Rossville Federal Sav. & Loan Ass'n v. Insurance Co. of North America

• Decision Date: 19 February 1970
• Docket Number: No. 44873,No. 3,44873,3
• Citation: 121 Ga.App. 435,174 S.E.2d 204
• Court: Georgia Court of Appeals
• Parties: ROSSVILLE FEDERAL SAVINGS & LOAN ASSOCIATION v. INSURANCE COMPANY OF NORTH AMERICA

Page 204

174 S.E.2d 204

121 Ga.App. 435

ROSSVILLE FEDERAL SAVINGS & LOAN ASSOCIATION v. INSURANCE COMPANY OF NORTH AMERICA.

No. 44873.

Court of Appeals of Georgia, Division No. 3.

Feb. 19, 1970.

Rehearing Denied March 18, 1970.

Certiorari Denied June 9, 1970.

Syllabus by the Court

Since under the Civil Practice Act a claim should not be dismissed unless it appears to a certainty that the plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim, the trial judge erred in dismissing the instant claim.

Rossville Federal Savings & Loan Association brought suit on an insurance policy against Insurance Company of North America. The petition alleged that the defendant issued to the plaintiff a 'savings and loan blanket bond' for which the plaintiff paid the required annual premium; that the First Trust Company of Chattanooga, Tennessee, issued and delivered to the plaintiff a check for $9284.31 and requested the plaintiff to cancel its note and security deed to certain described property and release its lien on the property; that based on the representation of First Trust Company's agents the plaintiff executed a cancellation of the note and security deed; that the plaintiff deposited the check on which payment was refused and the check was returned on account of 'uncollected funds' of the First Trust Company; that the check is still unpaid and that First Trust Company has been adjudged a bankrupt.

The petition alleged that First Trust Company procured a cancellation of the security deed by fraud and deception and represented that the check was equivalent to cash when in fact it was worthless; that the plaintiff's release and cancellation of the security deed were procured by fraud and deception and by the giving of a worthless check; the signature of the plaintiff's officer canceling the deed was obtained through trick, artifice, fraud and false pretenses and plaintiff has suffered a loss and has incurred expenses and attorney's fees in litigation 'in which it is seeking relief against the gross fraud perpetrated against it.'

The petition further alleged 'that plaintiff filed a suit in equity in the Superior Court of Walker County against the First Trust Company and others seeking to set aside and annul its cancellation of a security deed which cancellation had been induced by the fraud of the agents and officers of the First Trust Company as aforesaid.' It was alleged that the plaintiff had incurred $4,556.10 as attorney's fees and $215.80 expenses in the suit 'and will be obliged to incur further and additional attorney's fees and expenses in the near future in the prosecution of such action'; that the defendant agreed to indemnify and repay to plaintiff all sums paid as attorney's fees but now refuses to do so; that the defendant has paid only $1,152 for expenses incurred although required under the terms and provisions of its bond to pay all court costs and attorney's fees; that the plaintiff has filed a claim and has demanded that the defendant reimburse it but that the defendant has failed and refused to do so; that the refusal to pay is in bad faith and is capricious, unfounded and frivolous. The prayers were that the plaintiff recover a judgment of $4,771.90, plus a 25% statutory penalty because of defendant's bad faith in refusal to pay the sums due under the bond, and attorney's fees for filing and prosecuting the suit.

The defendant filed a general demurrer to the petition upon the ground that it did not state a cause of action. The trial judge sustained the defendant's general demurrer and dismissed the plaintiff's petition. From this judgment the plaintiff appeals.

Frank M. Gleason, Rossville, for appellant.

Powell, Goldstein, Frazer & Murphy, Edward E. Dorsey, Robert W. Patrick, Jr., James H. Keaten, Atlanta, for appellee.

QUILLIAN, Judge.

1. The defendant's general demurrer will be treated as a motion to dismiss under the Civil Practice Act of 1967. Hill v. Willis, 224 Ga. 263, 161 S.E.2d 281; B-W Acceptance Corp. v. Callaway, 224 Ga. 367, 162 S.E.2d 430; Dean v. Gainesville Stone Co., 118 Ga.App. 142(5), 162 S.E.2d 858; Ghitter v. Edge, 118 Ga.App. 750, 751, 165 S.E.2d 598. Under the Civil Practice Act, a motion to dismiss will lie for the failure of the pleading to state a claim upon which relief can be granted. Code Ann. § 81A-112 (Ga.L.1966, pp. 609, 622; 1967, pp. 226, 231; 1968, pp. 1104, 1106). In such regard the rule is applicable that while the claim may be dismissed if clearly without merit, it should not be dismissed unless it appears to a certainty that the plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim. Poole v. City of Atlanta, 117 Ga.App. 432, 434, 160 S.E.2d 874. In this posture, we therefore consider the merits of the plaintiff's claim.

2. (a) The provision of the policy under which the plaintiff contends the defendant is liable reads as follows: 'The underwriter will indemnify the insured against court costs and reasonable attorneys' fees incurred and paid by the insured in defending any suit or legal proceeding brought against the insured to enforce the insured's liability or alleged liability on account of any loss, claim or damage which, if established against the insured, would constitute a valid and collectible loss sustained by the insured under the terms of this bond. Such indemnity shall be in addition to the amount of this bond. In consideration of such indemnity, the insured shall promptly give notice to the underwriter of the institution of any such suit or legal proceeding, at the request of the underwriter shall furnish it with copies of all pleadings and other papers therein; and at the underwriter's election shall permit the underwriter to conduct the defense of such suit or legal proceeding, in the insured's name, through attorneys of the underwriter's own selection. In the event of such election by the underwriter, the insured shall give all reasonable information and assistance, other than pecuniary, which the underwriter shall deem necessary to the proper defense of such suit or legal proceeding.'

Although reference is made to the Rossville Fed. S. & L. Assn. v. Chase Manhattan Bank decision in 223 Ga. 188, 154 S.E.2d 243, as being the pending suit alluded to in the petition, there is nothing to show that it is in fact the case to which the petition refers. Upon being requested to consider previous decisions of the Court of Appeals the Supreme Court held in Salter v. Heys, 207 Ga. 591, 596, 63 S.E.2d 376: 'Physically we can take cognizance of these cases, but judicially we cannot take notice of them any more than the trial court could, in the absence of judicial proof, take notice of the judgment in another case between the parties in the same court.' See Georgia Casualty, etc., Co. v. Reville, 95 Ga.App. 358, 362, 98 S.E.2d 210. Thus absent some more specific identification of the case referred to, we cannot consider 223 Ga. 188, 154 S.E.2d 243, supra, or any other case, in passing upon the allegations contained in the pleading.

(b) This policy, like all contracts of 'adhesion' (Corbin, Contracts § 1446; Walnut Creek Pipe Distributors, Inc. v. Gates Rubber Co., Sales Division, 228 Cal.App.2d 810, 39 Cal.Rptr. 767, 771), in the event of ambiguity must be construed most strongly against the party preparing it and in favor of...