Mayfield v. Cotton States Mut. Ins. Co.

• Decision Date: 22 August 1986
• Citation: 495 So.2d 548
• Parties: Arno Vance MAYFIELD and Jackueline Mayfield v. COTTON STATES MUTUAL INSURANCE COMPANY, et al. 85-135.
• Court: Alabama Supreme Court

Page 548

495 So.2d 548

Arno Vance MAYFIELD and Jackueline Mayfield v. COTTON STATES MUTUAL INSURANCE COMPANY, et al.

85-135.

Supreme Court of Alabama.

Aug. 22, 1986.

W.N. Watson of Watson & Watson, Fort Payne, for appellants.

George P. Ford of Simmons, Ford and Brunson, Gadsden, for appellees.

HOUSTON, Justice.

Arno Mayfield and his wife, Jackueline Mayfield, appeal from a summary judgment granted in favor of Cotton States Mutual Insurance Company and Randall Gardner in this action to recover damages for breach of contract. We affirm.

The plaintiffs' complaint reads as follows:

"1. On or about the 28th day of September, 1981, the Cotton States Mutual Insurance Company, by and through its agent, Randall Gardner, and Randall Gardner individually, entered into an agreement by which the defendants severally promised to insure the plaintiff or provide insurance for the plaintiff for loss due to certain perils which included loss due to fire.

"2. Defendants breached said agreement, for after plaintiffs suffered loss by virtue of fire, the defendant Cotton States Mutual Insurance company refused to pay said loss, the date of said loss being December 4, 1982, and said agreement as referred to in paragraph 1. herein having been agreement to provide coverage through Cotton States Mutual Insurance Company.

"WHEREFORE, PLAINTIFFS DEMAND JUDGMENT AGAINST DEFENDANTS in the sum of $25,000.00, interest and costs."

All facts were presented to the trial court by way of affidavits (and attachments thereto) in support of and in opposition to the defendants' motion for summary judgment.

The defendants submitted the affidavits of Stan Lummus and Randall Gardner. Lummus's affidavit reads as follows:

"My name is Stan Lummus, and I am a resident of the State of Georgia, over twenty-one (21) years of age. I have personal knowledge of the facts and the matters stated in this Affidavit. I am an employee of Cotton States Mutual Insurance Company, which has its home offices in Atlanta, Georgia. At the present time I hold the position of Manager of the Personnel Lines Underwriting Department, which Position I have held since April 1, 1985. I have been employed in the Underwriting Department of Cotton States since April 1, 1985. I am familiar with the records and record-keeping procedures of Cotton States Mutual Insurance Company, including records of the issuance, renewal, and cancellation of policies such as the one made the basis of the above entitled action.

"I have reviewed the records of Cotton States Mutual Insurance Company relative to Policy No. 20 218621, which was issued by Cotton States to Arno Vance Mayfield and Jackueline Mayfield, and upon which this action is based. The policy originally went into effect on September 28, 1979, and was on an annual renewal basis. Exhibit 'A' [omitted from this opinion] is a true and correct copy of said policy of insurance. The effective date of the last renewal of the policy was September 28, 1981; and in the absence of cancellation or other termination, the policy would have expired on September 28, 1982. The policy was applied for through the Randall Gardner Agency, in Crossville, Alabama.

"The application for coverage which was submitted by Mr. and Mrs. Mayfield listed as mortgagee 'Federal Land Bank of New Orleans, P.O. Box 257, Rainsville, Al'; and this information was placed on the declarations page of the policy. Exhibit 'B' [omitted from this opinion] is a true copy of that portion of the application which names the mortgagee.

"When the policy was renewed in September, 1981 it was placed on a 'premium payment plan' which required the insured to pay installment payments of premium on 9/28/81, 11/28/81, 1/28/82, 3/28/82, 5/28/82 and 7/28/82. The first three of these payments were made, but the payment which was due on March 28, 1982 was never received by Cotton States Mutual Insurance Company. On or about April 2, 1982, two additional poultry houses had been added to this policy, at an additional premium of $133.68. This amount was received by Cotton States, prior to the time that the fact the March 28, 1982 installment premium had not been paid would have created any particular concern within the Home office. The computer which keeps up with these late installment payments is programmed to send automatic cancellation notices a certain time after an installment is late; and in this particular case, the 'programmed' cancellation notice went out on April 27, 1982.

