Hanover Fire Ins. Co. v. Street

• Decision Date: 07 October 1937
• Docket Number: 8 Div. 752
• Citation: 234 Ala. 537,176 So. 350
• Parties: HANOVER FIRE INS. CO. v. STREET et al.
• Court: Alabama Supreme Court

176 So. 350

234 Ala. 537

HANOVER FIRE INS. CO. v. STREET et al.

8 Div. 752

Supreme Court of Alabama

October 7, 1937

Rehearing Denied Oct. 28, 1937

Appeal from Circuit Court, Marshall County; A.E. Hawkins, Judge.

Suit in equity by the Hanover Fire Insurance Company against O.D Street, Sr., and John C. Street. From a decree for respondents, complainant appeals.

Affirmed.

Coleman Spain, Stewart & Davies, of Birmingham, for appellant.

W.R Bradford, of Birmingham, and O.D. Street, Jr., of Montgomery, for appellees.

FOSTER Justice.

This is a bill in equity to set aside a judgment rendered at law. Its equity was upheld in one aspect on a former appeal. Hanover Fire Ins. Co. v. Street, 228 Ala. 677, 154 So. 816. The judgment sought to be vacated was rendered on April 1, 1931, and recites that plaintiff came and withdrew counts 1, 2, 3, and 4, and added an amendment, which includes 15 counts, which left also the original counts 5 and 6. Demurrers had been filed to the original complaint. The court in a judgment dated April 1, 1931, overruled those demurrers to counts 5 and 6, as originally filed, and the judgment then recites that defendant, being called upon further to answer the complaint, says nothing. Thereupon, a judgment nil dicit with writ of inquiry was rendered, and it was executed. The time expired within which an appeal could be taken before this bill was filed. There was then no method of review or power to vacate the judgment except by bill in equity, except to the extent that it may be void or spurious.

The theory on which its equity was sustained was that defendant's counsel lived outside the county and was not notified of the setting of the case for trial, as required by section 9487, Code; with a showing of a meritorious defense to the action at law.

The trial court denied relief on a consideration of the evidence, and proceeded to fix the amount of the claim, from which was deducted the amount of the premium unpaid on the alleged insurance contract, and rendered judgment for the difference. The original bill sought, in the alternative of other claims made, to have this set-off decreed.

We think we may pass the question of fact as to whether the required notice was given appellant's counsel as to the setting of the trial, and whether they were negligent in the matter, by assuming that such notice was not given and that counsel were not negligent. We are rather impressed that such is the proper interpretation of the evidence, which would justify the relief, if appellant had proven his defense.

The suit was in two aspects; one based on a verbal contract of fire insurance, and the other on a verbal contract to renew an existing policy of insurance on the same property, which was breached, in that no such renewal policy was issued. They allege a consideration for the contract in either aspect, and state a valid cause of action. Globe & Rutgers Fire Ins. Co. v. Eureka Sawmill Co., 227 Ala. 667, 151 So. 827.

Appellant alleges as one meritorious defense that no such contract was made, either of insurance, or to issue a renewal policy at the expiration of that then existing. Other defenses go to breaches of conditions in the policy alleged to have been renewed or which was agreed to be renewed.

All the authorities hold that complainant in such a suit must allege and show that he was deprived of making a good and meritorious defense. Barrow v. Lindsey, 230 Ala. 45, 159 So. 232, where many cases are cited. The burden is therefore upon him to show that his defense is meritorious.

But the effect of complainant's equitable right, when shown, is to reopen the litigation for trial in the court of equity, with the same burdens to be borne by each party as if the cause were being retried at law. This seems to be the implication of the authorities. Noble v. Moses, 74 Ala. 604, 616, 617; 34 Corpus Juris 442, § 695.

Some of the authorities assert that it is only necessary to make out a prima facie showing of meritorious defense, so that the court may be satisfied that there is a substantial, not technical, controversy, when a new trial at law will be decreed. See 3 Freeman on Judgments, § 1190, at page 2473; 1 Black on Judgments § 351, pp. 547, 548; 34 Corpus Juris 442, § 695; Id. p. 494, note 76.

