text:
    Thomas E. POWELL v. REPUBLIC NATIONAL LIFE INSURANCE CO. et al.
    SC 1608.
    Supreme Court of Alabama.
    Oct. 1, 1976.

      J. Ronald Storey, Dothan, for appellant.
    Lee & Mclnish, and Alan C. Livingston, Dothan, for appellee Republic National Life Insurance Co.
    Harold Albritton, Andalusia, and Jere C. Segrest, Dothan, for Max K. Thompson.
   ALMON, Justice.

This is an appeal in a disability insurance case from a summary judgment in favor of one of the defendants and from a directed verdict and judgment in favor of the other defendant.

On September 26, 1973, Thomas E. Powell, plaintiff-appellant, filed his complaint against Republic National Life Insurance Company (hereinafter Republic National) and Max K. Thompson d/b/a Max K. Thompson Insurance Agency (hereinafter Thompson). Count One of the complaint alleged that Republic National and Thompson agreed to insure the appellant to provide him with disability and hospitalization coverage and that the policy proceeds were due and owing. Count Two and Count Three (added April 16,1975), alleging intentional misrepresentation, were against Thompson only.

On December 7, 1973, Republic National filed a motion for summary judgment on the grounds that no genuine issue of fact existed and defendant was entitled to prevail as a matter of law. The motion was supported by the affidavit of George Mona-ghan, Assistant Vice President, Underwriting Division, and the exhibits attached thereto. On March 5,1974, the court granted Republic National’s motion for summary judgment. Powell appealed the granting of the motion to this court and the appeal was dismissed on the ground that the judgment was not a final judgment in accordance with Rule 54(b) A.R.C.P. Powell v. Republic National Life Ins. Co., 293 Ala. 101, 300 So.2d 359 (1974).

The case against appellee Thompson was tried on August 27, 1975. At the close of the appellant’s evidence, the judge granted a directed verdict as to Count One (contract) in favor of Thompson. Count Two (intentional misrepresentation) was conceded to by appellant. Count Three (intentional misrepresentation) was tried by a jury which failed to reach a verdict and a mistrial was declared. Following the mistrial, the court granted Thompson’s motion for a directed verdict and this appeal was perfected by Powell.

At the trial Powell testified as follows:

Powell called Thompson at his office around the latter part of May, 1973, regarding the possible purchase of a disability policy. The following night Thompson came to Powell’s house and discussed disability insurance with him. Thompson told Powell that he wrote for several companies but that he thought the best company for Powell was Republic National. Thompson told him that Republic National was “more or less the best,” and when asked about the benefits, Thompson said that as far as sickness, there would be a waiting period but if Powell took out the policy he would be automatically covered for an accident. Powell told Thompson he would think about it and get back in touch with him.

On June 18,1973, Powell went to Thompson’s office and told Thompson he had decided to take the policy they had been discussing. Thompson asked Powell the necessary questions, filled out the application, and had Powell sign it. At the same time Powell filled out an automatic payment form whereby the correct amount of the premium would be taken from his checking account each month thereafter and gave Thompson a check in the amount of $20.00.

At the time the application for the disability policy was completed, Powell and Thompson discussed the fact that Powell had an ulcer problem in the past. According to Powell, Thompson said that there might be a rider placed on the policy to exclude sickness related to the ulcer problem but never said anything about the policy not being issued.

Subsequently, on June 26, Powell was accidentally shot in the foot by his brother-in-law with a rifle. He was hospitalized off and on, had his foot amputated and was disabled and unable to work for approximately nine months out of the one year period from June 18, 1973, until June 18, 1974.

Mr. Powell, his wife, and his father testified that Mr. Thompson had assured each of them on several occasions after the accident that Mr. Powell was fully covered and that it would be just a matter of time before he received a check from Republic National.

Thompson took the position at trial that the accidental disability insurance did not commence as soon as Mr. Powell filled out the application. He pointed to the following statement in the application:

“I understand that if the first full premium is paid with the application and if the application is approved by the Company at its Home Office without modification of the plan of insurance, amount of insurance, or premium, the policy will be effective from the date of the application. If the application is not so approved, the sum collected will be returned, unless a modified policy, effective on the date of issue, is accepted by the appellant.”

The trial court consistently ruled that oral testimony would not be admitted to vary this provision of the written application.

Thompson testified in substance as follows:

The application was received in Dallas on June 20 and on June 26 Powell was shot in the foot. During the next two months Thompson made continuing efforts to get the policy issued. On July 2 Republic National sent a request for medical information to Dr. Houghton, who was named in the application as having been the applicant’s physician in connection with a prior stomach infection. Republic National had not been advised of Powell’s accident. On July 22 or 23 Thompson was advised by Republic National that they were still awaiting a report from Dr. Houghton. Thompson called the doctor’s office and was assured that the information was being sent. On August 6 Thompson received a letter from Republic National stating that they had not received the attending physician’s statement and enclosing a refund check for $20.00 made payable to Powell. Thompson called Dr. Houghton’s office again, was again assured that the medical information was on the way, and returned the $20.00 refund check to Republic National with a memo advising that the physician’s statement was on the way.

On August 20 Thompson received another letter from Republic National advising that they still had not received the medical statement and again sending a $20.00 refund check. The following day Thompson returned the check to Republic National again and continued his efforts to obtain medical forms from the doctor’s office or from the hospital. On September 4 Thompson for the third time received a refund check for Powell from Republic National with a letter stating that the doctor had advised that he had no records for Powell and that the application was no longer acceptable. Thompson called the hospital again regarding the records and was told to get an authorization from Powell. He wrote Powell the same day sending him an authorization form to sign. The following day, September 5, Thompson received a telephone call from Republic National advising him that they had received a telephone call from Powell the previous day and directing Thompson to deliver the refund check to Powell and to tell him his application had been rejected because the medical records had not been received. With that, Thompson finally gave up his efforts to get the policy issued and sent Powell his refund check.

The first issue raised by appellant is whether the court erred in granting summary judgment in favor of Republic National. Summary judgment is governed by Rule 56 of the Alabama Rules of Civil Procedure which reads, in pertinent part as follows:

56(c) “. . . The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. . . .”

Mr. Monaghan, Assistant Vice President, Underwriting Division, submitted an affidavit in support of Republic National’s motion for summary judgment. The affidavit set forth the company’s correspondence with Thompson and Powell, essentially as was testified to at trial, and stated that because they could not obtain Powell’s medical records on August 30, 1973, “the company again returned the applicant’s check for the premium to Max K. Thompson for refund to Thomas E. Powell and the company informed Max K. Thompson that the application was no longer acceptable.”

In response to the motion and affidavit, Powell submitted an affidavit primarily related to his conversations with Max Thompson.

Appellant’s main argument goes to a question of law. He claims that the following statement in the application is actually a binder:

“I understand that if the first full premium is paid with the application and if the application is approved by the Company at the Home Office’ . . . the policy will be effective from the date of application.”

Appellant’s argument that the above clause is a binder and that he was temporarily covered until the application was approved or denied appears to be advanced under two somewhat separate theories of contract law — interpretation of contract and unconscionability. In Gaunt v. John Hancock Mutual Life Ins. Co., 2 Cir., 160 F.2d 599, cert. den. 331 U.S. 849, 67 S.Ct. 1736, 91 L.Ed. 1858 (1947), a clause in an application for life insurance read:

“ . . . [I]f the Company is satisfied that on the date of the completion of Part B of this application I was insurable . and if this application . is, prior to my death, approved by the Company at his Home Office, the insurance applied for shall be in force as of the date of completion of said Part B. ...” Id. at 599-600.

In interpreting this clause, Judge L. Hand noted the following:

“An underwriter might so understand the phrase [‘if the application, including Part B, is prior to my death, approved by the Company, at its Home Office,’ as a condition subsequent to the promise that ‘the insurance shall be in force on the date of the completion of Part B’], when read in its context, but the application was not to be submitted to underwriters; it was to go to persons utterly unacquainted with the niceties of life insurance, who would read it colloquially. It is the understanding of such persons that counts; and not one in a hundred would suppose that he would be covered, not ‘as of the date of completion of Part B,’ as the defendant promised, but only as of the date of approval. . . . But it does greater violence to make the insurance ‘in force’ only from the date of ‘approval’; for the ordinary applicant who has paid his first premium and has successfully passed his physical examination, would not by the remotest chance understand the clause as leaving him uncovered until the insurer at its leisure approved the risk; he would assume that he was getting immediate coverage for his money. . . . It is true that in Connecticut as elsewhere the business of writing life insurance is not colored with a public interest; yet in that state, again as elsewhere, the canon contra proferen-tem is more rigorously applied in insurance than in other contracts, in recognition of the difference between the parties in their acquaintance with the subject matter. A man must indeed read what he signs, and he is charged, if he does not; but insurers who seek to impose upon words of common speech an esoteric significance intelligible only to their craft, must bear the burden of any resulting confusion.” Id. at 601-602.

In Western and Southern Life Ins. Co. v. Vale, 213 Ind. 601, 12 N.E.2d 350 (1938), the applicant’s receipt read as follows:

“ . . . Said amount [first premium] is to be applied on account of premiums in the event such policy is issued, otherwise to be returned.
“Provided the insured be in sound health ... on the date of said application, the company’s liability under such policy, if and as issued, shall commence as of the date of said application.” Id. at 605, 12 N.E.2d 350, 352.

To this, the court commented:

“ . . .It may be that the acceptance of the application and of his money is a ‘qualified one,’ but it cannot be doubted that the company has represented to the applicant that it has become conditionally liable under the policy for which he had applied, and that the ordinary person, and especially the ordinary applicant for industrial insurance, would be led to believe that he is conditionally insured. It would be unconscionable to permit an insurance company, issuing such a receipt and receiving a premium from an applicant, part of which was to pay for protection under its policy from the date of the application to the date of acceptance, to say that it had not bound itself to give anything whatever for that portion of the premium; that it deliberately intended to accept the premium for that period, but that it never intended to, and that it had not insured the applicant for that period. . . . ” (Emphasis added.) Id. at 611, 12 N.E.2d 350, 354.

