American Mut. Liability Ins. Co. v. Sloan

• Court: South Carolina Supreme Court
• Writing for the Court: The opinion of the Court was delivered by MR. JUSTICE BONHAM.
• Citation: American Mut. Liability Ins. Co. v. Sloan, 2 S.E.2d 796, 190 S.C. 252 (S.C. 1939)
• Decision Date: 04 May 1939
• Docket Number: 14874.
• Parties: AMERICAN MUT. LIABILITY INS. CO. v. SLOAN.

2 S.E.2d 796

190 S.C. 252

AMERICAN MUT. LIABILITY INS. CO. v. SLOAN.

No. 14874.

Supreme Court of South Carolina

May 4, 1939

Order of Judge Plyler follows:

This action was brought by the American Mutual Liability Insurance Company to recover premiums alleged to be due by the defendant, E. D. Sloan, in the sum of Three Thousand Seven Hundred Sixty-five and 31/100 Dollars ($3,765.31). The defendant interposed a general denial and, in addition thereto, set up a counterclaim in the sum of Two Thousand Seven Hundred Fifty Dollars ($2,750). At the conclusion of the testimony, both plaintiff and defendant made motions for a directed verdict.

The insurance company in this action is a mutual company and the policy contains a provision which gives each member the benefit of certain dividends. The clause in reference thereto is as follows: "By his acceptance of this policy the insured becomes a member of the Company in accordance with the laws of Massachusetts and by-laws of the Company from the effective date of the policy, and shall be entitled to such dividends as may be declared by the board of directors; and agrees to pay, in addition to the premium herein provided for, such sums as may be assessed by the board of directors not to exceed in the whole an amount equal and in addition to the premium earned on this policy at its termination."

Counsel for plaintiff, in arguing his motion for directed verdict raised the question as to whether or not the defendant should have pleaded his claim for credit of twenty per cent dividend as provided in the insurance policies. Testimony had been taken throughout the trial upon this issue and no point had been raised that it had not been pleaded. Counsel for defendant, while stating that he did not believe it necessary to plead this credit, made a motion to amend the Answer so far as to set forth the claim that he was entitled to a credit of twenty per cent dividend as provided in the policy. There was no dispute between plaintiff and defendant as to the amount due for premiums, with the exception of the twenty per cent credit for dividends.

After considerable argument, it was agreed that the Court should reserve its decision as to whether or not the Answer should be amended and if the Answer should be amended the Court would further decide whether or not the defendant should be allowed to submit additional testimony upon the dividend issue. Counsel for both sides agreed that the Court should submit to the jury the sole issue as to whether or not the defendant was entitled to his counterclaim in the sum of Two Thousand Seven Hundred Fifty Dollars ($2,750) and that after this verdict was rendered by the jury the Court would then give final judgment for whatsoever amount should be due by either party. In other words, the Court directed a verdict in favor of the plaintiff for the premiums found to be due and reserved its decision as to whether or not the defendant was entitled to a credit of twenty per cent and also a credit of Two Thousand Seven Hundred Fifty Dollars ($2,750) in case the jury found in his favor. The jury, after due deliberation, rendered a verdict in favor of the defendant, Sloan, in the sum of Two Thousand Seven Hundred Fifty Dollars ($2,750). Counsel for the plaintiff thereupon made a motion for a new trial, and the matter is now before the Court upon that motion, and also for decision as to a final judgment between the parties.

In order to adequately comprehend the issues involved in this case, it was necessary to recite the facts and to refer to certain provisions of the contracts involved.

On December 11, 1935, the defendant, E. D. Sloan, entered into a contract with the County of Greenville for county road improvements consisting of surface treatment on approximately fifty-two (52) miles of highways. This work was financed in part by grants from the United States and the work was to be performed under the Public Works Administration of the Federal Government. The contract was approved by J. L. M Irby, Acting State Director, Public works Administration, February 24 1936. The contract contained the following provisions relative to insurance required to be carried by the contractor:

"Public Liability and Property Damage Insurance.

"The contractor shall take out and maintain during the life of this contract such Public Liability and Property Damage insurance as shall protect him and any sub-contractor performing work covered by this contract, from claims for damages for personal injury, including wrongful death, as well as from claims for property damages, which may arise from operations under this contract, whether such operations be by himself or by any sub-contractor or anyone directly or indirectly employed by either of them. The amounts of such insurance shall be as follows:

"'Public Liability Insurance in an amount not less than $10,000.00 for injuries, including wrongful death, to any one person, and, subject to the same limit for each person, in an amount not less than $20,000.00, on account of one accident, and Property Damage Insurance in an amount not less than $2,000.00.

