Hartford Acc. & Indem. Co. v. Oglesby

• Court: Alabama Supreme Court
• Writing for the Court: JONES; HEFLIN
• Citation: Hartford Acc. & Indem. Co. v. Oglesby, 308 So.2d 695, 293 Ala. 620 (Ala. 1975)
• Decision Date: 20 February 1975
• Parties: HARTFORD ACCIDENT AND INDEMNITY CO., a corp. v. Marshall OGLESBY et al. SC 758.

Page 695

308 So.2d 695

293 Ala. 620

HARTFORD ACCIDENT AND INDEMNITY CO., a corp. v. Marshall OGLESBY et al.

SC 758.

Supreme Court of Alabama.

Feb. 20, 1975.

William L. Utsey, Butler, and Howell, Johnston, Langford, Finkbohner & Lawler, Mobile, for appellant.

W. H. Lindsey, III, Butler, for appellees, Marshall Oglesby, Anthony Oglesby and Superior Drilling & Well Servicing Co., Inc.

Inge, Twitty, Duffy & Prince, Mann-Kline, Inc., Mobile, for appellee.

JONES, Justice.

Marshall Oglesby, Anthony, Oglesby, and Superior Drilling & Well Servicing Co. (appellees) filed this action in the nature of a declaratory judgment against Hartford Accident and Indemnity Co. (appellants) to determine whether a corporate insurance policy issued by Hartford provided coverage on a certain Ford Cobra automobile, or in the alternative to compel specific performance to provide such coverage under an alleged agreement to insure. The Circuit Court of Choctaw County, Alabama, decreed that the subject car was insured to the extent of the full fleet coverage. Hartford appeals assigning as error the insufficiency of legal evidence to support the order. We affirm.

On January 5, 1968, a comprehensive (fleet coverage) automobile liability policy was issued by Hartford through its agent, Mann-Kline (appellee), which covered the automobiles used both by Oglesby's family and his business, Superior Drilling & Well Servicing Company. In December of 1968, Oglesby purchased a high performance Ford Cobra automobile for his seventeen year old son, Anthony, and it too was covered under this corporate policy until January 5, 1969, when the first year of the policy expired.

At that time, Hartford informed Oglesby that the Cobra would be excluded from its coverage due to the age of the driver and the high-powered nature of the automobile. Consequently, a separate policy for this car ($10,000--$20,000 liability coverage) was issued by Hartford, and additional coverage of $240,000 on the automobile was purchased through Mann-Kline from Continental Casualty Company, both of which were effective from January 5, 1969, to January 5, 1970.

In September of 1969, Anthony went off to school and Oglesby informed Walter Roney of Mann-Kline that he himself would now be the principal operator of the Cobra. On direct examination Roney testified, 'Mr. Oglesby said, 'by-the-way, Toney has gone to high school and will not be driving it (the Cobra).' And I believe I kiddingly said, 'This is another service we can perform because we can save you some money and put it all back into the fleet,' because at that time Mr. Oglesby was paying a surcharge in rate for the underage driver. 'We can probably put it back in the fleet.'' On cross examination, the following appears:

'Q I believe you testified earlier that Marshall Oglesby did not request you to add this Cobra automobile to the corporate policy at that time, did he?

'A He did not specifically request it, that is correct.

'Q I also understand your testimony to the effect that you told him you probably could put it back on the corporate policy?

'A That's correct.

'Q You did not commit to do that to him, did you?

'A I would have to say no.'

Oglesby testified:

'Q Did Mr. Roney at the time you talked with him tell you that he would put that Cobra under the fleet policy?

'A Yes, sir.'

The Cobra was involved in the accident which gives rise to this dispute on January 7, 1970; but no more mention is made of the $10,000 policy or the $240,000 policy as to whether they lapsed or were renewed. Notice of the accident was made to Hartford by Mann-Kline under the corporate policy on January 9, 1970, and the renewal issuance date of the corporate policy was February 23, 1970.

Three issues confront us:

(1) Did Mann-Kline, as the agent of Hartford, have the requisite authority to bind Hartford to provide coverage for the Cobra under the corporate policy ($250,000 per person)?

(2) Was there sufficient legal evidence to support the finding of the trial Court that a binding insurance contract existed between Hartford and Oglesby? and

(3) Did the trial Court err in overruling Hartford's Demurrer to the bill of complaint?

I.