In Starr v. Mutual Life Ins. Co. of New York, 41 Wash. 228, 83 P. 116 (1905), the court commented on a clause in an insurance application “making the insurance in force from this date, provided this application shall be approved ... at the head office . . . .” Id. at 230, 83 P. 116, 117.

“ . . . The object of the second provision of the application, above quoted, is not entirely clear, especially from the standpoint of the insured. If there was to be no contract of insurance in any event until the application was approved at the home office and a policy issued thereon, it would seem entirely immaterial to the insured whether the contract related back to the date of the application or not. If he lived until the application was approved and a policy issued, it would seem a matter of indifference to him whether he had been insured during the interim between the date of the application and the date of the issuance of the policy. On the other hand, if he died before the application was approved and the policy issued, his beneficiaries would derive no benefit from the insurance. The chief object of the provision would, therefore, seem to be to enable the insurance company to collect premiums for a period during which there was in fact no insurance, and consequently no risk.” Id. at 231-232, 83 P. 116, 117.

The court in Francis v. Mutual Life Ins. Co. of New York, 55 Or. 280, 106 P. 323 (1910), responded to a similar clause:

“ . . . The clause seems to be a mere trick on the part of the insurance company to deceive the applicants into the belief that they have temporary insurance, and thereby induce them to part with their money in advance of the issuance of the policy. It is a practice unworthy of a great business corporation, and is commented upon by Rudkin, J., in Starr v. Mutual Life Ins. Co., 41 Wash. 228, 83 P. 116, in terms none too severe.” Id. at 292, 106 P. 323, 327-328.

The annotation, “Temporary life, accident, or health insurance pending approval of application or issuance of policy,” (2 A.L.R.2d 943; 2 A.L.R.2d Later Case Service 239) explains the reasoning behind such clauses:

“Since, in the absence of a specific agreement, the payment of the first premium and the delivery of the policy are concurrent acts, a period intervenes between the signing of the application by the applicant and the delivery of the policy. During this period no money has been advanced to the insurance company, and no insurance is in effect. This interval, of a few days to several weeks, depending upon the time consumed in investigation and physical examination of the applicant, in passing upon his application at the home office, and in the traveling of the application and policy to and from the home office, is highly undesirable from the point of view of the insurer as well as of the applicant. The disadvantage to the applicant consists in the fact that he is not covered by insurance during this period, while the disadvantage to the insurer consists in the fact that during this period the applicant possesses the power to revoke the offer made in his application. This disadvantage is a very real one as far as the insurer is concerned, since if the applicant decides to exercise his power, either because he chooses not to carry any insurance at all, or because he chooses to purchase it of a rival company, the company suffers a loss of what it has expended for the investigation and medical examination of the applicant, aside from the loss of business itself.
Binding receipts.
“To obtain some measure of protection against the applicant’s arbitrary withdrawal of his offer during the company’s extensive investigation of his insurability, the insurance companies have hit upon the idea of issuing so-called binding receipts to the applicant upon the payment of the first premium. These binding receipts, or conditional binding receipts, as these instruments are sometimes, though less frequently, called, usually contain a provision which, in some instances, is duplicated in the application itself, to the effect that the insurance shall be considered as in force from the date of the receipt, or the date of the medical examination, provided the application is approved and accepted at the home office of the insurer. Sometimes the date of approval or of issuance of the policy is chosen as the date the policy shall become effective, and in some instances no condition is imposed upon the applicant. The exact language of these provisions varies greatly.
The issuance of these binding receipts effectively does away with the disadvantage threatening the insurer. They protect it in two ways: The applicant to whom a binding receipt is issued feels, as a rule, contractually obliged to perform and, should he withdraw his application, he is unlikely to resort to a lawsuit to recover the relatively small sum paid. In addition to achieving this primary object, the issuance of a binding receipt has the incidental advantage for the insurer that it serves to give the insurer the use of the premium money at the earliest date possible and that it offers a selling point of which no agent fails to make the utmost in his talks with the prospective customers.” 2 A.L.R.2d 943, 945-947.

See also Service v. Pyramid Life Insurance Company 201 Kan. 196, 209-210, 440 P.2d 944, 956 (1968).

In response to the theory that the canon contra proferentem (against the party who proffers a thing) should apply, appellee cites Alabama, Gold Life Ins. Co. v. Mayes, 61 Ala. 163 (1878). Alabama Gold contained a clause in a receipt very similar to the one in question. “The said George Blakely shall be considered as insured from the date of this receipt, if said application shall be approved and accepted by said company . . . .” Id. at 164. The court held that the application was no more than a proposition to enter into a contract of insurance. “The receipt discloses, as we have said, the true character of the transaction, a proposal for a contract to an agent, the. agent reserving to his principal, from abundant caution, the absolute and unqualified right of acceptance or rejection.” Id. at 167.

Appellee also cites United Insurance Co. of America v. Headrick, 275 Ala. 594, 157 So.2d 19 (1963). However, in United Insurance the application read: “. . . and do you agree and understand that this application shall not be binding upon the Company till accepted by the Company? Yes.” Id. at 595, 157 So.2d 19, 20. The case does not indicate that if the applicant were approved the approval would relate back to the date of the application. Thus, United Insurance would not apply to the instant situation.

In the recent case of Barnes v. Atlantic & Pacific Life Ins. Co. of Amer., 295 Ala. 149, 325 So.2d 143 (1975), this court confronted a clause of an insurance receipt stipulating that the effective date of the policy would be the later of:

“. . . date of application, or date of medical examination, if required, provided that the
“1. proposed insured is determined by the Company at its Home Office in Atlanta, Georgia, in accordance with its rules and practices, to be insurable on such date for the policy exactly as applied for;
“2. first full premium is paid in cash on date of application;
“3. policy is issued exactly as applied for within 30 days from this date;
“4. total insurance in force with the Company on the life of the proposed insured, including amount now applied for, will not exceed $50,000.00.” Id. at 152, 325 So.2d 143, 146.

No medical examination had been required.

On the question of ambiguity, Justice Bloodworth stated that:

“. . .we see no ambiguity under the language at hand here. The policy provides that, if a binding receipt has been issued, the effective date of the policy is to be determined under the provisions of the binding receipt. The binding receipt provides that its date is to be the effective date of the policy only if certain conditions are satisfied. . .”

Id. at 157, 325 So.2d 143, 151.

The application presently before us is one for hospitalization and disability insurance. The clause in question states, in' effect, that the effective date of the policy is from the date of the application if the first premium is paid then and if the company subsequently approves the application without modification. Based on Alabama case law, we cannot say that the clause is ambiguous. Alabama Gold Life Ins. Co. v. Mayes, supra; Barnes v. Atlantic & Pacific Life Ins. Co. of Amer., supra.

However, that does not answer the question of whether the clause is unconscionable. This question would seem to turn on whether the applicant received any benefit between the date of the application and the date of approval. Appellee notes in brief that “of course, the insurer cannot arbitrarily withhold its acceptance of the application nor may an insurer reject the application merely because a loss has occurred following the date of the execution of the application.” If such were the case, an applicant would receive a benefit. However, in Alabama Gold Life Ins. Co., supra, this court adopted the language of the United States Supreme Court in Ins. Co. v. Young’s Admr., 23 Wall 85, 106, 90 U.S. 85, 106, 23 L.Ed. 152, 154, (1875).

“It was clearly within the power of the company, under the condition expressed, wholly to reject the application, without giving any reason; or to accept the proposition with such modifications of the term specified, and of the usual conditions of such policies, as it might see fit to prescribe. The entire subject was both affirmatively and negatively within its choice and discretion.” Id. at 169.

Moreover, Republic’s agency contract with Thompson authorizes him “to deliver policies of insurance and annuities as directed by the Company, if the proposed insured is in good health and the first premium has been paid . . .’’In other words, Thompson is authorized to deliver the policy only if the applicant is in good health at the time of delivery, not merely if he had been in good health at the time of payment of the first premium. In Alabama, delivery is complete upon mailing of the policy by the insurance company to the agent. United Ins. Co. of America, supra. Yet that does the insured little good if he never becomes aware that the policy was mailed in the first place.

Furthermore, if approval may not be arbitrarily withheld, who is to determine what is “arbitrary”—the courts? Surely, the conclusion that the clause before us is unconscionable would be less intrusion into the insurance industry than would be the courts deciding whether an insurance company “arbitrarily” withheld approval of an application.

From what we have said with regard to the contract clause in question, it necessarily follows that under the circumstances of this case we must conclude that the clause coupled with payment of the premiums created a temporary binder. It was therefore error to grant summary judgment for Republic National.

In view of our holding, the appeal against Thompson is moot, and therefore is dismissed. The summary judgment is reversed and the cause is remanded.

REVERSED AND REMANDED.

BLOODWORTH, MADDOX, FAULKNER, JONES, SHORES, EMBRY and BEATTY, JJ., concur.

HEFLIN, C. J., concurs in the result.

