Crook v. State Farm Mut. Auto. Ins. Co.

• Citation: 231 S.C. 257,98 S.E.2d 427
• Decision Date: 13 May 1957
• Docket Number: No. 17291,17291
• Parties: Edward C. CROOK, Plaintiff-Respondent, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner-Appellant, v. W. Frank SMITH, as Administrator of the Estate of Otis L. Smith, Deceased, Respondent.
• Court: South Carolina Supreme Court

Page 427

98 S.E.2d 427

231 S.C. 257

Edward C. CROOK, Plaintiff-Respondent, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner-Appellant, v. W. Frank SMITH, as Administrator of the Estate of Otis L.

Smith, Deceased, Respondent.

No. 17291.

Supreme Court of South Carolina.

May 13, 1957.

Butler & Chapman, Spartanburg, for appellant.

Benjamin A. Bolt, Greenville, Sam R. Watt, Chester D. Ward, Jr., Spartanburg, William K. Cox, Woodruff, for respondent.

MOSS, Justice.

It appears from the record that an automobile owned and driven by Edward C. Crook, the respondent herein, and one owned and driven by Otis L. Smith, now deceased, were in a collision in the year 1953. The respondent sustained personal injuries, and he instituted an action against Otis L. Smith, who died during the pendency of the action, and who is now represented by W. Frank Smith, as administrator of said estate, he having been substituted in lieu of the original defendant. The respondent recovered a judgment against the estate of Otis L. Smith in the amount of Five Thousand ($5,000.00) Dollars, in the Common Pleas Court of Spartanburg County, South Carolina. This judgment, which became final because no appeal was taken therefrom, was entered of record in the office of the Clerk of Court for Spartanburg County, South Carolina, on October 27, 1955. An execution was issued upon said judgment against the estate of Otis L. Smith and a nulla bona return was made by the Sheriff of Spartanburg County, South Carolina.

The record shows that the appellant, State Farm Mutual Automobile Insurance Company, issued its liability insurance policy to Otis L. Smith, covering the automobile which he was driving at the time of the collision with the respondent, which said policy had a policy limit to any one person in the amount of Five Thousand ($5,000.00) Dollars.

The present action was instituted by the respondent to recover from the appellant the amount of his judgment. The action is one ex contractu. The respondent alleges in his complaint that by the terms of the above referred to contract of insurance, the appellant agreed that it would pay any judgment, not exceeding the sum of Five Thousand ($5,000.00) Dollars, to any person holding such arising out of the negligent operation of the automobile of Otis L. Smith, now deceased. The complaint further alleges that this policy provided that the judgment creditor would have the right to sue the appellant to collect such judgment, these provisions in the contract being for the benefit of the holder of a judgment against the insured, Otis L. Smith. The complaint then alleges that the respondent demanded payment of his judgment from the appellant and that such demand was refused. It is then alleged by the refusal of the appellant to pay said judgment that it breached its contract of insurance with Otis L. Smith, which was made for the benefit of the respondent herein as a third party creditor beneficiary, pursuant to the terms of the insurance contract.

In defense, the appellant alleged that it issued to Otis L. Smith the liability policy referred to in the respondent's complaint but that said policy contained certain conditions, terms and limitations and that it sustained no liability for the payment of the judgment obtained by the respondent because of a violation of the provisions of said contract of insurance by the said Otis L. Smith.

The appellant asserts, among other things, that it obligated itself to defend any suit against the insured alleging bodily injuries and seeking damages on account thereof, and that it has the right to make such investigation, negotiation or settlement of any claim or suit as it deems expedient, and it asserts that the insured, following the accident with the respondent, represented to the appellant as to how the accident between the assured and the respondent had occurred, and that he later changed such statement with respect to the facts, thereby misleading and preventing the appellant from exercising its right to negotiate and settle respondent's claim. The appellant further alleged that the insured violated the contract of insurance by assuming liability to the respondent. In brief, the appellant alleges in its answer that the assured violated the terms and provisions of the policy of insurance by his misstatement as to the facts concerning the cause and circumstances of the accident, by admitting his responsibility for the accident and, in effect, assuming obligation therefor, and by his failure to cooperate with the insurer in the defense of the action. The appellant has asserted these various defenses and refers to the provisions of the policy containing such limitations and conditions. The appellant also asserts that no action would lie against it unless as a condition precedent thereto the assured had fully complied with the terms of the policy.

