Degenhart v. Knights of Columbus
| Decision Date | 21 April 1992 |
| Docket Number | No. 23684,23684 |
| Citation | 420 S.E.2d 495,309 S.C. 114 |
| Court | South Carolina Supreme Court |
| Parties | William J. DEGENHART, Vincent J. Degenhart, and Robert W. Degenhart, Appellants, v. KNIGHTS OF COLUMBUS, Respondent. . Heard |
Paul V. Degenhart, Columbia, for appellants.
Val H. Stieglitz, of Nexsen, Pruet, Jacobs & Pollard, Columbia, for respondent.
Appellants William J. Degenhart, Vincent J. Degenhart, and Robert W. Degenhart (the Degenharts) assert that the master-in-equity erred in holding that respondent Knights of Columbus was not liable for the acts of its agent, Michael A. Aun, II. We affirm.
Knights of Columbus is a fraternal, non-profit organization that offers life insurance, health insurance, and annuities to its members. Aun and Knights of Columbus entered into a Field Agent Contract wherein Aun was authorized to solicit and procure applications for life and health insurance on the lives of members of Knights of Columbus. Aun agreed that he would "not engage in any other occupation or business, except as authorized by [Knights of Columbus]."
Contrary to the Field Agent Contract, Aun established a real estate business. Aun initially contacted the Degenharts in his capacity as insurance agent for Knights of Columbus. He subsequently induced the Degenharts to invest over $250,000 in various partnerships created by him for the purposes of owning and managing rental properties. When the investments failed, the Degenharts brought an action against Aun and Knights of Columbus, alleging, among other things, that they were injured by Knights of Columbus's failure to properly supervise and manage Aun's activities.
The master-in-equity found that the Degenharts were aware that Aun promoted his various business ventures for his own benefit, and not for the benefit or profit of Knights of Columbus. He also found that Knights of Columbus possessed no notice of Aun's outside activities. Accordingly, the master-in-equity found that Aun was acting outside the scope of his authority as agent for Knights of Columbus. The master-in-equity discerned no genuine issue of fact tending to demonstrate that Knights of Columbus had notice of Aun's outside real estate activities sufficient to create a duty on the part of Knights of Columbus to supervise the activities. The master-in-equity therefore granted summary judgment in favor of Knights of Columbus.
The Degenharts assert that because Knights of Columbus entrusted its members to Aun, it owed a duty to its members, including the Degenharts, to implement adequate safeguards to monitor and enforce Aun's contract. We disagree.
Initially, we note that the question is not whether Knights of Columbus had notice of Aun's activities. Rather, the dispositive issue is whether Knights of Columbus owed the Degenharts a duty, and, if so, the extent of that duty. If Knights of Columbus owed no duty to the Degenharts to protect them from the harm they suffered, notice is immaterial. This is because the common law ordinarily imposes no duty on a person to act. Rayfield v. South Carolina Department of Corrections, 297 S.C. 95, 100, 374 S.E.2d 910, 913 (Ct.App.1988). Thus, a person usually incurs no liability when he fails to take steps to protect others from harm not created by his own wrongful conduct. Id.
Under certain circumstances, an employer is under a duty to exercise reasonable care to control an employee acting outside the scope of his employment. An employer may be liable for negligent supervision if the employee intentionally harms another when he:
(i) is upon the premises in possession of the [employer] or upon which the [employee] is privileged to enter only as his [employee], or
(ii) is using a chattel of [the employer], and ... [the employer]
(i) knows or has reason to know that he has the ability to control his [employee], and
(ii) knows or should know of the necessity and opportunity for exercising such control.
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