LIVINGSTON, Chief Justice.
This appeal is from a judgment of the Circuit Court of Walker County, Alabama, awarding the appellee, Phil Shapiro, Jr., plaintiff in the court below, $1,350 damages for the breach of an oral contract to insure, as claimed in Count 2 and 3, or of insurance, as claimed in Count 4 of the complaint.
A few days prior to December 18, 1954, plaintiff's father, Phil Shapiro, Sr., asked W. Douglas Leake, Jr., agent of appellant, defendant in the court below, to contact his son, appellee, and sell appellee some insurance covering a new automobile which appellee had just purchased. The agent did so, and a few days later, on or about
A bill for one year's premium on said insurance, in the amount of $127, was rendered appellee on January 1, 1955, and paid by him, by check, dated January 3, 1955.
Item 3 of the policy, showing the coverages contained in it, is as follows:
Coverages Limits of liability Rate Premium A—Bodily Injury Liability 25 thousand dollars XXXX $68.00 H A each person A C R C 50 thousand dollars T I each accident XXXX F D O E B—Property Damage Liability 5 thousand dollars R N each accident XXXX 32.00 D T C—Medical Payments $2000.00 each person XXXX 10.00 D—Comprehensive Loss of Insert Amount or H or Damage to the Automobile, Actual Cash Value A except by collision R F but including T I Fire, Theft and windstorm $ Actual Cash Value 17.00 F R O E E—Collision or Upset Actual Cash Value R less $____deductible XXXX D F—Fire, Lightning and Transportation $ G—Theft $ H—Windstorm, earthquake Explosion, Hail or Water $ I—Combined Additional coverage J—Towing and Labor Costs $10 for each disablement XXXX Premium for and Form Numbers of Endorsements attached to Policy Total Premium $127.00
On May 19, 1955, appellee drove his car off the highway and it was badly damaged. He then discovered that the policy of insurance carried by him did not cover collision and upset, and sued upon his alleged oral contract to insure, as set out in Counts 2 and 3 of the complaint, or of insurance as set out in Count 4 of the complaint.
On the trial, evidence of the one conversation between plaintiff and defendant's agent was admitted over objection of counsel that such negotiations were merged into the written contract. The written contract was not introduced until after testimony concerning these conversations was already in the record.
Plaintiff's testimony is that he stated he wanted "full coverage." Agent Leake testified that plaintiff balked at the high premium on collision and upset. After the policy was introduced, the following occurred:
"The Court: Motion overruled.
"Mr. Tweedy: We except.
"The Court: Motion overruled.
"Mr. Tweedy: We except."
These rulings raise the question of whether there was, as a matter of law, an oral agreement, valid at the time of the loss complained of, which the jury could consider in arriving at their verdict. The same questions are raised by appellant's written request for the general charge and by its timely motion for a new trial, which the trial court overruled. We are of the opinion and hold that the trial court erred in refusing to exclude the above evidence, and also, in refusing appellant's written request for the general charge, and in denying the motion for a new trial.
A valid contract to insure or of insurance can be effected by parol. Mobile Marine Dock & Mutual Ins. Co. v. McMillan, 31 Ala. 711; Insurance Co. of North America v. Thornton, 130 Ala. 222, 30 So. 614, 55 L.R.A. 547; Cherokee Life Ins. Co. v. Brannum, 203 Ala. 145, 82 So. 175; Liverpool & London & Globe Ins. Co. v. McCree, 210 Ala. 559, 98 So. 880; Globe & Rutgers Fire Ins. Co. of New York v. Eureka Sawmill Co., 227 Ala. 667, 151 So. 827; Liberty National Life Ins. Co. v. Staggs, 242 Ala. 363, 6 So.2d 432; Resolute Fire Ins. Co. v. O'Rear, 35 Ala.App. 398, 47 So.2d 425. Such a contract is without the Statute of Frauds. Commercial Fire Ins. Co. v. Morris, 105 Ala. 498, 505, 18 So. 34; Springfield Fire & Marine Ins. Co. v. DeJarnett, 111 Ala. 248, 259, 19 So. 995.
Sec. 75, Title 28, Code of Alabama 1940, reads, in pertinent part, as follows:
This statute does not prohibit the making of a valid contract of insurance by parol because such are not "policies." Sun Ins. Office of London v. Mitchell, 186 Ala. 420, 65 So. 143. Nor does it prevent the negotiation of an enforcible contract to insure. United Burial & Ins. Co. v. Collier, 24 Ala. App. 546, 139 So. 104, certiorari denied 224 Ala. 57, 139 So. 106.
First, as regards the contract of insurance: It is familiar law that a contract of insurance is essentially like all other contracts, and governed by general rules of contract. North River Ins. Co. v. McKenzie, 261 Ala. 353, 74 So.2d 599, 51 A.L.R.2d 687.
