Gulf Life Insurance Company v. Sidney M. Folsom, Folsom Construction Co., Randall M. Folsom, Lawanda F. Rigdon, 794 F.2d 1487, 11th Cir. (1986)
Uploaded by
Scribd Government DocsGulf Life Insurance Company v. Sidney M. Folsom, Folsom Construction Co., Randall M. Folsom, Lawanda F. Rigdon, 794 F.2d 1487, 11th Cir. (1986)
Uploaded by
Scribd Government Docs794 F.
2d 1487
GULF LIFE INSURANCE COMPANY, Plaintiff-Appellant,
v.
Sidney M. FOLSOM, Folsom Construction Co., Randall M.
Folsom, Lawanda F. Rigdon, Defendants-Appellees.
No. 86-8013.
United States Court of Appeals,
Eleventh Circuit.
July 10, 1986.
H. Holcombe Perry, Jr., Albany, Ga., for plaintiff-appellant.
David N. Rainwater, Cordele, Ga., for defendants-appellees.
Appeal from the United States District Court for the Middle District of
Georgia.
Before HILL, Circuit Judge, HENDERSON* , Senior Circuit Judge, and
LYNNE**, Senior District Judge.
PER CURIAM:
This diversity action requires an interpretation of Georgia statutes O.C.G.A.
Sec. 13-1-13 and O.C.G.A. Sec. 23-2-32(b). Because a question of state law
appears to control the outcome of this case, we certify the question to the
Georgia Supreme Court under Rule 36 of the Georgia Rules of Appellate
Procedure.
2
CERTIFICATE
FROM THE UNITED STATES COURT OF APPEALS FOR THE
ELEVENTH CIRCUIT TO THE SUPREME COURT OF GEORGIA PURSUANT
TO RULE 36 OF THE SUPREME COURT OF GEORGIA, TO THE SUPREME
COURT OF GEORGIA AND THE HONORABLE JUSTICES THEREOF.
3
(1) Style of the Case. The style of the case in which certificate is made is Gulf
Life Insurance Co., Appellant v. Sydney M. Folsom, Folsom Construction Co.,
Randall M. Folsom, and Lawanda F. Rigdon, Appellees, Case No. 86-8013,
United States Court of Appeals for the Eleventh Circuit, on appeal from the
United States District Court for the Middle District of Georgia, AlbanyAmericus Division.
4
(2) Statement of the Facts. Between March, 1974, and March, 1977, four
$100,000.00 insurance policies were issued by the appellant, Gulf Life
Insurance Company (Gulf) on the life of appellee Sydney M. Folsom, the expresident of appellee, Folsom Construction Company (Folsom). A total of
$17,396.00 in premiums were paid for these policies. Folsom became the
owner of these policies and on June 16, 1981, applied to Gulf for the maximum
amount available under the policies based upon their cash value. Later in June,
1981 Folsom received a total of $56,530.65 from Gulf representing the cash
value of the policies. A year later, on June 15, 1982, Folsom again sought the
maximum value of the policies and received $62,425.39 from Gulf.
At the time that Folsom made its second application for the maximum value of
the policies, they actually had no value. The second payment of over
$60,000.00 was the result of a computer mistake. This mistake occurred when
the premiums that were due on the policies in March of 1982 were not paid on
their due date or within the grace period. Because the premiums were not paid,
Gulf's computer automatically checked the cash value of the policies to
determine if there was any cash value remaining. When the computer checked
the Folsom policies it found that there was no cash value and therefore
recorded a lapse of those policies. Subsequently, the premiums on the policies
were paid and the policies were reinstated, but in the course of reinstating the
policies the computer did not pick up the 1981 loans as part of the information
relating to these policies. It is undisputed that this error stemmed from Gulf's
programming system which had been prepared by one of its subsidiaries. Thus,
when Folsom applied for the second maximum loan, the loans made in 1981
were not disclosed by the computer and the computer printed out checks for the
loan value as if there had been no pre-existing loans on these policies. It is
uncontested that Folsom did not play any role in this error. Furthermore, Gulf
had in its possession the file on the policy which contained the correct
information and a clerk checking the file manually would have discovered the
1981 requests.
In early 1983, agents of Gulf called Randall M. Folsom, the insured's son,
suggesting that the coverage be converted to a different type of policy. The
premiums for the upcoming year were not yet paid and Folsom had to decide
whether or not to keep paying the premiums on the policies. Sydney Folsom,
the insured, was no longer the president of the company. Randall Folsom, as
the new president of Folsom, asked Gulf's agent to determine the outstanding
cash surrender value of the policies. He was told that their value was $3,500.00.
