Cavin's Inc. v. Atlantic Mut. Ins. Co.
| Decision Date | 17 December 1975 |
| Docket Number | No. 7510DC488,7510DC488 |
| Citation | 220 S.E.2d 403,27 N.C.App. 698 |
| Parties | CAVIN'S INC. v. ATLANTIC MUTUAL INSURANCE COMPANY. |
| Court | North Carolina Court of Appeals |
Newsom, Graham, Strayhorn, Hedrick, Murray & Bryson by Josiah S. Murray, III, Durham, and Robert B. Glenn, Jr., Durham, for plaintiff-appellant.
Teague, Johnson, Patterson, Dilthey & Clay by Grady S. Patterson, Jr., Raleigh, for defendant-appellee.
In the policy sued upon, defendant Insurance Company did not agree to 'pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages, . . . arising out of . . . malicious prosecution.' Had the policy read in that fashion, plaintiff would be entitled to prevail. Such an agreement, however, can be read into the policy only by ignoring the words omitted from the foregoing quoted portion of the policy and by ignoring as well other clearly expressed policy provisions. This, we have no right to do.
What the policy did provide was that defendant Insurance Company will 'pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages Because of injury (herein called 'personal injury') sustained by any person or organization and arising out of . . . malicious prosecution.' (Emphasis added.) In the opening sentence after the word 'Schedule' on the policy endorsement with which we are here concerned, it is expressly stated that '(t)he insurance afforded is Only with respect to personal injury arising out of an offense included within (the policy coverage),' and in a separate paragraph entitled 'Amended Definition' the word 'damages' is specifically defined as meaning 'only those damages which are payable Because of personal injury arising out of an offense to which this insurance applies.' (Emphasis added.) Thus, the policy makes it as clear as language can make it that the Insurance Company is bound to pay on behalf of the insured only such sums as the insured shall become legally obligated to pay as damages 'because of personal injury' and that the insurance afforded is 'only with respect to personal injury.' The question presented by this appeal, therefore, is whether the sum of $4,500.00 which plaintiff insured became legally obligated to pay to Emory as punitive damages was payable as damages 'because of personal injury' and 'only with respect to personal injury.' We agree with the trial court that it was not and therefore plaintiff is not entitled to recover in this action.
Punitive damages, as the descriptive name clearly implies, are awarded as a punishment. They are never awarded as compensation. Transportaton Co. v. Brotherhood, 257 N.C. 18, 30, 125 S.E.2d 277, 286 (1962). Punitive damages are never awarded merely because of a personal injury inflicted nor are they measured by the extent of the injury; they are awarded because of the outrageous nature of the wrongdoer's conduct. Being awarded solely as punishment to be inflicted on the wrongdoer and as a deterrent to prevent others from engaging in similar wrongful conduct, punitive damages can in no proper sence be considered as being awarded 'only with respect to personal injury' or as damages which are payable because of personal injury.' Compensatory damages, which are awarded to compensate and make whole the injured party and which are therefore to be measured by the extent of the injury, are the only damages which are payable 'because of personal injury.'
In its brief on this appeal, plaintiff contends that '(e)ven if the defendant did not intend to provide coverage for punitive damages, it used terminology which was subject to two different interpretations,' and '(t)he interpretation which was chosen by the plaintiff was that the policy covered all damages for which it may become legally obligated to pay as damages if it was involved in a suit for malicious prosecution.' We find no such ambiguity as plaintiff asserts. The interpretation chosen by the plaintiff can be arrived at only by completely ignoring and reading out of the written policy language which it in fact contains. The rule that insurance contracts will be construed most strongly against the insurer and most liberally in favor of the insured does not extend so far as to authorize the court...
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