The defendant appeals from a judgment granting plaintiff's motion for new trial in an action for deceit.
Defendant sold four life insurance policies to plaintiff, two in September, 1962, and two in February, 1963. The complaint contains four counts relating to the sale of each policy. There are four sets of counts, one set for each policy. Except for names, dates, and other details, the allegations in each set of counts are the same, and we discuss only one set of counts relating to the sale of one policy. The same considerations and result apply to the sale of all policies.
The original complaint was filed August 2, 1968. In general effect, plaintiff alleges that defendant, by making false representations deceived plaintiff and induced him to purchase the policy and pay money for the same to defendant. In Counts II, III, and V, plaintiff alleges that defendant made false representations to plaintiff on or about September 24, 1962, and thereby induced plaintiff to purchase the policy. In Count IV, plaintiff alleges that on or about September 24, 1962, defendant embarked on a fraudulent scheme to induce plaintiff and others to purchase the policy.
Defendant's demurrer was overruled and defendant pleaded in short by consent the general issue with leave, etc. Defendant filed also pleas of the statute of limitations of one year averring that the representations allegedly made by defendant occurred more than one year prior to the filing of suit, and that the cause is barred by Title 7, § 26, Code 1940, there being no factual allegations bringing the cause within exceptions provided by Title 7, § 42, Code 1940.
Plaintiff filed a replication alleging that plaintiff did not discover the deceit until, to wit, September, 1967. We do not consider the sufficiency of the replication.
The trial was by jury. After the parties rested, the court charged the jury as follows:
Verdict was for defendant, and judgment was rendered on the verdict.
Plaintiff filed motion for new trial on the ground that the court erred in giving the affirmative charge for defendant for that there was at least a scintilla of evidence to show that plaintiff had not discovered the fraud within one year prior to filing suit and that plaintiff could not have discovered the same within said period of time by the exercise of reasonable diligence.
The error assigned is that the court erred in granting the motion. The parties agree that the motion was granted on the aforesaid ground. The question for decision is whether there is a scintilla of evidence to support plaintiff's replication.
In making this determination the evidence must be viewed in its light most favorable to plaintiff. Robinson v. Morrison,
The burden of allegation and proof as to fraud and its discovery by plaintiff within one year rested upon the plaintiff. Maxwell v. Lauderdale, 200 Ala. 648, 77 So. 22.
In Count II, plaintiff claims damages for deceit in the sale of a contract issued by defendant, viz., defendant's "`Variable Investment Plan,'" Policy No. 29173, and avers "that the defendant represented to the plaintiff on or about September 24, 1962, that the said contract was an investment on which the plaintiff would realize dividends which within three years would be sufficient to cover `premiums' payable by the plaintiff to the defendant ...," and that defendant, at the time of the sale of the contract, knew that said representation was untrue and was not based on actual experience or other facts which might furnish a reasonable basis for said representation.
In Count III, plaintiff alleged that defendant made the same false representation as alleged in Count II and wilfully concealed the fact that defendant had no records of operating profits or other reasonable basis in fact for making said representation concerning dividends, and, at the time of sale, defendant knew that said representation was untrue and not based on actual experience or other fact which might furnish a reasonable basis for said representation, and knew that the facts concealed should have been disclosed to plaintiff in view of said representations.
In Count V, plaintiff alleges ". . . . that the defendant represented to plaintiff on or about September 24, 1962, that `dividends' would be paid on such contract by defendant to plaintiff, if plaintiff purchased said contract." Plaintiff alleged that defendant knew that "said representation was false in that the `dividends' payable on such contract were in fact a rebate of a portion of the premium payable by purchasers of such contracts to the defendant."
Among other things, plaintiff testified that two men representing defendant came to see plaintiff and his wife in September, 1962, and:
Plaintiff further testified:
Plaintiff testified that about the third year he got in touch with one of the men, Mr. Strength, that plaintiff was not satisfied with "the interest" that we had gotten and asked him to look at it because he had promised us more; that plaintiff paid about the same amount in installments each year and it never did decrease.
Plaintiff testified that he went to a meeting with the staff of the State Insurance Department in Montgomery subsequent to August 3, 1967, and at that meeting he first learned that the contracts he had purchased were insurance policies.
Insurance Investigator Easterwood, employed by the State, testified that at some time subsequent to August 3, 1967, plaintiff came to the office of the witness in Montgomery and:
Plaintiff testified on cross-examination:
"A Yes, sir."
Defendant introduced into evidence a letter dated July 11, 1967, and stamped received in the State Department of Insurance the next day. The letter recites:
"Dear Mr. Houseal,
"Policy No. 28783 #28787 #29173 #29174
Plaintiff testified that his wife wrote the letter and: "She signed it Mrs. & Mr. Henson. She told me what she put in there. So—"
Plaintiff's testimony, although contradicted, that he first learned when he went to Montgomery that he had purchased insurance, and Easterwood's testimony, provide a scintilla of evidence tending to support an inference that plaintiff did first have knowledge of the fraud within one year prior to August 2, 1968. In reaching this conclusion we have considered the evidence admitted by the court. We do not have before us any question whether evidence was admissible and do not decide whether any evidence was or was not properly admitted.
There remains, however, the question whether defendant was entitled to the affirmative charge for the reason that the evidence shows without conflict that more than one year prior to filing suit plaintiff had knowledge of facts, sufficient to put a prudent man on inquiry, which in the exercise of proper prudence and diligence would enable him to learn of the fraud.
