Title: Aetna Cas. & Sur. Ins. Co. v. State Ex Rel. Eagerton

State: alabama

Issuer: Alabama Supreme Court

Document:

414 So. 2d 455 (1982)
AETNA CASUALTY & SURETY INSURANCE COMPANY
v.
STATE of Alabama, Ex rel. Ralph P. EAGERTON, Jr., as Commissioner of Revenue of the State of Alabama.
81-100.

Supreme Court of Alabama.
May 21, 1982.
*456 John M. Milling, Jr. of Hill, Hill, Carter, Franco, Cole & Black, Montgomery, and Thomas J. Groark, Jr. and Allan B. Taylor of Day, Berry & Howard and Peter Mear, Hartford, Conn., for appellant.
Charles M. Crook of Smith, Bowman, Thagard, Crook & Culpepper, Montgomery, for appellee.
BEATTY, Justice.
This is an appeal by the defendant Aetna Casualty & Surety Insurance Company (Aetna) from an adverse judgment rendered against it in an action brought by the State of Alabama to recover funds under the Uniform Disposition of Unclaimed Property Act, Code of 1975, § 35-12-20 et seq. We reverse and remand.
In its original complaint the State sought judgment for the sum of $42,023.00 under §§ 35-12-23 and 35-12-29 of the Act; the State later amended its complaint by adding the allegation that defendant held property pursuant to § 35-12-22.
Section 35-12-22 refers to property "held or owing by a banking or financial organization or by a business association," and specifically to:
Section 35-12-23 refers to unclaimed funds "held and owing ... unclaimed and unpaid for more than seven years after the moneys became due and payable."
Section 35-12-29 is a catch-all section referring to "[a]ll tangible and intangible personal property, not otherwise covered... including ... amounts due and payable under the terms of insurance policies not covered by section 35-12-23."
Aetna's answer denied holding any property presumed abandoned under the Act's provisions. Other defenses were also asserted. An ore tenus trial ensued following which the trial court, after making certain findings of fact, entered judgment in the amount of $28,217.08, together with accrued interest in the amount of $7,565.65, or a total of $35,782.73, for the State.
The property in question consisted of a number of drafts issued by Aetna's Alabama field offices during the period April 27, 1965, through December 31, 1969. These drafts were identified by Alabama auditors who reviewed Aetna records which consisted of computer printouts of drafts on which payment had been stopped because these drafts had not been presented for payment within four years following issuance. These records established that 336 drafts had been issued by Alabama offices between 1965 and 1969 but not presented for payment within four years. The trial *457 court found that drafts had been issued for the following types of claims:
Under those types, first party claims are those by a policyholder for damage to his property. Third party claims are those of a person contending that a policyholder is liable to him for damage to him. As to these drafts, Aetna's position below and on appeal is that these drafts were not evidence of liquidated claims but were issued as offers to settle claims and that, unless those offers were accepted by the payee's endorsement of the draft, Aetna had no fixed obligation to the claimant. Aetna does not contest the trial court's finding with respect to the five other types. The State of Alabama, on the other hand, contends that the evidence adduced below supports the trial court's findings that the subject drafts were issued to claimants only after such claimants had provided Aetna with any necessary releases, thus that these drafts were unclaimed property subject to the provisions of the Uniform Act.
In its final judgment the trial court made findings with respect to the internal procedures utilized by Aetna in the issuance and payment of drafts:
The court then added:
It should be noted that under Aetna's procedures a draft not presented for payment within four years following issuance was the subject of a stop payment order and thus was not automatically paid, but was the subject of review to determine whether payment should ensue.
The crucial question before us is whether there is evidence supporting the legal conclusion that these unpresented and unpaid drafts represented "moneys held and owing more than seven years after the moneys became due and payable."
Though not precisely on all fours with the facts of this case, the case of Allstate Insurance Company v. Eagerton, Ala., 403 So. 2d 172 (1981), furnishes clear guidance. In that case the insurance company similarly settled first and third party claims by drafts. Allstate's drafts provided on their faces that they were "void if not presented within six months after date of issue." Additionally, each bore an endorsement legend as follows:
Each also recited that it was in full settlement of all or a specified portion of the applicable claim.
After describing the internal accounting procedures which led to the issuance of drafts in partial or full settlement of claims, and which were never presented for *459 payment, this Court explained, at 403 So.2d 176:
It is significant that this Court's opinion in Allstate cited Kane v. Insurance Company of North America, 38 Pa.Cmwlth. 42, 392 A.2d 325 (1978), as persuasive authority. In Kane the insurance company was shown to have issued, inter alia, first party and third party drafts as Aetna had done here. The evidence of their issue was shown to be advice copies sent to the company cashier to serve as comparisons or presentment of the original, also as Aetna had done here. That court found:
In this case it was proved that Aetna was required to pay a third party claim only if Aetna's policyholder had been found liable to the claimant for damages for an act or an omission of its insured covered by the policy. As to first party claims, Aetna was required to pay only when the claimant had established that he had sustained loss or expenses covered by an Aetna policy and the amount of loss sustained. And during the period in question drafts were issued by Aetna routinely in efforts to settle claims before any obligation to do so had been established.
We note also that, although Aetna's draft did not on its face provide a voiding clause if not presented within six months, nevertheless Aetna did stop payment when the draft was not presented for payment within four years. According to the evidence, when such a stop payment entry was made, the draft was not thereafter paid but was subject to an internal review to determine whether payment should be made. At that point no accounting entry would be made because none were made when the drafts were issued.
It is apparent that the court below placed stress upon the negotiability of the drafts in question and upon its finding that "the substance" of the evidence was that "if releases were desired or required by Aetna, such releases were obtained from the payee of a draft prior to delivery of such draft." As to the negotiability of the drafts, that fact is irrelevant here, as it was in Allstate, supra, at 176. Their negotiability was neither an acceptance nor a presentment for payment and, moreover, had no effect upon Aetna's later determination to stop payment. The finding concerning possible releases *460 is not a finding that these drafts were evidence of any underlying obligation, such as the kind we called attention to in Allstate, supra, at 176, when we stated:
The speculation that releases, if required, were obtained, fails to establish that, in fact, releases were obtained in each instance which converted an unliquidated claim to a liquidated one. And although containing different conditional language than the drafts described in Allstate, Aetna's drafts did on their faces announce that they were issued "in satisfaction of [the claim]." Such language does not necessarily import a liquidated obligation.
Finally, it cannot be reasonably argued that these drafts represented "moneys held and owing ... unclaimed and unpaid" for more than seven years when the company stopped payment on them after four years and subjected each to an internal review. Such a determination itself removed any previous opportunity to settle each claim by accepting the draft and presenting it for payment.
We have concluded, therefore, that the trial court's application of the facts adduced below to the requirements of the statute as explained by our decision in Allstate, supra, was erroneous. The ore tenus rule in such an instance is inapplicable. Home Indemnity Company v. Reed Equipment Company, Inc., Ala., 381 So. 2d 45 (1980). Accordingly, the judgment is reversed and the cause is remanded for an order not inconsistent with this opinion.
REVERSED AND REMANDED.
TORBERT, C. J., and MADDOX, JONES and SHORES, JJ., concur.