Goltsman v. American Life Ins. Co.

• Decision Date: 11 April 1946
• Docket Number: 3 Div. 427.
• Citation: 26 So.2d 596,248 Ala. 151
• Parties: GOLTSMAN v. AMERICAN LIFE INS. CO.
• Court: Alabama Supreme Court

26 So.2d 596

248 Ala. 151

GOLTSMAN v. AMERICAN LIFE INS. CO.

3 Div. 427.

Supreme Court of Alabama

April 11, 1946

Rehearing Denied June 27, 1946.

Hill Hill, Whiting & Rives and Richard T. Rives, all of Montgomery, for appellant.

Hugh A. Locke and Wade H. Morton, both of Birmingham, for appellee.

LIVINGSTON Justice.

Appeal from a decree overruling demurrer to a bill of complaint as amended. Appellee filed this bill seeking the cancellation of an insurance policy insuring the life of Della Wallock in favor of her minor son, Larry E. Wallock, because of the fraudulent representations and conduct of the insured. By amendment, appellee seeks a declaratory judgment as to the rights of the parties. According to the averments of the bill the insured died on October 24, 1939.

On September 22, 1938, the insured signed an application for a policy of life insurance to appellee, and upon that application appellee first issued a policy of insurance on the life of Della Wallock in the amount of $10,000, on October 11, 1938. On November 15, 1938, that policy was cancelled and a new policy for the same amount was issued. On September 9, 1939, the last mentioned policy was cancelled and a new policy for the same amount was issued, a copy of which last policy is attached to the bill of complaint and made a part thereof.

By separate agreement between Della Wallock and appellee insurance company, it was agreed that in the event the policy becomes a claim, the proceeds of the policy would be held by the company and paid to Larry E. Wallock son of the insured, as follows: $1000 on June 1, 1946; $2500 on November 24, 1949; $3000 on November 24, 1954, and $3500 on November 24, 1959, all installments to bear interest at not less than three and one-half percent per annum.

The cancellation of the policy was sought because of alleged fraudulent answers of Della Wallock in her application for insurance.

The only grounds of demurrer argued on appeal are that, there is no equity in the bill, and that complainant has a full adequate and complete remedy at law.

The controlling rule is stated in National Life & Accident Ins. Co. v. Propst, 219 Ala. 437, 122 So. 656, as follows:

'We think this ruling in line with the current of authorities. 21 C.J. 68; 2 Pomeroy, Eq.Jur. (3rd Ed.) § 914, where the author says: 'The doctrine is settled that the exclusive jurisdiction to grant purely equitable remedies, such as cancellation, will not be exercised, * * * in any case, where the legal remedy, either affirmative or defensive, which the defrauded party might obtain, would be adequate, certain, and complete'--quoted approvingly in Merritt v. Ehrmen, 116 Ala. 278, 22 So. 514. And in the note to this section the author further states: 'The rule is generally adopted that a suit will not be sustained to cancel an executory, non-negotiable, personal contract--e. g. a policy of insurance when the fraud might be set up as a defense to an action on the contract, and there are no special circumstances which would prevent the defense from being available, adequate and complete.' As directly in point, the cases of Globe Mut. Life Ins. Co. v. Reals, 79 N.Y. 202, and Phoenix Mut. Life Ins. Co. v. Bailey, 13 Wall. 616, 20 L.Ed. 501 are cited. The case of Johnson v. Swanke, 128 Wis. 68, 107 N.W. 481, 5 L.R.A.,N.S., 1048, 8 Ann.Cas. 544, contains an interesting discussion of the principle here involved, and many illustrative cases are found cited in the notes.

'Numerous decisions from our own court have dealt with the equitable jurisdiction as to cancellation of instruments for fraud or other appropriate grounds, among them Merritt v. Ehrman, supra; Hodge v. McMahan, 137 Ala. 171, 34 So. 185; J. A. Fay, etc., Co. v. Independent Lbr. Co., 178 Ala. 166, 59 So. 470; Waddell v. Lanier, 62 Ala. 347; Collins v. Berman, 209 Ala. 67, 95 So. 287; Bullard Shoals Mining Co. v. Spencer, 208 Ala. 663, 95 So. 1; Morgan v. Gaiter, 202 Ala 492, 80 So. 876; Anders v. Sandlin, 191 Ala. 158, 67 So. 684; Ahlrichs v. Parker, 187 Ala. 227, 65 So. 815; Southern States Fire & Casualty Ins. Co. v. Whatley, 173 Ala. 101, 55 So. 620. The rule in this State is that 'fraud itself is never a distinctive ground of equity jurisprudence.' * * * 'No matter how gross the fraud may be, if the party can have full, complete and adequate redress at law, he cannot go into a court of equity.' Merritt v. Ehrman, supra. 'The test is not that he has a remedy at law, but whether or not the remedy will be adequate and complete' (Southern States Fire & Casualty Ins. Co. v. Whatley, supra), and the determination of that question must rest upon the peculiar facts presented in each particular case, and 'cannot be determined by any rule so phrased as to exactly fit all situations.' Johnson v. Swanke, supra.'

Further in the same case it was said: 'The suggestion, therefore in brief, that evidence may be lost by delay in institution of actions at law, finds no support in the averments of the bill, but, otherwise considered, the New York court in Globe...