text:
    Ex parte Bobby J. HOWELL. (In re Bobby J. HOWELL v. Henry M. LEIMAN, et al.)
    83-187.
    Supreme Court of Alabama.
    Feb. 10, 1984.

      James Whitmire of Brewer, Lentz, Nelson & Whitmire, Decatur, for petitioner.
    William B. Eyster of Eyster, Key, Tubb, Weaver & Roth, Decatur, for respondents.
   BEATTY, Justice.

Petition for writ of mandamus to issue to the Honorable Rudolph W. Slate, Judge of the Circuit Court of Morgan County. The writ is granted.

The petitioner, Bobby J. Howell, sustained personal injuries in an accident while employed as a construction worker for Henry M. Leiman, Inc., a corporation. Howell was paid workmen’s compensation benefits of approximately $21,584 by the Aetna Casualty & Surety Company (Aet-na), the workmen’s compensation carrier for Howell’s employer.

Subsequently, Howell filed an action in the Circuit Court of Morgan County against Henry M. Leiman, individually, Bill Wood, and certain fictitious parties to recover damages on account of those injuries. This was a third-party action brought under Code of 1975, § 25-5-11. It claimed that Howell’s injuries resulted from the negligence and/or wantonness of Leiman and Wood, the supervisory employees of the corporate employer. At the time of the accident, Henry M. Leiman was president of Henry M. Leiman, Inc., and Bill Wood was the job superintendent.

After Howell filed this third-party lawsuit, defendant Henry M. Leiman moved that the circuit court order Howell to name Aetna as a party plaintiff. The grounds asserted in support of this motion were:

(1) That Aetna was subrogated to any and all claims for workmen’s compensation benefits paid to Howell;

(2) That Aetna has a subrogation interest in the case and that the action should be brought and prosecuted in the name of Howell and Aetna; and

(3) That Aetna is a necessary party to the adjudication of the case in accord with Rules 17(a) and 19(a), A.R.Civ.P.

Judge Slate, in due course, entered the order prayed for. Howell then filed this petition to obtain a rescission of that order.

The basic legal question presented is whether Aetna, the compensation carrier, must be joined in the third-party action as a party plaintiff under Rules 17(a) and 19(a), A.R.Civ.P., in view of Code of 1975, § 25-5-11.

Rule 17(a) provides that:

“Every action shall be prosecuted in the name of the real party in interest....
“In subrogation cases, regardless of whether subrogation has occurred by operation of law, assignment, loan receipt, or otherwise, if the subrogor no longer has a pecuniary interest in the claim, the action shall be brought in the name of the subrogee. If the subrogor still has a pecuniary interest in the claim, the action shall be brought in the names of the subrogor and the subrogee.”

Rule 19(a) recites that:

“A person who is subject to jurisdiction of the court shall be joined as a party in the action if ... (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party.”

Respondents contend that Aetna has a pecuniary interest in Howell’s claim against Leiman and Wood which derives from the language of Code of 1975, § 25-5-11, which reads in part:

“If the injured employee ... recover[s] damages against such other party, the amount of such damages so recovered and collected shall be credited upon the liability of the employer for compensation, and if such damages so recovered and collected should be in excess of the compensation payable under this chapter, there shall be no further liability on the employer to pay compensation on account of such injury ... and the employer shall be entitled to reimbursement for the amount of compensation theretofore paid on account of such injury or death.” (Emphasis added.)

According to the respondents, the case of Roberts v. Hughes, 432 So.2d 1232 (Ala.1983), supports the conclusion that Aetna must be joined here. In that case, Roberts filed an action against Hughes and Super Valu Stores for injuries he sustained in a traffic collision. Roberts had received payments of money from Excalibur Insurance Company under its coverage of him for collision and workmen’s compensation benefits. Excalibur moved to intervene in Roberts’s action against Hughes and Super Valu Stores. The trial court granted Excalibur’s motion and Excalibur became a party plaintiff. Before trial occurred, however, Excalibur and Roberts made an agreement whereby Roberts promised to pay Excalibur $23,887.87 from any recovery from the defendants, whereupon Excalibur promised in exchange to dismiss its complaint in intervention. Excalibur then moved to dismiss that complaint. The trial court denied that motion. After Roberts and Excalibur lost in the trial on the merits, Roberts appealed to this Court, claiming error in the refusal to dismiss Excalibur’s complaint in intervention. This Court, in affirming the action of the lower court, took note of Rule 17(a), A.R.Civ.P., observing that “the subrogee, as real party in interest, is the proper plaintiff regardless of the form of the transaction between the insurer and the insured.” This Court added:

“It [A.R.Civ.P. 17(a) ] states that the action shall be brought in the name of the subrogee, regardless of whether its sub-rogation rights arose by virtue of operation of law, assignment, loan receipt, or otherwise. In other words, the acts giving rise to the rights of subrogation, not the form of any agreement between insured and insurer, are determinative of who shall be made a party.” 432 So.2d at 1234.

The petitioner, Howell, on the other hand, contends that the earlier decision of this Court in Hughes v. Newton, 295 Ala. 117, 324 So.2d 270 (1975), controls the facts here and compels the issuance of the writ. Hughes was also a third-party action involving the payment of workmen’s compensation benefits. In that case, the employee was paid $2,982.56 in such benefits by her employer’s insurance carrier. She later filed an action against her employer’s “principal executive officer” to recover damages for the same job-related injury. The workmen’s compensation insurance carrier for the employer was also the liability insurance carrier for the individual defendant. This insurance carrier petitioned to intervene as a party plaintiff in the action filed against the individual defendant, citing Rule 24, A.R.Civ.P. This Court held that the extraordinary facts of the case prevented

“the discretionary allowance of intervention where the insurance company ... represents the third party defendant and is also seeking, through intervention, status as a party plaintiff. Such a patent conflict of interest exists as to bar the right of unencumbered intervention. The potential for collusion is so inherent as to preclude a showing to the contrary within the spirit of Rule 24.” 295 Ala. at 120, 324 So.2d at 272.

See also Southern v. Plumb Tools, A Div. of O’Ames Corp., 696 F.2d 1321 (11th Cir.1983).

Having disposed of the case on that narrow ground, this Court, by way of obi-ter dictum, proceeded to set guidelines for the allowance of intervention in the ordinary workmen’s compensation case brought under Title 26, § 312 (Alabama Code of 1940, Recomp. 1958), now § 25-5-11. “Ordinarily,” the Court observed:

“Rule 24 anticipates potential future litigation brought by or involving the inter-venor. The purpose of allowing intervention in such cases is to discourgage multiplicity of litigation and to relieve the intervenor from the possible prejudice of ‘stare decisis in later litigation involving the same questions of law and fact to which the unsuccessful applicant for intervention is finally a party.’
“In the § 312 [now § 25-5-11] situation, however, no future litigation is contemplated. [Citing Liberty Mutual Ins. Co. v. Lockwood Greene Engineering, Inc., 273 Ala. 403, 140 So.2d 821 (1962).] The compensation carrier will be reimbursed from the employee’s judgment, if any, whether or not it intervenes. Since the employee is seeking exactly the same recovery as the insurer, the usual ease will be resolved by the final clause of Rule 24(a)(2), ‘... the applicant’s interest is adequately represented by existing parties.’
“Thus, in the [§ 25-5-11] case, the motives for liberally allowing intervention are absent and the right to intervene by the compensation carrier should be more restricted than in other Rule 24 cases. Before intervention should be allowed over the objection of the plaintiff in a [§ 25-5-11] third party action, the applicant must meet a burden of showing to the satisfaction of the trial court that he can make a substantial contribution toward a favorable outcome of the plaintiff-employee’s case.
“A mere showing that the applicant is the employer or his compensation carrier and the extent of its right of reimbursement is insufficient to meet this burden. If, on the other hand, the applicant can demonstrate active participation in the preparation of the third party action; that it has in its possession significant information or data essential to the prosecution of the third party suit; or that the employee-plaintiff is inadequately represented or otherwise less likely to succeed in his effort to effect recovery without the intervenor’s active participation; then, in such event unencumbered intervention (i.e., full participation in the litigation) should be allowed.” 295 Ala. at 120-121, 324 So.2d at 273.

Of course, it will not have escaped notice that these conditions were considered to apply to a Rule 24 situation, that is, to intervention. Intervention is a method by which “an outsider with an interest in a lawsuit may come in as a party” on his own application. Wright & Miller, Federal Practice and Procedure, § 1901 (1st ed. 1972) at 464. Intervention must be distinguished from joinder, which is a method by which one may be compelled to become a party. Rule 19, A.R.Civ.P.; Wright & Miller, supra, § 1602 at 17; § 1901 at 464. The rules governing intervention and join-der, however, do not provide automatic participation in the lawsuit in all instances. Quite the contrary, Rules 19 and 24 both provide certain conditions for joinder and intervention. Rule 19(a) requires joinder only if (1) complete relief cannot otherwise be given to those already parties; and (2) the person to be joined:

“claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest.”

In the situation before us, we are not concerned with Rule 24. Thus, we do not consider whether Aetna should or should not be made a party either through permissive intervention or by right. Rather, the question before us is whether Aetna, as a workmen’s compensation carrier, which has paid benefits to the workman, is a “real party in interest” under Rule 17(a) and, accordingly, may be joined in the action under Rule 19. Consideration of pertinent federal decisions, together with perusal of § 25-5-11, leads to the conclusion that Aet-na is not a “real party in interest” under these circumstances.

Who is a real party in interest under Rule 17(a)? Professor Moore’s definition is this:

“The meaning and object of the real party in interest provision [of Rule 17] would be more accurately expressed if it read:
“An action shall be prosecuted in the name of the party who, by the substantive law, has the right sought to be enforced.” (Emphasis in original.)

3A J. Moore, Federal Practice, § 17.02 at 53 (2d ed. 1953).

A leading case applying this principle is United States v. Aetna Cas. & Surety Co., 338 U.S. 366, 70 S.Ct. 207, 94 L.Ed. 171 (1949). There, the United States Supreme Court recognized that the “insurer-subro-gee, who has substantive equitable rights, qualifies as [a real party in interest].” That Court made it clear, however, that such substantive equitable rights were “substantive rights against the tort-feasor.” Aetna, supra, 338 U.S. at 380, 70 S.Ct. at 215. That Court then proceeded to determine whether or not Aetna possessed substantive rights against the third-party tortfeasor under the applicable substantive law of that case, i.e., the Federal Tort Claims Act.