This information was incorrect because it was based upon the same computer
mistake that resulted in the second payment of the maximum loan value of the
policies. Randall Folsom decided not to pay the premiums for the next year but
instead sought the cash surrender value of the policies. As a result of the
signing of these cash surrender agreements, each policy was immediately
cancelled.
7
Randall Folsom never received the $3,500.00 so he contacted one of Gulf's
agents. The agent said he did not understand the problem but he would check
on the matter. On September 8, 1983 Folsom received a letter from Gulf stating
that the loan value of the policies had been overpaid and that Folsom owed
Gulf $45,326.84. In addition, Gulf refused to pay Folsom the $3,500.00 that
represented the mistaken cash surrender value of the policies. After Folsom did
not return the money, Gulf instituted this action for money had and received in
the United States District Court for the Middle District of Georgia. Gulf
claimed that it was entitled to the $45,326.84 that had been mistakenly paid to
Folsom. Folsom filed a counterclaim seeking to recover the $3,500.00 which it
alleges Gulf is obligated to pay because of the cash surrender agreements. The
district court granted Folsom's motions for summary judgment as to both Gulf's
claim for money had and received and Folsom's counterclaim. The district court
found that the overpayment was caused solely by Gulf's negligence, and
therefore O.C.G.A. Sec. 13-1-13 dictated the grant of summary judgment to the
defendant.
O.C.G.A. Sec. 13-1-13 provides the following:
9
Payments
of claims made through ignorance of the law or where all the facts are
known and there is no misplaced confidence and no artifice, deception or fraudulent
practice used by the other party are deemed voluntary and cannot be recovered
unless made under an urgent and immediate necessity therefor or to release personal
property from detention or to prevent an immediate seizure of personal property.
10
Georgia courts have held that this section applies not only when one pays
money with knowledge of all the facts but also when one pays by mistake
without a valid reason for failing to ascertain the truth. See, e.g. Atlanta Coach
Co. v. Simmons, 184 Ga. 1, 190 S.E. 610 (1937); Barker v. Federated Life Ins.
Co., 111 Ga.App. 171, 141 S.E.2d 206 (1965). See also Bohannon v.
Manhattan Life Ins. Co., 555 F.2d 1205, 1212 (5th Cir.1977).1 In addition,
Georgia courts have placed the burden on the party seeking recovery to prove
that the payment was not made voluntarily because at the time of the payment
material facts were not known, or because a valid reason existed for the failure
to ascertain the truth. New York Life Ins. Co. v. Williamson, 53 Ga.App. 28,
184 S.E. 755 (1936). Relying on this interpretation of O.C.G.A. Sec. 13-1-13,
the district court concluded that Gulf could not recover its overpayment to
Folsom because there was no valid reason for Gulf's failure to ascertain the true
value of Folsom's policies.
11
There is another code section, however, that sheds doubt upon this conclusion.
O.C.G.A. Sec. 23-2-32(b) provides that "[r]elief may be granted even in cases
of negligence by the complainant if it appears that the other party has not been
prejudiced thereby." It is clear that this code section applies to actions for
money had and received. See Barton & Ludwig Inc. v. Thompson, 170 Ga.App.
187, 316 S.E.2d 786 (1984); J.C. Penney Co., Inc. v. West, 140 Ga.App. 110,
230 S.E.2d 66 (1976). There appears to be a conflict between O.C.G.A. Sec.
23-2-32(b) and O.C.G.A. Sec. 13-1-13, and we have been unable to find a
Georgia case that resolves this conflict.
12
(3) Question to be Certified. In an action for money had and received, can the
plaintiff recover a payment mistakenly made when that mistake was caused by
his lack of diligence or his negligence in ascertaining the true facts and the
other party would not be prejudiced by refunding the payment?
13
The particular phrasing used in this certified question is not intended to restrict
the Supreme Court's consideration of the issue in its analysis of the record
certified in this case. This latitude extends to the Supreme Court's restatement
of the issue or issues and the manner in which the answers are given. See
Martinez v. Rodriquez, 394 F.2d 156, 159 n. 6 (5th Cir.1968).
14
The clerk of this court is directed to transmit this certificate, as well as the
briefs and record filed with the court to the Supreme Court of Georgia and
simultaneously to transmit copies of the certificate to the attorneys for the
parties.
See Rule 3(b) Rules of the U.S. Court of Appeals for the Eleventh Circuit
**
Seybourn H. Lynne, Senior U.S. District Judge for the Northern District of
Alabama, sitting by designation
In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir.1981) (en banc), the
Eleventh Circuit adopted as precedent the decisions of the Fifth Circuit
rendered prior to October 1, 1981
