Title: Alabama Kraft Co. v. SOUTHEAST ALA. GAS
Citation: 569 So. 2d 697
Docket Number: N/A
State: Alabama
Issuer: Alabama Supreme Court
Date: September 28, 1990

569 So. 2d 697 (1990)
ALABAMA KRAFT COMPANY, A DIVISION OF GEORGIA KRAFT COMPANY (now known as Inland-Rome, Inc.) (plaintiff)
v.
The SOUTHEAST ALABAMA GAS DISTRICT and Duff &amp; Phelps, Inc. (defendants).
DUFF &amp; PHELPS, INC. (third-party plaintiff)
v.
Vera SMITH, as executrix of the estate of Robert J. Smith, deceased (third-party defendant).
89-715-CER.

Supreme Court of Alabama.
September 28, 1990.
Warren B. Lightfoot and Madeline H. Haikala of Lightfoot, Franklin, White &amp; Lucas, Birmingham, and Robert H. Harris and James N. Walter, Jr. of Capell, Howard, Knabe &amp; Cobbs, Montgomery, for Alabama Kraft Co.
John R. Matthews, Jr. and Clyde C. Owen, Jr. of Ball, Ball, Matthews &amp; Novak, Montgomery, and Edward C. Fitzpatrick and Patrick E. Deady of Lord, Bissell &amp; Brook, Chicago, Ill., for Duff &amp; Phelps, Inc.
M. Roland Nachman, Jr. and James A. Byram, Jr. of Balch &amp; Bingham, and Griffin Sikes, Montgomery, for Vera Smith, as executrix of the estate of Robert J. Smith, deceased.
HORNSBY, Chief Justice.
Pursuant to Rule 18, A.R.App.P., this Court accepted the following certified questions from the United States District Court:
The following statement of facts accompanied the certified questions:
"Section 43-2-350(b) provides, in part, as follows:
The purpose of § 43-2-350(b) is "`to promote a speedy, safe and definitive settlement of estates by giving the personal representative notice of all claims against the estate in his hands.'" Moore v. Stephens, 264 Ala. 86, 91, 84 So. 2d 752, 758 (1956) (quoting Smith v. Fellows, Adm'r, 58 Ala. 467 (1877); see, e.g., Lett v. Watts, 463 So. 2d 138 (Ala.1984); Motley v. Battle, 368 So. 2d 20 (Ala.1979); Fretwell v. McLemore, 52 Ala. 124 (1875). The phrase "[a]ll claims against the estate of a decedent" has been interpreted to include both contract and tort claims. Ivory v. Fitzpatrick, 445 So. 2d 262 (Ala.1984); Fox v. Wood, 382 So. 2d 1118 (Ala.1980); Moore v. Stephens, supra. See also Motley v. Battle, supra (phrase applies to counterclaims). However, this Court has long recognized an exception to the presentment requirement under § 43-2-350(b) for contingent claims that have not accrued at the time letters testamentary have been issued. See Hartford Accident &amp; Indem. Co. v. Kuykendall, 287 Ala. 36, 247 So. 2d 356 (1971); Fretwell v. McLemore, supra, and Jones' Executors v. Lightfoot, 10 Ala. 17 (1846). This Court stated in Fretwell:
52 Ala. at 140-41 (citations omitted). In Moore v. Stephens, supra, this Court further defined a "contingent claim" as excluding claims for unliquidated damages:
264 Ala. at 89, 84 So. 2d  at 755-56 (quoting Hicks v. Wilbur, 38 R.I. 268, 94 A. 872 (1915)) (emphasis added).
This Court has held that one who acts as a surety is not barred from bringing a claim against his principal. In Hartford Accident &amp; Indem. Co. v. Kuykendall, supra, J.P. Kuykendall brought suit for a declaration of his rights against the administrator of the estate of L.B. White. Kuykendall had allegedly acted as a surety for L.B. White on two promissory notes. He argued that because he paid the notes as surety he had a claim against the decedent's estate and that the claim was not barred under the nonclaim statute. This Court held that Kuykendall's claim was contingent and therefore fell under the nonclaim statute exception. See Fretwell v. McLemore, supra; see also Edgehill Corp. v. Hutchens, 282 Ala. 492, 213 So. 2d 225 (1968) (rent claim was contingent where lease provided for contingencies).