Another significant decision applying the “substantive rights against the tortfeasor” principle is Joyner v. F & B Enterprises, Inc., 448 F.2d 1185 (D.C.Cir.1971). In that case, one Joyner was injured in the course of his employment and was paid workmen’s compensation benefits by his employer’s insurance carrier. Joyner then filed a third-party action in federal district court against the person allegedly responsible for his injuries and that person’s employer. Those defendants moved to have the compensation insurance carrier joined as a party-plaintiff in Joyner’s third-party action. The district court granted that motion and denied Joyner’s motion in opposition. On appeal, the United States Court of Appeals for the District of Columbia reversed. That court looked to the applicable provisions of the Longshoremen’s and Harbor Workers’ Compensation Act to determine whether or not the substantive law gave the insurance carrier any substantive rights against the alleged tortfeasors. That is, and as the court stated, it sought to determine the “nature” of the insurance carrier’s subrogation rights once it had paid benefits in order to determine whether it was a “real party in interest.”

The court found particular guidance in section 33(b) of the Longshoremen’s Act, 33 U.S.C. § 933(b) (1964), which stated:

“Acceptance of [workmen’s] compensation under an award in a compensation order filed by the deputy commissioner shall operate as an assignment to the employer of all rights of the person entitled to compensation to recover damages against such third person unless such person shall commence an action against such third person within six months after such award.”

In discussing the consequences of the employee’s bringing the third-party action, the Court of Appeals stressed the importance of the following questions:

“Where compensation benefits are paid without an award, and the employee commences a third-party action, what substantive right does the employer-assignee then enjoy? Does the employer-assignee retain a substantive right as against the third party? Or, is there merely a right as against the employee if the employee succeeds in his third-party action?” (Emphasis in original.) 448 F.2d at 1187.

The court recognized that the compensation carrier did receive subrogation benefits when it made payments to the injured employee. However, it found that when those payments were made without an award under § 933(b) of the Act the only right the insurance carrier possessed was an interest in any proceeds recovered in Joyner’s action against his alleged tort-feasor. The court stated, at 1188:

“Only if [the insurance carrier] had obtained a formal award of benefits, and Joyner had not commenced a third-party action within six months of the entry of the award [under § 33(b)], would [the carrier] have a substantive right directly against the third-party tortfeasor. This being the case, [the carrier] is not a ‘real party in interest’ in Joyner’s suit against the third-party tortfeasor.” (Emphasis added.)

Cf. Travelers Ins. Co. v. District of Columbia, 382 A.2d 269 (D.C.App.1978) (insurer has nonstatutory rights not preempted by § 933 under theory of “independent wrong” committed by alleged tortfeasor).

That the “real party in interest” is the one owning the substantive right to be enforced is a principle also followed in other decisions. See, for example, Doyle v. Colborne Mfg. Co., 93 F.R.D. 536 (D.Kan.1982), and Beaver v. Ambros, Inc., 432 F.Supp. 1330 (D.Guam 1977). As in Joyner, supra, the court in Doyle determined from the statutory scheme of the Kansas Workmen’s Compensation Act that there had not been a statutory assignment of the injured workmen’s cause of action against the third party wrongdoer. It cited an earlier case, Pyle v. Kansas Gas & Electric Co., 23 F.R.D. 148 (D.Kan.1959), which had analyzed the Kansas statute, concluding that no statutory assignment occurred when the employee had brought his action within one year of his injury. Pyle held that the compensation insurer was not a real party in interest under Kansas substantive law until there had been an assignment by operation of law, i.e., the employee had not brought his action within one year of his injury under the statute; nor had he reached a settlement with or obtained a recovery from the tortfeasor. The court in Doyle negated any assignment which would bestow “real party in interest” status “except perhaps when the employee shows no inclination to press his cause of action himself and the employer decides to do so in the employer’s own name beyond the applicable [statutory] time limitations [which required the employee to bring his third-party action within one year of his accident].” 93 F.R.D. at 538.

It is, of course, true that our Rule 17 referring to subrogation cases states that, “regardless of whether subrogation has occurred by operation of law, assignment, loan receipt, or otherwise, if the subrogor no longer has a pecuniary interest in the claim, the action shall be brought in the name of the subrogee.” The question to be resolved, however, is whether the nature of the interest of the insurer-subrogee is such that he may be joined under Rule 19. The answer to that question, like that in the federal cases cited above, depends upon the statutory rights of the insurer.

An early Alabama case, Metropolitan Cas. Ins. Co. of New York v. Sloss-Sheffield Steel & Iron Co., 241 Ala. 545, 3 So.2d 306 (1941), held that under Title 26, § 311, Alabama Code of 1940, if the employee elected to receive compensation from his employer, then his employer or the latter’s insurance carrier was subrogat-ed to the employee’s right to recover against the tortfeasor and could bring legal proceedings to recover the amount of compensation payable. That statute, however, was repealed in 1947. Its companion statute, § 312, was amended that year and was interpreted by this Court and by the Court of Civil Appeals to mean that the employee, or his dependents in case of his death, had the exclusive authority to bring the action, unless they failed to bring the action within the time allowed by law, in which case the employer or his insurer then had the right to proceed against the third-party tortfeasor. Orum v. Employers Cas. Co., 348 So.2d 792 (Ala.Civ.App.1977); Liberty Mutual Ins. Co. v. Lockwood Greene Engineers, Inc., 273 Ala. 403, 140 So.2d 821 (1962).

That section exists in essentially the same form presently as § 25-5-11. Under it, the employee is given a cause of action against his tortfeasor, and any damages collected therein are “credited upon the liability of the employer for compensation.” If he recovers damages in excess of compensation payable, the employer has no further liability to pay compensation, and the employer is entitled to reimbursement for compensation theretofore paid.

Thus, it can be seen that when the injured employee exercises his statutory right to initiate his exclusive action against the alleged third-party tortfeasor, the insurance carrier is not a “real party in interest” under Rule 17(a). The interest to which it is “subrogated” is in whatever recovery is obtained by the employee against the tortfeasor. The statute, § 25-5-11, gives the insurer no “right to be enforced” against the tortfeasor in that instance, and thus the insurer is not a real party in interest under these circumstances. Hence, it can be seen that the comments of this Court in Hughes v. Newton, supra, dealing with the effect of § 25-5-11 upon intervention under Rule 24, are equally apropos here:

“The compensation carrier will be reimbursed from the employee’s judgment, if any, whether or not it intervenes [and even when it is not joined]. Since the employee is seeking exactly the same recovery as the insurer, the usual case will be resolved by the final clause of Rule 24(a)(2), ‘... the applicant’s interest is adequately represented by existing parties.’ ” 295 Ala. at 121, 324 So.2d at 273.

Not being a “real party in interest,” therefore, the insurance carrier here, Aet-na, is not required to be joined under Rule 19(a). To the extent that the case of Roberts v. Hughes, supra, is contrary to the views expressed herein, it must be considered modified.

The writ of mandamus is granted. The Honorable trial court is directed to rescind the order naming Aetna as a party plaintiff in the case of Bobby J. Howell against Henry M. Leiman, Bill Wood, et al.

WRIT GRANTED.

TORBERT, C.J., and MADDOX, JONES, ALMON, SHORES and ADAMS, JJ., concur.

FAULKNER and EMBRY, JJ., concur specially.

FAULKNER, Justice

(concurring specially)-

Roberts v. Hughes, 432 So.2d 1232 (Ala.1983), is not in conflict with the opinion here. Roberts involved a different issue. The insurer in that ease had paid benefits under an automobile insurance policy as well as under a workmen’s compensation policy. See 432 So.2d at 1233. Upon payment of collision benefits to its insured, the insurer was entitled to proceed against the third-party tortfeasor. Fidelity & Guaranty Fire Corp. v. Silver Fleet Motor Express, 242 Ala. 559, 7 So.2d 290 (1942). The insurer in Roberts v. Hughes was, therefore, a subrogee. Its payment of workmen’s compensation benefits did not affect its status as a subrogee. The issue in Roberts v. Hughes was whether the sub-rogee could defeat the operation of Rule 17(a), A.R.Civ.P., by entering into an agreement with its insured. Based on the express language of Rule 17(a), this court ruled that the agreement, which was tantamount to a “loan receipt,” did not defeat the operation of the rule.

The conclusion that the defendant is not entitled to join Aetna as a plaintiff is based on a construction of § 25-5-11, Code 1975. That statute provides that when a workmen’s compensation carrier has paid benefits to an employee the insurer is to be reimbursed out of any recovery by the employee against a third-party tortfeasor. If the employee fails to bring an action against the tortfeasor within the time allowed by law, the insurer may bring the action. In the case at bar the employee has neither recovered anything from the defendant nor failed to bring a timely action.

The decision in this case that Aetna is not required to be joined should not be taken as a repudiation of the express language of Rule 17(a). Aetna is not a subro-gee in the true sense of the word. The language in Rule 17(a) dealing with subro-gation cases is simply inapplicable to the facts of this case. Roberts v. Hughes should be distinguished from the case at bar.

EMBRY, J., concurs.


source: Caselaw Access Project

author: MADDOX, Justice.

license: Public Domain

text:
    Janice L. GILLILAN v. FEDERATED GUARANTY LIFE INSURANCE CO., a corporation, et al.
    82-1008.
    Supreme Court of Alabama.
    Feb. 24, 1984.

      Mac Downs, Gadsden, for appellant.
    Clarence Simmons, Jr., of Simmons & Ford, Gadsden, J. Thaddeus Salmon, Montgomery, for appellees.
   MADDOX, Justice.

The issues on appeal are whether a contract of life insurance had been created between an applicant for a life insurance policy and an insurance company, prior to the applicant’s death, and whether the wife of the deceased applicant may be permitted to bring a negligence claim against the insurance company and its agent, either individually or as administratrix of her deceased husband’s estate. The trial court’s summary judgment is affirmed.

