Old Southern Life Ins. Co. v. Woodall

• Decision Date: 26 August 1977
• Citation: 348 So.2d 1377
• Parties: OLD SOUTHERN LIFE INSURANCE COMPANY v. Ocie T. WOODALL et al. SC 2080.
• Court: Alabama Supreme Court

Page 1377

348 So.2d 1377

OLD SOUTHERN LIFE INSURANCE COMPANY v. Ocie T. WOODALL et al.

SC 2080.

Supreme Court of Alabama.

Aug. 26, 1977.

Kenneth L. Funderburk, Phenix City, Edmon L. Rinehart, Montgomery, for appellant.

C. Neal Pope, Phenix City, for appellee.

BEATTY, Justice.

This is an appeal by the defendant from a judgment for the plaintiff based upon a jury award of $25,000. We affirm.

The facts of this case are reported in Old Southern Life Insurance Co. v. Woodall, 295 Ala. 235, 326 So.2d 726 (1976). On the first trial, we reversed the decision and remanded the case for deficiencies pertaining to two of the three claims for relief.

Thereafter the defendant amended its answer by alleging additional defenses: (1) By paying Six Hundred Thirty-Seven and 20/100 Dollars into court for the plaintiff, it discharged its duty under its policy for the confinement of Etta W. Woodall from May 27, 1973 to June 16, 1973, and June 30, 1973 to July 10, 1973; (2) Its payment into court of all money due under its policy barred plaintiff's cause of action; (3) Not guilty; (4) A denial of any false representations to plaintiff or of ever intending not to pay claims of Etta W. Woodall; (5) That the two claims in question were denied because of a pre-existing heart condition, and that the defendant determined in good faith that the admissions of May 27, 1973 and June 30, 1973 were primarily related to the pre-existing heart condition; and (6) That plaintiff knowingly gave false information to defendant which was relied upon by defendant in issuing the policy, and therefore, the policy was void. Following the filing of this amended answer, defendant filed a motion for summary judgment, based upon the pleadings and upon the payment into court of what defendant termed the full sum of money due under the policy. This motion was denied.

Then, with the trial court's permission, the plaintiff amended his complaint. It is helpful to recall that in the original complaint the second theory of relief charged fraud of the company by making fraudulent and false representations which induced plaintiff to pay premiums on the policy after the claims were denied. In his amended complaint plaintiff averred that between November 1, 1972 (the date of the contract) and prior to September 11, 1973 (the date of the denial letter pertaining to the second claim) the defendant negotiated with the plaintiff "concerning the continuation of the contract of insurance in force and the payment by MR. WOODALL of renewal premiums for the contract." It charged that:

20. At that time Defendant COMPANY represented to MR. WOODALL that the Defendant COMPANY would pay to MR. WOODALL substantial sums of money toward the costs of medical expenses incurred by MR. WOODALL resulting from the Hospitalization of MRS. WOODALL for pneumonia and other conditions.

21. The representations made by Defendant COMPANY were false and Defendant knew they were false.

22. MR. and MRS. WOODALL believed the representations made by Defendant COMPANY and in reliance upon them paid the renewal premiums and purchased the renewed contract of insurance.

WHEREFORE, Plaintiff demands Judgment against Defendant COMPANY in the sum of $1,000,000.00 for compensatory and punitive damages.

Without attempting to fully repeat what was stated in our earlier opinion, it was plaintiff's theory then, and in this second trial, that having evidence upon which the company might have been able to terminate the policy on the ground of false statements in the application, the company based its denial of benefits on an entirely different reason, and with such knowledge fraudulently induced the plaintiff to pay premiums when it had no intention of paying any claims of Mrs. Woodall.

The defendant on appeal argues in a number of his designated issues that the trial court erred because he instructed the jury upon a different cause of action than that "approved" by this Court on the first appeal. Such an argument misconstrues our language. What we stated, and all that we stated, was:

We hold, therefore, that the second theory sued on stated a claim upon which relief could be granted. There was at the very least a scintilla of evidence to support that claim. The trial court, therefore, did not err in submitting the second claim to the jury.

