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FARMERS & MERCHANTS BANK v. WINFREY.
34850.
Action on insurance policy. Before Judge Perryman. Wilkes Superior Court. August 3, 1953.
FELTON, J.
1. The amended petition alleged a cause of action for damages due to a breach of a contract to procure insurance, and the court did not err in overruling the renewed demurrer to the amended petition.
2. The amended petition failed to allege any damages due to the alleged bad faith of the defendant; therefore the court erred in overruling the demurrer directed to the allegation of bad faith.
In an action by George M. Winfrey against Farmers & Merchants Bank, the amended petition alleged the following facts: The plaintiff, on October 23, 1951, applied to an executive officer of the defendant bank for a loan of $600, and offered to secure the loan by a bill of sale to secure debt on a certain 1949 automobile. As a condition precedent to making the loan, the defendant's officer required an insurance policy for a period of eighteen months covering the automobile given as security against any loss to the automobile resulting from fire, theft, and collision, with loss payable to the defendant as its interest might appear. The amount necessary to so insure the automobile for its fair market value was $89. The officer in his official capacity agreed with the plaintiff to obtain a policy of insurance covering the automobile. The plaintiff executed a note payable to the defendant for $750.20, secured by a bill of sale to secure debt on the automobile. The sum of the note included $600 as principal and $150.20 for insurance premium, interest, and other charges for eighteen months. No policy of insurance was ever delivered to the plaintiff. On or about October 24, 1952, the plaintiff's automobile which was given as security for the loan was damaged in a collision in the amount of $800. Shortly thereafter, the plaintiff reported the loss to the defendant, and sought its assistance in securing an adjustment on the policy of insurance which the bank had agreed to obtain for him and for which he had paid the premium. The defendant never obtained a policy of insurance covering the automobile, although it received the amount necessary to insure it for a period of eighteen months. The plaintiff prays judgment for $700 damages for breach of the contract, she policy contracted for being one containing a $100 deductible clause, and $150 for bad faith. The defendant's renewed demurrers to the amended petition were overruled and the defendant excepts.
It is contended by the defendant that, as a bank, it could not itself insure as an insurer the property of the plaintiff because it was not so authorized by the laws of Georgia. The plaintiff's action is not predicated on a contract whereby the defendant as an insurer was to insure the automobile, but upon a contract whereby the bank was to procure a policy of insurance covering the property. The petition in effect alleges that the bank, as agent of the plaintiff, agreed to procure the insurance for him. A bank may act as the agent of another. Morgan County Bank v. Poullain, 157 Ga. 423 (121 S. E. 813); s.c., 32 Ga. App. 10 (123 S. E. 29); Oconee County Bank v. Marshall, 159 Ga. 515 (126 S. E. 369); 7 An. Jur. 145, 190. Contrary to the defendant's contention, its executive officer was authorized to make such a contract with the plaintiff. In Bank of Newington v. Bossert Corp., 45 Ga. App. 767 (165 S. E. 887), it was held that the defendant bank's cashier was authorized to enter into a contract with the plaintiff, whereby the bank was to collect a draft, obtain the execution of notes, prepare and take from the person executing the notes a chattel mortgage on designated property, the mortgage for public record, and, after paying the expenses incurred with reference to the mortgage, remit the balance to the plaintiff; and it was further held that the bank was liable for damages occasioned to the plaintiff by the bank's failure to record the mortgage. The defendant admits that its executive officer was authorized to make the loan agreement with the plaintiff. The contract to procure the insurance was a part of the whole loan transaction. Lending money, taking security therefor, and requiring insurance to protect the security are all within a bank's ordinary course of business, and citations to support this principle are unnecessary. It was held in Bell v. Fitz, 84 Ga. App. 220 (66 S. E. 2d 108), that a warehouseman was liable for damages arising from his breach of a contract to procure insurance on furniture stored with him. In Farlow v. Barton, 60 Ga. App. 287 (3 S. E. 2d 777), it was held that the seller of an automobile was liable for damages occasioned by his breach of a contract with the buyer to procure insurance on the automobile sold. See also North American Loan &c. Assn. v. Dykes, 58 Ga. App. 457 (198 S. E. 831); Atlas Auto Finance Co. v. Atkins, 79 Ga. App. 91 (53 S. E. 2d 171); Schmidt v. Sinclair, 342 Ill. App. 484 (97 N. E. 2d 129); Dufton v. Mechanicks Nat. Bank, 95 N. H. 299 (62 Atl. 2d 715).
The amended petition stated a good cause of action for the breach of the contract to procure insurance on the plaintiff's automobile.
The plaintiff fails to allege any damage due to the alleged bad faith of the defendant, and the defendant's demurrer to this allegation was good.
The court did not err in overruling the renewed general demurrer to the amended petition.
The court erred in overruling the demurrer directed to the allegation of bad faith.
Colley & Orr, contra.
Clement E. Sutton, for plaintiff in error.
DECIDED NOVEMBER 7, 1953.
Saturday May 23 04:08 EDT


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