Case Title: Strickland v. ALA. FARM BUREAU MUT. CAS. INS.

Citation: 502 So. 2d 349

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1987-01-09T00:00:00Z

Document:
502 So. 2d 349 (1987)
Fred E. STRICKLAND
v.
ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, INC.
85-352.

Supreme Court of Alabama.
January 9, 1987.
*350 Jim H. Fernandez of Allen & Fernandez, Mobile, for appellant.
Reggie Copeland, Jr., and Forrest S. Latta of Nettles, Barker, Janecky & Copeland, Mobile, for appellee.
BEATTY, Justice.
Appeal by plaintiff, Fred E. Strickland, from a judgment for defendant, Alabama Farm Bureau Mutual Casualty Insurance Company, Inc. ("Farm Bureau"), in plaintiff's action against the defendant for breach of a contract of insurance. We affirm.
At the request of Strickland, its insured, Farm Bureau transferred existing collision coverage from a farm truck to Strickland's newly acquired automobile. The new policy was issued effective November 3, 1982; however, no premium payment was made upon issue. The declarations sheet on the new policy, together with the first notice of premium due, was mailed by Farm Bureau and was received by Strickland on November 10, 1982. The premium was not paid. A second notice was mailed by Farm Bureau and was received by Strickland on either November 20 or 21, 1982. That notice recited: "THIS IS YOUR FINAL NOTICE. DO NOT LET YOUR POLICY BE CANCELLED FOR NON-PAYMENT OF PREMIUM."
When no premium payment had been received by December 7, 1982, Farm Bureau on that date mailed a letter to Strickland at the address shown on the policy, the same address as used on previous correspondence and later confirmed as correct by Strickland. This letter stated:
Strickland denied receiving this letter, but maintained that the premium was paid by mail on December 18, 1982. Farm Bureau received the premium payment on December 22, 1982, in a Farm Bureau return envelope postmarked December 21, 1982. In accord with its letter of December 7, 1982, Farm Bureau negotiated Strickland's check, issued a new declarations sheet which reflected a new effective date, December 22, 1982, and mailed the new declarations sheet to Strickland.
Meanwhile, Strickland's automobile was damaged in a collision which occurred on December 20, 1982. Strickland filed a loss report with Farm Bureau on the next day. A Farm Bureau agent contacted Strickland and acquainted him with the question concerning the premium. Another representative contacted Strickland about a week later and arranged to take the policyholder's statement, which was done. After investigation, Farm Bureau denied coverage by letter on January 10, 1983, on the ground that the policy had been cancelled before the date of the accident, December 20, 1982, and that notice of the cancellation had been properly mailed on December 7, 1982.
Thereafter, Strickland filed this action, alleging breach of contract. Following Farm Bureau's answer, Strickland filed an amended complaint alleging bad faith refusal to pay; he later amended the complaint to state a claim based upon fraudulent misrepresentation. Apparently considering matters outside the pleadings, the trial court granted Farm Bureau's motion to dismiss the fraud count, and the case was tried to a jury on the claims of breach of contract and bad faith refusal to pay.
At the close of the evidence, both parties moved for directed verdicts. Farm Bureau's motion addressed to the bad faith *351 refusal to pay count was granted, while Strickland's motion addressed to the contract count was denied. The jury returned a verdict in favor of Farm Bureau. Subsequently, Strickland moved for judgment notwithstanding the verdict or a new trial. This motion was denied, and Strickland appealed.
The standard of review applicable to this appeal is as it was explained in Casey v. Jones, 410 So. 2d 5, 7-8 (Ala.1981):
By way of his motion for J.N.O.V., Strickland also contends that the trial court erred in directing a verdict for Farm Bureau on his bad faith refusal claim and in dismissing his fraud claim. As far as the bad faith refusal claim is concerned, our review of the evidence is made in a light most favorable to Strickland to determine whether or not there was any evidence to support that theory. On the fraud claim, the question is whether there was a genuine issue of material fact regarding the allegation of fraud. Morton v. Allstate Ins. Co., 486 So. 2d 1263 (Ala.1986).
Against the breach of contract claim, Farm Bureau pleaded cancellation as a defense. Under Code of 1975, § 27-23-25:
In Hilliar v. State Farm Mutual Automobile Ins. Co., 451 So. 2d 287, 288-89 (Ala. 1984), this Court cited its decision in Security Ins. Co. of Hartford v. Smith, 360 So. 2d 280 (Ala.1978), for the proposition controlling in these instances:
A review of the record establishes that Farm Bureau complied with these authorities and met its burden of proving the proper mailing of the cancellation notice.