"When the 3/28/82 premium installment had not been received by 4/30/82, a notice of Cancellation was sent to the insureds and to the mortgagee. Exhibit 'C' [omitted from this opinion] is a true copy of that cancellation notice. That same day the agent was advised of the cancellation, and a Company check was sent to the agent for forwarding to the insureds. This check was for the unearned premium on the policy after its cancellation date of April 5, 1982. ¹ A true copy of that check is attached hereto as Exhibit 'D' [omitted from this opinion]." This check has been negotiated by the payees and has been charged to the account of Cotton States at the bank on which it was drawn.

"The cancellation notice to the mortgagee was sent by certified mail, as required by the policy. Exhibit 'E' [omitted from this opinion] is a true copy of the certified mailing list of Cotton States Mutual Insurance Company for the date of April 30, 1982, and bears the stamp of the U.S. Postal Service, acknowledging receipt of this particular item. Item 14 is the notice which was sent to the mortgagee, and shows the policy number name of addressee, etc. The policy does not require certified mail service to the insured in order to effect cancellation.

"Had this policy not been cancelled effective May 15, 1982, its natural expiration would have occurred on September 28, 1982. The loss upon which this action is based occurred after that date, on December 4, 1982, according to the records of Cotton States Mutual Insurance Company."

Gardner's affidavit reads as follows:

"My name is Randall G. Gardner, and I am a resident of DeKalb County, Alabama, over nineteen (19) years of age. I have personal knowledge of the facts and the matters stated in this Affidavit.

"I have a contract to solicit, sell and service policies of insurance issued by Cotton States Mutual Insurance Company, and have held such contracts since April 2, 1973. Exhibit 'A' is a true copy of my contract with Cotton States, as it existed in 1979, 1980, 1981, and 1982.

"In 1979, I solicited the sale of a policy of insurance issued by Cotton States Insurance Company to Arno Vance Mayfield and Jackueline Mayfield, viz.: Policy No. 20 218621, which policy is made the basis of the above entitled lawsuit. The policy ran annually, from 9/28/79 to 9/28/80, and so on.

"At or prior to the time of the 9/28/81 renewal, at the request of Mr. Mayfield, the policy was put on a plan which allowed the premium to be paid in six installments, with the installments being due on 9/28/81, 11/28/81, 1/28/82, 3/28/82, 5/28/82, and 7/28/82. The premium payments ordinarily are made directly to Cotton States, and not to me or my agency.

"About 4/2/82, I requested that two additional poultry houses be added to the Mayfield policy. This was done, and Mr. Mayfield paid an additional premium of $133.68 for this change. At that time I had no knowledge of whether the 3/28/82 installment premium had been paid.

"On May 3, 1982, I received in my office a copy of a cancellation notice sent by Cotton States to Mr. and Mrs. Mayfield and to their mortgagee, dated 4/30/82. Exhibit 'B' [omitted from this opinion] is a true copy of the notice I received. It bears a 'rec'd' stamp of my agency in the upper right hand corner. On May 5, 1982 I received from Cotton States a memorandum of this cancellation, of which a true copy is attached hereto as Exhibit 'C' [omitted from this opinion] and which also shows my agency 'rec'd' stamp. Along with this memo was a check from Cotton States to Arno Vance Mayfield and Jackueline Mayfield, in the amount of $102.78, representing the unearned portion of the policy premium, after cancellation. A true copy of this check is attached as Exhibit 'D' hereto [omitted from this opinion].

"On May 5, 1982 I sent the original of Exhibit 'D' to Mr. Mayfield at his last known address, together with my own, handwritten note explaining why the check was being sent. This memo and check were sent in a window envelope, which is the only type envelope my agency uses; with the memo being folded so that the name of the addressee appears in the 'windowed' portion.

"After that date I heard nothing further from Mr. or Mrs. Mayfield until after a fire damaged or destroyed one of their poultry houses on or about December 4, 1982. This not only was after the cancellation had been effected, but also was after the natural expiration date of the last policy or renewal issued to Mr. and Mrs. Mayfield, which policy would have expired on 9/28/82. Between April 30, 1982 and December 4, 1982, no premiums were paid to me or my agency by either Mr. or Mrs. Mayfield, and in my best recollection we had no contact of any kind or nature whatsoever, relating to business.

"On December 13, 1982, Mr. Mayfield called me at my office to discuss his loss and the status of his coverage. I have a tape recording of this conversation. I told Mr. Mayfield that my records indicated the policy was cancelled effective 5/15/82. Mr. Mayfield explained that about the time the cancellation took place, he had undergone heart surgery. I told him he was welcome to come and look over my file, and he said he did not doubt what I was saying to him about the cancellation. He implied to me that he had confused the bill for the addition of the two poultry houses on April 2, 1982 with its premium installment bill, which was due on March 28, 1982. He admitted to me in the course of this conversation that he remembered getting the check (Ex...