The fact that we found no error in the trial court's holding which found that the second theory stated a cause of action upon which relief could be based was not the equivalent of an "approval" of an allegation which denies other similar allegations in a subsequent trial. Nothing in that language remotely suggested any limitation upon the plaintiff's freedom to state whatever viable action he might prove, and indeed, under Rule 15, ARCP, that right is provided him. Moreover, we have compared the allegations of the causes of action on fraud alluded to in our original opinion, and contained in both the original and the amended complaints, and we find that they allege the same cause of action. See Rudman v. Hooks, 252 Ala. 280, 40 So.2d 866 (1949); Tit. 7, §§ 108, 110, 111, Alabama Code. This was the cause of action upon which the trial court gave an extensive instruction to the jury, which we deem correct:

What do we mean by 'fraud?' I might define it generally to mean there must first have been a willful representation on the part of the defendant in this case in order to charge the defendant with legal fraud. First, you must find or reasonably believe from the evidence there was a willful misrepresentation to Mr. Woodall at the time this letter, Plaintiff's Exhibit No. 4, was written to him; further, that at the time they wrote this letter which is the basis for that misrepresentation that they did so with the intent to induce Mr. Woodall, after receiving this letter, to continue to pay premiums under the terms of the policy; further, there would have to be found as a fact in this case that Mr. Woodall did in fact pay additional premiums and that he was induced to make such payments in reliance on the false, willfully false, misrepresentation made in this letter to him; and that in doing so he acted to his own injury, that he did in fact pay out additional premiums; that the company either had a right never to collect because they could have canceled it, or they could have offered a return of his premiums, if they wished to do so, but that he did in fact pay out some additional premiums before that thing finally was allowed to terminate. You would have to be satisfied, then, at least of that as a very minimum before a person charged with legal fraud could be found guilty of such legal fraud. It has got to be a willful misrepresentation of a material fact as being true. It would be for you to say whether or not this letter does willfully misrepresent a true fact. And you have got to as a further result, as I said, find that after the receipt of that letter Mr. Woodall was induced to make his next premium payment or payments, if in fact he made any such payments but that is a question of fact for you and that he did act so to his own injury and he had no knowledge that this statement was false in any way.

Next, the defendant contends that the trial court erred by removing from the jury's consideration the fact that the defendant ". . . has now, ever has, or ever will make any payment under the claim filed by Mr. Woodall, either the first time or the last time." It should be pointed out that the trial court, in that connection, added: "This is not an action to recover certain sums which the plaintiff contends were due under the contract entered into between these parties." And later, after defining the tort, added:

I have allowed the fact that tender of payment has been made, however, to come before you for the purpose of your consideration as to whether or not there has actually been any fraud on the part of the defendant.

Describing these instructions as imposing a novel theory which also led to the erroneous refusal of three of its requested charges, the defendant maintains that this position effectively cuts off its only true defenses, full payment under the contract, and denial of claim under the contract's provisions. We cannot agree with defendant's contentions. Payment of or satisfaction under the contract is not a defense to an action for fraud after that right of action has accrued. Berry v. Wooddy, 16 Ala.App. 348, 77 So. 942; cert. den., 201 Ala. 698, 78 So. 988 (1918).

Defendant has cited us to the case of Pihakis v. Cottrell, 286 Ala. 579, 243 So.2d 685 (1971), as authority for the proposition that the payment into court by the defendant should have been considered by the jury in "mitigation of damages," and that it was error for the trial court to fail to so instruct in his oral charge.

It is true that an amount which a party receives as compensation for his injury is applicable to reduce his damages recoverable from a tortfeasor. Anderson v. Kemp, 279 Ala. 321, 184 So.2d 832 (1966). Such proof does not, however, in any way defeat the victim's right to recover his damages. So that in this case, the plaintiff was entitled to recover any actual damages claimed and sustained by the fraud committed upon him, notwithstanding the payment into court of sums based upon the contract out of which the fraud arose. His acceptance of those sums, to be sure, would have mitigated any recovery he would have been entitled to based upon breach of contract. But the mere tender of those sums in satisfaction of the defendant's contract obligation did not mitigate plaintiff's right to recover any compensatory damages claimed and proved for fraud, or punitive damages should they have been applicable. Pihakis itself lends support for this view. In that case, the defendant contended that after the alleged fraud had occurred, the plaintiff had received deeds and a check covering their recording costs, which would place the plaintiff in the same position she occupied before...