Harrison v. Insurance Co. of North America

• Decision Date: 28 August 1975
• Citation: 294 Ala. 387,318 So.2d 253
• Parties: In re Woddie E. HARRISON, Plaintiff-Appellee, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellant. CER. 1.
• Court: Alabama Supreme Court

Page 253

318 So.2d 253

294 Ala. 387

In re Woddie E. HARRISON, Plaintiff-Appellee, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellant.

CER. 1.

Supreme Court of Alabama.

Aug. 28, 1975.

Balch, Bingham, Baker, Hawthorne, Williams & Ward and C. William Gladden, Jr., Birmingham, for defendant-appellant.

Robert M. Hill, Jr., Florence, for plaintiff-appellee.

SHORES, Justice.

The Honorable John R. Brown, Chief Judge of the United States Court of Appeals, Fifth Circuit, recently remarked that Barnes v. Atlantic & Pacific Ins. Co. of America, 514 F.2d 704 (5 Cir. 1975), was an historic case, '. . . not because of the intrinsic difficulty of the issues, but because this is our first Published opinion utilizing the certification provisions recently adopted by the citizens of Alabama.' (Emphasis Supplied)

This, too, is an historic case, since it is the first case from this court answering questions certified to us under the provisions of the new Judicial Article, Art. VI, § 140(b)(3).

Justice Brandeis, writing one of his last opinions, said in Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938):

'. . . Except in matters governed by the Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the state. . . .'

That doctrine requires a federal court, in a case based upon diversity of citizenship between the litigants, to apply the law of the state wherein it sits. Since each state is sovereign under our system of government, this court is the final authority on Alabama law. While the federal courts are considered the primary experts on National law, the state courts are the final expositors of the law of their respective jurisdictions. The burden placed on the federal courts by Erie is frequently a heavy one, particularly where the law of the state is unclear or has not been expressed. On occasions, those courts are put in the awkward position of having the state courts 'overrule' them by subsequently deciding a question contrary to the conclusion reached by the federal court.

In recognition of this problem and in an effort to ameliorate it, this court adopted, pursuant to Art. VI, § 140(b)(3), Constitution, ARAP 18(a), which provides:

'When it shall appear to a court of the United States that there are involved in any proceeding before it questions or propositions of law of this State which are determinative of said cause and that there are no clear controlling procedents in the decisions of the Supreme Court of this State, such federal court may certify such questions or propositions of law of this State to the Supreme Court of Alabama for instructions concerning such questions or propositions of state law, which certified question the Supreme Court of this State, by written opinion, may answer.'

We are confident that this procedure will be utilized by the Federal Bench for the purpose for which it is intended--to allow the federal court to obtain authoritative answers To difficult questions of Alabama law. In the words of Professor Philip B. Kurland, reproduced in 24 F.R.D. 481, 490, perhaps the process can serve as a '. . . demonstration of cooperative judicial federalism which would justify those of us who think that the federal form of government has a contribution to make toward the preservation of justice in this country.'

When properly utilized, we think this intersovereign certification procedure can have that effect.

The following was certified to us on March 17, 1975:

'CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT TO THE SUPREME COURT OF ALABAMA, PURSUANT TO ARTICLE 6, S 140(B)(3) OF THE ALABAMA STATE CONSTITUTION, AS AMENDED 1973

'To The Supreme Court on Alabama and the Honorable Justices thereof:

'It appears to the United States Court of Appeals for the Fifth Circuit that this case involves questions or propositions of the law of the State of Alabama which are determinative of the cause, and there appear to be no clear controlling precedents in the decisions of the Supreme Court of Alabama. This court hereby certifies the following questions of law to the Supreme Court of Alabama for instructions concerning the same, based on the facts recited herein, pursuant to Article 6, § 140(b)(3) of the Alabama State Constitution, as amended 1973, as follows:

'1. Style of the case.

'The style of the case is Woddie E. Harrison, Appellee, v. Insurance Company of North America, Appellant, being case No. 73--3161, United States Court of Appeals for the Fifth Circuit, an appeal from the United States District Court for the Northern District of Alabama.

'2. Statement of the case.