On November 29,1980, Billy Wayne Gilli-lan (applicant), the husband of plaintiff/ appellant Janice Gillilan, went to the office of Wanda Thrift, an agent of Federated Guaranty Insurance Company (Federated), and applied for a $40,000 policy of ordinary life insurance. The application contained the following terms and conditions:

“I have paid $87.67 to Wanda Thrift, Agent, of Federated Guaranty Life Insurance Company (herein called ‘Company’) as a deposit to be applied on the first premium for the insurance herein applied for if approved and issued subject to and in accordance with Conditional Advance Premium Deposit Receipt for such payment.
“I agree, on behalf of myself and any other persons who shall have or claim any interest in a life insurance policy contract (herein called ‘Contract’) issued by reason of this application, as follows:
“1. ‘Application,’ as herein used, shall mean this Part 1 and Statement to Agent or Statement to Medical Examiner whichever is required by Company’s rules for this particular proposed insured.
“2. That in case deposit is not made at the time of this application, then the Contract herein applied for shall not take effect until this application has been received, approved and accepted by Company at its Home Office in Montgomery, Ala., and the Contract issued thereon delivered to me personally and payment to Company of full first premium therefor during the life-time and continued insurability of Proposed Insured, according to Company’s standards, whereupon Contract shall be deemed to take effect as of the date of such approval of this application.
“3. That if, after receipt at its Home Office in Montgomery, Ala., of this application, Company’s Underwriting Department, after investigation, shall be satisfied that at the time of completion of said application, the Proposed Insured was insurable and entitled, under Company’s rules and standards, to insurance on the plan and for the amount applied for at Company’s published rates corresponding to the age of the Proposed Insured, and shall accept and approve said application, the insurance shall take effect as of the date of the completion of said application, provided the amount of the Conditional Advance Premium Deposit equals at least the full first premium (as shown in Item 9 above) for the Contract applied for.
“4. That in case Company, according to its underwriting rules, should offer to issue a Contract different from that applied for above, or in case of any apparent errors or omissions found by Company in this application, Company is hereby authorized to amend this application by recording the change in the space provided for ‘Home Office Endorsement,’ and that my acceptance of any Contract issued on this application shall constitute a ratification by me of such changes or amendments.
“5. That this application, and any amendments thereto, together with the Contract herein applied for, shall constitute the entire Contract between the parties, and that no information or knowledge obtained by any agent, Medical Examiner, or any other person in connection with this application shall be binding upon Company unless the same is reduced to writing and made a part of this application.
“6. I further expressly agree and understand that no agent, general or special, or any other person, except Home Office Underwriters in the Home Office of Company at Montgomery, Ala., has any authority to accept and approve on behalf of Company, the insurance herein applied for.
“The Proposed Insured hereby agrees that all statements herein are full, complete, and true, to the best of my knowledge and belief and shall be the basis for an insurance policy on his (her) life, as applied for above, to be issued to the Applicant upon his (her) application of which this shall form a part and all rights, title and interest in and to said insurance policy shall be vested in the applicant.
“/s/ Billy W. Gillilan “Signature of Proposed Insured”

The applicant made a check payable to Federated in the amount of $87.67, which was given to the agent as a deposit to be applied against the first premium for the insurance if approved and issued. It is undisputed that Wanda Thrift loaned to the applicant money to pay part of the deposit. The receipt issued by the agent to the applicant at the time the application was taken was as follows:

“CONDITIONAL ADVANCE PREMIUM DEPOSIT RECEIPT
“RECEIPT NO. B 167572 November 29, 1980 RECEIVED FROM Billy W. Gillilan Applicant, the sum of $87.67 which is tendered as a deposit to be applied upon the first premium for a life insurance policy contract (herein called ‘contract’) if approved and issued by Federated Guaranty Life Insurance Company (herein called ‘Company’).
“1. That if, after receipt at its Home Office in Montgomery, Ala., of this application which shall be comprised of this Part 1 (Statement to Agent or Statement to Medical Examiner, whichever is required by Company’s rules for this particular Proposed Insured), Company's -Underwriting Department, after investigation, shall be satisfied that at the time of completion of said application, the proposed insured was insurable and entitled, under Company’s rules and standards, to insurance on the plan and for the amount applied for at Company’s standard published rates corresponding to the age of the Proposed Insured, and shall accept and approve said application, the insurance shall take effect as of the date of the completion of said application, PROVIDED the amount of the Conditional Advance Premium Deposit equals at least the full first premium (as shown in Item 9 of the application) for the Contract applied for.
“2. That if the above deposit amounts to less than the full premium (as shown in Item 9 of Part 1 of the application), or, if the Company’s Underwriting Department, after investigation, does not accept and approve said application exactly as applied for, but does accept and approve the application subject to modification either as to plan, amount, premium rate and/or disallowance of any supplementary benefit applied for, the insurance offered in the modified Contract shall take effect as of the date the Company’s Underwriting Department at its Home Office in Montgomery, Ala., accepts and approves said application, or approves a modified offer, PROVIDED the applicant accepts delivery of the Contract by paying the full first premium, or balance thereof, during the lifetime and continued insurability of the Proposed Insured, according to Company’s standards, within sixty days from said effective date of Contract.
“3. That if this application is not accepted and approved by the said Home Office of Company within sixty (60) days from the date thereof, then no Contract will be issued, and upon surrender of this receipt, Company will promptly refund the above deposit to Applicant.
“No agent, general or special, or any other person, is authorized by Company to waive or modify in any way any of the conditions of this Conditional Advance Premium Deposit Receipt. THE LIABILITY OF THE COMPANY UNDER THIS RECEIPT IS LIMITED TO THE AMOUNT OF DEPOSIT IF THE TOTAL INSURANCE ON LIFE OF PROPOSED INSURED EXCEEDS OR WILL EXCEED $50,000.
“This receipt covers a deposit of the above amount which is not to be applied as payment of premium for insurance applied for until all applicable conditions contained herein have been met.
“/s/ Wanda Thrift Agent
“Federated Guaranty Life Insurance Company
“Home Office, Montgomery, Alabama”

On December 31, 1980, the applicant died intestate, and on January 9, 1981, Federated refunded the premium to the administra-trix of the applicant’s estate.

The plaintiff filed a multicount complaint, which was amended several times, against Federated and other named and unnamed defendants, alleging, among other causes of action, breach of an alleged contract of life insurance, breach of an agreement to insure the husband of the plaintiff, breach of contract on the ground that the receipt constituted a life insurance contract, a claim that the defendants were negligent in failing to provide insurance coverage on the life of the decedent, and bad faith refusal to pay proceeds of the policy.

Defendants moved for summary judgment, alleging that there was no genuine issue as to any material fact and that the defendants were entitled to judgments as a matter of law. The court granted the defendants’ motion for summary judgment and plaintiff appealed.

I

As a contract, a life insurance policy is not complete until the minds of the parties have met and they arrive at an understanding of the terms of the agreement, i.e., the proposals of one party being accepted by the other, and the risk does not attach until the conditions precedent have been fulfilled. Security Life and Trust Co. v. Galin, 280 Ala. 325, 328, 193 So.2d 766, 768 (1966); Cherokee Life Ins. Co. v. Brannum, 203 Ala. 145, 148, 82 So. 175, 178 (1919). An application for insurance is a mere offer which does not ripen into a contract unless, and until, it is accepted by the insurer. Liberty National Life Ins. Co. v. Smith, 356 So.2d 646, 647 (Ala.1978).

The terms and conditions of the proposal for insurance in this case are specified in the application and in the “conditional advance deposit receipt.” Normally the application for a life insurance policy and a binder receipt must be taken together, and if they constitute all the elements of a contract, they are binding upon the insurer and insured. Liberty National Life Ins. Co. v. Patterson, 278 Ala. 43, 46, 175 So.2d 737, 740 (1965).

The final paragraph of the receipt in this case states unambiguously that the deposit is not to be applied as a premium payment for the insurance applied for until the applicable conditions in the receipt have been met. Paragraph three of the terms and conditions of the application and paragraph one of the receipt provide that the insurance shall take effect as of the date of the application’s completion, if: after receipt of the application in its home office, Federated’s underwriting department “after investigation,” is satisfied that at the time of the completion of the application the “proposed insured was insurable” and entitled under its rules and standards to insurance on the plan and in the amount applied for “at the company’s standard published rates,” corresponding to the age of the insured, and accepts and approves the application. Moreover, paragraph six of the application states that only the home office underwriters have the authority to accept and approve an application on behalf of Federated.

E.M. McKinney, an administrator in charge of life operations for Federated, testified, on deposition, concerning the review of the deceased’s application for a life insurance policy. He stated that when the application and the medical examiner’s report was received by the home office in Montgomery, it was checked for completeness, entered in the company’s computer, and then sent to Federated’s underwriting department, which commenced its underwriting investigation. After additional medical information was requested and received by Federated from the applicant’s physician, the underwriting department determined, based on the additional medical information, that the applicant’s risk was not acceptable. Consequently, on December 23, 1980, Federated's underwriting department submitted its entire file on the applicant to its reinsurer, North America Reassurance Company, so that it could determine whether it would offer reinsurance on the risk at an increased premium rate. McKinney stated that the application was still being processed when the applicant died on December 31, 1980, and that upon learning of the applicant’s death, Federated once more reviewed the application to determine if the applicant could have been insured at Federated’s standard rates at the time the application was made. On January 9, 1981, Federated informed appellant, as administratrix of the deceased applicant’s estate, that the deceased was un-insurable at the time the application was made and refunded the premium deposit.

As McKinney’s deposition suggests, the applicant was not insurable at Federated’s standard published rates at the date of his application, and as a result, Federated did not accept the applicant’s proposal for insurance. Consequently, under these facts, the conditions in paragraph one of the receipt necessary for the insurance to take effect at the date of the application were not met.

Examining the remaining terms and conditions of the receipt and application, we note that paragraph two of the receipt provides that if, after its investigation, Federated’s underwriting department does not accept the application as applied for but offers a modified contract as to plan, amount, or premium rate, the contract offered must be accepted by the applicant “during the lifetime and continued insura-bility of the proposed insured.” When this occurs, the receipt states that the modified contract takes effect as of the date Federated’s underwriting department accepts and approves the application or a modified offer.