As to the 'agency' issue, we must first consider the scope of Mann-Kline's agency arrangement with Hartford. The agency agreement between Hartford and Mann-Kline expressly provided Mann-Kline with authority 'with respect to all classes of business . . . which the company is legally qualified to write in said territory, to:

'(a) Solicit, submit applications, receive and accept proposals, issue and deliver policies, bonds, certificates, endorsements and binders which the Company may, from time to time, authorize to be issued and delivered;

'(b) Cancel such policies, bonds, certificates, endorsements and binders at the discretion of the Agent where such cancellation is legally possible; . . .'

Mann-Kline and Oglesby argue that this agreement made Mann-Kline a general agent of Hartford, and thus clothed it with the actual authority to bind Hartford to provide coverage on the Cobra. Hartford, on the other hand, contends that Mann-Kline's authority to bind Hartford on this corporate policy was limited since it had made known to Mann-Kline that Oglesby's account had to be cleared through Hartford's Atlanta office. Therefore, says Hartford, the only theory of liability must be based upon apparent authority which it asserts the agent did not have in this case.

The evidence before us is fully supportive of the trial Court's finding that Mann-Kline was a general agent of Hartford, and, accordingly, had actual authority to bind Hartford on insurance contracts. This Court has generally held that an agent who is authorized 'to solicit and receive applications for insurance, and, at his discretion, to countersign and issue policies of insurance entrusted to him by the company for that purpose, must be regarded quoad hoc as the general agent of the company.' Sun Insurance Office of London v. Mitchell, 186 Ala. 420, 65 So. 143 (1914). See also Occidental Fire and Casualty Company v. Eidson, 279 Ala. 111, 182 So.2d 375 (1966); Tutton v. Liverpool and London and Globe Insurance Co., Ltd., 237 Ala. 230, 186 So. 551 (1939); Yorkshire Insurance Co., Ltd. v. Gazis, 219 Ala. 96, 121 So. 84 (1929).

We do not find any limiting features in the agency agreement between Hartford and Mann-Kline, and so cannot agree with Hartford's contentions on this point. If we assume, arguendo, that Mann-Kline's agency agreement was found to be limited in some way, this fact alone would not alter our conclusions.

An agent who is, by certain limitations, less than a general agent may bind his principal as though he were a general agent by apparent authority. While an agent's powers can be limited, and such limitations be binding as between the company and the agent, this could not affect third persons relying upon his apparent authority without notice of his limitations. Continental Casualty Co. v. Holmes, 266 F.2d 269 (5th Cir. 1959); Sun Insurance Office of London v. Mitchell, supra.

Having determined the scope of Mann-Kline's agency arrangement with Hartford, we next consider whether Mann-Kline had the requisite authority to bind Hartford by oral binder in regard to coverage under Oglesby's corporate policy. Hartford relies heavily upon Tit. 28, § 75, Code of Alabama 1940 (Recomp.1958), which states:

'No . . . insurance company nor any agent thereof shall make any contract of insurance or agreement as to policy contract other than is plainly expressed in the policy issued thereon . . .'

It also relies upon Alabama Farm Bureau Mutual Casualty Insurance Company v. Adams, 289 Ala. 304, 267 So.2d 151 (1972), in contending that Mann-Kline could not make a contract of insurance or any agreement as to policy contract other than that which is plainly expressed in the actual printed policy issued thereon. Mann-Kline and Oglesby, however, rely on the premise that this statute does not prevent the negotiation of an enforceable parole contract to insure.

In view of the express agency agreement between Hartford and Mann-Kline and the history of the coverage afforded Oglesby by Mann-Kline, we find ample evidence to support the trial Court's holding that Mann-Kline had the requisite authority to make a preliminary oral contract of insurance with Oglesby which would be binding upon Hartford. Under Alabama law, a general agent duly authorized to bind his company by contracts of insurance may make valid contracts by parole. National Life and Accident Insurance Co. v. Claytor, 254 Ala. 413, 48 So.2d 180 (1950). Furthermore, this Court has held that Tit. 28, § 75, does not prohibit such an oral contract of insurance. National Life and Accident Insurance Co. v. Claytor, supra; Hartford Fire Insurance Co. v. Shapiro, 270 Ala. 149, 117 So.2d 348 (1960).

As approved in Sun Insurance Office of London v. Mitchell, supra:

'A contract of insurance is an agreement, express or implied, and that means either an express contract, an express agreement by words and in this connection it would not make any difference whether it was in writing or not.'

Here, especially since the written renewal policy had not been issued, it was perfectly natural for Mann-Kline and Oglesby to enter into an oral binder. 32 C.J., Insurance, § 184, citing Hartford Fire Insurance Co. v. King, 106 Ala. 519, 17 So. 707, states:

'A...