      . The annotation, “Temporary life, accident, or health insurance pending approval of application or issuance of policy,” (2 A.L.R.2d 943; 2 A.L.R.2d Later Case Sendee, 239) covers the subject of temporary insurance well. The writer grouped the variety of insurance clauses into one of four types:
      “(1) The first type of contract, around which most of the existing conflict centers, usually provides that any insurance shall, by reason of the payment of a premium at the time of the application, be in force from the date of the application (or of the medical examination), provided the application shall be approved and accepted, as applied for, at the home office of the insurance company.
      “(2) Another type of receipt provides that the insurance shall be effective as of the date of the medical examination, if the company shall be satisfied that on that date the applicant was an insurable risk and that the application was otherwise acceptable under the company’s regulations for the amount and plan of the policy applied for. In some instances the date of the application is taken instead of the date of the medical examination.
      “(3) In a third type of receipt the provision is that the insurance shall be in force as of the date of the application or the medical examination if the company at its home office shall issue the policy on the plan applied for. In some instances delivery of the policy is required.
      (4) The fourth type of receipt is represented by the unconditional provision that the insurance shall take effect as of the date of the approval of the application by the insurer.” Id. at 960-963.

      . The states are clearly divided on how to deal with clauses such as the one before us. Of the four types listed in Footnote 1, the first type most closely approximates the clause before us. As to this type, the American Law Reports annotation, 2 A.L.R.2d 943, 2 A.L.R.2d LCS 239, lists the following states as holding that no contract exists before approval.

        “United States. — Mutual L. Ins. Co. v. Young (1875) 23 Wall 85, 23 L. ed 152; Steinle v. New York L. Ins. Co. (1897; CCA 5th) 81 F 489; Pace v. Provident Sav. Life Assur. Soc. (1902; CCA 5th) 113 F 13; Mohrstadt v. Mutual L. Ins. Co. (1902; CCA 8th Mo) 115 F 81; Brancato v. National Reserve L. Ins. Co. (1929; CCA 8th Mo) 35 F2d 612; Whitney v. Union Cent. L. Ins. Co. (1931; CCA 8th Neb) 47 F2d 861; Braman v. Mutual L. Ins. Co. (1934; CCA 8th Minn) 73 F2d 391; Winslow v. Mutual L. Ins. Co. (1938; CCA 9th Cal) 93 F2d 802 (dictum).

        “Alabama. — Alabama Gold L. Ins. Co. v. Mayes (1878) 61 Ala 163.

        “Arkansas. — Cooksey v. Mutual L. Ins. Co. (1904) 73 Ark 117, 83 SW 317, 108 Am St Rep 26.

        "Georgia. — Hill v. Life & C. Ins. Co. (1935) 51 Ga App 578, 181 SE 104.

        “Kentucky. — Northwestern Mut. L. Ins. Co. v. Neafus (1911) 145 Ky 563, 140 SW 1026, 36 LRA NS 1211.

        “Michigan. — Smiley v. Prudential Ins. Co. (1948) 321 Mich 60, 32 NW2d 48.

        “New York. — Coming v. Prudential Ins. Co. (1936) 248 App Div 187, 288 NYS 661 (affd without op (1937) 273 NY 668, 8 NE2d 338); Arcuri v. Prudential Ins. Co. (1936) 248 App Div 501, 290 NYS 567; Hughes v. John Hancock Mut. L. Ins. Co. (1937) 163 Misc 31, 297 NYS 116.

        “South Carolina. — -Hyder v. Metropolitan L. Ins. Co. (1937) 183 SC 98, 190 SE 239.

        “Texas. — Connecticut Mut. L. Ins. Co. v. Rudolph (1876) 45 Tex 454; Beaty v. Southland L. Ins. Co: (1930; Tex Civ App) 28 SW2d 895.

        “Wyoming. — Wheelock v. Clark (1913) 21 Wyo. 300, 131 P 35, Ann Cas 1916A 956.” 2 A.L.R.2d 943, 964-965.

        “Ark. — Union Life Ins. v Rhinehart (Ark) 315 SW2d 920 (citing annotation); Dove v Arkansas Nat. Life Ins. (Ark) 386 SW2d 495 (citing annotation).

        “Killpack v National Old Line Ins. Co. (CA10th Utah) 229 F2d 851 (applying Arkansas law).

        “Ga. — Kammerer v Metropolitan Life Ins. Co. (Ga App) 98 SE2d 391; Etheridge v. Woodmen of the World Life Ins. Soc. 223 Ga 231, 154 SE2d 369, conformed to (Ga App) 155 SE2d 862.

        “Neb. — Adolph v Union Nat. Life Ins. Co. 170 Neb 38, 101 NW2d 504.

        “Tex. — Southwestern Life Ins. Co. v Evans (Tex Civ App) 262 SW2d 512 (citing annotation), error ref; Devenport v. Great Commonwealth Life Ins. Co. (Tex Civ App) 324 SW2d 566; Great Southwest Life Ins. Co. v Henson (Tex Civ App) 401 SW2d 89, error ref n r e' (citing annotation).” 2 A.L.R.2d LCS 239, 241.
      The following states are listed as holding that the insurance is in effect, on the ground of an assumed intention of the parties:

        “United States. — Gaunt v. John Hancock Mut. L. Ins. Co. (1947; CCA2d Conn) 160 F2d 599 (cert den (1947) 331 US 849, 91 L ed 1858, 67 S Ct 1736).

        “Kentucky. — Indiana Nat. L. Ins. Co. v. Maines (1921) 191 Ky 309, 230 SW 54 (dictum).

        “Massachusetts. — De Cesare v. Metropolitan L. Ins. Co. (1932) 278 Mass 401, 180 NE 154, 81 ALR 327 (doubtful).

        “New York. — Hart v. Travelers Ins. Co. (1932) 236 App Div 309, 258 NYS 711 (affd without op (1933) 261 NY 563, 185 NE 739 (doubtful); Buono v. Prudential Ins. Co. (1933) 240 App Div 898, 267 NYS 972.

        “Ohio. — Prudential Ins. Co. v. Howard (1935; App) 18 Ohio L Abs 688.
      “See Leube v. Prudential Ins. Co. (1947) 147 Ohio St 450, 72 NE2d 76, 2 ALR2d 936.

        “Washington. — Starr v. Mutual L. Ins. Co. (1905) 41 Wash 228, 83 P 116.” 2 A.L.R.2d 943, 967.

        “Cal. — Ransom v. Penn Mutual Life Ins. Co. 43 Cal2d 420, 274 P2d 633.

        “Wernecke v Pacific Fidelity Life Ins. Co. 238 Cal App 2d 884, 48 Cal Rptr 251.

        “Metropolitan Life Ins. Co. v Wood (CA9 Cal) 302 F2d 802 (applying California law).

        “Md. — Simpson v Prudential Ins. Co. (Md) 177 A2d 417 (citing annotation).

        “N. J. — Life Ins. Co. v De Chiaro, 68 NJ Super 93, 172 A2d 30 (citing annotation).” 2 A.L.R.2d LCS 239, 241-242.

      . In dealing with an “insurable” type clause (the second type of clause mentioned in Footnote 1) as distinct from an “approval” type clause (the first type of clause mentioned in Footnote 1), many courts do look to the good faith of the insurer in determining the applicant’s insurability as of the date of the application. If, at the time of the application or medical examination the insured was an insurable risk, the temporary contract of insurance is found to be in force.

        "Missouri.—Fields v. Equitable Life Assur. Soc. (1938; Mo App) 118 SW2d 521; Wolfskill v. American Union L. Ins. Co. (1943; Mo App) 172 SW2d 471.

        “Ohio.—Duncan v. John Hancock Mut. L. Ins. Co. (1940) 137 Ohio St 441, 31 NE2d 88.

        “Pennsylvania. — Stonsz v. Equitable Life Assur. Soc. (1936) 324 Pa 97, 187 A 403, 107 ALR 178.

        “Texas. — Colorado Life Co. v. Teague (1938; Tex Civ App) 117 SW2d 849.” 2 A.L.R.2d 943, 986.

        “Ga. — Coastal State Life Ins. Co. v Vickers, 97 Ga App 646, 104 SE2d 140.

        “Iil. — Johnson v Equitable Life Assur. Soc. (CA7 Ill) 275 F2d 315 (applying Illinois law).
      “Md. — Simpson v Prudential Ins. Co. (Md) 177 A2d 417 (citing annotation).

        “N. J. — Life Ins. Co. v De Chiaro, 68 NJ Super 93, 172 A2d 30 (citing annotation).

        “N. C. — Wright v Pilot Life Ins. Co. (CA4 Va) 379 F2d 409 (citing annotation).

        “Or. — Morgan v State Farm Life Ins. Co. (Or) 400 P2d 223 (citing annotation).

        “Pa. — McAvoy Vitrified Brick Co. v North American Life Assur. Co. 395 Pa 75, 149 A2d 42 (citing annotation).

        “Tenn. — Life & Casualty Ins. Co. v Vertrees (Tenn App) 318 SW2d 559 (citing annotation);

        “Liberty Nat. Life Ins. Co. v Hamilton (CA6 Tenn) 237 F2d 235, stated supra. § 8.

        “Tex. — United Founders Life Ins. Co. v Carey (TexCivApp) 347 SW2d 295; Henry v Lincoln Income Life Ins. Co. (TexCivApp) 405 SW2d 167.
      “ Utah. — Prince v Western Empire Life Ins. Co. 19 Utah 2d 174, 428 P2d 163 (citing annotation).” 2 A.L.R.2d LCS 239, 244.
      On the other hand, if, the applicant at the time of the application or the medical examination was not an insurable risk, the company will not be liable under the “binding receipt.”

        “United States. — Warren v. New York L. Ins. Co. (1942; CCA5th La) 128 F2d 671 (affg (1941 DC) 37 FSupp 358).

        “Illinois. — Gerrib v. Northwestern Mut. L. Ins. Co. (1930) 256 IllApp 506.

        “Iowa. — Reynolds v. Northwestern Mut. L. Ins. Co. (1920) 189 Iowa 76, 176 NW 207.

        “Louisiana. — Gonsoulin v. Equitable Life Assur. Soc. (1922) 152 La 865, 94 So. 424.

