Case Name: CARREKER v. NATIONAL DIVERSIFIED, INC.
Court: Court of Appeals of Georgia
Jurisdiction: Georgia
Decision Date: 1975-07-07
Citations: 135 Ga. App. 511
Docket Number: 50311
Parties: CARREKER v. NATIONAL DIVERSIFIED, INC.
Judges: Bell, C. J., Pannell,P. J., Deen, P. J., Stolz, Webb and Marshall, JJ., concur. Quillian, J., dissents. Evans, J., dissents with opinion.
Reporter: Georgia Appeals Reports
Volume: 135
Pages: 511–518

Head Matter:
50311.
CARREKER v. NATIONAL DIVERSIFIED, INC.

Opinion:
Clark, Judge.
In this suit for an unpaid balance on a promissory note made to finance the premiums to obtain issuance of a life insurance policy, the defendant-maker acknowledged a prima facie case in the plaintiff-payee and assumed the burden of proof. His defenses present three questions on this appeal: (1) Was the lender required to be licensed under the Georgia Industrial Loan Act? (2) Was there a total failure of consideration? (3) Was there a partial failure of consideration? It is submitted that the answers to these three questions should be in the negative. Accordingly, the trial court should be affirmed.
National Diversified, Inc., a subsidiary of Coastal States Life Insurance Company, was engaged in the business of financing insurance premiums on policies of Coastal States and its subsidiary insurance companies. An agent of Coastal States sold Carreker an insurance policy which became effective as of August 3, 1970. That was the same date of the promissory note signed by plaintiff. The principal amount of the loan together with a $15 cash payment was to cover the first two annual payments of a life insurance policy acquired by the maker.
Delivery of the policy and acceptance thereof is evidenced by Exhibit No. 4 dated August 26,1970. In this document addressed to Coastal States Life Insurance Company the maker acknowledged he had checked over the policy and represented to the insurer that "My policy is in force and I am fully covered according to its terms and conditions until August 3, 1972 at which time my third annual premium of $383.95 will be due and payable directly to Coastal States Life Insurance Company." (T. 69). This exhibit further stated that "My note, given in connection with the first two annual premiums is payable directly to National Diversified, Inc., . in two installments as outlined below." (T. 69). This acceptance further notified Coastal States of the insured's assignment of the policy as collateral to secure the note and loan.
At the trial defendant used only two witnesses. These were an officer of the plaintiff and the Coastal States agent who had sold the insurance policy. Among the exhibits identified by them and introduced as defendant's evidence were the original promissory note, the original insurance policy, and the acceptance of the policy from which we have quoted.
Upon the conclusion of defendant's evidence the court granted a motion for directed verdict for plaintiff for the principal balance owing on the promissory note plus 8% interest from its date as provided therein and attorney fees. This appeal is from the judgment rendered on that verdict.
1. Appellant's first enumeration of error asserts that plaintiffs failure to possess a license under the Georgia Industrial Loan Act made the note null and void under the provisions of Code Ann. § 25-9903. This is without merit as the statute expressly exempts "[P]ersons making loans and charging interest thereon at a rate of not more than eight percent simple interest per annum." Code Ann. § 25-305.
2. Nor is there any merit in the second enumeration contending there was a total failure of consideration because the defendant obtained the insurance policy which the plaintiff had agreed to procúre.
If the policy had not been delivered as agreed plaintiff would nevertheless have been liable to defendant for such failure to procure the policy subject to the application. In a case involving an agreement to obtain credit life insurance on a loan, Justice (previously Judge) Quillian pointed out that under circumstances similar to those here the duty to obtain credit life insurance was created. Consumers Financing Corp. v. Lamb, 217 Ga. 359, 363 (2) (122 SE2d 101). Similar holdings are Farmers & Merchants Bank v. Winfrey, 89 Ga. App. 122 (78 SE2d 818) (bank agreed to secure insurance on property conveyed by plaintiff to secure a loan); and Home Bldg. &c. Assn. v. Hester, 213 Ga. 393 (99 SE2d 87) (lender agreed to procure term life insurance to cover balance due on loan).
3. Nor was there a partial failure of consideration as asserted in the third enumeration of error. The basis of appellant's argument is that defendant was charged interest at 8% per annum effective from August 3, 1970 whereas the payment by Diversified to Coastal States was made on September 10. This fails to recognize that the defendant was fully insured effective August 3 as shown by his insurance policy. The fact that Diversified as a subsidiary of Coastal States had an arrangement whereby credit was extended to Diversified until it was billed along with premiums due for other policies financed by it did not affect the insured's status. He obtained from Coastal States what Diversified had agreed to procure: a life insurance policy in force for two years from August 3, 1970.
4. My disagreement with the dissent rests in our interpretation of the facts. The promissory note constituted a transaction between the maker and the payee with the plaintiff having performed by procurement of the life insurance policy. Defendant received what he contracted for, that being life insurance effective as of August 3,1970. The policy language quoted in the dissent could not have been used to avoid payment if the insured had died after the effective date of the contract. The credit transaction between the insurer and its subsidiary resulted in the first premium having "been actually paid" (to use the contractual words).
Additionally, the language contained in Exhibit 4 quoted in our statement of facts created an estoppel upon the Coastal States Life Insurance Company which it had prepared and which its agent had the insured execute.
Furthermore, the testimony presented by the defendant through the agent for the Coastal States confirms the fact that the insured received his contractual coverage effective August 3. In using him as a witness the defendant chose to establish his credentials as an expert, a chartered life underwriter. Thereafter, there was elicited from him that the defendant ". . . was covered from the minute I walked out the door. If he had died any time between August 3 and August 26 or any time in that first two years, the proceeds would have been paid as a legal obligation." (T. 49). This witness also testified in his capacity as the agent for the insurer that "the first premium was paid, in effect, when he signed the note." (T. 58).
In short, the transaction here did not involve any question as to the date when the maker obtained the use of the money for which he was charged interest. As between the maker and the payee, the payee procured life insurance coverage for the maker effective from the date of the promissory note. As the interest at the rate of 8 percent was computed upon the principal balance owing plaintiff from the date of the effective date of the policy, there was no usury.
5. A prima facie case was admitted by appellant. There was no conflict as to any material issue and the evidence introduced with all reasonable deductions therefrom demanded a verdict for plaintiff. Code Ann. § 81-150 (a).
Judgment affirmed.
Bell, C. J., Pannell,P. J., Deen, P. J., Stolz, Webb and Marshall, JJ., concur. Quillian, J., dissents. Evans, J., dissents with opinion.
Submitted March 10, 1975
Decided July 7, 1975
Rehearing denied July 24, 1975
David W. Griffeth, for appellant.
Lewis N. Jones, J. Norwood Jones, Jr., for appellee.