In a more recent case, this court quoted at length from Peters Mineral Land Co. v. Hooper, supra, and said:
The cause of action, as alleged in Counts II, III, and V, accrued on or about September 24, 1962. One year subsequent to that date had expired long before the instant suit was filed August 2, 1968. Plaintiff seeks to bring himself within the exception provided by § 42, Title 7, Code 1940. The evidence is without conflict that more than one year prior to August 2, 1968, plaintiff possessed knowledge of facts which would lead a reasonable man to make diligent inquiry. The letter of July 11, 1967, quoted above is itself an act making inquiry. The letter shows that on the date of the letter plaintiff had actual knowledge of facts which on inquiry led to knowledge that the representations allegedly made by defendant were false.
In Counts II and III, the false representation is alleged to be that the contract was an investment, and that within three years plaintiff would realize dividends sufficient to pay the premium. The letter refers to four "Life Insurance Policy"; the writer states that the policy reads "Life Insurance"; the letter days the policies were sold to plaintiff by "false pretenses"; that the sales pitch was false; each year the salesman continues the same "false story"; and plaintiff is faced with a loss on his investment. It seems inescapable that knowledge of such facts would provoke a reasonable man to make inquiry, as plaintiff was so provoked.
As to Count V, the false representation is alleged to be that "`dividends'" would be paid on such contract. If the evidence did show that no "`dividends'" at all had been paid or credited to plaintiff's account; which is not the fact; plaintiff, nevertheless, has wholly failed to show that defendant represented to plaintiff that the contract would pay "`dividends.'" The only evidence we have found is directly to the contrary. Plaintiff testified:
As to Counts II, III, and V, plaintiff failed to bring himself within the exception provided by § 42, Title 7; See Van Ingin v. Duffin, 158 Ala. 318, 48 So. 507; and defendant was entitled to the affirmative charge as to those three counts.
The circumstances charging deceit in Count IV are different. The fraud there charged is more complicated than the fraud charged in the other three counts. Plaintiff alleges in Count IV that defendant in 1962 entered upon the execution of a scheme to cause plaintiff to purchase the policies by misrepresenting the amount or percentage of the profits which would be paid to plaintiff; that defendant adopted a dividend scale and paid dividends during the early years so as to lull and deceive plaintiff and intended "from the outset" to reduce the dividend payout at a later date; that in 1962 defendant represented that policyholders, including plaintiff, would receive 90% of the profits and the annual return within three years would be sufficient to pay the annual premium, and after three years would exceed the premium;
The evidence does not persuade us that plaintiff had knowledge of the scheme to reduce the dividend scale which defendant allegedly followed by paying dividends in the early years and reducing the dividend in later years. The letter of July 11, 1967, does not suggest to us that plaintiff had knowledge that defendant was following a plan to reduce the dividend in the later years.
Plaintiff did testify that about the third year he was not satisfied with the "interest" he received and that Mr. Strength, through whom he had bought the policies, had "promised us more"; that the installment payments did decrease but not as much as 25%; that he never received any cash dividends; and that he received a statement each year. Plaintiff's Exhibit 8 appears to show the form of the statements. Apparently the statement shows the Total Coupon and Interest Deposits on the policy, and other information. Plaintiff also received other statements from the company, some showing the cash value. Plaintiff testified that he was not told that the dividends would be reduced on these policies, that he knows now that the dividends were reduced on these policies in 1967 by about half.
Plaintiff's Exhibit 15 is a letter dated June 19, 1962, from an actuary to the treasurer of defendant. To the letter is attached a dividend scale for "VIP DIVDENDS." The writer suggests that the company's experience with this contract be examined in the next 2 or 3 years and the dividend scale modified accordingly. The writer states that the company will not lose anything by issuing the policy but will not make anything either, and the company is entitled to its fair share of profits.
Plaintiff's Exhibit 22 is a letter dated March 16, 1967, from the actuary to defendant's bookkeeper. The letter refers to VIP Dividends. The writer states that dividends for the early years were estimated rather high to attract new policyholders; that experience and costs for this block of business have not been developed and a long range dividend scale is possible; that the lower scale may be conservative at first, but this is partially due to the coupons which are in a sense guaranteed dividends.
In view of another trial we do not discuss other evidence bearing on Count IV. We are not to be understood as commenting on the effect of any of the evidence other than with respect to giving the affirmative charge for defendant.
On consideration of all the circumstances shown by the evidence, we are not persuaded that it is without conflict on the issue whether plaintiff had knowledge of the facts constituting the fraud alleged in Count IV. Whether, within one year prior to filing suit, plaintiff had knowledge of such facts, or knowledge of facts which would lead a reasonable man to make diligent inquiry which would have enabled plaintiff to discover the fraud alleged in Count IV was a question for determination by the jury.
The affirmative charge took from the jury determination of the issue whether plaintiff was barred by the statute of limitations from recovery on all four counts. As to Counts II, III, and V, the court did not err in so instructing the jury. We are of opinion, however, that the court did err in giving the affirmative charge for defendant as to Count IV, and, therefore, that the court did not err in granting the motion for new trial.
HEFLIN, C. J., and BLOODWORTH, MADDOX, and McCALL, JJ., concur.