The Metropolitan Life Insurance Company petitioned this court for an alternative writ of mandamus to be directed to Honorable J. Edgar Bowron, as Judge of the Tenth Judicial Circuit of Alabama. We ordered issuance of a rule nisi as prayed for and Judge Bowron has made answer thereto.
The question presented is whether the insurance company's motion to transfer the case of Evelyn E. R. Booker, plaintiff,
The suit at law is on a policy of life insurance issued by the defendant company insuring the life of Luther Booker, now deceased, in the sum of $7,000, the plaintiff being the beneficiary under the policy. The policy was issued in Mississippi in 1948, where the insured resided at the time.
Petitioner-defendant, by its motion, seeks to transfer the suit to equity in order to reform the policy on the ground of mutual mistake or, in the alternative, that the policy "was issued on and pursuant to a unilateral mistake on the part of defendant and fraud or inequitable conduct on the part of said Luther Booker or plaintiff." The motion was filed pursuant to Code 1940, Tit. 13, § 153, which provides as follows:
The single question for decision is whether the motion, as last amended, states the substance of an equitable right or defense available to the defendant which should dispose of the cause and which cannot be disposed of in the law side of the court. Plaintiff's demurrer was the appropriate method of testing the sufficiency of the motion. Code 1940, Tit. 13, § 153, supra; Ex parte R. A. Brown & Co., 240 Ala. 157, 160, 198 So. 138, supra. The facts alleged in the motion were not controverted by affidavit, as authorized by § 153, Tit. 13, supra. In this connection, see Ex parte R. A. Brown & Co., supra.
We have held that "in order to require a judge at law to transfer a cause to equity under authority of Title 13, section 153, Code, the motion must not only withstand such test as if it were an original bill seeking equity (Ex parte Griffin, 243 Ala. 672, 11 So.2d 738; Ex parte R. A. Brown & Co., 240 Ala. 157, 198 So. 138), but two other conditions must appear as required by the statute: (1) The equitable right or defense must be sufficient to dispose of the cause; and (2) it cannot have that effect on the law side of the court." Ex parte Adams Const. Co., 251 Ala. 347, 348, 37 So.2d 497, 498. However, a decision on the motion is not res judicata on the issue of the claimed equitable right or defense. Ex parte Perusini Const. Co., 242 Ala. 632, 636,
When a motion to transfer to equity is granted, the movant becomes the complainant and it is incumbent on him to file in the equity court a bill of complaint seeking relief on the basis of the equitable right or defense asserted in the motion. Cornelius v. Moore, 208 Ala. 237, 238, 94 So. 57. But this does not mean that relief in equity may not also be sought on other equitable grounds nor that all of the grounds made the basis of the motion must be substantiated in the equity court. Ballentine v. Bradley, 238 Ala. 446, 451, 191 So. 618; Ex parte Perusini Const. Co., 242 Ala. 632, 7 So.2d 576, supra. So long as there is one equitable right or defense which is dispositive of the cause but which cannot be availed of in the law side of the court, that is sufficient. Of course, the proceedings in equity follow the same course as if the cause had originated there.
We come, then, to consider whether the motion, on demurrer, sufficiently states at least one equitable right or defense entitling defendant to have the cause transferred to equity. We are persuaded that it does.
Code 1940, Tit. 9, § 59, provides as follows:
There appears to be no doubt that one of the "equitable right or defense" relied on for transfer is that the insurance contract, "through * * * a mutual mistake of the parties, * * * does not truly express the intention of the parties." The question is whether the motion sufficiently alleges such mutual mistake.