A vice president in Farm Bureau's underwriting department, Ms. Jane Adams, detailed the special procedure used by the company in handling a cancellation notice:
The mailroom supervisor at Farm Bureau, Ms. Linda Hudson, testified that she receives two original copies of the cancellation letter, compares the two for the address, places the signed original in a window envelope, and initials the other to verify her actions. Ms. Hudson further explained that she then places postage on the letters and places them in a postal tray, from which an employee under her direction takes them to a loading dock to be picked up by the Postal Service. She added that persons check to insure that this mail has been picked up and report to her.
In this instance, the initial "L" as written by Ms. Hudson appeared on the unsigned original as did the date stamp, December 7, 1982, applied by her. This evidence clearly established that the cancellation notice was properly mailed. Strickland testified that the address on the notices was the correct mailing address and that he received the billing notices mailed to that address, which notices preceded the cancellation notice. Having this evidence, the jury could have properly found a verdict for Farm Bureau. The trial court was thus not in error for denying Strickland's motion for J.N.O.V. or new trial on the contract count.
It is true, as Strickland argues, that the policy contained a provision which required ten days' notice, while the cancellation letter stated that cancellation was effective immediately. But Strickland can take nothing from that fact. This Court has addressed such a situation in Trans-American Ins. Co. v. Wilson, 262 Ala. 532, 80 So. 2d 253 (1955), which adopted the principle earlier pronounced in Black v. Travelers Ins. Co., 231 Ala. 415, 416, 165 So. 221, 222 (1936):
Under that rule, the cancellation notice became effective ten days after December 7, 1982, i.e., December 17, 1982, which date was still prior to the date of the loss occurring on December 20, 1982.
Finally, Strickland argues that coverage existed for the collision loss because the company had failed to clearly convey to the insured its intent to prospectively apply any premium received. Farm Bureau had the burden of proving that it clearly conveyed its intent to do so to Strickland. The cancellation letter itself stated: "Should you wish to reinstate your policy, we will be happy to comply, effective the date premium is received." This was a clear expression of Farm Bureau's intent, as the jury must have found.
In National Savings Life Ins. Co. v. Dutton, 419 So. 2d 1357, 1362 (Ala.1982), this Court explained:
There is nothing in the record indicating that this case falls beyond the normal. Not only does the proof in this case fail to show that Strickland was entitled to a directed verdict, but, to the contrary, the evidence supports the verdict of the jury in favor of Farm Bureau. Thus, the tort claim failed as a matter of law. Mordecai v. Blue Cross-Blue Shield, 474 So. 2d 95 (Ala.1985); Dutton, supra.
Strickland's allegations of fraud are contained in Count III of his amended complaint:
Farm Bureau's motion to dismiss this fraud count was argued to the trial court and then granted, apparently under the authority of Rule 12(b), A.R.Civ.P. It appears that the fraud claim was based upon the allegation that Strickland had mailed his late premium check to Farm Bureau. This was alleged as the reliance. Thus, whatever misrepresentation existed must have occurred prior to that reliance. See Sovereign Camp, W.O.W. v. Moore, 232 Ala. 463, 168 So. 577 (1936); Code of 1975, § 6-5-101. In other words, the element of reliance cannot precede the alleged misrepresentation where fraud by misrepresentation is claimed.
Strickland argues fraud by suppression from the fact that Farm Bureau's agents, during their investigation, told Strickland nothing about the company's intention to cancel or to apply any premium received thereafter prospectively. Strickland, however, failed to adduce any evidence that these agents possessed any prior knowledge of either the company's intention to cancel or to apply, prospectively, any premium received thereafter, or that these agents, themselves, had any intention to deceive him. In short, no evidence of any active concealment or misrepresentation was shown to be present. Berkel & Company Contractors, Inc. v. Providence Hospital, 454 So. 2d 496 (Ala.1984). The company clearly disclosed its intention to prospectively apply late premiums, as we have shown. No inference of concealment is suggested by the fact that such action was taken by the company following the mailing of the late payment, or from any other conduct on the part of the company. Summary judgment, therefore, was appropriate on the plaintiff's fraud count.
Let the judgment be affirmed.
AFFIRMED.
TORBERT, C.J., and ALMON, ADAMS and HOUSTON, JJ., concur.