Opinion
4 Div. 406.
October 4, 1960. Rehearing Granted November 15, 1960.
Appeal from the Circuit Court, Covington County, F.M. Smith, J.
Robt. B. Albritton, Albrittons Rankin, Andalusia, for appellant.
A loss payable clause in an insurance policy gives the person named as one to whom payment is to be made the superior right to recover to the extent of his or her interest, and the assured can only recover any balance in excess. Girard Fire Marine Ins. Co. v. Gunn, 221 Ala. 654, 130 So. 180; Capital City Ins. Co. v. Jones, 128 Ala. 361, 30 So. 674; Taber v. Royal Ins. Co., 124 Ala. 681, 26 So. 252; Gunn v. Palatine Ins. Co., 227 Ala. 245, 149 So. 672; Home Ins. Co. v. Tumlin, 241 Ala. 356, 2 So.2d 435. Right of beneficiary under insurance policy is primary right, and is essential feature of original contract itself and the beneficiary is a third party beneficiary. Mutual Savings Life Ins. Co. v. Hall, 254 Ala. 668, 49 So.2d 298; Liberty Nat'l. Life Ins. Co. v. Stringfellow, 38 Ala. App. 594, 92 So.2d 924. In insured's action on a credit insurance policy containing provision making the creditor the primary beneficiary to the extent of indebtedness of the insured, where the creditor is not a party, insured has the burden of showing a loss, the amount due under the policy, and that the indebtedness to the creditor has been satisfied in full. Home Ins. Co. v. Tumlin, supra. There was no evidence to support plaintiff's contention that he was the owner of the policy. No evidence was offered to show that the indebtedness to the named creditor beneficiary had been paid. The language of the policy is controlling under the circumstances, and appellant's motions for new trial should have been granted. Matthews Morrow v. Batson, 218 Ala. 378, 118 So. 749; Franklin Fire Ins. Co. v. Slaton, 240 Ala. 560, 200 So. 564; Byars v. Hollimon, 228 Ala. 494, 153 So. 748; Independent Life Ins. Co. v. Carroll, 219 Ala. 79, 121 So. 88.
Tipler Fuller, Andalusia, for appellee.
A policy of insurance naming the owner as the insured, with loss payable clause to a creditor, as his interest may appear, constitutes such creditor merely an appointee entitled to payment only in the event liability accrues to the insured. Under a policy of insurance providing that loss or damage shall be payable to creditor or debtor as their interest appears, the insurer agrees to a split of the liability justifying a separate claim on behalf of each. Home Loan Finance Co. v. Fireman's Fund, 221 Ala. 529, 129 So. 470; New Hampshire Fire Ins. Co. v. Curtis, 264 Ala. 137, 85 So.2d 441; Capital City Ins. Co. v. Jones, 128 Ala. 361, 30 So. 674. Although a policy issued to a mortgagor is taken out for the benefit of the mortgagee and is made payable to him, yet the mortgagor may sue thereon in his own name. The payee named in loss payable clause of insurance policy takes precedence only to the extent of his or her interest which is proven on the trial. American Equitable Assur. Co. v. Bailey, 25, Ala.App. 303, 147 So. 446; 26 C.J. 484, § 681; 8 Couch on Ins., § 2051. There is no error in the judgment granted below for failure of the Plaintiff to make the First National Bank of Opp a party to the suit. Such creditor could not recover without an affirmative showing of the extent of his interest at the time of the loss and had the insurer wished that issued disposed of, he should have made the creditor a party in the Court below or raised the question by affirmative pleading. An objection for failure to join the First National Bank of Opp as a party to the suit can not be raised for the first time on appeal. New Hampshire Fire Ins. Co. v. Curtis, supra; Aetna Ins. Co. v. Koonce, 233 Ala. 265, 171 So. 269; 8 Couch on Ins., § 2051; Camden Fire Ins. Ass'n v. Wandell, Tex.Civ.App., 195 S.W. 289; Fidelity Union Fire Ins. Co. v. Bickerstaff, Tex.Civ.App., 249 S.W. 539.
