Hornby v. Pennsylvania Nat. Mut. Cas. Ins. Co.

• Decision Date: 15 October 1985
• Docket Number: No. 855SC137,855SC137
• Citation: 77 N.C.App. 475,335 S.E.2d 335
• Court: North Carolina Court of Appeals
• Parties: Gregg HORNBY, d/b/a the Touch of Class v. PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY and C. Benjamin Spradley, d/b/a C. Benjamin Spradley Insurance.

Page 335

335 S.E.2d 335

77 N.C.App. 475

Gregg HORNBY, d/b/a the Touch of Class v. PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY and C. Benjamin Spradley, d/b/a C. Benjamin Spradley Insurance.

No. 855SC137.

Court of Appeals of North Carolina.

Oct. 15, 1985.

Johnson & Lambeth by Robert White Johnson, Wilmington, for defendant Pennsylvania Nat. Mut. Cas. Ins. Co.

Marshall, Williams, Gorham & Brawley by Lonnie B. Williams, Wilmington, for defendant C. Benjamin Spradley.

WELLS, Judge.

Penn contends the trial court erred in submitting the issue of agency to the jury and in its charge to the jury on this issue. Penn argues that the evidence shows that Spradley was an independent contractor, rather than its employee, and that therefore it was not liable for any negligence on the part of Spradley.

This same argument was made by Penn and rejected by this Court on the first appeal in this action, see Hornby v. Penn. Mut., supra, as conceded by Penn in a document filed with this Court. The law is clear that "[o]nce an appellate court has ruled on a question, that decision becomes the law of the case and governs the question not only on remand at trial, but on a subsequent appeal of the same case." N.C.N.B. v. Virginia Carolina Builders, 307 N.C. 563, 299 S.E.2d 629 (1983). Transportation, Inc. v. Strick Corp., 286 N.C. 235, 210 S.E.2d 181 (1974). This is so provided the same facts and the same questions which were determined in the previous appeal are involved in the subsequent appeal. Transportation, Inc. v. Strick Corp., supra. This Court's prior determination that the evidence in this case was sufficient to submit to the jury the question of Penn's liability based on the negligence of Spradley under generally accepted principles of agency is the law of this case; therefore, we are bound by it and must reject Penn's argument.

Although Penn noted exceptions to certain portions of the jury charge relating to the issue of agency and made these exceptions the basis of an assignment of error, no argument or discussion appears in its brief relating to the instructions to the jury on this issue other than its argument that the issue should not have been submitted at all. Any other contentions Penn may have had with respect to the instructions on this issue are therefore deemed abandoned. See Rule 28(a) of the Rules of Appellate Procedure; Love v. Pressley, 34 N.C.App. 503, 239 S.E.2d 574 (1977); disc. rev. denied, 294 N.C. 441, 241 S.E.2d 843 (1978).

Penn assigns as error the trial court's denial of Penn's motion for a directed verdict on the issue of punitive damages. Plaintiff asserts that Penn has not properly preserved this assignment of error for review. We disagree. Penn timely moved for a directed verdict on the issue of punitive damages and stated the specific grounds therefore, and excepted to, and assigned as error, the denial of its motion. After the verdict was returned, Penn made a timely motion for judgment notwithstanding the verdict and immediately gave notice of appeal when the motion was denied. Penn brought forward this assignment of error and presented the arguments and authorities on which it relies in its brief. Such actions were clearly adequate to preserve this issue for review. See Rules 10 and 28(a) of the Rules of Appellate Procedure; N.C.Gen.Stat. § 1A-1, Rule 50 of the Rules of Civil Procedure (1983).

Penn argues that the issue of punitive damages should not have been submitted to the jury because no evidence was presented of conduct on its part which would justify an award of such damages. It further argues that an award of punitive damages against it based on the conduct of Spradley could not be upheld because the evidence shows that it is not liable for Spradley's conduct since Spradley was an independent contractor, not an employee. The latter argument must fail since it has been determined that sufficient evidence was presented to submit to the jury the question of Penn's liability based on Spradley's conduct under agency principles. In addition, it is clear that in this state liability for punitive damages may be imposed on a principal based on the conduct of its agent. See Hairston v. Greyhound Corp., 220 N.C. 642, 18 S.E.2d 166 (1942).