The motion, as last amended, contains the following allegations:
"1. Defendant avers that this suit is brought by plaintiff as beneficiary upon a policy of life insurance issued by this defendant, numbered 17 330 032 A, under which plaintiff claims that defendant agreed to insure the life of Luther Booker, now deceased in the sum of $7,000; that said policy sued on was issued by defendant pursuant to a written application signed and dated by said Luther Booker on, to-wit, July 6, 1948, and a written amendment thereto dated September 2, 1948, and signed by said Luther Booker on, to-wit, September 10, 1948, and under and by reason of facts and circumstances hereinafter set forth; that said Luther Booker applied for said insurance in the exercise of conversion rights to which he was entitled under Group Policy No. 6770-GLHD issued to St. Louis-San Francisco Railway Company under which group policy said Luther Booker had formerly been insured as an employee of said railroad company in the amount of $7,000; that said Exhibit 2 is a true and correct copy of the policy sued on, which exhibit is made a part of this motion, and which exhibit also contains a true and correct copy of said written application and said written amendment thereto.
"2. Defendant further avers that in said original written application said Luther Booker applied for issuance of a policy of life insurance in the amount of $7,000 under an insurance plan described as `whole life paid up at age 65', with premiums payable monthly and with plaintiff as the primary beneficiary of said insurance; that one George W. Nethery as the soliciting agent for defendant received said original application from said Luther Booker and at the same time collected for defendant from said Luther Booker the sum of $57.19 as a payment in advance on account of the first
a) whole life paid-up at age 85 - $66.18 b) 20 payment life 66.22 c) 30 payment life 66.50 d) 30 year endowment 65.10;
that during said month and on or before August 17, 1948 said Luther Booker or plaintiff, acting for and in his behalf, thereupon requested defendant to issue a policy of life insurance on said plan known as `30 year endowment'; and that on, to-wit, August 7, 1948, said Luther Booker or plaintiff paid to defendant the additional sum of $10.00 to be applied on account of the first monthly premium on said policy of insurance, all in accordance with the provisions of said original application dated July 6, 1948, which specified that the first premium on an individual policy issued under the conversion rights set out in said group policy was required to be paid to and accepted by the Company during the lifetime of the applicant as a condition precedent to the issuance of such a policy, and further in accordance with the provisions of said group policy as hereinbelow more particularly averred.
"3. Defendant further avers that the conversion rights of employees insured under said group policy were provided in Article IV, Section 12 thereof, which in words and figures provided as follows:
that said Section 12 above quoted is the only provision in said policy setting out the conversion rights of employees insured thereunder; that upon termination of the employment of said Luther Booker by said railroad, defendant was under a contractual obligation to him, pursuant to the above quoted provision of said group policy, to issue to him without evidence of insurability, upon his request and application therefor within the period specified, and upon payment in advance of the required premium, a policy of life insurance in any one of the forms, except term insurance, customarily issued by defendant to individuals of the age of said Luther Booker; that said Luther Booker ceased work for said railroad on, to-wit, the month of May, 1948; that within the period specified, said Luther Booker notified defendant of his desire
"4. Defendant further avers that at its Home Office in New York, New York, it did then cause to be prepared a policy of life insurance on its printed form customarily used for the plan known as `30 year endowment' on a monthly premium basis as requested and directed by said Luther Booker, the monthly premium being the sum of $65.10; that its decision to issue such policy was predicated upon and it acted in reliance on said original application of said Luther Booker except as amended by said change in the plan of insurance which change defendant avers was made with the knowledge and consent of and at the request of said Luther Booker or of plaintiff acting as his agent and further that it was required to issue such insurance under the above quoted provision of said group policy; that defendant did further cause to be prepared said written amendment to said original application to reflect the change in the plan of said insurance; that said policy was agreed to be issued as of August 1, 1948; that said policy was prepared by employees of defendant in its said Home Office by the completion of blanks on defendant's printed form 1309 (A) Ord, which was the form customarily used for a policy of insurance on a 30 year endowment plan; that said Exhibit 1 is a true and correct copy of the policy of insurance agreed to be issued to said insured, which exhibit is made a part hereof. Defendant is informed and believes and so avers that said Exhibit 2 is a true and correct copy of the policy actually issued to said insured.