        “Missouri. — State ex rel. Equitable Life Assur. Soc. v. Robertson (1916; Mo) 191 SW 989.

        “Wyoming. — Raymond v National L. Ins. Co. (1929) 40 Wyo 1, 273 P 667.” 2 A.L.R.2d 943, 987.
      “ U. S. — Cortez v Life Ins. Co. (CA8 Iowa) 408 F2d 500.

        “Del. — Novellino v Life Ins. Co. (DelSup) 216 A2d 420 (citing annotation).

        “Iowa. New England Mut. L. Ins. Co. v Hinkle (CA8 Iowa) 248 F2d 879 (citing annotation) revg (DC) 147 FSupp 547 (applying Iowa law).

        “Ky. — Investors Syndicate Life Ins. & Annuity Co. v Slayton (Ky) 429 SW2d 368 (citing annotation).

        “Mo. — Porter v Farm Bureau Life Ins. Co. (MoApp) 322 SW2d 927.

        “NJ. — Allen v Metropolitan Life Ins. Co. 83 NJ Super 223, 199 A2d 254 (citing annotation).

        “Utah. — Green v Equitable Life Assur. Society, 3 Utah2d 375, 284 P2d 695.” 2 A.L.R.2d LCS 239, 244.


source: Caselaw Access Project

author: ALMON, Justice. JONES, Justice

license: Public Domain

text:
    Hattie P. Cooper FOX and Charles J. Fox v. TITLE GUARANTY AND ABSTRACT COMPANY OF MOBILE, INC., a corporation. Hattie P. Cooper FOX and Charles J. Fox v. FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION, a corporation.
    SC 1617, SC 1579.
    Supreme Court of Alabama.
    Oct. 1, 1976.

      William Roberts Wilson, Jr., Mobile, for appellants.
    Michael J. Salmon, Mobile, for appellee.
   ALMON, Justice.

This is an appeal from summary judgments against the defendants-appellants in a suit for ejectment and rent.

On or about November 15,1972, Hattie P. Cooper Fox and her husband, Charlie J. Fox, approached First Federal Savings and Loan Association of Mobile (now Southern Federal) relative to refinancing their home, which Hattie Fox had acquired prior to their marriage. They dealt with John Watson, a loan officer at First Federal. According to sworn affidavits of the Foxes, Mrs. Fox advised Watson that there was a possibility that the Internal Revenue Service had placed a lien on the house as a result of a transfer made to her by her previous deceased husband. She said she told Mr. Watson that if she owed the Internal Revenue Service, she wanted to use the money from the loan to pay them. Otherwise, she would use the money to consolidate some bills.

According to the affidavit of Mrs. Pox, Watson advised her and her husband that First Federal had a company that they worked with all the time and, if there was any lien whatsoever, they would find it. The Foxes alleged that they understood Watson to be talking about a title insurance company, and they accepted his representations and placed their trust in him. Thereafter, according to the Foxes, Watson assured them that the title company had cleared the property and there was no lien on it.

According to Watson’s affidavit, neither he nor anyone at First Federal made any inducements or representations to the Foxes concerning title to the property. He further stated that at no time was he advised of a lien and neither he nor First Federal undertook any duties to the Foxes concerning title to the property.

On or about December 19, 1972, the loan was closed and a new mortgage was executed to First Federal. The Foxes used the money to pay off debts, thereby dissipating their collateral and ability to pay off the Internal Revenue Service lien which thereafter surfaced in the form of a tax sale.

In December, 1972, First Federal took out a policy of mortgage title insurance from Title Guaranty and Abstract Company of Mobile, Inc. First Federal was the only named insured. On September 25,1973, the Internal Revenue Service sold the Fox property. Title Guaranty and Abstract Company of Mobile purchased the property at the sale, paying $8,006.89 for it.

Title Guaranty sued the Foxes for ejectment and rent, alleging that Title Guaranty had legal title to the property, that the Foxes were in possession, and that the Foxes were unlawfully withholding possession from Title Guaranty.

The Foxes made a general denial and pleaded unjust enrichment and estoppel as special defenses. They joined to their answer a counterclaim and third party complaint against First Federal. The counterclaim and third party complaint were both in one pleading. It asserted six claims jointly against Title Guaranty and First Federal and sought substantial damages, compensatory and punitive, against them jointly and severally. The claims are summarized briefly below:

1. That First Federal, an agent for Title Guaranty, and Title Guaranty, induced the Foxes to sign a note and mortgage and to borrow $28,840.00 from First Federal by misrepresenting to them that they did not have a tax lien on their property, when in fact there was such a lien; further, that the Foxes had a policy of title insurance on the property with Title Guaranty which they bought and paid for. As a result, they claimed Internal Revenue Service sold their property for taxes, and Title Guaranty bought it at a sale. In addition, the Foxes claimed that Title Guaranty was negligent in searching the title, thereby breaching a legal duty owed the Foxes.

2. On the same allegations, that Title Guaranty and its agent, First Federal, were grossly negligent in failing to discover the tax lien.

3. On the same allegations, that First Federal and Title Guaranty, acting in concert, breached express and implied warranties to them in undertaking to search the title of their property.

4. On the same allegations, the Foxes claimed that they were third-party beneficiaries under a policy of title insurance issued by Title Guaranty to First Federal on their property (a mortgage title policy), and claimed thereunder.

5. On the same allegations, the Foxes claimed that the Title Company and First Federal were guilty of the unauthorized practice of law.

6. That the same allegations constituted the tort of insult and outrage.

Title Guaranty and First Federal each filed motions to strike and dismiss the counterclaims and Third-Party action; Title Guaranty also filed a motion to strike the Foxes special defenses of estoppel and unjust enrichment.

The trial court ruled on these motions at pre-trial and made the rulings part of its pre-trial order. The order struck First Federal as a third party defendant, ordered the Foxes to amend so as to sever the claims against the two parties, and ordered the severed claim against First Federal docketed and tried as a separate action, the court declining consolidation.

The court also struck the Foxes third defense to the ejectment complaint, estop-pel, and their fifth counter-claim or cause of action charging the unauthorized practice of law.

The Foxes never amended.

With trial date approaching, Title Guaranty filed a motion for summary judgment with affidavits; counter-affidavits and the deposition of Mrs. Fox were before the court. The court granted summary judgment for Title Guaranty on its ejectment complaint, and also granted summary judgment for Title Guaranty for the Foxes’ counter-claims.

First Federal filed a motion for summary judgment in the severed action against it based on the pleadings, the affidavits, documents and deposition which had previously been filed, and a supplemental affidavit by John Watson, a loan officer of First Federal. The trial court granted First Federal’s motion for summary judgment.

The Foxes claim the trial court erred in striking the various defenses, counterclaims and in granting the summary judgments. We shall address ourselves primarily to the summary judgments.

Summary judgment may be granted only where the moving papers show that there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Isbell v. City of Huntsville, 295 Ala. 380, 330 So.2d 607, 10 ABR 769, 775 (1976); Birmingham Television Corp. v. Water Works, 292 Ala. 147, 152, 290 So.2d 636, 640 (1974).

The moving party for summary judgment has the burden of showing the absence of any genuine issue as to all material facts, which, under the applicable principles of substantive law, entitled it to a judgment as a matter of law. On review all reasonable doubts touching the existence of a genuine issue of a material fact must be resolved against the party moving for summary judgment. Bennett v. United Auto Parts, Inc., 294 Ala. 300, 315 So.2d 579 (1975). A trial judge may not make material factual findings on a motion for summary judgment. Ray v. Midfield Park, 293 Ala. 609, 308 So.2d 686 (1975).

Basically, what the Foxes are attempting to say is that they have some rights under the title insurance policy issued to First Federal. This claim is predicated upon their allegations with supporting affidavits that they paid the premium for the insurance policy and that Watson was also the agent of Title Guaranty and represented to them that no tax lien was outstanding; that because of these representations made to them, Title Guaranty had some obligation to them resulting from Title Guaranty’s negligent failure to discover the tax lien. The effect of what the Foxes claim is that Title Guaranty under the circumstances had a duty to pay them the amount of the tax assessment which would have permitted them to pay off the tax lien and keep their house. They assert that Title Guaranty should be estopped from maintaining an ejectment suit. They contend that Title Guaranty has profited from its own negligence. The Foxes are continuing to pay the mortgage payments to First Federal.

In Mrs. Foxes’ affidavit in opposition to summary judgments she stated:

“I clearly understood that Mr. Watson regularly dealt with the title company and in fact that I was hiring the title company through him to check the title and specifically check and determine whether there was any lien from the Internal Revenue Service. I was led to believe that the title company, plaintiff in this lawsuit, was engaged in the business of making abstracts of titled real estate for hire and I did, in fact, hire them and paid them, to make the search upon which I relied when floating the above mentioned loan.
“I have lost my house, my home, and I lost it because I relied on the representations of the title insurance company, through Mr. Watson, that my title was clear. There is no other reason that I lost this house.”

In her deposition, Mrs. Fox further stated:

“Q. All right. And, what happened after your initial conversation with Mr. Watson?
“A. Well, like I told him, I had no proof. I had received no notice or lien about Internal Revenue having a lien. I said that it was only told to me in person that there was a lien, but there was no proof. So, in the meantime, he said I will let you know about the money, because we deal with insurance companies all the time.
“Q. At the hospital?
“A. No, at the first Federal, talking to Ron Watson. He said if there was a lien, they would find it. We deal with them all the time. I said, okay, but he said, there will be a fee and you will have to pay for it. And, I told him all right.
“Q. All right. So, you told him you had heard there was a lien and you thought there was a lien?
“A. Yes.
“Q. And he said he would find out about it?
“A. He said they would find it. He placed emphasis that they would find it.”