The appellant also pleads, by way of defense, that it refers to the original record and transcript of the trial proceedings and other records in the original action in order to show the policy violations by the assured. The appellant further alleged that the action and attitude of the administrator of the insured's estate, upon the trial of the original cause, was such as to seriously prejudice the appellant's defense. It is further alleged that upon the appellant learning of the violation by the assured of the various conditions and limitations of the policy of insurance, that it defended the original cause under a full reservation of rights.

The appellant also moved the court to require that W. Frank Smith, as administrator of the Estate of Otis L. Smith, be made a party defendant to this action so that a judgment in this cause will be binding upon the estate of the assured.

The respondent moved to strike the allegations of the answer containing the defenses heretofore outlined, and also to refuse the motion by the appellant to make the administrator a party to this action. The trial Judge granted the respondent's motion to strike the portions of appellant's answer heretofore referred to and also refused the motion by the appellant to make the administrator a party.

The appellant is before this Court on exceptions to the Order of the lower Court. The exceptions raise two questions. (1) Were the allegations stricken from the answer irrelevant, immaterial, redundant and evidentiary? (2) Should the administrator of the insured's estate have been made a party of the action?

In the case of Du Bose v. Bultman, 215 S.C. 468, 56 S.E.2d 95, 96, this Court says:

'An allegation is irrelevant when it has no substantial relation to the controversy. Lucas v. Garrett, 208 S.C. 292, 38 S.E.2d 18. The motion here is in the nature of a demurrer. Mason v. Williams, 194 S.C. 290, 9 S.E.2d 537. The question is whether the matter stricken from the answer constitutes a defense to the cause of action alleged in the complaint.'

In the case of Alexander v. DuBose, 73 S.C. 21, 52 S.E. 786, 788, we find the following:

'An allegation is irrelevant when the issue formed by its denial can have no connection with nor effect upon the cause of action. Pom.Code Rem., § 551; Smith v. Smith, 50 S.C. 67, 27 S.E. 545. An allegation is irrelevant when it has no substantial relation to the controversy. Nichols v. Briggs, 18 S.C. 473.'

The allegations of the answer which were stricken out by the lower Court have a substantial relation to the controversy made by the pleadings in this action. The allegations of the answer put into issue in this case the question of whether or not the assured had violated the terms, conditions and limitations contained in the insurance contract existing between the appellant and Otis L. Smith.

It is proper in an answer to allege that which constitutes a defense to plaintiff's cause of action. It is essential that every fact necessary to constitute the defense be pleaded.

This court, in the case of Williams v. Metropolitan Life Insurance Company, 202 S.C. 384, 25 S.E.2d 243, 246, has concisely stated the rule, as follows 'The allegations of a pleading merely affirm propositions which are to be established by proof. It is a truism that allegation without proof is as unavailing as proof without allegation. Not only is it essential that every fact necessary to constitute a cause of action or defense be pleaded, but every such fact, if in issue, must be proved.'

In the case of State Farm Mutual Automobile Ins. Co. v. Arghyris, 189 Va. 913, 55 S.E.2d 16, 20, it appears that a judgment had been obtained against the insured and this action was brought by the injured party against the insurer which pleaded certain policy violations by the insured as a defense to the action. It appears that the insurance company had issued a liability policy to one Newman, the owner of the automobile involved in the accident. The car was being driven by one Bohler with the permission and consent of Newman. The insurance company contended that the insured's failure to comply with the policy provisions justified its denial of liability. The Virginia Supreme Court of Appeals, in passing upon the appeal of the insurer, had this to say:

'The policy in this case contains in clear terms an exact statement of the loss insured against and the conditions under which liability for such loss shall become fixed against the insurance company. Its terms and conditions constitute a contract between the company and the insured under which Bohler, by virtue of the permissive use given by Newman, occupies the...