## Facts

- Bruce Palmer met with Carol M. Strickland and her family to sell medical insurance and presented plans from multiple companies, including Washington National.
- Strickland applied for Washington National coverage and paid Palmer a $100 premium check.
- Palmer issued a company “conditional receipt” and wrote that the “effective date of coverage” was January 15, 1981.
- Strickland and family members testified Palmer affirmatively stated coverage was effective immediately, including for an accident occurring on the way home from the meeting.
- Relying on these assurances, Strickland cancelled a pending hospitalization application with another insurer.
- Four days later, Strickland fell and injured her ankle; Palmer had not yet submitted her application to Washington National.
- Palmer testified he submitted the application to a general agent, John Martin, on January 22, 1981.
- Washington National later declined to issue a policy, citing Strickland’s physical condition as making her uninsurable.
- The application and receipt contained printed limitations stating agents lacked authority to modify contracts, waive requirements, or bind the company by representations.
- Strickland sued Palmer and Washington National for fraud and misrepresentation based on Palmer’s statements about immediate coverage.

## Issues

1. Whether sufficient evidence supported treating Palmer as Washington National’s agent or servant for purposes of tort liability arising from insurance solicitation.
2. Whether Washington National could be held liable for Palmer’s alleged fraudulent statements about the effective date of coverage.
3. Whether written disclaimers limiting an agent’s authority and conditioning coverage on underwriting approval precluded tort liability for Palmer’s oral misrepresentations.
4. Whether the evidence was sufficient to support the jury’s findings of fraud, compensatory damages, and punitive damages.

## Decision

- The Supreme Court of Alabama affirmed the judgment entered on the jury verdict for Strickland against Palmer and Washington National.
- The court held the evidence permitted the jury to find Palmer acted within the scope of his insurance-selling role such that Washington National could be liable for his fraud.
- The court rejected the insurer’s argument that limitation clauses in the application and conditional receipt barred liability for misrepresentations about immediate coverage.
- The court upheld the fraud verdict and the award of punitive damages based on the evidence and the jury’s credibility determinations.

## Legal Principles

- Insurance agents may be classified as general agents (broad authority) or soliciting/special agents (limited authority, typically lacking power to bind coverage by contract).
- An insurer may be vicariously liable under respondeat superior for fraud committed by a soliciting agent within the scope of employment, even if the agent lacks contractual authority to bind the insurer.
- Contractual or printed limitations on an agent’s authority can restrict contract formation but do not necessarily defeat tort liability for fraudulent misrepresentations made in soliciting insurance.
- Conflicts in testimony about alleged misrepresentations and reliance are questions for the jury; appellate review defers to the verdict when evidence supports findings of false representation, materiality, reliance, and damage.
- Punitive damages may be upheld in fraud cases when the evidence supports wilful or reckless misrepresentation.

## Conclusion

The court held that Washington National could be liable for misrepresentations made by a salesperson in the course of soliciting insurance, and that printed disclaimers limiting authority to bind coverage did not, by themselves, bar tort recovery where the jury found actionable fraud and justified reliance.


Wash. Nat'l Ins. Co. v. Strickland, 491 So. 2d 872 (Ala. 1985)