Tiger River Pine Co. v. Maryland Cas. Co.

• Decision Date: 04 December 1931
• Docket Number: 13290.
• Citation: 161 S.E. 491,163 S.C. 229
• Parties: TIGER RIVER PINE CO. v. MARYLAND CASUALTY CO.
• Court: South Carolina Supreme Court

161 S.E. 491

163 S.C. 229

TIGER RIVER PINE CO. v. MARYLAND CASUALTY CO.

No. 13290.

Supreme Court of South Carolina

December 4, 1931

Appeal from Common Pleas Circuit Court of Union County; C.J. Ramage Judge.

Action by the Tiger River Pine Company against the Maryland Casualty Company. From an order overruling demurrer to the complaint defendant appeals.

Appeal dismissed, and order appealed from affirmed.

Sawyer & Sawyer, of Union, for appellant.

Hughes & Russell, of Union, for respondent.

BONHAM J.

The respondent is a corporation engaged in the sawmill business. The defendant is a corporation engaged in the business of indemnity insurance. It is alleged in the complaint that the defendant corporation insured the plaintiff corporation "against any loss for any liability imposed by law upon the plaintiff for damages on account of bodily injuries including death, resulting therefrom accidentally suffered, or alleged to have been suffered, by any employee of the insured while engaged within his employment subject to the limitation of Five Thousand ($5,000) Dollars, of any one person so injured or killed."

A further term of the policy of insurance was to this effect: The defendant further contracted and agreed to defend in the name and on behalf of the plaintiff, the defendant to have exclusive control and direction of such defense, any suits or other proceedings which might at any time be instituted against the plaintiff on account of bodily injuries either suffered or alleged to have been suffered by any employee of the plaintiff, during the term of such policy, even though such suits, proceedings, allegations, and demands were false and groundless. And under the provisions of the policy the defendant reserved unto itself the exclusive right to compromise and settle all suits or claims, and the plaintiff was especially prohibited from making any compromise, settlement, or expenditure of any kind in connection with any such injuries, unless first authorized in writing by the defendant.

These facts are all set out in the complaint. It further appears from the complaint that during the currency of the policy one Chesser, an employee of the plaintiff, suffered an injury while engaged in the duties of his employment, resulting from an accident of a character contemplated and provided for by the policy, from which injury the employee lost the use of one arm. Plaintiff gave immediate notice of the accident to the insurance company; thereupon the defendant became possessed of, and exercised the exclusive right to compromise and settle, the claim; plaintiff was denied any right to treat with Chesser with a view to compromise or settlement; that Chesser was willing to settle for $100, of which fact plaintiff notified defendant, but defendant gave no heed to the information; that later Chesser offered to settle for $175, which was communicated to defendant, which communication was also ignored; that thereafter Chesser brought action against this plaintiff and received a verdict for $7,000, which is $2,000 more than its contract of indemnity with defendant. The case went to the Supreme Court, and the judgment of the circuit court was affirmed. 155 S.C. 356, 152 S.E. 646.

The complaint alleges that the loss thus entailed on the plaintiff was due to the negligence of the defendant, its willful disregard of plaintiff's rights in the matter of the opportunities to settle for a nominal sum; its hostile attitude to plaintiff in behalf of its own interests; that conduct of defendant was "reckless, contumacious, and fraudulent, all with a view of its own interests to the wanton exclusion of the just rights of plaintiff."

It is further alleged that after the verdict of $7,000 against the plaintiff was rendered and pending the appeal, Chesser's attorneys offered to settle for $5,000, which plaintiff besought defendant to pay, but the defendant, "knowing well that in all reasonable possibility it had no chance to reverse or modify the judgment for $7,000.00, realizing that its conduct could but result in damage to plaintiff, acting in bad faith and derogation of plaintiff's interests refused to settle."

The defendant demurred on the ground that the complaint does not state facts sufficient to constitute a cause of action, in that it does not set forth any breach of contract, or delict, on the part of the defendant.

The demurrer was heard by Judge Ramage, who in a short order overruled it, saying that at the hearing he was of the opinion that the demurrer ought to be sustained, but after considering the cases cited, especially the Attleboro Case found in 17 N.C. C. A. 1068, and copied from the Federal Reporter (240 F. 573), he felt constrained to overrule it.

The appeal is from that order. The exceptions are six in number, but they all converge to the question whether an action of the nature of that embodied in this action can be maintained.

This question apparently has not been considered by the courts of this state.

Does the complaint state a cause of action either in contract or in tort for breach of contract, or of bad faith or negligence in the performance of contract? If it states a cause of action of the nature of any one of these stated, it is sufficient.

"The complaint *** contains allegations appropriate to two causes of action, one arising ex contractu, and the other ex delicto. If they are sufficient to constitute either cause of action, the complaint is not demurrable." Williams v. Philadelphia Life Ins. Co. et al., 105 S.C. 305, 89 S.E. 675, 676, citing Cartin v. Railway Co., 43 S.C. 221, 20 S.E. 979, 49 Am. St. Rep. 829.

In the case of Attleboro v. Frankfort Co. (C. C. A.) 240 F. 573, 582, it is said: "As each count sounds in tort, and is based upon a duty imposed by law, it is wholly immaterial whether the defendant was or was not under a contractual duty to prepare and defend the suit or to settle the same."

His honor, Judge Ramage, plants his change of opinion upon the cases cited, especially the case of Attleboro Mfg. Co. v. Frankfort, etc., Co. (C. C. A.) 240 F. 573. The appellant analyzes that case, in his brief, in an effort to show that the presiding judge deduced a wrong conclusion from the opinion of that case.

It may be that the Attleboro Case holds that the insurance company is not responsible if it makes a mistake in refusing to settle a claim when the matter of settlement is within its control under the contract of insurance, nevertheless it is authority for the proposition that the insurer must act in good faith, otherwise it will be responsible for consequent injury to the insured.

" Where an insurer under an employers' liability policy on...