In Cherokee Life Ins. Co. v. Brannum, supra, the Court held that where the applicant entered into a definite agreement that the insurance applied for should not be in effect until the policy was delivered during the “lifetime” of the insured, the insurance policy was to be in force from the date of the unconditional approval of the application by the insurer’s medical director, and that if the premium was paid with the application, the payment was subject to the conditions stated in the receipt, which referred to and adopted the conditions in the application. There, the policy became effective only when those conditions were fulfilled. One of the condition precedents was the delivery of the contract of insurance to the insured “during her lifetime,” following its approval by the medical director. 203 Ala. at 152, 82 So. at 182. Likewise in Ivie v. International Life Ins. Co., 217 Ala. 559, 117 So. 176 (1928), the Court considered provisions very similar to the provisions in the insurance application and receipt in the instant case and opined:

“The contractual status of the parties became fixed upon the death of the applicant. At that time there had been no contract agreed upon; the application was still pending and undisposed of when knowledge of the death of the applicant came to the company. Thereafter no new contract between the parties by a waiver or estoppel could be created, as one of the contracting parties was dead. Valentine v. W.O.W., 180 Cal. 192, 180 P. 2, 8 A.L.R. 380.”

217 Ala. at 561, 117 So. at 177-178.

After reviewing the terms of both the insurance application and the “conditional advance premium deposit receipt,” and the attendant facts of this case, we conclude that the applicant died while the application was being processed and that no insurance contract had been either issued or offered by Federated in response to the application prior to the applicant’s death.

Appellant asserts that the question of whether Federated’s failure to issue a policy was within the bounds of reasonableness constituted a jury question and that Federated should be estopped to deny coverage under the circumstances. While a proposed insured is justified in assuming that an insurer will exercise reasonable care and diligence in acting upon his application, Liberty National Life Ins. Co. v. Smith, supra, 356 So.2d at 648, mere delay in accepting an offer that is evidenced by a life insurance application and in returning a cash premium for which no demand has been made, does not amount to acceptance of the application and convert it into a contract. United Ins. Co. of America v. Headrick, 275 Ala. 594, 598, 157 So.2d 19, 23 (1963). Paragraph three of the receipt states, however, that if the application is not accepted and approved by the company within sixty days, then no contract will be issued and upon surrender of the receipt, the deposit will be refunded. Because the sixty day provision is absolute, there was no unreasonable delay, as a matter of law, since the application in this case was rejected and the premium was refunded within forty-four days. Liberty National Life Ins. Co. v. Smith, supra, 356 So.2d at 648.

There is no foundation to appellant’s assertion that because of applicant’s poor medical condition and the medical information in Federated’s possession, that Federated and its agent knew that applicant would never be issued an insurance policy when the company and its agent received his application on November 29, 1980. As we have previously shown, Federated did not violate any of the provisions of the agreement its agent made with the insured; therefore, there can be no liability for Federated’s failure to issue a policy, Federated having reserved to itself the right to determine whether the insured was an insurable risk, and having made that determination within the time set out in the agreement.

II

Appellant, alleging that Federated’s agent negligently failed to obtain insurance and that Federated negligently processed the application, sues both individually and in her capacity as personal representative of her deceased husband.

A claim for negligence is one sounding in tort. A claim sounding in tort for which no action has been filed does not survive death in favor of the personal representative. Code 1975, § 6-5-462; Bates v. L & N Employees Credit Union, 374 So.2d 323, 324 (Ala.1979); Sanford v. Western Life Ins. Co., 368 So.2d 260, 263 (Ala.1979). As noted in Sanford, supra, the fact that a legal duty stems from a contract out of which the tort is claimed to have been committed, does not transform an ex delicto action into a survival contract action that survives in favor of the personal representative. 368 So.2d at 263. Because this action was not commenced until May 1, 1981, after the death of the applicant, the negligence claim alleged by appellant in her capacity as personal representative of the deceased did not survive.

With respect to the maintenance of the negligence action individually, appellant argues that she was the designated beneficiary of the proposed policy and part owner of the funds that paid the advance premium deposit.

The case of Royal Neighbors of America v. Fortenberry, 214 Ala. 387, 107 So. 846 (1926), is dispositive of appellant’s negligence claim. In Royal Neighbors of America, Mrs. Fortenberry had completed an application for life insurance with the defendant insurer, but died before the policy was delivered. Mr. Fortenberry, the named beneficiary in the application, brought suit. As the Court described:

“The theory of the suit is for the breach of parol agreement to insure, or negligence in unnecessary delay in the transmission of the application and its conduct in the home office to the issue of the beneficiary certificate and its return for acceptance by the assured, resulting in financial loss to the beneficiary, for which he might sue.

214 Ala. at 388-389, 107 So. at 847. In holding that the plaintiff could not maintain either claim, the Court opined:

“The applicant, if she had received the policy, might have changed the beneficiary named therein, if done subject to its prescribed form and terms. That the mere issuance of the policy would not have established in the beneficiary rights paramount to those of the assured is the rule of old line policies. [Citations omitted.]
“... It would seem to follow that whether, under an old line policy or fraternal insurance, the right of action for failure to promptly issue, or negligence in the due issue of the policy or certificate, pursuant to the application, is in the insured or her personal representative, and not in the beneficiary named in the application. 1 Williston on Contracts, p. 748-50.”

214 Ala. at 389-390, 107 So. at 848-849.

Appellant’s reliance upon Royal Neighbors of America is misplaced; that case is not authority for her to bring an action, either individually, or as a personal representative. Whether or not the negligence action survived was not before the Court in that case, since the suit was not brought by the husband as personal representative. Thus, Royal Neighbors of America is authority for the proposition that a beneficiary named in a pending insurance application does not have a right to maintain an action against an insurance company for negligently processing an insurance application. Also, under the particular facts of this case there was no cause of action available to the personal representative because there was no breach of any duty, as a matter of law, by Federated, because under the terms of the agreement between the company and the deceased, the time within which the company could decide whether to issue a policy or not had not expired.

Because there was no genuine issue as to any material fact in this case, and because defendants, as the moving parties, were entitled to judgment as a matter of law, the Court concludes that the trial court properly granted summary judgment. Rule 56, Ala.R.Civ.P.; Houston v. McClure, 425 So.2d 1114, 1116 (Ala.1983).

AFFIRMED.

TORBERT, C.J., and JONES, SHORES and BEATTY, JJ., concur.


author: PER CURIAM.

text:
    G. Bennett HAYNES, Jr. v. ALABAMA STATE BAR.
    82-1055.
    Supreme Court of Alabama.
    Feb. 24, 1984.
    Robert C. Boyce, III, of Furner, Boyce & Nave, Homewood, for appellant.
    John A. Yung IV, Asst. Atty. Gen. Counsel, Alabama State Bar, for appellee.
   PER CURIAM.

G. Bennett Haynes, a Birmingham lawyer, appeals from an order of the Disciplinary Board of the Alabama State Bar suspending him from the practice of law for 120 days. We affirm.

The Grievance Committee of the Birmingham Bar Association filed formal disciplinary charges against Haynes on March 17, 1983. The Secretary of the Alabama State Bar caused a summons and copy of the charges to be served on Haynes.

The charges all rely upon the same facts, which were alleged in the complaint as follows:

“1. At all times pertinent, the respondent attorney was licensed to practice law in the State of Alabama, and was practicing in Jefferson County, Alabama.
“2. Within six years prior to the filing of these disciplinary charges, the respondent attorney was retained by Sandra Ort to represent her son, Tony Ort, pursuant to the written contract between respondent attorney and Sandra Ort....
“3. The respondent attorney, after entering into the above-mentioned contract, proceeded to file suit on behalf of the said Tony Ort on, to-wit: June 15, 1981, in United States District Court for the Middle District of Alabama, styled Anthony Kevin Ort v. R.G. Britton, etc., et al., civil action number 81-328-N.
“4. On to-wit: January 13, 1982, the U.S. District Court for the Middle District of Alabama entered an order ... directing that the Plaintiff in the above-mentioned civil suit show cause on or before January 28, 1982, as to why the suit should not be dismissed for want of prosecution.
“5. The respondent attorney, who was still attorney of record for the Plaintiff, Tony Ort, filed nothing in the United States District Court for the Middle District of Alabama in response to the said show cause order.
“6. On, to-wit: February 9, 1982, the United States District Court for the Middle District of Alabama dismissed the abovermentioned Ort suit and taxed the costs against the Plaintiff....
“7. At no time prior to the dismissal of the above-mentioned Ort suit had the respondent attorney withdrawn, or filed a motion to withdraw, as attorney for the Plaintiff.”

In addition to these facts, the truth of which Haynes admitted, there was evidence that Sandra Ort, on behalf of her son, Tony Ort, who was Haynes’s client, had paid $800.00 to Haynes for attorney fees, pursuant to a retainer agreement. She also had given $60.00 to Haynes for the U.S. District Court filing fee. The complaint was filed, but no other pleadings or motions ■were ever prepared or filed. The complete U.S. District Court file was admitted into evidence. It revealed that service had never been attempted on the defendants, even though the court clerk notified Haynes of the proper addresses for service. It is undisputed that Haynes had actual knowledge of the show cause order and its contents and, in fact, was “expecting something like that.” Subsequent to receiving the order, he told his former law partner and a Grievance Committee investigator that he would file a motion for an extension of time or respond to the order in some other appropriate manner. However, no response by motion or otherwise was made. Mrs. Ort testified that she spoke with Haynes, and he promised he would make an appearance in court and respond to the order. Haynes explained at the disciplinary hearing that he wanted to contact Sandra Ort before drafting his motion. He testified that he believed, despite the fact that the order required cause to be shown by January 28, 1982, that he had until February 11, 1982, to file his response. According to him, the secretary to the federal judge who issued the order told him that the judge would be out of the office,

and no action would be taken until February 11, 1982. The order to dismiss was signed on February 9,1982. No action was taken to reinstate the case. Haynes said that he did not have opportunity to speak with the Orts until about a month later and explain to them why the case had been dismissed.

Haynes admits that he was negligent in failing to attempt to reinstate the case in the interim, but contends that it would have been fruitless to do so because his client’s parents were uncooperative. It is not clear whether Haynes ever discussed reinstating the case with Tony Ort personally. The inference from the evidence is that Haynes communicated with his parents only because Tony Ort was incarcerated.