But in our practice, we think the procedure adopted extends to a trial of the case in the same cause after the judgment is opened on the issues of merit as though it were being so tried at law. We have not found any of our cases in which this question was considered on appeal, though we find that in Fields v. Henderson, 161 Ala. 534, 50 So 56, relief was denied complainant because the proof did not support the special defense to an action on a note, but was granted in Raisin Fertilizer Co. v. McKenna, 114 Ala. 274, 21 So. 816, when complainant made satisfactory proof of his defense. (Since writing the foregoing, our attention has been called to our case of Timmerman v. Martin [[Ala.Sup.] 176 So. 198).

When a jury is demanded in the trial of an action at law and the meritorious defense asserted in such a bill as this is one that is dependent upon conflicting proof, and complainant in equity asserts and demands his right to such a trial of which he was deprived without his fault and under circumstances which justify a vacation of the judgment, we will not say that he is not entitled to such a trial by ordering the issue tried by a jury in equity. Code, § 6631; 34 Corpus Juris 499, notes 59, 60, and 61.

No such claim was here made, though a jury trial was demanded at law, and no ruling on that subject is here intended. We refer to it as it affects the burden of proof on the trial which was here conducted.

After complainant has established a right in equity to set aside the judgment on some recognized ground, and shows the existence of a substantial controversy, which is predicated on a plea denying the allegations of the complaint by which the burden would be on plaintiff on a trial at law, the same burden should be the rule of a trial of that issue in a suit such as this. Crafts v. Dexter, 8 Ala. 767, 42 Am.Dec. 666.

That does not mean that appellees must prove all the allegations of the complaint as would be necessary on the trial at law with the general issue; for here the only matter alleged in the complaint as to which the bill shows a controversy is the existence of the verbal contract sued on. As to that it must, as it does, specifically deny its execution when the burden to prove it falls on appellees, plaintiffs at law. All other matters set up as a meritorious defense are by way of confession and avoidance, and the burden is on complainants, defendants at law, to prove them in this suit as they would have on a trial at law.

We will endeavor to analyze the effect of the evidence on that basis. We will first consider the claim that there was neither a contract of insurance nor to insure made by this appellant.

The property burned was a dwelling house. It had belonged to M.L. Street, deceased, former wife of O.D. Street, Sr., who died prior to October 8, 1925, on which date appellant issued a policy of insurance on said house for three years, expiring October 8, 1928. The fire occurred on January 29, 1929. The policy recited that the insured were "O.D. Street, or executors of Mary L. Street and John C. Street." No new policy was issued to become effective at its expiration, or was in existence on the date of the fire, in so far as this appellant is concerned.

The rights of appellees depend upon the existence of a verbal agreement. It is not necessary to review the evidence in detail, but we find that it shows that during the existence of the policy which appellant issued, and in May, 1926, Mr. Street had occasion to review with appellant's agent the amount of his fire insurance on this property, when a memorandum was made and signed by the agent showing this policy, with others, and at the end was a statement "Will be renewed?"; and shortly after the expiration of the policy the agent told Mr. Street he had renewed it. They also had other conversations before it expired, in which the agents were told to keep up the policies, and they agreed to do so.

When the fire occurred, claim was made on this contract as on others. Both the agent and Mr. Street conducted themselves as though they understood that this insurance was renewed, but neither could find the policy nor that it had been reported to appellant. It seems reasonably certain that they both intended to renew the policy and agreed upon its renewal, but the agent neglected to write it up. As we pointed out in the case of Globe & Rutgers Fire Ins. Co. v. Eureka, supra, when a proper inference from the evidence is that the agent was acting for a certain company in that connection, and with due authority, his agreement, though verbal, is that of the company.

This was not the initiation of a new act of business by an agent of several companies without designation of the particular company which was to carry the coverage, but it was in relation to the renewal of an existing policy in a certain company, so that all the features of the contract were agreed upon, with an implied promise to pay the reasonable amount of premiums on such a policy. There was nothing left to uncertainty or so as not to be made certain by what was agreed by the parties. No element of a valid contract was thereby wanting.

At the time of the issuance of the policy by appellant, which was to have been renewed, and which was to extend from October 8 1925, to October 8, 1928, the title to the property was controlled by the will of Mrs. Mary L. Street, by which the property in question was devised to "O.D. Street for and during his natural life. At his death or on his...