Ex parte Porter

• Decision Date: 14 July 1960
• Docket Number: 3 Div. 870
• Citation: 122 So.2d 119,271 Ala. 44
• Parties: Ex parte Martha W. PORTER et al.
• Court: Alabama Supreme Court

Page 119

122 So.2d 119

271 Ala. 44

Ex parte Martha W. PORTER et al.

3 Div. 870.

Supreme Court of Alabama.

July 14, 1960.

John W. Pemberton, Frank W. Riggs, III, and Godbold, Hobbs & Copeland, Montgomery, for petitioners.

Rives, Peterson, Pettus & Conway, Birmingham, and Steiner, Crum & Baker, Montgomery, for respondent.

STAKELY, Justice.

This matter is in this court on a petition for a peremptory writ of mandamus and the answer of the respondent, Judge Walter B. Jones, the trial judge, to the rule nisi issued by this court.

State Farm Mutual Automobile Insurance Company commenced a declaratory judgment action on the law side of the Circuit Court of Montgomery County, naming as respondents, R. S. Porter, Mrs. Martha W. Porter, E. C. Snead and Harold T. Snead, all of whom live in Montgomery County, Alabama. (The defendants are the petitioners here).

The action sought a declaration that a policy of insurance issued by State Farm to petitioner, R. S. Porter, was not in force and effect on November 8, 1958, at which time Harold T. Snead, minor son of E. C. Snead, was involved in an accident with the automobile of R. S. Porter, which was being driven by his wife, Mrs. Martha W. Porter. Shortly after the commencement of the action State Farm took the depositions of R. S. Porter and Mrs. Martha W. Porter and thereafter filed a motion to transfer the cause from the law side to the equity side of the court for the purpose of cancelling or reforming an alleged erroneously issued receipt, which incorrectly showed that the premium on the aforesaid policy of insurance had been paid prior to the date of the accident.

The motion to transfer alleges that the aforesaid receipt and the original policy together form a contract of insurance which on its face indicates coverage in force and effect on the date of the accident, whereas in truth and in fact the aforesaid premium had not been paid when the accident occurred and the policy was not in force and effect on that date.

The defendants E. C. Snead and Harold T. Snead, through his guardian ad litem, demurred to the motion of State Farm to transfer and the defendants R. S. Porter and Martha W. Porter filed an answer to the motion, attached to which was an affidavit of R. S. Porter.

The motion to transfer was heard by the respondent at which time there was some discussion of the averments of the motion to transfer in the light of the grounds of the demurrer assigned and attorneys for State Farm conceded that there might be some technical omission readily amendable. Without any ruling on the demurrer the hearing proceeded to a consideration of the merits of the motion. Evidence and arguments were heard by the respondent, who, considering all allowable amendments to have been made, overruled the demurrers to the motion to transfer and entered an order transferring the cause to the equity side of the court for further proceedings. Thereafter petitioners (defendants in the court below), filed in this court their petition for a writ of mandamus in response to which this court issued a rule nisi to the respondent allowing thirty days within which to show cause why a peremptory writ of mandamus should not issue directing the respondent to return the case to the law side of the court. Within thirty days respondent filed his answer alleging cause why the peremptory writ of mandamus should not issue.

State Farm Mutual Automobile Insurance Company was insurer under a policy of automobile liability insurance covering an automobile owned by R. S. Porter, the premium for which was paid through October 28, 1958 and thus the policy expired on that date. When the policy expired State Farm sent to R. S. Porter an expiration notice, stating that the policy expired at 12:01 a. m. on October 28, 1958, and that 'payment within ten days of due date (October 28, 1958) will renew your policy and provide continuous protection.' We note here that the expiration notice said nothing whatever about reporting any accident to any agent of the plaintiff. The notice which did contain such a statement was a 'semi-annual premium notice,' a form which State Farm sends in advance of the due date while the policy is in force. A copy of this form is attached to the respondent's answer and made a part thereof. In the deposition of R. S. Porter, he said, 'I might have received such a notice but did not recall.'