'On December 21, 1972, Woddie E. Harrison, the appellee, filed his complaint against Insurance Company of North America ('INA'), the appellant, alleging that INA on October 1, 1965, insured plaintiff against loss resulting from bodily injuries caused by accident; that said insurance provided that one year after continuous total disability, INA will pay permanent total disability benefits of $50,000; and that on August 13, 1969, plaintiff suffered an accidental injury which caused permanent and total disability.

'On February 21, 1973, defendant filed its answer alleging that the policy of insurance alluded to in the original complaint, dated October 1, 1965, had been duly executed by the Tennessee Valley Authority ('TVA') (Harrison's employer) and INA as a group disability policy; that the policy of insurance sued on was renegotiated and replaced by a subsequent policy on October 1, 1966; that the 1966 policy was the only contract in force and effect; that the 1966 policy differed from the previous policy in that the 1966 policy excluded disability benefits for injuries for which benefits are payable under the Federal Employees' Compensation Act ('FECA'); that plaintiff is receiving disability benefits under FECA (this was later stipulated); and that plaintiff has not suffered a permanent total disability.

'Defendant's motion for summary judgment was denied on April 2, 1973. Thereafter on April 18, 1973, a trial on the merits commenced. At the conclusion of all the evidence the trial judge ruled as a matter of law that Alabama law applied to determine the rights and liabilities of the parties; that notice of the changed policy admittedly received by TVA did not constitute notice to Harrison; and that TVA was not the agent of Harrison for the purpose of receiving notice of the changed policy. The court submitted to the jury for determination the issues as to whether Harrison had notice of the changed policy and whether Harrison had suffered permanent total disability. In answer to five special interrogatories, the jury on August 20, 1973, returned its special verdict, in part, as follows: (1) plaintiff did not, prior to the accidental injury of August 13, 1969, receive a copy of the 1966 Certificate of Insurance or otherwise have notice of the change in insurance coverage, (2) INA did not take action reasonably calculated to provide insured employees with a copy of the new Certificate of insurance or with other notice of the change in insurance coverage, and (3) as of August 13, 1970, plaintiff was completely unable as a result of said accidental injuries to perform his occupation as a machinist or to engage in any occupation or employment for which he was fitted by reason of education, training or experience.

'On April 26, 1973, the District Court entered its Opinion and Judgment based on the jury's special verdict and the applicable law, holding that the plaintiff recover of INA the sum of $50,000, together with interest and costs.

'Motion for Judgment Notwithstanding the Verdict and for New Trial was filed on May 4, 1973, and overruled on June 28, 1973.

'Notice of Appeal to the United States Court of Appeals for the Fifth Circuit was filed on June 28, 1973.

'A. Choice of law

'Harrison is and has been a resident and citizen of the State of Alabama, and INA is a corporation incorporated under the laws of the State of Pennsylvania. TVA's home office is in Knoxville, Tennessee. The 1960 accident policy was executed by INA through its Vice-President and Assistant Secretary in the city of Philadelphia, Pennsylvania, and countersigned by an authorized representative of INA, in Knoxville, Tennessee. (See Exhibit S--1, page 514 of Appendix.) The 1966 policy of insurance was executed by INA through its Vice-President and Assistant Secretary in the city of Philadelphia, Pennsylvania, but was not countersigned. (See page 523 of Appendix.)

'INA originally contracted with TVA to afford coverage to TVA employees in 1960. The evidence showed that coverage was afforded for eligible employees of TVA. TVA employees paid premiums to TVA through a payroll deduction system, and TVA forwarded the monies to INA in a lump sum.

'Harrison, as well as other insured employees, applied for insurance coverage at TVA's Muscle Shoals plant in Alabama. Harrison received a Certificate of Insurance in October 1965. The Certificate was handed to him on the job by one of the office personnel of TVA.

'Plaintiff was injured on August 13, 1969, while employed with TVA at the Wilson Dam Hydro plant in Muscle Shoals, Alabama. Harrison testified that the 1966 Certificate was received by him through the mail from TVA's office six or seven months after he was hurt.

'The policies of insurance obtained by TVA provided:

'Conformity with State Statutes: Any provision of this policy which, on its effective date, is in conflict with the statutes of the state in which the Insured resides on such date is hereby amended to conform to the minimum requirements of such statutes.

'Legal Actions: . . . No such action shall be brought after the expiration of three years (or the minimum time, if more than three years, permitted by the law in the State where the insured resides) . . .

'B. Notice to Harrison

'The original INA group master policy, Accident Policy SGA--420...