As a general rule, punitive damages are recoverable only when the tortious conduct which causes the injury partakes of or is accompanied by some element of aggravation such as "fraud, malice, gross negligence, insult," or "when the wrong is done willfully, or under circumstances of rudeness or oppression, or in a manner which evinces a reckless and wanton disregard of the plaintiff's rights." Baker v. Winslow, 184 N.C. 1, 113 S.E. 570 (1922). SEE ALSO SHUGAR V. GUILL, 304 N.C. 332, 283 s.e.2d 507 (1981); NEWTON v. Insurance Co., 291 N.C. 105, 229 S.E.2d 297 (1976). As summarized by one noted commentator, punitive damages may be awarded only when the defendant commits the actionable legal wrong willfully (i.e., knowingly, intentionally and voluntarily), wantonly (i.e., in conscious and intentional disregard of and indifference to the rights and safety of the plaintiff), or maliciously (i.e., motivated by personal hatred, ill will or spite for the plaintiff). S. Ervin, Jr., Punitive Damages In North Carolina, 59 N.C.L.Rev. 1255 (1981). Punitive damages are awarded in addition to compensatory damages for the purpose of punishing the wrongdoer and deterring others from committing similar acts. Shugar v. Guill, supra; Oestreicher v. Stores, 290 N.C. 118, 225 S.E.2d 797 (1976).

Punitive damages are recoverable not only for intentionally inflicted injuries but for negligently inflicted injuries as well when the tortfeasor's conduct is wanton or gross. Mazza v. Medical Mut. Ins. Co., 311 N.C. 621, 319 S.E.2d 217 (1984). In Hinson v. Dawson, 244 N.C. 23, 92 S.E.2d 393 (1956), our Supreme Court explained that when the term "gross negligence" was referred to in the past as a basis for the recovery of punitive damages the term was used in the sense of wanton conduct. The Court further stated:

Negligence, a failure to use due care, be it slight or extreme, connotes inadvertence. Wantonness, on the other hand, connotes intentional wrongdoing. Where malicious or wilful injury is not involved, wanton conduct must be alleged and shown to warrant the recovery of punitive damages. Conduct is wanton when in conscious and intentional disregard of and indifference to the rights and safety of others.

Id.

We note that this Court has recognized previously that punitive damages may be assessed against an insurer in appropriate circumstances. See e.g., Dailey v. Integon General Ins. Corp. 75 N.C.App. 387, 331 S.E.2d 148 (1985); Payne v. N.C. Farm Bureau Mutual Ins. Co., 67 N.C.App. 692, 313 S.E.2d 912 (1984).

Plaintiff argues that an award of punitive damages is justified in this case based on Penn's alleged violation of N.C.Gen.Stat. § 58-177(4)(1982). G.S. 58-177 provides:

No fire insurance company shall issue fire insurance policies ... on property in this State other than those of the substance of the standard form as set forth in G.S. 58-176 except as follows:

* * *

(4) Binders or other contracts for temporary insurance may be made ... for a period which shall not exceed 60 days....

Plaintiff argues that the evidence shows that Penn routinely violated G.S. 58-177(4) by taking more than 60 days to pass upon applications for insurance and that Penn used its violation of the statute to escape contractual liability. Plaintiff further contends that Penn violated the statute either intentionally or wantonly, and that Penn's treatment of him was under circumstances of willfulness, insult, indignity, capriciousness, and oppression.

We find plaintiff's arguments unpersuasive. The evidence shows only that Penn negligently delayed in acting upon plaintiff's application for insurance. It does not show that Penn intentionally or wantonly delayed in acting upon the application, nor does it show that there was any other element of aggravation in or accompanying Penn's negligence. Thus, assuming arguendo that Penn's negligent failure to act timely upon plaintiff's application constituted a violation of G.S. 58-177(4), we find nothing in Penn's violation which justifies an award of punitive damages.

We further find no basis for an award of punitive damages in the conduct of...