According to the deposition of Mrs. Martha W. Porter she wrote a check in the amount of the premium on October 31, 1958, and gave the check to her husband on that date. Mr. Porter put the check in his pocket and left it there until November 9, 1958. The ten day option to renew expired on November 7, 1958, without the premium having been paid. On November 8, 1958, Mrs. Martha W. Porter while driving the automobile of her husband which had been insured under the policy in question, was involved in an accident resulting in an injury to Harold T. Snead with resultant damage to his father, E. C. Snead.

Mrs. Porter advised Mr. Porter of the accident and he realized that he had not paid the premium within the time allowed. On Sunday, November 9, 1958, at around 6:30 or 7:00 p. m., according to Mr. Porter's deposition, he telephoned a Mr. Johnson, the State Farm salesman in Montgomery through whom he had purchased the policy, told him of the accident and that he had not paid the premium and asked Mr. Johnson whether he should mail the check. Mr. Porter quotes Mr. Johnson as saying, 'Well, you travel, you have to have insurance don't you?' and 'Well you are still driving the car aren't you; you have to be insured.' After that conversation, sometime between 7:00 and 8:30 p. m. on November 9, 1958, Mr. Porter mailed from the Post Office in Montgomery to the State Farm Office in Birmingham the check dated October 31, 1958, along with the expiration notice which contained the ten day option to renew with continuous coverage. The enclosure did not show the actual date of mailing and did not show that the accident had occurred on November 8, 1958. Some three or four days later Mr. Porter received through the mail the expiration notice which he had sent and the stamped date of payment shown on the notice appears to be November 2, 1958, seven days before the check was deposited at the Post Office at Montgomery on November 9, 1958.

In its motion to transfer State Farm alleges that when the expiration notice and check were received in the premium payment department of State Farm's Birmingham office, a mistake was made in the issuance of the receipt in that through error, mistake or inadvertence, the clerk whose duty it was to stamp the date of payment on the receipt, entered a date of payment which appears to be November 2, 1958, whereas in fact the check was not deposited in the United States mail until the night of November 9, 1958, and was not received in the Birmingham office of State Farm until November 10, 1958.

The motion to transfer further alleges that in the ordinary course of business the proper method of handling the check and only method which the clerk who processes, was authorized to handle the check, was to reinstate the policy with coverage effective as of the date of payment and to refund to Mr. Porter the unearned premium for the period the policy was out of force. According to the allegations of the motion, within a reasonable time after discovery of the mistake made in the entering of the date of payment on the receipt, State Farm on January 20, 1959, prepared a corrected premium receipt, showing the date of payment as of November 10, 1958, computed the unearned premium, for 13 days when the policy was out of force between the policy due date and the date of payment to be $4.07 and sent to R. S. Porter the corrected premium receipt and a check in the amount of $4.07 as a refund for the unearned premium. R. S. Porter returned to State Farm the check in the amount of $4.07 and the corrected premium receipt, contending the coverage was made continuous by virtue of the entry on the original receipt showing payment to have been made on November 2, 1958. The check for $4.07 and the corrected premium receipt are attached to the respondent's answer and made a part thereof.

The motion to transfer further alleges that the clerk who made the mistake in entering the date of payment on the receipt had no authority to enter a date of payment so as to give continuous coverage or to enter any date of payment other than the date payment was in fact made and had no authority to waive late payment after the expiration of ten days from the due date and that State Farm did not intend to show payment of the premium on November 2, 1958, when in fact the payment was not received until November 10, 1958.

State Farm further alleges in its motion that but for the existence of the receipt bearing the incorrect date of payment notation, the same having been issued wholly by mistake, there would be no cloud on plaintiff's right to a declaration in the declaratory judgment action to the effect that coverage was not in force and effect under the policy at the time of the accident which occurred on November 8, 1958, since the said instrument is the only piece of evidence in any way indicating that premium on the policy was paid prior to the date on which it was actually paid.

State Farm further alleges in its motion that it has an equitable right to cancel the receipt thus erroneously issued and to have the same reformed so as to show the actual date on which the premium payment was made.

In his deposition Mr. Porter said that Mr. Johnson 'told me at the time that he would get in touch with his adjuster, State Farm's adjuster, and have them get in touch with me immediately, and let me know the status on this particular incident such as the premium and so on like that.' According to Mr. Porter's deposition and his affidavit attached to his answer to the motion to transfer, he did not hear anything from State Farm...