Principal-surety relationships are similar to master-servant or principal-agent relationships because in both cases a principal, master, or one acting as a surety may recover from his agent, servant, or principal, respectively, once the underlying liability or obligation is paid. In In re Covington Grain Co., 638 F.2d 1357, 1362 (5th Cir.1981), the court stated that "[u]nder the principles enunciated in American Southern Insurance Co. v. Dime Taxi Service, Inc., ... a master is entitled to recover from his servant damages which the master has been required to pay by reason of the negligence of his servant." In American Southern Ins. Co. v. Dime Taxi Serv., Inc., 275 Ala. 51, 151 So. 2d 783 (1963), this Court stated that a master could collect from its servant (or its servant's liability insurer) damages paid by reason of its legal responsibility for the servant's negligent acts. See Huey v. Dykes, 203 Ala. 231, 82 So. 481 (1919). This right of indemnity is usually founded upon an implied contract or legal duty. See Travelers Indemnity Co. v. Firestone Tire &amp; Rubber Co., 360 F. Supp. 1328 (S.D.Ala.1973); Belcher v. Birmingham Trust Nat'l Bank, 348 F. Supp. 61 (N.D.Ala.), stay denied, 395 F.2d 685 (5th Cir.1968). Such a right to indemnity does not arise, however, until one acting as surety satisfies his principal's obligation, or until a master or principal pays damages arising from his servant's or agent's negligent or fraudulent acts. Nevertheless, this Court recognizes a difference between principal-surety relations and master-servant or principal-agent relations, because a master or principal in an agency situation normally has more control over its servant or agent than does one who acts as surety. We find that the right *701 to indemnification for a master or principal is contingent and falls within the established exception to § 43-2-350(b). However, a master or principal in an agency relationship must prove that he or she, acting with reasonable diligence, did not or could not discover the servant's or agent's tortious acts resulting in the claim against the master or principal.
Duff &amp; Phelps's claim is not barred by § 43-2-350(b), because it is contingent in nature and thus falls within the established exception to § 43-2-350(b). Because Duff &amp; Phelps may proceed with its claim without bar, we find it unnecessary to consider the second question.
QUESTION ANSWERED.
JONES, ALMON, SHORES, ADAMS and KENNEDY, JJ., concur.
MADDOX and STEAGALL, JJ., dissent.
MADDOX, Justice (dissenting).
Because I think that Duff &amp; Phelps's claim is not a "contingent claim," and thus is barred, I must respectfully dissent.
The words "all claims against the estate of a decedent" in Ala.Code 1975, § 43-2-350(b), include tort claims. Ivory v. Fitzpatrick, 445 So. 2d 262 (Ala.1984). This Court has recognized an exception to the presentment requirement in the Alabama statute of nonclaim for contingent claims that have not accrued at the time the letters testamentary issue. See Hartford Accident &amp; Indem. Co. v. Kuykendall, 287 Ala. 36, 247 So. 2d 356 (1971); Fretwell v. McLemore, 52 Ala. 124 (1875), and Jones' Executors v. Lightfoot, 10 Ala. 17 (1846). This Court stated in Fretwell:
52 Ala. at 140-41. In Moore v. Stephens, 264 Ala. 86, 84 So. 2d 752 (1956), this Court further defined a "contingent claim" as excluding claims for unliquidated damages:
264 Ala. at 89, 84 So. 2d  at 755-56 (quoting Hicks v. Wilbur, 38 R.I. 268, 94 A. 872 (1915)).
Duff &amp; Phelps argues that its claim for indemnification against Smith's estate is a contingent claim in that it would never have accrued if Alabama Kraft Company had not sued it; in other words, Duff &amp; Phelps argues that it will have suffered no legal injury until it is required to pay damages to Alabama Kraft, if it is so required. I am of the opinion that Duff &amp; Phelps misconstrues the nature of the claim it has against Robert J. Smith's estate. Duff &amp; Phelps's indemnification claim is based upon the alleged negligence of Smith in not passing the gas refunds on to Alabama Kraft. Smith's alleged failure to perform his duties with due care constitutes legal injury, whether or not the full amount of the damages is known or apparent; Smith's actions occurred during his lifetime, and Duff &amp; Phelps certainly would have been able to sue Smith for his alleged breach of duty immediately after it occurred, regardless of whether the full amount of the damages was known. As this Court stated recently in Watson, Watson, Rutland/Architects, Inc. v. Montgomery County Bd. of Educ., 559 So. 2d 168, 175 (Ala.1990):
Here, Duff &amp; Phelps's claim is for the allegedly negligent acts of Smith occurring while he was alive. The alleged circumstance that Duff &amp; Phelps did not know that the gas refunds had been withheld would not constitute an exception to the statute of limitations. "[N]either difficulty of ascertainment nor ignorance of the cause of action will toll the statute of limitations unless superinduced by fraud." Garrett v. Raytheon Co., 368 So. 2d 516, 520 (Ala.1979). However, even fraud is not an exception that will extend the time under the nonclaim statute. Yniestra v. Tarleton, 67 Ala. 126, 129 (1880).
The settlement of estates is a desirable goal. In this case, the principal has been sued. Its agent allegedly committed the wrong. The question is: Should the principal, if sued after its agent dies, be able to seek indemnification from the estate of the agent if the principal is found to be liable. I would answer "yes, if" the claim is filed within the period allowed by law.
I would hold that Duff &amp; Phelps's claim against Smith's estate is not a "contingent claim" so as to be excepted from § 43-2-350(b). Therefore, I would answer that Duff &amp; Phelps's claim against Smith's estate is barred by § 43-2-350(b).
STEAGALL, J., concurs.