Haynes’s actions and omissions are alleged to be violations of the following disciplinary rules:

“DR 6-101 Failing to Act Competently.
“(A) A lawyer shall not willfully neglect a legal matter entrusted to him.
“DR 7-101 Representing a Client Zealously.
“(A) A lawyer shall not intentionally:
“(1) Fail to seek the lawful objectives of his client through reasonably available means permitted by law and the Disciplinary Rules, except as provided by DR 7-101(B). A lawyer does not violate this Disciplinary Rule, however, by acceding to reasonable requests of opposing counsel which do not prejudice the rights of his client, by being punctual in fulfilling all professional commitments, by avoiding offensive tactics, or by treating with courtesy and consideration all persons involved in the legal process.
“(2) Fail to carry out a contract of employment entered into with a client for professional services, but he may withdraw as permitted under DR 2-111, DR 5-102, and DR 5-105.
“(3) Prejudice or damage his client during the course of the professional relationship, except as required under DR 7-102(B)

Haynes filed a general denial of all charges. On June 24, 1983, the Board heard the matter and entered its order finding Haynes guilty on all charges, and ordered the suspension of 120 days.

Haynes asserts as error that there is no clear and convincing evidence of “willful neglect” under DR 6-101(A), or of “intent” under DR 7-101(A).

“The scope of review applicable to this case is: Under the present rules of disciplinary enforcement, where the members of the Disciplinary Board hear the evidence and observe the demeanor of the witnesses, the Supreme Court, on review, will presume that the Board’s decision on the facts is correct; and the disciplinary order will be affirmed unless the decision on the facts is unsupported by clear and convincing evidence, or the order misapplies the law to the facts.”

Hunt v. Disciplinary Board of the Alabama State Bar, 381 So.2d 52, 54 (Ala. 1980). See, also, Worley v. Disciplinary Board of the Alabama State Bar, 407 So.2d 822 (Ala.1981).

The Board’s order did not contain any findings of fact. We have read the entire record of the evidence and conclude that all reasonable inferences which can be drawn from it show that Haynes, with full knowledge that failure to respond to the show cause order would result in the dismissal of his client’s case, did not file any motions, did not make any appearance, and did not take any action whatsoever to protect the case. He had no indication from his client, or his client’s parents, that his client wanted to dismiss the case. Because Haynes failed to show cause, his client’s suit, which sought to enforce an alleged constitutional right to receive medical treatment while incarcerated, was dismissed with prejudice. Haynes did not provide the representation which was promised in the retainer agreement, and he certainly failed to pursue the “lawful objective” of getting proper medical treatment for Tony Ort.

Haynes charges that, even if these facts are true, they do not constitute “willful neglect.” He asserts that willful neglect requires “a conscious course of conduct with the specific intent and design to injure and damage Tony Ort.” We disagree. In Hunt v. Disciplinary Board of the Alabama State Bar, supra, we said:

“The law governing the lawyer-client relationship may be stated, in the context of the instant case and Disciplinary Rule 6-101(A), Code of Professional Responsibility, as follows: Whenever a person consults a lawyer, advising him of the facts concerning a legal claim, and the lawyer agrees to ‘take the case,’ and thereafter assures such person that he is handling the case and that it will be heard at a future date, a lawyer-client relationship is established; and the lawyer is guilty of wilfully neglecting a legal matter entrusted to him if he takes no action on client’s behalf.”

Hunt v. Disciplinary Board of the Alabama State Bar, 381 So.2d at 53-54. Hunt failed to file suit for his client after promising him that the case would be heard in court in the future. We affirmed the Board’s decision that Hunt had violated DR 6-101(A). There was no evidence that Hunt’s actions were done with the specific intent to injure and damage his client; such evidence is not necessary to prove that a lawyer willfully neglected a legal matter entrusted to him.

We hold that there is clear and convincing evidence that Haynes’s acts and omissions constituted violations of DR 6-101(A) and DR 7-101(A). The decision of the Disciplinary Board is due to be affirmed.

Haynes raises one other point. He argues that 120 days’ suspension is too severe for the offense. We cannot agree. We are not inclined, on the record before us, to disturb the punishment prescribed by the Board.

AFFIRMED.

TORBERT, C.J., and MADDOX, JONES, SHORES and BEATTY, JJ., concur.


author: SHORES, Justice.

text:
    Eliza HUGHES v. Marvin Kermit HUGHES, et al.
    82-1111.
    Supreme Court of Alabama.
    Feb. 24, 1984.
    Charles E. Floyd, Phenix City, for appellant.
    William G. Hause of Hardwick, Hause & Segrest, Dothan, for appellees.
   SHORES, Justice.

This is an appeal from a dismissal of a petition to set aside a deed.

Eliza Waldrep and Oscar Hughes were married in November of 1970, within a month of their first meeting. Mrs. Hughes was born in 1905; Mr. Hughes was born in 1888. He died at age ninety-three in 1982. Three days prior to the wedding, Mr. Hughes executed a warranty deed of all his land, except twenty-two acres and the home situated thereon, to his two living children and two grandchildren, children of his deceased child. He delivered the deed to his son Clifton Hughes on the day of the wedding. None of the children or grandchildren, grantees in the deed, knew about the wedding until after it had taken place.

About six weeks following the wedding, Mr. Hughes told his wife that he had deeded the property to his children and grandchildren. She did nothing at the time to protest the action. In fact, during the trial of this case, she stated that she would have married Mr. Hughes even if she had known of the conveyance before the wedding.

By his will, Mr. Hughes left Mrs. Hughes $10,000. She did not contest the will. She subsequently filed this suit to set aside the deed executed prior to the marriage, alleging that the deed was executed without consideration with the intent of fraudulently defeating or preventing her rights of dower and homestead from attaching to the land conveyed.

The case was tried on May 19, 1983, and the court rendered judgment denying the relief sought in the complaint. We affirm.

It is the rule in Alabama that the conveyance of land by a man, executed in contemplation of marriage, without consideration, without the knowledge or consent of the intended wife, and executed with the intention of preventing her rights of dower and homestead from attaching to the lands conveyed, is a fraud upon her rights, against which equity will grant relief. McBee v. McBee, 265 Ala. 414, 92 So.2d 675 (1956); Dorrough v. Grove, 257 Ala. 609, 60 So.2d 342 (1952). The trial court found that no fraud was committed against Mrs. Hughes. Whether that finding is correct, we need not decide, since the trial court also found, and the evidence supports its finding, that Mrs. Hughes knew of the alleged fraudulent conveyance in 1970, six weeks after the marriage.

Section 6-2-3, Ala.Code 1975, establishes the statute of limitations for a cause of action based on fraud as one year from the date of the discovery of the fraud. The fraud is deemed discovered when it ought to have been discovered. Retail, Wholesale and Dept. Store Emp. Union, Local 453 v. McGriff 398 So.2d 249 (Ala.1981); Jefferson County Truck Growers Association v. Tanner, 341 So.2d 485 (Ala.1977).

If that statute controls, the time for filing an action based on the alleged fraud against her was within one year after that discovery, and the trial court correctly denied the relief sought.

If § 6-2-33, Ala.Code 1975, is the controlling provision of law, the action was also untimely under that statute. That section reads: “The following must be commenced within ten years: ... (2) Actions for the recovery of lands....”

This Court in Van Ingin v. Duffin, 158 Ala. 318, 48 So. 507 (1909), held that a bill to avoid a fraudulent conveyance is subject to the statute of limitations of ten years, § 6-2-33, Ala.Code 1975. A suit to avoid a fraudulent conveyance is a suit to recover land. Drummond v. Drummond, 232 Ala. 401, 168 So. 428 (1936).

Mr. and Mrs. Hughes were married in November of 1970, and the deed was delivered to the grantees on the day of the wedding. This action was filed June 28, 1982, well beyond the statutory ten years within which to file an action to recover property.

Because the action is time barred regardless of which statute is applied, we do not review the trial court’s conclusion that no fraud was committed against Mrs. Hughes. The time within which to file her complaint has expired. The trial court was correct in its denial of her petition.

Therefore, the judgment of the trial court is due to be, and it hereby is, affirmed.

AFFIRMED.

TORBERT, C.J., and MADDOX, JONES and BEATTY, JJ., concur.


author: JONES, Justice.

text:
    LIGHTNER INVESTIGATORS, INC., and Tom Elliott v. Patricia Lynn GOODWIN, Administratrix of the Estate of Lucy Goodwin, Deceased.
    82-1112.
    Supreme Court of Alabama.
    Feb. 24, 1984.

      Chris S. Christ, Birmingham, for appellants.
    William H. Atkinson of, Fite, Davis & Atkinson, Hamilton, for appellee.
   JONES, Justice.

This is an appeal from a denial of an A.R.Civ.P. 60(b) motion, which motion sought to set aside a default judgment against Lightner Investigators, Inc., and Tom Elliott (Defendants/Appellants) in the amount of $125,000. We reverse and remand.

Sandy Craig, an employee of Lightner Investigators, Inc., purportedly received instructions from Mary Redmond, an employee of Chrysler Credit Corporation, to repossess a vehicle in the possession of Lucy Goodwin and subject to a valid security interest held by Chrysler. On October 7, 1982, Tom Elliott, an employee of Lightner Investigators, Inc., acting pursuant to Craig’s instructions, went to Haleyville, Alabama, located and took possession of the vehicle, and then towed the automobile to a local Chrysler dealership.

Subsequently, Craig received a summons and complaint. The complaint sought damages for trespass to land and personal property and for conversion. Named as Defendants were Chrysler Credit, Mary Redmond, Lightner Investigators, and Tom Elliott. At the hearing on Appellants’ motion to set aside the default judgment, Craig testified that Mary Redmond informed him that Chrysler’s lawyer would “handle the whole matter.” Later, Redmond assured Craig that Chrysler Credit’s lawyer would call Craig and make arrangements for Craig and Tom Elliott to give a deposition at his office.

