies with State Farm; that he was entitled to certain medical benefits under his own policy and in connection with his claim therefor the adjuster of the company directed him to a chiropractor for treatment, reminding him of the co-operation clause in his policy; that he talked with the adjuster of his claim against Walker for his pain and suffering, etc. on several occasions while he was taking some 129 treatments from the chiropractor and that the adjuster kept reminding him of his obligation to co-operate; that when he suggested the possibility of employing an attorney to pursue the matter for him the adjuster told him that if he did so he would get nothing; that he saw the adjuster August 15, 1961, and asked about a settlement of his claim against Walker and was told not to worry and that the company would 'take care of him,' and finally on September 8, 1961, was told that he should not employ an attorney because the company had a fine settlement for him, the amount of which could not be determined until after September 15, 1961; that when he got in touch with the adjuster on September 15 the only response he got was that the statute of limitation had run against his claim. He alleged that he was an illiterate man, scarcely able to read and write, and that the adjuster had violated a confidential relationship between them by the course of conduct described.

He alleged that the adjuster was Walker's agent, thus binding Walker by his fraudulent conduct. Details of the rear-end collision alleged to have resulted from specified acts of negligence on that part of Walker were set out.

Both State Farm and Walker filed general demurrers, raising the question as to whether the petition stated a cause of action against them, the matter of whether any right of action arising from the rearend collision described was barred by the statute of limitation, and demurrers of multifariousness of duplicity and misjoinder, pleas of the statute of limitation and answers. The general demurrers and certain of the demurrers as to multifariousness and duplicity were sustained, and the petition was dismissed. To that judgment plaintiff excepts.

Wilson, Branch, Barwick & Vandiver George W. Hood, Atlanta, Landise & Crawley, Christopher Landise, Smyrna, for plaintiff in error.

Edward E. Dorsey, John T. Marshall, Atlanta, for defendants in error.


The conduct of the adjuster for State Farm in this case was reprehensible if the allegations as to it are true. The plaintiff says he was lulled into a sense of propriety in following the advice and suggestions against taking any action--such as the employment of an attorney for the preservation or enforcement of his rights--until his rights became barred, and he thus was choused. There are provisions in the Insurance Code for investigation by the Commissioner of complaints against the conduct of an adjuster. See Code Ann. § 56-209 et seq. Whether these be ample to prevent the sort of conduct alleged here we do not know. If not, that may well be a matter that addresses itself to the General Assembly.

There is no question that the two-year period of the statute of limitation (Code § 3-1004), had run but plaintiff relies on allegations of fraud to toll the statute. Code § 3-807. State Farm's agency on behalf of Walker is alleged, relying on Aetna Cas. & Surety Co. v. Brooks, 218 Ga. 593, 129 S.E.2d 798, where it was held that the insurer acts as the insured's agent when adjusting claims arising against the insured.

Conceding the agency of State Farm for Walker as to its dealings with Clinton concerning claims he may have had against Walker, no actionable fraud is alleged. Plaintiff simply charges that (1) State Farm led him to believe that be would be compensated at a time in the future when it had no intention of doing so, and (2) that he was obligated under the cooperation clause of his own policy to follow the advice and suggestions of the insurer's adjuster.

1. The representation that plaintiff would receive compensation in the future is not as to an existing or past fact, and does not give rise to an action for fraud. Beach v. Fleming, 214 Ga. 303, 104 S.E.2d 427 and citations; S. & S. Builders, Inc. v. Equitable Investment Corp., 219 Ga. 557(4), 134 S.E.2d 777; Haynesworth v. Hall Construction Co., 44 Ga.App. 807(2), 163 S.E. 273; Gibraltar Fire &c. Ins. Co. v. Lanier, 64 Ga.App. 269(3), 13 S.E.2d 27; Ambrose v. Brooks, 109 Ga.App. 881(1), 137 S.E.2d 573. See, Printup v. Alexander, 69 Ga. 553.

The statements attributed to the adjuster that plaintiff 'would receive a settlement and satisfaction for [his] injuries,' that the insurance company 'would care for' plaintiff, or 'would take care of' him, and that 'a very fine settlement' would be provided to him, 'the exact amount [of which] could not be determined until after Thursday, September 15, 1961,' and that at that time plaintiff 'would be informed of the settlement he was to receive' all are representations as to matters to take place at a future time and come within the above rule.

The case of Floyd v. Morgan, 62 Ga.App. 711, 715(5), 9 S.E.2d 717 is, insofar as it may hold otherwise as to promissory statements concerning a matter to occur at a future time, in conflict with the holding in Beach v. Fleming, 214 Ga. 303, 104 S.E.2d 427; Jackson v. Brown, 209 Ga. 78, 70 S.E.2d 756, and other cases of the Supreme Court, by which we are bound, as well as Haynesworth v. Hall Construction Co., 44 Ga.App. 807, 163 S.E. 273; Rogers v. Sinclair Refining Co., 49 Ga.App. 72, 174 S.E. 207, and other older cases of this court. Consequently it will not be followed. The rule appearing in Restatement, followed in Floyd v. Morgan, is not in harmony with the rule of this State. It may be a better or more desirable rule, but if it is to be substituted for that announced by the Supreme Court it must be done by that court not this one. Until that is done we can do no other than follow the rule now standing.

We are not unaware of Coral Gables Corp. v. Hamilton, 168 Ga. 182, at p. 194, 147 S.E. 494, 500, where it was asserted: '[T]here can be no question that a promise to do a certain thing of value to the promisee, when at the time of making the promise there was no intention to fulfill it, but, on the contrary, the promise was made with intention not to fulfill it, and as a mere device to defraud, is such a fraud as will avoid any contract induced thereby.' The principle may have its genesis in Atlanta & West Point R. Co. v. Hodnett, 36 Ga. 669. Similar holdings are to be found in Baker County Power Co. v. Adkins, 169 Ga. 187, 149 S.E. 910; Smith v. Merck, 206 Ga. 361(1), 57 S.E.2d 326; Kirven v. Blackett, 208 Ga. 178, 65 S.E.2d 791; Bucher v. Christopher, 211 Ga. 317, 85 S.E.2d 760; Bucher v. Murray, 212 Ga. 259, 91 S.E.2d 610; Sutton v. McMillan, 213 Ga. 90(4), 97 S.E.2d 139; Rushing v. Bashlor, 219 Ga. 119, 131 S.E.2d 775, and perhaps others. But it is to be observed that in each of these cases the action was for rescission of a deed the consideration for which is alleged to have been the fraudulent representations and promises of the grantee made with no intention of performance. As was asserted in Coral Gables, and in the other cases, this type of fraud will avoid any contract induced thereby. It is called incipient fraud,--that which infected the contract from the beginning. Plaintiff in this action seeks no rescission of any contract induced by the fraud alleged, for none was made. When a solemn contract has been entered into and the rights of the parties are altered thereby, there can be no restoration of the status without a rescission. If no contract is made the status is not changed, and the rights of the parties remain the same. This is the basis of the rule in Coral Gables and cases following it.

Mr. Clinton's right of action for damages on account of injuries sustained accrued when the accident occurred. His right to bring an action for his injuries continued to exist throughout the ensuing two...

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