Raley v. Royal Ins. Co. Ltd.
| Decision Date | 08 August 1980 |
| Citation | 386 So.2d 742 |
| Parties | Nathan O. RALEY et al. v. ROYAL INSURANCE COMPANY LIMITED et al. 79-18. |
| Court | Alabama Supreme Court |
James M. Prestwood of Prestwood & Prestwood, Andalusia, for appellants.
Griffin Sikes of Tipler, Fuller & Sikes, Andalusia, for appellees.
The Raleys appeal from a summary judgment in a suit brought by them against Royal Insurance, and Royal Globe for conversion. We reverse.
May 21, 1975, the Raleys executed a mortgage to the Covington County Bank on Lot 20, Conecuh Subdivision, that secured a promissory note for $11,859.12. Meanwhile, on April 14, 1975, Mr. Raley executed an installment note to the Bank of $1,247.40, secured by a 1974 Chevrolet pick-up truck. On or about August 24, a fire destroyed the Raley dwelling situated on the mortgaged property. The dwelling and its contents were insured, as required by the terms of the mortgage, with Royal Globe Insurance Company. The loss payee under the policy was the Bank. Royal Globe investigated the fire loss, and took the petition that it was not liable. The Raleys' suit filed on January 15, 1976, against Royal Globe in the Circuit Court of Covington County was transferred to the United States District Court, Middle District of Alabama, where the case was tried on October 14. A jury awarded the Raleys the whole amount sued for less living expenses. However, the jury, on direction of the trial judge, deducted $9,143.23 from the verdict. This deduction resulted from Royal Globe's representation that it had paid the Bank as mortgagee, and was therefore entitled to a credit against the award to the Raleys.
The record shows that, instead of Royal Globe paying off the Raleys' mortgage, it had the Bank transfer the mortgage to Royal Globe by giving the Bank a check dated August 23, 1976, for $9,143.23. The mortgage transfer, signed by the Bank's Vice-President, J. T. Kirkland was dated August 23. The mortgage was not satisfied of record until May 3, 1978.
Now, as far as the pick-up truck is concerned, it does not appear that it was involved in the Federal Court suit, yet Mrs. Raley stated by affidavit that the amount due on the truck was also deducted from their jury verdict. A former agent of Royal Globe stated by affidavit, that his Company did not receive the truck note. But, Mr. Raley testified that Royal Globe, the insurer of the truck, took possession of it. As an aside, it appears that the pick-up had been involved in a wreck, and was a total loss. We are not shown whether any insurance proceeds were paid to the Raleys for loss of the truck.
The Raleys allege in their complaint that Royal Globe converted to its own use $9,143.23 property belonging to them. Royal Globe answers, in effect, that it paid off the mortgage to the Bank, therefore, there has been no conversion. But, Royal Globe did not pay off the mortgage, and extinguish the debt before the Federal Court suit. On the contrary, it had the mortgage transferred to it. Therefore, at the time of the suit, Royal Globe had not paid any loss resulting from the fire. It had merely placed itself in the Bank's position as mortgagee. For aught that appears, Royal Globe could have demanded mortgage payments from the Raleys. Even though it did not demand payments on the mortgage, Royal Globe still had the legal title to the Raleys' property.
In Ott v. Fox, 362 So.2d 836 (Ala.1978), this Court stated that a wrongful conversion constituted a wrongful taking, wrongful detention or interference, or illegal assumption of ownership, or illegal use or misuse. See also Webb v. Dickson, 276 Ala. 553, 165 So.2d 103 (1964). In our opinion, when Royal Globe had possession of the mortgage, and failed to have it satisfied for almost two years, it was interfering with Raley's right of possession of his property, and was thereby guilty of conversion. Raley either had a right to the full amount of the jury award or the right to have the mortgage satisfied. The fact that the mortgage was eventually satisfied does not correct the evil done.
We hold that summary judgment was improper here. Our cases, since the adoption of the Rules of Civil Procedure, are legion that summary judgment is only appropriate where it appears that the non-moving party could not prevail under any set of discernible circumstances. Whitehead v. Danison Oil Co., Inc., 352 So.2d 1339 (Ala.1977). Folmar v. Montgomery Fair Co., Inc., 293 Ala. 686, 309 So.2d 818 (1975).
REVERSED and REMANDED.
Plaintiffs below claim defendants converted $9143.23, the property of plaintiffs, and further claim punitive damages on the basis that defendants "knowingly and fraudulently" converted plaintiffs' money. The underlying facts of this case are unusual, and the cause of action for conversion of money upon such facts is novel.
The case law of Alabama establishing the essential requisites for the maintenance of a cause of action in conversion has long been firmly established. There are four different actions which constitute conversion: (1) A wrongful taking; (2) an illegal assumption of ownership; (3) an illegal use or misuse; and (4) a wrongful detention. Only the fourth action requires proof that the plaintiff demanded the return of the converted property and that the defendant refused that return.
It is believed that all conversions may be divided into four distinct classes.
1. By a wrongful taking;
2. By an illegal assumption of ownership;
3. By an illegal user or misuser; and
4. by a wrongful detention Bull.N.P. 44; 2 Saund. 47, E.
In the first three named classes, there is no necessity for a demand and refusal, as the evidence arising from the acts of the defendants, is sufficient to prove the conversion. In the latter class alone, is such evidence to be required, as the mere detention of a chattel furnishes no evidence of a disposition to convert it to the holder's use, or to divest the true owner of his property.
Glaze v. M'million, 7 Port. 279, 281-82 (1838) (emphasis added). See also, Claybrooke Warehouse and Gin Company v. Farmers Cooperative Warehouse and Gin Company, 260 Ala. 518, 71 So.2d 88 (1954).
The building insured by defendant, Royal Globe, burned, and Royal Globe paid the mortgagee bank, as loss payee under the plaintiffs' fire insurance policy, the sum of $9143.23, representing the balance of the indebtedness owed by plaintiffs to the bank. In turn, Royal Globe took an assignment of the bank's note and mortgage, apparently for the reason that Royal Globe denied liability to plaintiffs under the insurance contract. The bank did not satisfy the mortgage of record, having transferred ownership to Royal Globe.
In the federal court action by plaintiffs against defendants on the insurance contract, plaintiffs recovered for their fire loss, and the $9143.23 paid by Royal Globe to mortgagee bank was deducted from the jury verdict against Royal Globe. Until the jury determined that the insurance company's defense on the policy was without merit, the insurance company was entitled to take an assignment of the mortgage from the mortgagee bank, on the theory that if the jury determined Royal Globe was not liable on its policy, Royal Globe would be entitled to some security for the money which it paid on behalf of the plaintiffs to the bank. Therefore, because the "taking" of an assignment of the mortgage by Royal Globe was not wrongful, the only possible category of conversion into which Royal Globe's actions could fall is the fourth category listed above, i. e., wrongful detention.
In the recent case of Tenneco Oil Company v. Clevenger, 363 So.2d 316 (Ala.Civ.App.1978), the Court of Civil Appeals recognized that the statutory penalty for failure of a mortgagee to satisfy a mortgage (Code 1975, § 35-10-30) is penal in nature and therefore not the exclusive remedy to recover damages against a mortgagee. The Court of Civil Appeals held there is a field of operation for a civil cause of action for damages on behalf of a mortgagor based upon the wrongful failure of the mortgagee to satisfy his mortgage.
Inasmuch as the statute is penal and not remedial, the penalty is not in lieu of compensatory damages suffered by the mortgagor and resulting from the mortgagee's wrongful failure to exonerate. When, as here, the mortgagor...
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