Craig testified that he thereafter received notice of the default judgment against Lightner Investigators and Tom Elliott, awarding damages in the amount of $125,000. He then called Mary Redmond for an explanation. Redmond notified Craig that the lawyer for Chrysler Credit could not represent Lightner Investigators or Tom Elliott because of a potential conflict of interest. Lightner and Elliott then retained separate counsel, and moved, within 30 days of entry of judgment, to set aside the entry of default, made pursuant to Rule 55, A.R.Civ.P. From an adverse ruling, they appeal following certification pursuant to A.R.Civ.P. 54(b).

The standard of review here applicable is whether the trial judge abused his discretion in refusing to set aside the default. In Oliver v. Sawyer, 359 So.2d 368 (Ala.1978), Justice Shores, writing for the majority, said:

“It is a primary principle of the Alabama Rules of Civil Procedure that the parties to an action should be afforded a prompt and fair trial upon the merits. It is because of this principle that default judgments are not favored, and, while the trial court has discretion to grant such judgments, we have frequently held that this exercise of discretion should be resolved in favor of the defaulting party where there is doubt as to the propriety of a default judgment. Knight v. Davis, 356 So.2d 156 (Ala.1978); Welch v. G.F.C. Credit Cory., 336 So.2d 1346 (Ala.Civ.App.1976).” 359 So.2d at 369-70.

In this case, Sandy Craig presented uncontroverted testimony that, as a result of several conversations with Mary Redmond of Chrysler Credit, he reasonably believed and relied on her representation that all defendants would be represented by the lawyer for Chrysler Credit. After default, Appellants took prompt and diligent measures to secure defense counsel. Counsel promptly filed a motion to set aside the default judgment. In our view, to let the default judgment stand under the circumstances of this ease would create a hardship and a potential injustice on Appellants. They had a right to rely on, and it was reasonable for them to rely on, the representations made by an employee of Chrysler Credit.

Central to our consideration is the relationship of Appellants and Chrysler Credit as that relationship bears on Appellants’ allegations of a meritorious defense — a requisite to Appellants’ Rule 60(b) motion to set aside the default judgment. Appellee contends that that relationship, as an element of Appellants’ defense, is reduced to relative insignificance because of Chrysler Credit’s allegations, by way of answer to Plaintiff’s complaint, that Appellants were acting as independent contractors and not as its agents.

This argument is misplaced. First, the default denied Appellants the opportunity to contradict this charge; second, and more importantly, Appellants’ good faith conduct in effecting the repossession of Plaintiff’s automobile is not necessarily dependent upon whether Appellants were independent contractors or Chrysler Credit’s agents. In either relationship, whether Appellants acted in accordance with Chrysler Credit’s instruction, or exceeded that authority in taking Plaintiff’s property, is material in fixing joint or several liability, if any, as between Appellants and Chrysler Credit. It is the denial of this opportunity of proof, coupled with the potential loss of any cross-claim against Chrysler Credit, that weighs heavily in our decision to remand this cause and permit Plaintiff’s claim to proceed against all original Defendants. To rule otherwise, where, as here, Appellants’ failure to appear is reasonably excusable, is to risk a substantial injustice.

Therefore, because we find that the trial court abused its discretion in failing to set aside the default judgment, we reverse the judgment, and remand this cause to the trial court for further proceedings not inconsistent with this opinion.

REVERSED AND REMANDED WITH INSTRUCTIONS.

TORBERT, C.J., and MADDOX, SHORES and BEATTY, JJ., concur.


text:
    William H. BRASHER and June Brasher v. FIRST ALABAMA REAL ESTATE FINANCING, INC., a Corp., Charter Mortgage Co., a Corp.
    82-1154.
    Supreme Court of Alabama.
    Feb. 24, 1984.
    H. Jadd Fawwal, Bessemer, for appellants.

      Douglas Corretti of Corretti & Newsom, Birmingham, for appellee First Alabama Real Est. Fin.
    Joseph W. Letzer of Thomas, Taliaferro, Forman, Burr & Murray, Birmingham, for appellee Charter Mortgage Co.
   MADDOX, Justice.

The question presented by this appeal is whether the trial court’s granting of summary judgment on behalf of two lending institutions, and entering a final judgment pursuant to the provisions of Rule 54(b), A.R.Civ.P., was in error. We affirm.

In August 1980, William H. Brasher went to First Alabama Real Estate Financing, Inc. (Real Estate Financing), and met with Hilton H. Flowers, who was a vice-president of Real Estate Financing and branch manager of the Riverchase, Alabama, office.

Brasher explained to Flowers that he was building a house on property owned by his wife’s parents and that he needed a commitment letter to take to the bank in order to obtain a construction loan. Based on the financial information furnished by Brasher, Flowers issued, on behalf of Real Estate Financing, a “take-out” commitment letter dated August 19, 1980, addressed to Ron Currin of First Shelby National Bank, the construction lender.

The commitment letter issued by Real Estate Financing, by which Real Estate Financing committed itself to pay out the Brasher construction loan, was in the amount of $55,000, and committed Real Estate Financing for a period of one year, or longer, at Real Estate Financing’s option, and at the prevailing interest rate on the date of closing. The letter contained other conditions: that the purchaser must be satisfactory to Real Estate Financing; that proper title and hazard insurance must be submitted; that VA (Veterans Administration) or FHA (Federal Housing Administration) compliance inspection reports and an appraisal of at least $73,350 must be submitted, and that closing be concluded by August 19, 1981.

On September 16, 1980, Flowers left the employ of Real Estate Financing and went to work for Charter Mortgage Company (Charter). After discussing the status of several files with Walter Kennedy, senior vice-president of Real Estate Financing, Flowers took some of those files with him, one of them being the Brasher file.

Real Estate Financing cancelled its “take-out” commitment on September 24, 1980, by a letter to First Shelby National Bank, stating that the commitment had been transferred to Charter, although the “take-out” letter contained no provision for its transfer or cancellation. There was no testimony contained in the depositions indicating that the Brashers requested or consented to the transfer by Real Estate Financing.

The Brashers stated in their depositions that when they contacted Flowers at Charter, subsequent to his leaving Real Estate Financing, he told them to stay with him and Charter. They admitted, however, that Flowers did not give them a written commitment for a loan from Charter, and that Flowers did not otherwise guarantee them permanent financing, nor did they ask Charter for a loan commitment.

Charter informed the Brashers sometime in February or March of 1981, that it had been unsuccessful in obtaining a source of permanent financing. Prior to receiving this information from Charter, the Brash-ers had not contacted any other financial institutions to seek permanent financing for their house and had not made a demand on Real Estate Financing to honor its commitment letter.

Following an exchange of letters between Real Estate Financing, an attorney for the Brashers, and First Shelby National Bank, concerning Real Estate Financing’s obligations under the terms of the “takeout” letter of August 19, 1980, Real Estate Financing, after requiring the Brashers to complete a second loan application, extended the terms of the “take-out” letter ten days and agreed to close the mortgage loan in accordance with the terms of the commitment. This fact was conveyed to the Brashers and their attorney both orally and in writing. Although all the loan documents were prepared and ready for execution and a loan closing was scheduled at the offices of Real Estate Financing’s attorneys, the Brashers failed to appear to close the loan. The Brashers later stated that they elected not to close the loan because they concluded that they could not make payments on the Real Estate Financing loan and also make payments on the construction loan interest at First Shelby National Bank, which interest amounted to nearly nine thousand dollars. First Shelby National Bank, the construction lender, foreclosed on the house on August 24, 1981. The Brashers filed suit against Flowers, Real Estate Financing, and Charter. We first consider the appeal as it relates to Real Estate Financing.

The Brashers contend that, by can-celling the “take-out” letter without their consent, and by failing to obtain long-term financing, Real Estate Financing never manifested its readiness, willingness, and ability to finance the loan pursuant to the terms of the written loan commitment. The record indicates otherwise, however.

Real Estate Financing issued its “takeout” letter to First Shelby National Bank on behalf of the Brashers on August 19, 1980. Real Estate Financing did write First Shelby National Bank stating that the loan commitment to the Brashers was being terminated because the Brashers’ file had been transferred to Charter. The facts show that at no time did Real Estate Financing make any loan commitment to the Brashers other than the one contained in the August 19, 1980, letter.

The evidence further shows that when Real Estate Financing was requested by the Brashers to honor its original commitment, it expressed its readiness, willingness, and ability to close the loan called for by the August 19, 1980, agreement, provided the Brashers complied with the conditions of that loan commitment. Although the Brashers did not furnish Real Estate Financing with an appraisal, Real Estate Financing nevertheless extended the expiration date of the loan commitment and attempted to schedule a closing of the loan for the Brashers, who eventually elected not to close.

Even though Real Estate Financing requested the Brashers to complete a second loan application, because the Brasher file had been transferred to Charter, Real Estate Financing informed the Brashers that it would close the loan pursuant to the terms of the original commitment, and it was the Brashers’ decision not to close; therefore, under these circumstances, we conclude the trial court acted properly in granting summary judgment as to the breach of contract claim against Real Estate Financing, because there was no genuine issue as to any material fact and Real Estate Financing was entitled to judgment as a matter of law. Houston v. McClure, 425 So.2d 1114, 1116 (Ala.1983).

We now consider the appeal as it relates to Charter. The Brashers contend that the failure of Charter to provide permanent financing amounted to a breach of contract. Their counsel asserts that “... even if Charter was under no obligation to obtain financing for the Brashers, once they undertook to do so, by actions of their agent, Flowers, having the file transferred to Charter, they assumed the responsibility of Real Estate Financing and were under an obligation to carry through with what they had initiated.” Counsel cites the case of First Federal Savings & Loan Ass’n v. Caudle, 425 So.2d 1050 (Ala.1982), as authority for this proposition. We do not believe that First Federal Savings & Loan Ass’n v. Caudle, supra, is appropriate. There, bank customers brought an action against a lending institution and claimed that it was guilty of negligence, wantonness, and fraud by willful misrepresentation, in the processing, and approval of, and false statements made concerning, an FHA loan application. The Court upheld a general verdict in favor of the customers, ruling that once the lending institution agreed to assist the customers, it was required to act with due care. In Caudle, there was evidence showing that the lender had contacted both the customer and the customer’s contractor to inform them that the low cost loan had been approved and that construction on the house could commence. Not until the construction on the house had been completed did the lender inform the customers that, in fact, the low-cost loan had not been approved, whereupon the customers were forced to obtain a loan at a higher rate of interest.