The original opinion in this case has, on Atlantic's application for rehearing, been withdrawn and the following is the opinion of the Court.
Robbins brought an action in the Covington Circuit Court against Atlantic under a one count complaint seeking $1,000 under a policy issued by Atlantic insuring him against the loss of sight from injury or disease. Robbins averred that he suffered a compensable loss of sight for which he had not been paid.
The jury's verdict against Atlantic and judgment thereon was for $1,000. The court overruled Atlantic's motion for a new trial.
The question for decision is: On a credit life insurance policy, must the borrower prove how much he owes the lender?
The amended complaint on which Atlantic took issue reads:
"Plaintiff claims of the defendants the sum of One Thousand ($1,000.00) Dollars plus interest and costs, for that on, to-wit, the 1st day of February, 1957, the defendant, Atlantic National Life Insurance Company issued a policy of insurance to the plaintiff, M.L. Robbins, whereby the defendant agreed, in consideration of the payment in advance of the weekly premium specified therein, to insure the plaintiff against loss of life through accidental means and against loss of sight or limb from injury or diseases. Plaintiff avers that subsequent to the effective date of said policy and while said policy was in full force and effect, all premiums due thereon having been paid to and accepted by the defendant, the plaintiff suffered loss of sight within the meaning of said policy of insurance, in that the plaintiff suffered the loss of sight in one eye. And the plaintiff avers that, although he has complied with all the terms and provisions of said contract on his part, the defendant has failed to comply with the following provisions thereof, viz., the defendant has wholly failed and refused to pay to the plaintiff the sum of One Thousand ($1,000.00) Dollars due and owing under the terms of said policy. Plaintiff avers that said policy is the property of himself."
To the complaint (besides a demurrer not of concern on appeal) Atlantic plead: "It is not guilty of the matters and things alleged in the complaint."
Atlantic argues two assignments of error, i. e., (1) the refusal of the affirmative charge; and (2) denial of new trial. Only two grounds of the motion for a new trial are brought into the argument, (a) the refusal of the affirmative charge; and (b) that the verdict was contrary to the great weight of the evidence.
The parties stipulated that Atlantic issued a "Master Group Credit [Life] Insurance Policy" to the First National Bank of Opp. In paragraph 1 of the policy, Atlantic insured "the lives of certain debtors" of the Bank. Paragraph 2 provided:
"Upon due proof of * * * the loss of sight of one eye as the direct result of accidental bodily injury independently of all other causes, and is [sic: "as"?] evidenced by a visible contusion or wound on the exterior of the body and the date of occurrence of each injury is not more than 90 days prior to the date such loss was sustained, the Company, on receipt at its Home Office of due and satisfactory proof of loss, will pay the creditor [the bank] the said amount, up to the amount of the debtor's indebtedness not to exceed $1,000.00, and the balance, if any, to the debtor or his assigns. * * * With respect to the eye, 'loss' means the entire and irrecoverable loss of sight."
The "certain debtors" were those between 18 and 65 years of age. The insurance was for a maximum term of three years. The amount of the coverage for a debtor who was under 60 years was $1,000:
"Each debtor between the ages (nearest birthday) of 18 and 60 years inclusive may be insured in connection with a loan granted by the Creditor [the bank] in an amount not to exceed the aggregate amount specified in paragraph 2 in the event of the dismemberment of the debtor. * * *"
Further clauses, pertinent here, provide:
"13. Upon the death or dismemberment of a debtor insured hereunder the Creditor [the bank] shall furnish due proof of death or dismemberment to the Company which shall include evidence of the death or dismemberment of the debtor and an affidavit by an officer of the Creditor certifying the amount due hereunder.
* * * * * *
"16. Beneficiary: The Creditor shall be the irrevocable beneficiary hereunder.