If the summary judgment is upheld, the result would be that Title Guaranty would have (1) the premium for the policy paid by the Foxes, (2) the Foxes home, worth at least $28,480.00, for which Title Guaranty had only paid approximately $8,000.00; and (3) Title Guaranty would have no obligation under the insurance policy so long as the Foxes continued to make mortgage ' payments for which they are personally liable. The Foxes argue that to allow Title Guaranty to prevail is unjust enrichment and would permit a party to profit from its own wrong.

Although not exactly in point, the case Shine v. Nash Abstract & Investment Co., 217 Ala. 498, 117 So. 47 (1928) is persuasive on the questions of abstractors’ liability and third party beneficiaries.

At this stage of the proceeding, we have not addressed ourselves to each defense, counter-claim, etc. We are clear to the conclusion, however, that the summary judgments were prematurely granted. They are reversed and the cause is remanded.

REVERSED AND REMANDED.

HEFLIN, C. J., and BLOODWORTH, MADDOX, FAULKNER, EMBRY and BEATTY, JJ., concur.

JONES, J., concurs specially.

JONES, Justice

(concurring specially):

My first inclination was to dissent and take issue with the majority opinion’s reversal of the trial Court’s order granting summary judgment. After much consideration, I concur in the result because I believe there is a possibility that the motion for summary judgment was prematurely granted.

Whether the plaintiff’s testimony generates the barest scintilla of a genuine issue of fact is extremely borderline. It is true that she says by way of conclusion that she relied on First Federal’s representation to the effect, “if there is an IRS lien on your property, we will find it.” If we had this ease in its present posture of the evidence and the trial Court had granted a directed verdict, I would affirm.

Here is the difficulty, as I see it, with the plaintiff’s case. When she went to First Federal for an additional loan, she either owed IRS a delinquent tax assessment or not. IRS either had an outstanding lien on the subject property or not. That she owed the tax, that the assessment was delinquent and final, and that the lien was filed of record seems to be uncontested. The fact that the title company issued the mortgage insurance and either overlooked the lien of record or failed to except this incumbrance in its contract of title insurance, alters in no respect the plaintiff’s debt to IRS or the right of IRS to collect the debt through enforcement of the lien through a tax sale.

Perhaps there is a conceivable circumstance by which the defendant’s misrepresentation induced the plaintiff into a sense of false security and thereby caused her not to take the steps which she might otherwise have taken with respect to the tax sale. I must say quite frankly that my personal experience in representing tax payers in delinquency assessment cases has not enabled me to conceive of any such circumstance. But, because I may be missing something, I would not foreclose plaintiff’s right to proceed to trial.

Even assuming that the plaintiff’s reliance upon the defendants’ representation that they would find the lien, which they did not, in someway worked to the plaintiff’s detriment in delaying or otherwise hindering her ability to cope with IRS’s enforcement of that lien, the only possible damage which I can foresee is that she was denied the right to pay off the debt and retain her property. This was done for her by the title company at the tax sale, and it may well be that equity will afford her the relief of restoring her title to the property upon her reimbursement to the title company of its outlay at the tax sale. Indeed, this would seem to be an equitable result in order to avoid unjust enrichment by the title company.

In summary, then, it is difficult for me to perceive, under the facts as I understand them, how plaintiff has changed her position as the result of anything that she says the defendants did or said. It must be remembered that this case is totally different from the ordinary purchaser-title insurance company relationship. Ordinarily, the purchaser contracts for a policy of insurance to guarantee title to property to which he is a stranger. If there are incumbrances which are overlooked and not excepted by the title insurance company, the purchaser’s loss flows directly from this breach of obligation. Here, the plaintiff, in applying for her loan, informed First Federal only vaguely concerning facts and circumstances of a tax assessment against her that she had been living and dealing with over a long period of time.

I would hold that summary judgment was prematurely granted, but I also would observe that plaintiff’s evidence of reliance upon the representation to her detriment would have to be expanded and clarified to withstand a directed verdict.


author: ALMON, Justice.

text:
    UNITED STATES FIDELITY AND GUARANTY CORPORATION, a corporation v. ELBA WOOD PRODUCTS, INC., a corp., et al. Rachel COOK, as Executrix, etc. v. ELBA WOOD PRODUCTS, INC., a corporation, et al.
    SC 1652 and SC 1652X.
    Supreme Court of Alabama.
    Oct. 1, 1976.

      Cassady & Fuller, Enterprise, for United States Fidelity and Guaranty Co., a Corp.
    Alton L. Turner, Luverne, for appellee and cross-appellant, Rachel Cook, as Executrix of the estate of Mace Cook, deceased.
    Pittman & Whittaker, Enterprise, for ap-pellees Jerry Wayne Grissett and W. C. Grissett.
   ALMON, Justice.

Appellant, United States Fidelity and Guaranty Company, appeals from a declaratory judgment rendered in the Circuit Court of Coffee County in which appellant requested the interpretation of the following insurance contract clause:

“It is understood and agreed that no coverage is afforded under the policy for any unit which is driven by or in the custody of Joe Robert (Buddy) Beck.”

Appellee, Rachel Cook as executrix of the estate of Mace Cook, deceased, cross-appealed, contending the circuit judge erred in refusing to determine the coverage under the policy of a party to the accident, Jack Michael Holmes.

According to the facts as agreed to by the parties, appellant had issued a liability insurance policy to Elba Wood Products, a corporation, on February 25,1974. The policy was in full force and effect on April 4, 1975, the date of the accident which is the basis of two law suits for which coverage is claimed and which are now stayed pending the rendering of this decision. The policy provided coverage for a van type trailer involved in the accident along with other equipment not involved in the accident.

The accident leading to the request for declaratory judgment occurred in Enterprise, Coffee County, Alabama. Jack Michael Holmes was driving a tractor truck owned by Joe Robert (Buddy) Beck. The truck was pulling a trailer owned by Elba.

Beck, who was in the trucking business, had an oral agreement with Elba to provide trucks to pull trailers loaded with wood chips to Cedar Springs, Georgia. Beck employed drivers to haul the loads and only occasionally drove a load himself. At no time had Beck owned any of the trailers. All of the trailers, including the one in the accident, were owned by Elba. Beck was paid on a per load basis and he paid his drivers on a per load basis.

According to a deposition of Beck taken by Cook in Civil Action No. 132-74 and entered as part of the record (the appellant was not at the deposition), Beck and Elba had a history of prior dealings beginning just before Christmas in 1972 when they entered into an oral agreement. Beck did not own a truck at that time but subsequently bought a Mack truck. Title to the truck was in his name but with Elba’s consent he put the license in Elba’s name to avoid problems of “rights” from the Alabama Public Service Commission. Insurance for the truck was in Beck’s name but was paid for by Elba. During the first part of 1973 Beck sold the Mack truck and bought the Chevrolet truck involved in the accident. Approximately a year prior to the accident Beck had a disagreement with Elba, left the company, and leased his truck to Watkins Truck Lines. Within six months after leaving Elba, Beck rejoined the company.

One reason Beck left the company was that they wanted him to reimburse them for the insurance. When he returned to work for Elba, he told them he could not afford the insurance. His understanding was that the truck was to be included in Elba’s policy, though the owners of Elba never specifically stated it would be.

After the accident the following conversation transpired between Beck and one of the owners of Elba, as told by Beck:

“A. I come from the wreck, come back to Mace’s, and told them that if there was anything I could do just to call me. Then, I come from there to the drugstore over there (indicating) looking for Tatum. He was parked in front of the store there and he was coming down the street with a boat paddle in his hand, so anyway I said, ‘Ray, we have had a bad wreck. We had better get all of our ducks in line, because the insurance is going to have to be paid,’ and he said, ‘What insurance?’
“Q. That’s the only statement he made to you?
“A. Yes, that surprised me. It really surprised me. He said, T think there’s a letter in the file from Robert Morrison’s to the effect that you would not be insured by Elba Wood Products.’ So I jumped on around to Mr. Marsh’s, and he more or less said the same thing.”

The issue is whether the trailer was “driven by or in the custody of Joe Robert (Buddy) Beck”. The truck pulling the trailer was not one of the units listed in the insurance policy and none of the parties argues that it is covered by the policy. Beck was not driving the trailer; technically, a trailer could not be driven by anyone, only pulled. Therefore, if the exclusion is to apply to the accident in question, the trailer must have been in the custody of Beck as it was being pulled by Holmes, Beck’s employee.

The cardinal principle in the interpretation of any contract is that the intention of the parties should control. 43 Am.Jur.2d, § 260 at 318; Alabama Farm Bureau Mutual Casualty Insurance Company v. Goodman, 279 Ala. 538, 188 So.2d 268 (1966). In ascertaining the intent of the parties, the terms used are to be taken in their plain, ordinary and popular sense if they ^re clear and unambiguous and have not acquired a technical meaning. 43 Am.Jur.2d, § 265 at 324; Franklin Life Ins. Co. v. Lewis, 36 Ala.App. 313, 55 So.2d 518 (1951); Universal Underwriters Ins. Co. v. Marriott, 286 Ala. 231, 238 So.2d 730 (1970); Alabama Farm Bureau Mutual Cas. Ins. Co. v. Goodman, supra. If doubt arises as to the meaning of the terms used, then they will be interpreted against the party who has drawn the contract. 43 Am.Jur.2d, § 271 at 329; Trans-Continental Mutual Insurance Company, Inc. v. Harrison, 262 Ala. 373, 78 So.2d 917 (1955); State Farm Mutual Automobile Insurance Co. McInnish, 284 Ala. 492, 226 So.2d 149 (1969).

“The rule is well established that if exceptions, exclusions, and exemptions from, or limitations of, the liability of an insurer are not expressed plainly and without ambiguity, they will be construed strictly against the insurer, and liberally in favor of the insured, in order that the purpose of insurance shall not be defeated.” 43 Am.Jur.2d, § 279 at 340-341.