"5. Defendant avers that clerical mistakes or scrivener's errors were made in the completion or filling in of certain blanks on the first page of the policy so prepared, which are shown by comparison of the first pages of said Exhibit 1 and said Exhibit 2, and which consisted of completing the following sentence on page 1 of Exhibit 2 to read as follows (the typed insertions on said printed form being underlined):
whereas, said sentence as shown by page 1 of Exhibit 1 should have read:
that said clerical mistakes or scrivener's errors resulted in specifying that premiums subsequent to that for the first month were payable quarterly on the first days of November, February, May and August, instead of monthly on the first day of each month.
"7. Defendant further avers that it did thereafter mail to said Luther Booker written premium notices for some or all of the months from October, 1948, through March, 1949, which notices specified that a monthly premium in the amount of $65.10 would be due on the first of each such month, a true and correct copy of the premium notice for the month of March, 1949, being attached hereto as Exhibit 4 to this motion and made a part hereof, each of said notices being substantially identical with said Exhibit 4; that plaintiff or said Luther Booker or both thereafter paid premiums in the amount of $65.10 for the months of September, October, November and December of the year 1948, and for the months of January and February of 1949, or a total of seven monthly premiums, the premium for the month of August, 1948, having been theretofore paid as above stated; that each of said premiums was paid and intended to be paid to maintain said policy of insurance in force and effect for a period of one month and not for a period of three months or one quarter of a year, and that said premiums were so received by defendant; that defendant did deliver to said Luther Booker or to plaintiff its official premium receipt for each of said premiums so paid, except for the premium for the month of August, 1948, which receipt acknowledged payment of a monthly premium and not a quarterly premium. Defendant also avers that notwithstanding the language of said premium notices, the payment of premiums monthly or the language of said premium receipts, neither said Luther Booker nor plaintiff ever advised any officer, agent or employee of defendant that they or either of them claimed that premiums were due quarterly and not monthly or that each or any of the payments of premiums so made would or should maintain said policy in force and effect for a period of three months instead of a period of one month.
"8. Hence, defendant avers that on account of the facts hereinabove set forth, said policy of insurance as shown by said Exhibit 2 was so completed and issued to plaintiff erroneously and based on a mutual mistake of fact, in that both defendant and said Luther Booker and plaintiff were under the misapprehension and mistaken belief that said policy contract provided for monthly premiums in the amount of $65.10 rather than quarterly premiums in said amount.
"9. Defendant avers in the alternative that, if defendant is mistaken in alleging
"10. Defendant further avers that following the payment of the premium for the month of February, 1949, no further premiums were paid on said policy of insurance and said insurance in accordance with the terms of said policy lapsed for non-payment of premiums and was automatically converted or continued as non-participating paid-up term insurance for an amount equal to the face amount of said policy and for a term computed in accordance with Section 14 of page 5 of said policy, said policy provisions all being shown in said Exhibits 1 and 2 attached hereto, which are identical except as above noted; that said policy and the term insurance and all of the rights of the insured thereunder expired prior to the death of the insured which occurred on February 3, 1950. Defendant also avers that said table of provisions and benefits on surrender or lapse contained in Section 14 of said policy was prepared and computed on the basis of monthly premiums in the amount of $65.10 and not on the basis of quarterly premiums of like amount.
"11. Defendant further avers that the original policy issued to said Luther Booker was the only written record on which said mistakes or errors were made; that all of defendant's records showed that said policy was issued for a monthly premium of $65.10; and that neither defendant nor any of its employees or agents had any knowledge of the existence or fact of said mistakes or errors until after suit was filed and plaintiff, through her counsel, advised defendant's counsel as to the same and as to plaintiff's contentions with respect thereto.
"12. Defendant further avers that plaintiff now claims that some or all of said premiums so paid were quarterly premiums, that sufficient quarterly premiums were paid to keep and maintain said policy of insurance in force and effect up to the date of death of said Luther Booker or up to a date sufficiently close thereto so that said policy would have been in force and effect at the date of death either under Section 4 or under Section 14 thereof, whereas in truth and in fact all insurance terminated prior to the death of said insured.