In the instant case, the Brashers admitted, while being deposed, that there was never any oral or written guarantee by Flowers on behalf of Charter to obtain long-term mortgage financing for their house. Despite the lack of a written or verbal guarantee, Charter or its agents attempted, in good faith, to obtain financing for the Brashers’ house from several sources, but were unsuccessful. There is no evidence in the record to suggest that Charter or its agents did not put forth their best efforts to obtain the financing that the appellants desired. Indeed, the facts indicate that because of the existing economic conditions, funds for long-term mortgages were scarce.

Because the appellants offered no evidence to support the application of the Caudle rationale in this instance, and because appellants failed to provide evidence of the existence of an agreement on the part of Flowers or Charter to provide the appellants with financing, we conclude that summary judgment for Charter was proper. See Holliyan v. Gayle, 404 So.2d 31, 34 (Ala.1981).

In addition to alleging a breach of contract, appellants also allege what could be characterized as a cause of action for fraud by Charter and Flowers. The applicable statute of limitations for fraud allegedly committed by an agent is one year. Code 1975, §§ 6-2-3 and 6-2-39(a)(5), (7).

The Brashers filed suit in this case on September 23, 1982. The facts show that on March 27, 1981, at least eighteen months before they filed suit, their attorney wrote in a letter to Walter Kennedy, senior vice-president of Real Estate Financing, that Charter was unable to obtain financing for their house. This uncontro-verted evidence shows that they were aware at least eighteen months prior to the filing of their lawsuit, that Charter would be unable to obtain financing for them. Consequently, under the circumstances, any claim they may have had for fraud is barred by the one-year statute of limitations.

AFFIRMED.

TORBERT, C.J., and JONES, SHORES and BEATTY, JJ., concur.


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    Georgia H. WILLIAMS v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, a Corporation.
    82-1170, 82-1266.
    Supreme Court of Alabama.
    Feb. 24, 1984.

      Joseph J. Boswell, Mobile, for appellant.
    J. Edward Thornton, Mobile, for appellee.
   JONES, Justice.

These are appeals by the beneficiary of a life insurance policy from a summary judgment for The Prudential Insurance Company of America on two counts of Plaintiffs complaint. The judgment was made final by certification pursuant to Rule 54(b), A.R.Civ.P. We affirm.

William L. Appling was the insured under several life insurance policies with Prudential. Georgia Williams, Plaintiff/Appellant, was the beneficiary of a $10,000 policy on Appling’s life. Contending that the policy in question had lapsed due to nonpayment of the premium and had not been reinstated before the death of the insured, Prudential declined to pay the proceeds of the policy to Williams.

Williams sued, alleging, among other things, that Prudential had breached the contract of insurance by failing to pay the policy proceeds, and claiming damages for wrongful conversion of the policy. From Prudential’s summary judgment on these two claims, Williams appeals.

Appellant contends that Appling, and Clennon Kasai, Prudential’s agent, established a pattern of conduct pursuant to which Appling would pay the premiums on his selected policies. Kasai visited Appling periodically to pick up a check for the premiums. These premiums were paid on the due date, or within the grace period of each month, except for one premium that was due on January 16, 1980. Because of Ap-pling’s failure to pay that particular premium within the grace period, the policy lapsed, but, Appellant contends, it was reinstated by check dated March 19, 1980, signed by Appellant Williams.

The trial court made the following findings of fact:

“A. The premium due on March 16, 1981, for the suit policy, with a grace period of 31 days to April 16, 1981, was not paid, and when Appling was called on for the premium, he informed Defendant’s agent that he was unable to pay the premium at that time, and he requested the agent to return the next week with the hope that he would then have sufficient funds to reinstate the policy. Though sought by the agent, Appling was not seen by the agent thereafter. Appling died on April 26, 1981, without ever reinstating the suit policy.
“6. The charge that this Defendant waived the forfeiture provisions contained in the suit policy by establishing a custom and practice of accepting late, irregular or erratic payments of premiums is not sustained by the undisputed documentary evidence.”

Moreover, the trial court found, as a matter of law, that acceptance of premiums during the grace period does not establish a custom or habit which waives the forfeiture provisions in the policy. Lolley v. Allstate Life Insurance Company, 48 Ala.App. 230, 263 So.2d 688 (Ala.Civ.App.1972). We agree. In order for Williams to recover, she must show that a policy was in effect, or that the company had waived the forfeiture provisions for nonpayment. This she did not do.

Even if we found that such a custom or course of conduct was established, the outcome of this case would not change. Kasai came by for the payment due and was told to return later, which he did. Still, he was not paid, and the policy lapsed.

Furthermore, Williams made no showing that Appling had knowledge that Prudential had habitually accepted premiums after the policy was in default, and that Appling had relied on that custom or habit at the time in question. Childress v. Foremost Insurance Company, 411 So.2d 124 (Ala.1982). Only once did Prudential accept a payment after the grace period had expired, and that acceptance was concurrent with an application for reinstatement of the policy.

Therefore, because we find no error in the trial court’s order, the judgments are due to be, and they hereby are, affirmed.

AFFIRMED.

TORBERT, C.J., and MADDOX, SHORES and BEATTY, JJ., concur.


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    Myrtle Hosmer HELMS v. W. Hardy McCOLLUM, et al.
    82-1179.
    Supreme Court of Alabama.
    Feb. 24, 1984.
    Raymond E. Ward and Dennis Herndon of Ray, Oliver, Ward & Parsons, Tuscaloosa, for appellant.
    Barry L. Mullins of Lee, Barrett & Mullins, Tuscaloosa, for appellee W. Hardy McCollum.
    Mary R. McKay of Watson & Harrison, Tuscaloosa, for appellee Enhanced Energy Resources, Inc.
   SHORES, Justice.

The appellant, Myrtle Hosmer Helms, appeals from the dismissal of a petition for a writ of certiorari or, in the alternative, a writ of mandamus. We affirm.

This case arises from a condemnation action in the Probate Court of Tuscaloosa County, Alabama, filed on November 29, 1982. Enhanced Energy Resources, Inc. (Enhanced), a Houston corporation, filed the application to condemn and acquire the right to construct and maintain a pipeline across property owned by Helms in Tuscaloosa County. The probate court set the hearing on the application for December 14, 1982, at 10:00 a.m., and provided for ten days’ notice, pursuant to § 18-1-8, Ala. Code 1975.

Notice of the application was issued to the sheriff of Tuscaloosa County and forwarded on to Jefferson County for service on the appellant. Several days later, Helms found a note on her door instructing her to call the Jefferson County sheriffs office for papers that were, in fact, the notice and application of condemnation. Helms received these papers on December 6, 1982, eight days prior to the hearing.

Prior to this alleged service, on November 29, 1982, Enhanced, through its attorney, sent to Helms by certified mail, restricted delivery, return receipt requested, copies of the papers involved in the condemnation proceedings, including the notice and order setting the date for the hearing.

Helms arrived late at the Tuscaloosa County Courthouse for the hearing, which had started without her. She was unaccompanied by legal counsel. She participated in the proceedings and voiced her objections to the proceedings and their objective. At the conclusion of the hearing, the probate judge granted the application of Enhanced and appointed commissioners, who performed all the duties required of them and entered their report. Judgment was entered on the commissioners’ report, and the decree of condemnation was entered.

Helms filed a motion to set aside the decree of condemnation, which was denied. She then filed notice of appeal to the Circuit Court of Tuscaloosa County, Alabama. While that appeal was pending, Helms filed a petition for writ of certiorari or, in the alternative, writ of mandamus, with the same court, naming the probate judge and Enhanced as respondents. This petition sought to require the probate judge to vacate his order of condemnation. This is the same relief sought on the appeal.

The circuit court granted the respondents’ motion to dismiss and denied Helms’s motion for rehearing. The court entered the following order, from which this appeal was taken:

“Although this case may not properly be before this Court in deference to Plaintiff, the case has been considered on its merits.
“Section 18-1-8 of the Alabama Code (1975), required that notice of an application for a condemnation order and of the day for the hearing thereof must be served on the owner of the property sought to be condemned by the sheriff or other legal officer at least ten days before the scheduled date of the hearing. On November 29, 1982, Defendant McCollum entered an order setting the date of the hearing on December 14, 1982. Plaintiff Helms received a copy of the application and the order setting the date of the hearing from Enhanced Energy Resources, Inc., by certified mail on November 30, 1982, and was served notice by the Sheriff’s Department of Jefferson County on December 6, 1982. Enhanced Energy maintains that these actions constitute proper service upon Mrs. Helms and that as a result the Probate Court of Tuscaloosa County had in per-sonam jurisdiction over her.
“Although ARCP Rule 4.1(b)(2) allows service of process by persons other than a sheriff, the Alabama Court of Civil appeals has stated that for this method of service to be proper, the court — in this instance, the Probate Court — must issue an order specially appointing someone other than the sheriff as the appropriate person to legally serve process. O’Donohue v. Citizens Bank, 350 So.2d 1049, 1053-54 (Ala.Civ.App.1977). In the case at bar, this did not occur.
“In Alabama, however, service of process is not essential if the party intended to be served appears and defends and submits himself to the jurisdiction of the court. The purpose of process is to bring the party into court and it may be waived by him. Persons v. Summers, 274 Ala. 673, 151 So.2d 210 (1963); Oden v. McCraney, 235 Ala. 363, 179 So. 191 (1938). If a party intends to rely on lack of in personam jurisdiction, he must appear, if at all, for the sole purpose of objecting to the court’s jurisdiction. Persons, 274 Ala. at 680 [151 So.2d 210], An appearance for any other purpose is usually considered general, Thompson v. Wilson, 224 Ala. 299, 140 So. 439 (1932), and a party’s general appearance will cure any defects in service upon him prior to that time. Pridgen v. Head, 282 Ala. 193, 210 So.2d 426 (1968). Mrs. Helms’ appearance in court on December 14, 1982, cured the defect in her service and the Probate Court had in personam jurisdiction over her.”