However, that is not to say that insurance companies cannot write their contracts in any legal form they wish. 43 Am.Jur.2d, § 279 at 341; Alabama Farm Bureau Mutual Cas. Ins. Co. v. Goodman, supra.

“Custody” as defined by Webster’s New Collegiate Dictionary, 1975 ed., is “immediate charge and control exercised by a person or an authority.” According to Black’s Law Dictionary, Revised 4th Ed., 1968,

“The word is defined as the care and possession of a thing, and means the keeping, guarding, care, watch, inspection, preservation or security of a thing, and carries with it the idea of the thing being within the immediate personal care and control of the person to whose custody it is subjected; charge; immediate charge and control, and not the final, absolute control of ownership, implying responsibility for the protection and preservation of the thing in custody.”

The appellant submits the following definition of custody:

“ ‘Custody’ . . . ‘means to have in charge or safe keeping, connotes control, and includes as well, although it does not require, the element of physical or manual possession, implying a temporary physical control merely, and responsibility for the protection and preservation of a thing in custody. * * * The term * * * carries with it the idea of thing being within the immediate personal care and control of the person to whose custody it is subjected; charge; charge to keep, subject to order or direction; immediate charge, and control and not the final absolute control of ownership.’ ” National Fire Insurance Company v. Davis, Tex.Civ.App., 179 S.W.2d 316 (1944).

By all these definitions Holmes had custody, not Beck. Holmes was pulling the trailer. Only he could have immediate charge and control over it; only he could keep, guard, care for and preserve it as it was being pulled down the highway.

Appellant argues that the clause should be interpreted in light of the history of dealings with Elba and Beck. “It has been said in this connection that one of the most satisfactory tests for the ascertainment of the true meaning of an insurance contract is to place oneself in the position of the contracting parties and to view all of the facts and circumstances surrounding them in order to determine what they meant by the phrases and words of the instrument.” 43 Am.Jur.2d, § 260 at 319-320. See Flagg-Utica Corporation v. City of Florence, 275 Ala. 475, 156 So.2d 338 (1963). However, the circumstances surrounding the contract are only considered where the terms are ambiguous. Flagg-Utica Corporation, supra. Assuming, ar-guendo, that the terms are ambiguous, then the ambiguities should be interpreted against the party drawing the contract if the circumstances surrounding the contract do not make the terms clear.

When Beck was first associated with Elba in 1972, Elba paid for Beck’s insurance. After leaving them and then becoming reassociated with them, Beck requested Elba to include him in their insurance policy. While he believed he had been included, for some reason not explained in the record, he was specifically excluded. However, this history does not show that the intent was to also exclude anyone working for Beck.

Similarly, the fact that Beck only occasionally drove the trucks himself does not aid appellant’s interpretation. On the contrary, this fact lends support to the construction given the clause. Elba owned and maintained the trailer; it would conceivably be liable for the negligent maintenance of that trailer no matter who was pulling it. If Beck himself pulled the trailers most of the time, then Elba would be carrying the risk for the trailers most of the time, in which case Elba would have purchased essentially nothing when it bought the insurance on the trailers. Elba purchased “something” only because Beck rarely pulled the trailers himself.

Thus, at the very least, the circumstances surrounding the contract leave the clause ambiguous, in which case it would be interpreted against the drafter, Fidelity. . Had Fidelity intended to exclude the situation before us, it should have simply added, “and/or driven by or in the custody of Beck’s agents.”

On the cross-appeal Cook alleges that the trial judge erred in refusing to determine whether Holmes was covered by the policy. The issue arose at the trial from the following discussion:

“MR. HOLMES: If I could say something, Judge?
“THE COURT: Yes, sir. Do you want to put this in the form of testimony?
“MR. HOLMES: Yes, sir.
“(The witness was placed under oath by the court.)
“MR. HOLMES: Judge, what I am trying to figure out, is all I can get out of the insurance policy, what I am told, is the exclusion made by Joe Beck. I don’t know what is happening; I don’t have a lawyer — I really can’t afford one. I would like to know whether I have coverage or not.
“THE COURT: What do you have to say about that, gentlemen?
“MR. FULLER: I think that is the whole subject of this hearing.
“THE COURT: Would you say that would be the determination for this Court, regardless of whether he is here asking as a cross-action — ?
“MR. FULLER: Yes, sir. It is the plaintiff’s position that Mr. Holmes was an employee of Mr. Beck, and acting within the line and scope of his authority at the time, that he was driving for Mr. Beck and that the trailer on this occasion was picked up by him; that he went by Mr. Beck’s home and conferred with him on the afternoon he picked it up, before the accident occurred the next morning, and then went to the mill and dropped off the load and started back. Now, the exclusionary part says driven by or in the custody of Mr. Beck, and we are saying that the custody of the agent is the custody of the master. I am saying that, indirectly, in answer to what he is saying.
“THE COURT: I have no objection to determining that and treating it as such. He is here representing himself and he may be in default, but I think we would be ducking the issue that might later come into play, if we don’t decide it now.
“MR. FULLER: That he is covered under the named insurer, rather than excluded, is that what he is saying?
“THE COURT: Of course, I don’t know whether he knows what he is saying, you have to translate the legal terminology, but I thought it might be one of the things that could come into play. I will say for the record, I am not familiar with the complaint and pleadings, or the evidence. You have all the depositions and I haven’t; I don’t know how he would be in it, but let’s say he is asking for the Court to determine this issue, whether he is covered or not, and I imagine it makes little difference to him how he is covered. He’s talking about is he covered personally, on the policy.
“MR. TURNER: I talked to him and advised him of the terms of the policy. This is really what he asks the court for, from what I understand, and hé doesn’t have it in proper form.
“THE COURT: I understand from you gentlemen, that if the Court will do this, you gentlemen have no objection?
“MR. JACKSON: No, sir.
“MR. FULLER: No, sir. We will like to make it clear we are not waiving anything under that omnibus clause.
“THE COURT: It is understood you will not be waiving anything. You would insist on everything you got in here.
“MR. TURNER: Your Honor, in line with the plaintiff’s agreement and to expedite this thing, I have my authorities prepared.
“THE COURT: I am sure the depositions cover all this, the factual situation leading up to this, whatever it was?
“MR. FULLER: Yes, sir.
“END OF HEARING.”

Whether Holmes is covered by the policy is a question requiring considerations that go beyond the interpretation of the exclusionary clause. When the judge agreed to decide whether Holmes was covered, the issue had been presented to him by Mr. Fuller, attorney for Fidelity, as though the interpretation of the exclusionary clause would, by necessity, lead to a decision as to Holmes’ personal coverage. While that would be true if the exclusionary clause had applied to the trailer, the converse is not necessarily true. When the judge agreed to decide the question, he also noted that

“I will say for the record, I am not familiar with the complaint and pleadings, or the evidence. You have all the depositions and I haven’t; I don’t know how he would be in it . . ..”

At the time of the hearing the issues surrounding the question were not clearly drawn. In his opinion the trial judge added:

“The Court makes known however, that if the attorneys for the parties will all join in a written request to this court formulating the issues concerning the Holmes request, that it will determine the issue requested by Holmes on the evidence here under consideration.”

Under this set of facts, the trial judge was not under any obligation to decide Holmes’ personal coverage under the policy. The judgment is therefore affirmed.

AFFIRMED.

All the Justices concur.

      . Civil Action No. 132-74, Rachel Cook v. Elba Woods Products et al. and Civil Action No. 51-75, W. C. Grissett v. Elba Wood Products et al.


author: BEATTY, Justice. JONES, Justice FAULKNER, Justice

text:
    James M. SIMS v. ETOWAH COUNTY BOARD OF EDUCATION et al. Judy F. SIMS v. ETOWAH COUNTY BOARD OF EDUCATION et al.
    SC 1837, 1837-A.
    Supreme Court of Alabama.
    Oct. 1, 1976.

      Thomas E. Davis, Gadsden, for appellants.
    David B. Carnes, Gadsden, for appellees.
   BEATTY, Justice.

Judy F. Sims and her husband, James M. Sims, filed actions against the Etowah County Board of Education to recover damages for personal injuries incurred by Ms. Sims when the viewing stand on which she was seated collapsed while she was attending a football game. The complaints contained negligence and contract counts. These alleged that Mr. and Ms. Sims had purchased tickets to observe the game being played at Hokes Bluff High School Stadium between Hokes Bluff High School, operated and controlled by the Etowah County Board of Education, and Glencoe High School.

The negligence counts alleged that the defendants “negligently maintained said football stands, or negligently allowed said football stands to fall into an unsafe condition, so that they were not safe for persons to sit on said stands . . . ” followed by allegations of proximate consequential injury.

The amended contract count of Ms. Sims alleged:

“2. That the plaintiff and her husband did pay a sum of money to the defendants to purchase a ticket to witness said football game and the defendant did impliedly contract to furnish to the plaintiff a safe and proper place from which she could observe said football game.
“3. The defendants breached said contract ... in that the football stands upon which she was seated were not fit and proper for use as football stands and collapsed during said football game, causing the plaintiff to suffer personal injury and damages.”

Her husband’s contract count contained almost verbatim recitals, and each alleged proximate consequential injuries. Ms. Sims demanded damages for injuries; Mr. Sims demanded damages for loss of consortium. The two actions were consolidated for trial.

The defendant filed motions to dismiss to each complaint which were granted, and from which this joint appeal followed.

In their briefs all parties agree that the basic legal question is whether the Etowah County Board of Education is immune from suit due to governmental immunity. We hold that it is not immune from suit for breach of contract and thus we reverse the decision of the trial court dismissing the complaints.