Where there exists between the parties a written contract, the authorities are in agreement that parol evidence cannot be received to explain, contradict, vary, add to, or subtract from its terms. Bozeman v. J. B. Colt Co., 19 Ala.App. 126, 95 So. 588; Miles v. Sledge, 157 Ala. 528, 47 So. 595; W. T. Rawleigh Co. v. Phillips, 232 Ala. 124, 167 So. 271; Worthington v. Davis, 208 Ala. 600, 609, 94 So. 806; Town of Brewton v. Glass, 116 Ala. 629, 22 So. 916. The statement of this rule employed in insurance cases, is that all parol negotiations, understandings and agreements are merged into the written policy. Jefferson Life & Casualty Co. v. Williams, 37 Ala.App. 718, 76 So.2d 185.
The plaintiff concedes that this is the law, but insists that the parol evidence, or merger rule, should not apply in this case on the ground that the agreement concerning collision and upset insurance is collateral, separate and distinct from the agreements embodied in the policy. Such an exception to the parol or extrinsic evidence rule is recognized in Alabama, as evidenced by Woodall v. Malone-Harrison Motor Co., 219 Ala. 366, 122 So. 357, 358, where the court said:
The question presented here is whether or not the oral contract is sufficiently separate and distinct from the written one as to bring it within the exception stated.
Various courts have evolved tests to determine this separateness. Alabama has not been presented with the precise question, but has stated that the oral agreement may be considered collateral, even though the subject matter of the two contracts is the same. Alabama Power Company v. Pierre, 236 Ala. 521, 183 So. 665.
The majority of American courts presented with this problem agree that:
In a leading case, Mitchell v. Lath, 247 N.Y. 377, 160 N.E. 646, 647, 68 A.L.R. 239, reargument denied 248 N.Y. 526, 162 N. E. 511, Justice Andrews said:
Gianni v. R. Russel & Co., Inc., 281 Pa. 320, 126 A. 791, 792, reaches the following solution:
Professor Wigmore, in IX Wigmore on Evidence, 3rd Ed. 98, § 2430, analyzes the problem as follows:
Considering the situation in the light of the principles above set forth, it must be concluded that: (1) The written contract had a space provided for collision and upset coverage, and a space provided for the annual premium charge made therefor, and these spaces were left blank, and the inference of the written contract is that the parties did not intend to contract for
There can be no other conclusion but that the oral agreement for collision and upset coverage was not a separate and distinct, or collateral one. It is closely bound to the written one, and no doubt intended to be made part and parcel thereto.
As regards the counts charging breach of an oral contract to insure, the general rule is the same as that regarding any other negotiations or agreements culminating in the issuance of a policy, i. e., that they are merged into the policy. City Mortgage & Discount Co. v. Palatine Ins. Co., Ltd., 226 Ala. 179, 145 So. 490; Town of Brewton v. Glass, supra; Globe & Rutgers Fire Ins. Co. v. Pappas, 219 Ala. 332, 122 So. 346; Tutton v. Liverpool & London & Globe Ins. Co., 237 Ala. 230, 186 So. 551; Jefferson Life & Casualty Co. v. Williams, 37 Ala.App. 718, 76 So.2d 185. The majority of American courts hold that if the policy is accepted by the insured, he is bound thereby, even though the policy does not correspond to the preliminary negotiations. 44 C.J.S. Insurance § 266, pp. 1071, 1072; 44 C.J.S. Insurance § 229, p. 953; 1 Appleman, Insurance Law and Practice 175, and cases cited therein; Fort Valley Coca-Cola Bottling Co. v. Lumbermen's Mutual Casualty Co., 69 Ga.App. 120, 24 S.E.2d 846; 12 Appleman, Insurance Law and Practice 220, § 7155.
This same rule would seem to obtain in Alabama, since our precedents provide that an insured is presumed to be familiar with the provisions of his policy. Metropolitan Life Ins. Co. v. Goodman, 10 Ala.App. 446, 65 So. 449; Georgia Home Ins. Co. v. Warten, 113 Ala. 479, 22 So. 288; Mutual Life Ins. Co. of New York v. Barrett, 215 Ala. 142, 110 So. 275; Vredenburgh v. Liberty Nat. Life Ins. Co., 246 Ala. 251, 20 So.2d 207.
Here, the insured could read and write, having attended college for a year. The policy had been in effect for five months, under which a claim had been made and payment duly received by insured.
It was said in Floars v. Aetna Life Ins. Co., 144 N.C. 232, 56 S.E. 915, 916:
This doctrine is expressed in Mowles v. Boston Ins. Co., 226 Mass. 426, 115 N.E. 666, 667, as follows:
In view of the conclusions we have reached, the trial court erred in denying defendant's motion to exclude evidence of the oral understanding, in refusing the request for the general charge and denying the motion for a new trial, and the case should be, and is herewith, reversed.
Reversed and remanded.
SIMPSON, GOODWYN and COLEMAN, JJ., concur.