The trial court correctly noted that the case was not properly before it by petition for certiorari and, for that reason, its order is correct and not subject to reversal here. The only issue before us is the propriety of the trial court’s order dismissing the petition. If the merits of the case were before us, we, as did the trial court, would hold that Mrs. Helms’s appearance and participation in the hearing, without raising the defect in service of process, cured the defect in her service, and that the probate court properly had in personam jurisdiction over her.

Therefore, the judgment of the circuit court is due to be, and it hereby is, affirmed.

AFFIRMED.

TORBERT, C.J., and MADDOX, JONES and BEATTY, JJ., concur.


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    Mrs. Hoyt JOHNSON, Individually and as Administratrix of the Estate of Hoyt Johnson, Deceased v. Jewell KEENER.
    82-1202.
    Supreme Court of Alabama.
    Feb. 24, 1984.
    William L. Irons, Birmingham, for appellant.
    Jewell Keener, pro se.
   SHORES, Justice.

This case is before us for the third time. It originally involved two parcels of land, one in Chilton County and one in Bessemer. It was last before us in Johnson v. Keener, 425 So.2d 1108 (Ala.1983). In that case, Justice Beatty, speaking for the Court, summarized the history of the litigation as follows:

“In earlier litigation the aunt sought unsuccessfully to have both deeds set aside on the ground of undue influence. Johnson v. Keener, 370 So.2d 265 (Ala.1979). Upon losing that case the aunt began the present action for a partition sale of both parcels, alleging joint ownership of each. The nephew filed a notice of election to purchase his aunt’s half interest in both parcels under Code of Ala.1975, § 35-6-100. The trial court found that the parties ‘each own a fifty percent interest jointly with right of sur-vivorship’ in both parcels and that the nephew was entitled to purchase his aunt’s interest. The nephew thought he concluded the. matter when on February 5, 1982, he paid into court $30,500 for his aunt’s interest in the Chilton County property, $1,150 for her interest in the Bessemer property, and the appraisal costs.
“However, on the day before, the aunt had filed a motion to strike the portion of her complaint relating to the Bessemer parcel. She alleged that she was ‘mistaken in the allegation of ownership of the [Bessemer] parcel,’ because she had conveyed her interest in it to Richard and Edna Cruce on December 14, 1977. This deed was not recorded until February 4, 1982, the same day the motion to strike was filed. At a hearing on the aunt’s motion to strike, the nephew filed a ‘counterclaim’ alleging that the 1977 deed ‘is void under the laws of the State of Alabama and otherwise fails to convey the interests and property set out in the purported conveyance.’ The trial court summarily denied the counterclaim and granted the motion to strike, finding ‘that the plaintiff-aunt owned no interest in the [Bessemer] parcel at the time she filed this lawsuit.’ The nephew then took this appeal.”

425 So.2d at 1109.

We reversed the trial court’s order and held that the “discovered” deed was ineffective to defeat the nephew’s interest in the Bessemer parcel because it came within the rule of Bernhard v. Bernhard, 278 Ala. 240, 177 So.2d 565 (1965).

The nephew died just before the opinion in Johnson v. Keener was released on January 28, 1983. The trial court has now entered an order as follows: “The Supreme Court of Alabama in the case of Keener v. Johnson held that the purported deed was ineffective to convey the fee and destroy Hoyt Johnson’s remainder interest. This remainder interest vested in Jewell Keener the instant Hoyt Johnson died.”

The widow and administratrix of the nephew’s estate appeals from that order. We reverse.

The trial court’s holding would be correct had there not been a final judgment vesting title in the nephew, who exercised his statutory right to purchase the interest of the aunt under the provisions of § 35-6-100, Ala.Code 1975. He paid into court the amount ordered to purchase her interest, and all that remained to be done was the ministerial act of drawing a Register’s deed to him when the aunt suddenly “discovered” the deed referred to in this Court’s opinion written by Justice Beatty. When we reversed the holding of the trial court striking from the proceedings the Bessemer parcel, this had the effect of reinstating the order directing the conveyance of both parcels to the nephew. Title to both parcels now rests in his heirs, since he died intestate, and the aunt takes no interest under the deed because the nephew had utilized and consummated the procedure permitted by § 35-6-100, Code.

The judgment of the trial court is reversed, and the cause is remanded with instructions to order a Register’s deed to convey the aunt’s interest in the Bessemer parcel to the heirs of the nephew, and to pay the monies heretofore paid into court by the nephew to the aunt.

REVERSED AND REMANDED WITH DIRECTIONS.

TORBERT, C.J., and MADDOX, JONES, and BEATTY, JJ., concur.


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    Jerry W. LEWIS and Marcelle Lewis v. HALEYVILLE MOBILE HOME SUPPLY, INC.
    82-1220.
    Supreme Court of Alabama.
    Feb. 24, 1984.
    William H. A.tkinson of Fite, Davis & Atkinson, Hamilton, for appellants.
    Jackie O. Isom, Hamilton, for appellee.
   SHORES, Justice.

Jerry Lewis and Marcelle Lewis, personal guarantors of debts incurred by Boulder, Inc., on its open account with Haleyville Mobile Home Supply (HMH), appeal from a summary judgment entered in favor of HMH in this action to collect the corporate debt. We affirm.

The material facts are undisputed. Boulder owes HMH $33,736.76 on open account. Jerry Lewis and Marcelle Lewis, by written agreement with HMH, personally guaranteed payment on the account, to a maximum amount of $30,000.00. The agreement also provided that the guarantors would pay “a reasonable attorney’s fee and all costs and expenses which may be incurred by Creditors [HMH] in the collection of any account due by Debtor [Boulder] or in the enforcement of the Guaranty.” HMH filed this action and sought recovery of the debt against Boulder and the personal guarantors. Boulder was dismissed from the suit after it filed a “Suggestion of Bankruptcy,” stating that it had filed a petition for relief in the U.S. Bankruptcy Court and that the petition was still pending.

HMH moved for a summary judgment against the guarantors. Accompanying the motion was an affidavit by Tom Casey, the general manager of HMH, stating the amount due and the fact of the guaranty agreement. In addition, Casey stated that “the reasonable and customary contingency fee [for] collections in this area is one third of the amount of the claim which Haleyville Mobile Home Supply, Inc., claims on this Guaranty Agreement,” which, of course, would be $10,000.00. The trial court originally awarded HMH’s counsel a-fee of one third of the amount guaranteed and then, following a hearing on the guarantors’ motion for new trial, reduced the fee to $6,000.00, which is twenty percent of the debt.

The only evidence offered by the guarantors in opposition to Casey’s affidavit is an affidavit of Marcelle Lewis, secretary of Boulder, in which she stated that she and her husband, Jerry Lewis, are unable to defend themselves or verify the amount of the indebtedness because Boulder’s corporate records are in the possession of the bankruptcy trustee. They admit all other material facts.

The rule regarding the form and content of affidavits in opposition to motions for summary judgment appears in Day v. Merchants National Bank of Mobile, 431 So.2d 1254 (Ala.1983):

“Under Rule 56(e), ARCP, an opposing affidavit must be made on personal knowledge, and must set forth facts as would be admissible in evidence and show affirmatively that the affiant is competent to testify to the matters stated. The rule is stated in Butler [v. Michigan Mutual Ins. Co., 402 So.2d 949 (Ala.1981) ]:
“ ‘It is the rule that when a motion for summary judgment is made and is supported as provided in Rule 56, Alabama Rules of Civil Procedure, a party adverse to such a motion may not rest upon the mere allegations or denials of the pleadings and must submit facts controverting those facts presented by the moving party. Imperial Group, Ltd. v. Lamar Corp., 347 So.2d 988 (Ala.1977); Ray v. Midfield Park, Inc., 293 Ala. 609, 308 So.2d 686 (1975); Glover v. Merchants Adjustment Service, 57 Ala.App. 62, 326 So.2d 129 (1976). Likewise, the affidavits must be made on personal knowledge and must set forth facts to show that the evidence would be admissible as testimony to contradict the mov-ant’s evidence. Arrington v. Working Woman’s Home, 368 So.2d 851 (Ala.1979); Oliver v. Brock, 342 So.2d 1 (Ala.1977). The scintilla rule cannot be satisfied by speculation and the evidence presented must be supported by at least a reasonable inference. Ar-rington v. Working Woman’s Home, 368 So.2d 851 (Ala.1979); Oliver v. Brock, 342 So.2d 1 (Ala.1976).’
402 So.2d at 952.”

431 So.2d at 1256-1257.

The guarantors did not present any falcts which controvert the facts in support of the motion for summary judgment. They do not dispute the amount of the debt nor the fact that they guaranteed it up to $30,000.00. Their alleged inability to verify the amount of the debt does not amount to an assertion that the amount claimed is disputed.

Furthermore, the trial judge gave the guarantors an opportunity to adduce facts in opposition to the motion for summary judgment. He continued the hearing on the motion for twenty-one days to give the guarantors time to subpoena the corporate records and books from the bankruptcy trustee. When they reappeared before the trial court after the continuance, they conceded on the record that no. subpoena duces tecum had been issued. Absent any good faith attempt by the guarantors to obtain the records alleged to be necessary to their defense, the trial court properly ruled on the motion for summary judgment following the continuance. Rule 56(f), A.R.Civ.P.

The guarantors also argue on appeal that there was no proof by HMH on the reasonableness of the award of attorney’s fees. However, they expressly state in their brief that they do not challenge the reasonableness of the amount of fees awarded; they only assert that there was no proof on this issue. It is true that the only evidence of record regarding attorney’s fees is the statement by Casey in his affidavit that one third of the debt was the customary fee for collections in the area. Again, the guarantors offered no contradictory evidence on what is a reasonable amount to award as a fee for this type of case. Under these circumstances, we cannot say that there was no evidence upon which to fix the attorney’s fee.

The moving party having carried its burden to negate the existence of any material issue of fact, the burden shifted to the guarantors to raise a genuine issue of material fact. This they failed to do. The only evidence before the trial court, by Casey’s affidavit and through oral testimony by Casey, established without contradiction that the debt is due and owing in the amount of $33,736.76, and that the Lewises personally guaranteed payment of the first $30,000.00. The trial court’s summary judgment in favor of HMH was proper and is, therefore, due to be affirmed.

AFFIRMED.

TORBERT, C.J., and MADDOX, JONES and BEATTY, JJ., concur.