In its brief, appellee defends the dismissal of the contract counts by citing a statement contained in Lorence v. Hospital Board of Morgan County, 294 Ala. 614, 320 So.2d 631, 632:

“. . . We hold that the trial Court did not err in granting the motion to dismiss the contract counts since the duty alleged is imposed solely by law and its alleged breach is tortious only. . . . ”

Appellee also classifies itself as an independent agency of the state, immune from suit while acting within the scope of its corporate powers.

In Lorence we held that the Legislature had exercised its prerogative by authorizing suit against a county hospital board. (“What is before us is the immunity question with respect to county hospital boards; and because the statute authorizing such corporate entity expressly provides for suits against them, . . . ” 294 Ala. p. 618, 320 So.2d p. 634). Lorence and its companion case, Jackson v. City of Florence, 294 Ala. 592, 320 So.2d 68 (1975) (which abrogated municipal immunity from suit), both concerned liability in tort. The complaint in Jackson did not contain a breach of contract allegation, but Lorence sustained the trial court’s dismissal of a contract count on the ground that the county’s duty alleged therein was one implied by law and involved a tortious breach only. This aspect of the decision followed the holding in Green v. Hospital Building Authority of City of Bessemer, 294 Ala. 467, 318 So.2d 701 (1975), that the hospital-patient relationship would not give rise to a contract implied by law to impose a duty upon a hospital to use care in its patient treatment. Nothing in those cases sought to limit liability on the part of counties or county agencies for breaches of their contracts implied in fact. Indeed, in Hudson v. Coffee County, 294 Ala. 713, 321 So.2d 191 (1975) and Berry v. Druid City Hospital Board, 295 Ala. -, 333 So.2d 796 (1976), we clearly distinguished the contract implied by law (to which Lorence referred) from the contracts implied in fact (under which the recovery in Berry proceeded). Berry contains a quotation from Vines v. Crescent Transit Company, 264 Ala. 114, 119, 85 So.2d 436 (1955) which is applicable in the instant case:

“It will be observed that a negligent failure to perform a contract express or implied ... is but a breach of the contract. But if in performing it, it is alleged that defendant negligently caused personal injury or property damage to plaintiff, the remedy is in tort, for it is not the breach of a contract express or implied, but the breach of an implied duty to exercise due care not to injure plaintiff . . . which is the gravamen of the action. . . .”

It will be noted that these contract counts alleged an implied contract to furnish a safe and proper place from which to observe the game and that the defendants breached that contract because the football stands upon which she was seated were not fit and proper for that use, and collapsed. This allegation appears to us to charge the breach of an implied agreement to furnish a proper place from which to safely observe the game, and thus falls within that class of implied undertakings referred to in Berry. Plaintiffs have stated a contract, albeit an implied one, and its breach sufficiently to comply with ARCP 8(a), 1 Lyons, Alabama Practice, § 8.3 (1973), and if the defendant is otherwise amenable to suit, the motion to dismiss was improperly granted.

By virtue of Alabama Code, Tit. 52, § 99:

“The county board of education . may sue and contract, all contracts to be made after resolutions have been adopted by the board and spread upon its minutes.

This right to sue carries with it the implied right to be sued, Kimmons v. Jefferson County Board of Education, 204 Ala. 384, 85 So. 774 (1920), but only upon such matters as are within the scope of its corporate power. Morgan et al. v. Cherokee County Board of Education, 257 Ala. 201, 58 So.2d 134 (1952). Thus our cases recognize that a county board of education may be sued on its contracts. The restriction on contracts made by the board, i. e., that a resolution precede their making, obviously, applies to express or “special” contracts, not to “implied” contracts. When the parties state the terms of their contract it is an “express” contract. But when their agreement has not been expressed in words but from their conduct they have manifested mutual assent to its terms, it is an implied contract, implied from the factual circumstances. Adams v. Republic Steel Corp., 254 Ala. 620, 49 So.2d 214 (1950); Williston, Contracts § 3 (Rev.Ed.). It seems clear that under § 99 a board of education is authorized to enter into either type of contract; however, the restriction contained in § 99 requiring a resolution would appear to apply only to contracts of the first type, for any such resolution undoubtedly anticipates, at least to some extent, the express terms to be subsequently agreed upon by the board. It does not appear reasonable to expect that a board of education could anticipate by resolution its contracts which courts might later decide existed because of factual implication, but which, nevertheless, fall within the scope of the board’s power. Cf. Board of Education of Escambia County v. Watts, 19 Ala.App. 7, 95 So. 498 (1922); Ex parte Watts, 209 Ala. 115, 95 So. 502 (1923).

It is a matter of common knowledge that physical education is an important aspect of the public school curriculum, and spectator participation is common. That it is within the scope of the corporate power of a county board of education to authorize athletic contests between schools under their management and others, and to contract, expressly or by implication, with members of the public who wish to view such contests, is clear.

The authorities in other jurisdictions are divided on the issue of liability to a spectator who has been injured during such a contest. Some have applied the “governmental function” doctrine and avoided local responsibility, e. g., Reed v. Rhea County, 189 Tenn. 247, 225 S.W.2d 49 (1949), while others have allowed recovery, especially when the event resembles a commercial sports exploitation, e. g., Hoffman v. Scranton School District, 67 Pa. Dist. & Co. 301, 41 Mun.L.R. 21.

In Alabama, however, a ticket to a place of public entertainment constitutes a contract between the proprietor and the purchaser of the ticket; whatever contractual duties grow out of that relation, it has been held, must be performed by the proprietor or he must respond in damages for breach of contract. Interstate Amusement Co. v. Martin, 8 Ala.App. 481, 62 So. 404 (1913). The contractual undertaking, arising out of this relation was succinctly stated by Justice Somerville in Birmingham Amusement Co. v. Norris, 216 Ala. 138, 141, 112 So. 633, 635 (1927), a case in which a theatre owner was held liable to a patron who was injured when her chair collapsed. He wrote:

“. . . [wjhere the proprietor invites people upon his premises, and receives compensation for the privilege of their entrance, or for their entertainment while there, he impliedly undertakes that the premises are reasonably safe for the purpose intended, and for which they are accordingly used by his patrons.” (Emphasis supplied.)

This language followed a comparative discussion of authorities in other states, some basing liability on tort principles and others on contract principles. Justice Somerville’s language, concurred in by all the justices, denotes the relationship as contractual by implication, and his view of the situation in that case may be applied with consistency to the facts here. For what we have here is a unilateral contract, with the promisor-board of education, as proprietor, upon receiving the admission price, promising admission by ticket and the performance of all other contractual duties arising from the circumstances, including the implied promise that the premises are reasonably safe for the purpose of viewing the athletic contest.

Having found that a county board of education has statutory authority to make a contractual undertaking with regard to the safety of premises it utilizes in conducting athletic contests which the public may view upon the payment of consideration, we must hold that the trial court erred in dismissing the contract counts.

The tort counts are another matter. However appealing it may be for reasons of fairness under contemporary conditions, we cannot interpret Lorence beyond the boundaries which this Court fixed for it, and which we have quoted. What Lorence decided was that the Legislature had provided that county hospital boards might be sued and the Court construed this to include suit in tort. The question of the county’s general liability was not before this Court in Lorence, and that question is not before us in this action against the Etowah County Board of Education. Thus the nature and authority of a county board of education become material considerations insofar as its amenability to tort liability is concerned.

In contradistinction to the legislative will expressed in Alabama Code, Tit. 22, § 204(24) that county hospital boards might “sue and be sued,” and this Court’s decision in Lorence that this legislative language encompassed tort suits as well as contracts, no such language is used in the statute creating the powers of county boards of education:

“The county board of education shall have the right to acquire, purchase by the institution of condemnation proceedings if necessary, lease, receive, hold, transmit and convey the title to real and personal property for school purposes. It may sue and contract, all contracts to be made after resolutions have been adopted by the board and spread upon its minutes. All processes shall be executed by service on the executive officer of the board.” (Emphasis supplied.) (Alabama Code, Tit. 52, § 99.)

It has been left to judicial decision, not to express legislative authorization, to determine the extent of liability to which such a governmental entity may be subject, and liability for tort claims has not been recognized.

Turk v. County Board of Education of Monroe County, 222 Ala. 177, 131 So. 436 (1930) is a case directly in point. The plaintiff, a minor, brought an action pro ami against the board of education to recover damages for injury caused him by the negligence of a school bus driver. This Court described the board as “a quasi corporation, an independent agency of the state for the purposes enumerated in the statute,” and limited its liability for negligence with this language from School District v. Rivera, 30 Ariz. 1, 243 P. 609 (1926):

“ ‘A school district, under our system of government, is merely an agency of the state. As is said in Freel v. Crawfordsville, 142 Ind. 27, 41 N.E. 312, 37 L.R.A. 301: “They are involuntary corporations, organized not for the purpose of profit or gain but solely for the public benefit, and have only such limited powers as were deemed necessary for that purpose. Such corporations are but the agents of the state, for the sole purpose of administering the state system of public education. * * * In performing the duties required of them they exercise merely a public function and agency for the public good for which they receive no private or corporate benefit. School corporations, therefore, are governed by the same law in respect to their liability to individuals for the negligence of their officers or agents as are counties and townships. It is well established that where subdivisions of the state are organized solely for a public purpose, by a general law, that no action lies against them for an injury received by a person on account of the negligence of the officers of such subdivision, unless a right of action is expressly given by statute. Such subdivisions then, as counties, townships, and school corporations, are instrumentalities of government, and exercise authority given by the state, and are no more liable for the acts or omissions of their officers than the state.” Anderson v. Board of Education, 49 N.D. 181, 190 N.W. 807; Board of Education v. Volk, 72 Ohio St. 469, 74 N.E. 646 [18 Am.Neg.Rep. 581]; McClure Bros. v. School Dist., 79 Mo.App. 80.
“ ‘Such being true, the overwhelming weight of authority naturally is to the effect that school districts are not liable for the negligence of their officers, agents or employees, unless such liability is imposed by statute either in express terms or by implication.’ ”