* * * * * *
"21. Refund of Unearned Premiums: If a loan is paid in full prior to the maturity of the loan, and if the Creditor requests a refund of the unearned premium and the cancellation of the insurance, the Company will cancel the insurance and refund the unearned net premium. If no written request is received by the Company from the Creditor, the insurance will remain in force for the period for which premiums were paid." (Italics added.)
The policy was supplemented, according to the stipulation, by a "certificate" which purports to paraphrase the policy and by a receipt form issued to Robbins at the Bank. Also, "the defendant [Atlantic] received notice and completed proof of loss forms."
There was no testimony as to whether or not The First National Bank of Opp still had any claim against Robbins on October 15, 1957, the date of the casualty. The shares between mortgagor and mortgagee under property policies become fixed at the time of loss. Aetna Ins. Co. v. Koonce, 233 Ala. 265, 171 So. 269.
But New Hampshire Fire Ins. Co. v. Curtis, 264 Ala. 137, 85 So.2d 441, seems to indicate that changed circumstances after loss may be considered in apportioning the underwriter's liability.
We consider (1) the court below was not in error in refusing the affirmative charge requested by Atlantic in writing, and (2) the court below committed reversible error in denying Atlantic's motion for a new trial on the ground that the verdict was against the great weight of the evidence.
Ordinarily, damages for the breach of a contract to pay money are measured by the amount due under the agreement. Here, however, while the cause of action is several as between Robbins and the Bank, the evidence fails to show a liquidated amount due either of them.
Capital City Ins. Co. v. Jones, 128 Ala. 361, 30 So. 674, 676.
This lack of proof prevents assessment of compensatory damages. But the breach alone, if proved (as the verdict here implies), entitles Robbins to nominal damages. Thus, in Wilson Co. v. Clark, 259 Ala. 619, 67 So.2d 898, 901, Mr. Justice Lawson says:
"Conceding, without deciding, that plaintiff did fail to prove actual damages, * * * it would not follow that defendant should have been given the general affirmative charge. If the jury found from the evidence that there was such a contract as claimed by plaintiff and that Rudder had authority to make such a contract for defendant, then plaintiff would at least have been entitled to recover nominal damages, for it is without dispute that no cattle were put on his pasture. * * *" — Citing authorities.
See also Corbin on Contracts, § 1001.
The language in Aetna Ins. Co. v. Koonce, supra [ 233 Ala. 265, 171 So. 271] approving "the rule sustaining a joint action," we take to mean as alternative and not exclusive of a separate action. Atlantic's promise to the Bank was different from its promise to Robbins. Indeed, the amount, if any, due one excluded pro tanto what Atlantic owed the other.
We think it clear from Capital City Ins. Co. v. Jones, supra, wherein Fire Ins. Cos. v. Felrath, 77 Ala. 194, was expressly overruled, that a mortgagor or mortgagee may separately sue on a fire policy.
"* * * So, in this case, we hold that the plaintiff can maintain this suit for the balance, if any, of the loss, after deducting the amount due upon the mortgage at the time of the loss. This is the promise of the defendant, and there is no good reason why it should not be enforced as made. — Palmer Sav. Bank v. Insurance Co. of North America, 166 Mass. 189 [44 N.E. 211, 32 L.R.A. 615]. This, of course, imposes the burden upon the plaintiff of showing there was a balance after paying the mortgage, and the amount of such balance." — 128 Ala. at page 365, 30 So. at page 676.
Here we have no demurrers, pleas in abatement, nor claim of lack of the real party in interest. Under the Jones case, supra, we consider that on this record Robbins stated a separate cause of action. Since no objection for variance was made to the policy (which showed the Bank's possible interest) coming into evidence, the sole question is the sufficiency of the evidence to support the verdict.
As above shown the absence of proof as to the Bank's interest in the proceeds of the policy at the most would entitle Robbins to nominal damages. Inasmuch as we consider no useful purpose would be served by a conditional affirmance we are reversing and remanding this cause for new trial.
Reversed and remanded.