"13. Defendant further avers that if the policy agreed to be issued and issued had specified a quarterly premium, the same would have been slightly less than three times said monthly premium; that if the policy agreed to be issued and issued had specified an annual premium, the same would have been $740.74, and that such quarterly premium would have been slightly more than one-quarter of said annual premium; that defendant's records which show the premiums applicable to said insurance issued to said Luther Booker show both a monthly premium of $65.10 and an annual premium of $740.74, which is in accordance
"14. Defendant avers that on account of the facts herein set forth, it is entitled to reformation of the policy of insurance sued on to correct the clerical mistakes or scrivener's errors above set forth; that it cannot have said policy reformed on the law side of this court, but that said cause must be transferred to equity to give to defendant the relief to which it is entitled; and that upon reformation of said policy to conform with the agreement between defendant and said insured, defendant will have a defense to this suit, but that it cannot assert said defense on the law side of this court until after reformation of said contract of insurance."
Although the motion contains some allegations which, when considered alone and without their relationship to other allegations, might appropriately be termed "conclusions" of the pleader, we think it also contains factual averments sufficient to give it equity (considering the motion as though it were a bill in equity) on the ground of mutual mistake with respect to the premium payment periods. As to whether any other equitable "right or defense" is sufficiently alleged, there is no necessity of deciding.
In Clipper v. Gordon, 253 Ala. 428, 430, 44 So.2d 576, 577, this court had under consideration the sufficiency of a bill for reformation on the ground of mutual mistake. What was there said is of particular significance here, viz.:
One of the propositions stated in brief on behalf of respondent is that "where an insurance policy is drawn by an insurance company a mistake made in drafting the policy is the mistake of the insurance company alone and there is a want of mutuality of mistake." However, this does not appear to be seriously insisted on. The approved rule is stated in Ballentine v. Bradley, 238 Ala. 446, 450, 191 So. 618, 621, as follows:
See, also, Clipper v. Gordon, 253 Ala. 428, 431, 44 So.2d 576, supra, where the foregoing extract was quoted with approval.
Another insistence is that the alleged mistake was due to negligence on the part of the insurance company and that such negligence is a bar to reformation of the policy. What was said in Clipper v. Gordon, supra, is sufficient answer to this insistence, viz.:
We do not think the allegations of the motion show any "culpable and injurious negligence" on the part of petitioner or negligence on its part amounting "to the violation of a positive legal duty."
As to the effect of negligence on the right to reformation we quote the following from Williston on Contracts, Rev.Ed., Vol. V, § 1596, pp. 4447-8:
It seems to us that the motion clearly shows an agreement and understanding—"a meeting of the minds"—of the parties in the respect that the premiums were to be paid on a monthly basis and not on a quarterly basis. It is averred in the motion "that the agreement between defendant and said Luther Booker was that said policy of insurance was to be issued on the basis of monthly premiums, each in the amount of $65.10; that said policy was issued and delivered by defendant and was accepted and received by said Luther Booker on the basis of payment of monthly premiums in said amount and not on the basis of payment of quarterly premiums in said amount; that defendant and both said Luther Booker and plaintiff believed that said policy as issued specified monthly premiums in said amount and were unaware of said mistakes or errors." The application by Booker was made a part of the policy later issued to him. In it monthly payment periods were requested. In effect, the application was an offer on the part of Booker which the insurance company accepted on issuing the policy. It was at the time of issuance of the policy that the minds of the parties met.
In Appleman's Insurance Law and Practice, Vol. 13, § 7608, p. 364, it is said:
Cited to the foregoing text is Columbian Nat. Life Ins. Co. v. Black, 10 Cir., 1929, 35 F.2d 571, 574, 71 A.L.R. 128. From that case we quote the following:
* * * * * *
We think the averments of the motion bring the case fairly within the principles
Writ awarded conditionally.
LIVINGSTON, C. J., and SIMPSON and COLEMAN, JJ., concur.