Negligence actions against county boards of education, therefore, are historically limited by the terms of statute. This is consistent with the Court’s decision in Lorence whose premise of hospital board tort liability was statutory authorization. This limitation has been followed in a later case, Hawkins v. State Board of Adjustment, 242 Ala. 547, 7 So.2d 775 (1942). The question there was whether the State Board of Adjustment had jurisdiction over a claim based upon the negligence of an employee of the Talladega County Board of Education, or to put it another way, whether claims against the county board of education, as opposed to claims against other governmental agencies, were among those to be adjudicated by the Board of Adjustment. This determination prompted the Court to make the following observations regarding the nature and power of a county board of education:

“This Court has held that a county board of education could sue and be sued to a limited extent, but not on a claim arising from the negligence of one of its servants or agents because it is an independent agency of the State, not one which is immediate, but nevertheless it is acting in a governmental capacity. Turk v. Board of Education, 222 Ala. 177, 131 So. 436; Ex parte Board of School Com’rs of Mobile County, 230 Ala. 304, 161 So. 108. Those cases, following Shepherd v. Jones, 228 Ala. 307, 153 So. 223, make a separate classification of strictly State boards and commissions, including State colleges and describe them as immediate and strictly governmental agencies, not subject to suit. But that a county board of education, while not an immediate agency of the State, acts in a public and governmental capacity, and therefore is not liable for the torts of its agents and employees, while so engaged, but is ordinarily otherwise subject to suit. Its funds are State funds. State v. Tuscaloosa County, 233 Ala. 611, 172 So. 892; Williams v. State, for Use and Benefit of Pickens County, 230 Ala. 395, 161 So. 507.” (Emphasis supplied.)

As we stated earlier, a county board of education can be sued “within the scope of its corporate power.” Morgan v. Cherokee County Board of Education, supra, (an action by the board to recover land), but our cases appear to have held that tort liability is not one of those matters within the scope of its corporate power. Indeed, had the Legislature wished to place boards of education on the same tort liability footing as county hospital boards, it could have made Tit. 52, § 99 read “It may sue and be sued, and contract. . . .” Then we could have followed the reasoning we applied in Lorence. It did not do so, however, and so we are left with the same problem the Court faced in deciding Lorence, that is, otherwise finding express legislative permission for tort actions against boards of education. Our previous decisions have found none, and we have been referred to no change in the legislation which has created such permission. Accordingly, the trial court was correct in granting the motion to dismiss the negligence counts.

For the error in granting the motion to dismiss the contract counts, the judgment is due to be reversed and remanded. It is so ordered.

REVERSED AND REMANDED.

HEFLIN, C. J., and ALMON, SHORES and EMBRY, JJ., concur in the result.

JONES, J., concurs in part and dissents in part.

BLOODWORTH, MADDOX and FAULKNER, JJ., dissent.

JONES, Justice

(concurring in part and dissenting in part):

I concur with the opinion of the Court to reverse and remand as to the contract claim. I do not agree that the plaintiffs cannot proceed on their claims in tort. I agree that The Etowah County Board of Education does not equate the State of Alabama for constitutional immunity purposes, but I do not agree that the defendant has been granted legislative immunity in the act that creates the Board.

FAULKNER, Justice

(dissenting).

Under Title 52, § 99 of the Code of Alabama 1940, the county board of education may sue and contract. Although there is no explicit granting or denial of the right to be sued, county boards have been held, in numerous cases, to be quasi corporations with the right to sue and the implied right to be sued. E. g., Madison County Board of Education v. Wigley, 288 Ala. 202, 259 So.2d 233 (1972); Turk v. County Board of Education, 222 Ala. 177, 131 So. 436 (1930). However, the right to be sued is not a right to be sued for any cause of action, but is limited to suit upon such matters only as are within the scope of its corporate powers. Turk, supra. Thus, the mere fact that the county board of education is created as a body corporate with power to sue and be sued does not affect its immunity from tort. Turk, supra. See also Buck v. McLean, 115 So.2d 764 (Fla.App.1959) (facts and issue nearly identical to case at bar).

In this case there was no contract, express or implied, between the county school board and the paying spectator. The contract counts were properly dismissed since the duty alleged was imposed solely by law and its alleged breach was tortious only. See Lorence v. Hospital Board, 294 Ala. 614, 320 So.2d 631 (1975).

Moreover, Lorenee does not allow me to avoid or alter this statutory construction. Lorenee abolished the defense of governmental immunity to actions in tort against county hospital boards. In doing so, full effect was given to the legislative intent expressed in the statute governing such boards. This statute, Title 22, § 204(24) of the Code of Alabama 1940, expressly gives county hospital boards the power to sue and be sued.

The single issue in Lorenee was the question of immunity of a county hospital board. “Neither [the question of the county hospital board’s liability had the statute been silent as to its right to be sued] nor the question of the county’s general liability is before us.” Lorence, supra, at 618, 320 So.2d at 634. Thus, Lorenee is of value only indirectly as a guiding case.

Although both are creatures of statute, a county board of education and a county hospital board are different in several ways. Education is a state function — not a county function. See Alabama Constitution, Art. 13, § 256. County boards of education are not agencies of counties but are independent agencies of the state. Greeson Mfg. Co. v. County Board of Education, 217 Ala, 565, 117 So. 163 (1928).

BLOODWORTH and MADDOX, JJ., concur.


author: EMBRY, Justice.

text:
    Frankie Lee THOMPSON et al. v. Oolie Charlie MITCHELL et al.
    SC 1973.
    Supreme Court of Alabama.
    Oct. 1, 1976.
    Cornett & Perdue and Terry R. Smyly, Phenix City, for appellants.

      Gray, Seay & Langford and Billy L. Carter, Tuskegee, for appellees.
   EMBRY, Justice.

In the case before us we are asked to decide whether the rule regarding the proof necessary to set aside a deed, based on plaintiffs’ claims that the deed was forged and that they are the lawful heirs of the original owner, was complied with sufficiently so as to uphold the trial court’s order dismissing plaintiffs’ petition for sale for division. We find that the trial court correctly complied with the rule and therefore affirm.

Plaintiffs, Frankie Lee Thompson and Arthur Thompson, claim to be the lawful heirs of Jim Thompson, their paternal grandfather, whose estate consists of 156 acres of land in Russell County, Alabama. At issue here is a deed executed by plaintiffs’ mother, Fannie Thompson, conveying any and all interest she had in the Jim Thompson estate to Hattie M. Hurt and Minnie Mitchell. That deed purports to carry the signatures of Frankie Lee Thompson and Arthur Thompson. The defendants in this case include Oolie Charlie Mitchell, son of Minnie Mitchell, and all other heirs who claim an interest in the Jim Thompson estate.

Fannie Thompson died in 1972. In 1974, plaintiffs, children of Fannie, petitioned the Circuit Court of Russell County to decree that they are the legitimate heirs of Jim Thompson, with an undivided interest in his estate, and to order the property in his estate sold for division. The circuit court dismissed the petition after taking all testimony on the matter. Plaintiffs appeal from that judgment of dismissal.

The deed in evidence contains the mark of Fannie Thompson, and the signatures of plaintiffs, evidencing its execution by them as grantors. In a column next to these signatures appear the signatures of four witnesses, two of which attest the mark of Fannie Thompson, and one witness each attesting the signatures of Frankie and Arthur Thompson. The form of this deed complies with Tit. 47, § 22, Code of Ala. Fannie Thompson’s mark is also properly acknowledged by a notary public. The deed was filed for record in the Russell County Probate Office on November 26, 1949, and recorded the same day; it was rerecorded on February 6, 1973.

This court has said that proper execution and recordation of a deed is pri-ma facie evidence of its due execution and one attacking such a deed as a forgery must show that it was a forgery by clear and convincing evidence, reaching a high degree of certainty, leaving no doubt of the truthfulness of such fact. Jordan v. Conservation & Land Co., 273 Ala. 99, 134 So.2d 777 (1961); Freeman v. Blount, 172 Ala. 655, 55 So. 293 (1911). One seeking to have a deed declared invalid must show by clear and convincing evidence the facts relied upon to demonstrate the invalidity; and that party seeking to have the deed set aside bears the burden of proof. Chapman v. Turner, 255 Ala. 423, 51 So.2d 867 (1951).

The only evidence presented by plaintiffs in support of their contention that the deed is a forgery is their oral testimony denying that they signed the deed, that they did not know the person who witnessed the deed, and that they had never received any consideration for the deed. They contend, but put forth no evidence to show, that the last two witnesses’ signatures attest only to the signature of Arthur Thompson and no witness attests to Frankie’s signature.

The trial court was in the best position to observe the witnesses and to assay the amount of probative force to be given their testimony. The conclusions and decree rendered by the lower court, when the case is heard ore tenus, have the force and effect of a jury verdict and cannot be disturbed by the appellate court unless they are palpably wrong. San-Ann Service, Inc. v. Bedingfield, 293 Ala. 469, 305 So.2d 374 (1975).

The trial court made no statement of findings of fact in its order dismissing the petition for sale for division. Even so, after studying the record and transcript before us, we find there was sufficient evidence upon which the trial court could base its conclusion that, assuming plaintiffs are the lawful heirs of Jim Thompson, plaintiffs had not placed before the court evidence of proper weight and sufficiency as to require the deed be declared invalid.

We affirm the decree of the trial court dismissing plaintiffs’ petition.

AFFIRMED.

HEFLIN, C. J., and BLOODWORTH, MADDOX, FAULKNER, JONES, ALMON, SHORES and BEATTY, JJ., concur.