"'Provided, however, that the Owner, with the approval of the State Director, may accept insurance covering a sub-contractor in character and amounts less than the standard requirements set forth under this sub-paragraph (b) where such standard requirements appear excessive because of the character or extent of the work to be performed by such sub-contractor."'

Before commencing work upon this contract, the defendant was required to submit proof to Greenville County and to the Public Works Administration that he had insurance as provided in the contract. This insurance was purchased from the American Mutual Liability Insurance Company, plaintiff in this action, through its agent, Henry A. Brown, on July 1, 1936, the insurance company issued its certificate of insurance as follows:

"Exhibit 5

"No. 2846 A

"Risk No. New

"American Mutual Liability Insurance Co. of Boston

"The American Mutual Liability Insurance Company hereby insures the risk as set forth in the following schedule for a period not exceeding thirty (30) days, subject to the terms, limits of indemnity, and agreements of the policy form specified below.

" A pro rata premium charge will be made for the coverage under this binder unless policies are issued and accepted by the insured.

"American Mutual Liability Insurance Co.

"F. R. Mullaney Charles E. Hodges, Jr.

"Secretary. President.

"Schedule

"Insured, E. D. Sloan

Address, News Building, Greenville, S.C.

Plant Location, State of South Carolina.

Classification, 5506, 5507. Apprx. Prem. $500.00.

Policy *** Limits of) One Person $20,000.00.

Form WC,PL. Pd. liability) One accident $40,000.00.

Remarks, Property Damage on Greenville PWA Jobs, $2-10,000.

Binder Begins July 1st, 1936.

Binder Ends August 1st, 1936.

Henry A. Brown, District Manager.

New Policy No. *** Renewal of Policy No."

On August 1, another certificate, in exactly the same language as the above, was issued, extending the insurance to September 1, 1936, as shown by Exhibit 6.

Certificates were also issued by the insurance company to the County Board of Commissioners for Greenville County that the policies had been issued as required by the contract. Some time thereafter, the exact date being undisclosed, the insurance company issued the three insurance policies referred to in the binders above set forth.

The defendant, Sloan, in carrying out the terms of the contract with Greenville County entered into an agreement with E. H. Holliday for the purpose of having stone hauled in connection with the construction of the road. Holliday was the owner of a number of trucks available for this purpose, and the agreement between Sloan and Holliday was that Holliday should be paid so much per hour for each truck, which included the cost of the driver. It was further understood that the driver of each truck should be placed upon Sloan's payroll and paid by Sloan and that Sloan should also carry employer's liability insurance covering each driver, but this expense was also to be charged against the account of Holliday, and would be deducted from the amount due him upon the rate agreed upon.

On or about the 5th day of December, 1936, Roy Walters, driving one of the trucks belonging to E. H. Holliday in connection with the building of the road described in the contract, ran into and killed Robert Carson Shetley, a child about fourteen years of age. The administrator of the estate of Robert Carson Shetley brought suit against Roy Walters, the driver, E. H. Holliday and Douglas C. Holliday, owners of the truck, and E. D. Sloan, the contractor, for damages on account of the death of Shetley. Judgment was recovered by the plaintiff in that action against all defendants, in the sum of Six Thousand Five Hundred Dollars ($6,500). E. H. Holliday paid Four Thousand Dollars ($4,000) of this judgment and E. D. Sloan paid Two Thousand Five Hundred Dollars ($2,500) and the judgment was satisfied.

When suit was brought against the defendant, E. D. Sloan, in the Shetley case, the Summons and Complaint was forwarded to the American Mutual Liability Insurance Company, with the request that the company come in and defend the case as provided in the insurance policy. The insurance company denied the liability upon the ground that the truck being driven by Roy Walters was in the control of the defendant, Sloan, and refused to defend the case. Sloan employed counsel and paid an attorney's fee of Two Hundred Fifty Dollars ($250) in connection with the defense of that case.

Defendant has paid plaintiff the sum of Three Thousand Forty-eight and 12-100 Dollars ($3,048.12) premiums on the policies involved in...