Insurance Financial Services, Inc. v. South Carolina Ins. Co.

• Decision Date: 14 August 1978
• Docket Number: No. 20742,20742
• Citation: 247 S.E.2d 315,271 S.C. 289
• Court: South Carolina Supreme Court
• Parties: INSURANCE FINANCIAL SERVICES, INC., Appellant, v. The SOUTH CAROLINA INSURANCE COMPANY, Respondent.

Page 315

247 S.E.2d 315

271 S.C. 289

INSURANCE FINANCIAL SERVICES, INC., Appellant, v. The SOUTH CAROLINA INSURANCE COMPANY, Respondent.

No. 20742.

Supreme Court of South Carolina.

Aug. 14, 1978.

David M. Ratchford and Donald E. Jonas, of Ratchford & Cooper, Columbia, for appellant.

David W. Robinson, II of Robinson, McFadden, Moore & Pope, Columbia, for respondent.

RHODES, Justice:

This action was brought by the appellant insurance agency against the respondent insurance company seeking both a temporary and permanent injunction against respondent's alleged unlawful termination of the appellant's agency contract with the company. The complaint also sought damages for the alleged unlawful termination. After an injunction Pendente lite had been obtained barring termination of the contract, a $2,000 injunction bond was set by the court in accordance with an agreement between the parties. The respondent subsequently made motions to have the bond increased and to have the action transferred to the nonjury, equity calendar for trial. The lower court granted both motions. The appellant contends it was error to place the action on the equity docket and to increase the bond. We affirm the lower court.

This action centers around South Carolina Act 1177, which was passed in 1974 and significantly revised the automobile insurance law in this State. Prior to passage of this act, high risk drivers were authorized to be written insurance at "nonstandard" rates which were higher than the "standard" rates at which other drivers were offered insurance. However, the 1974 Act eliminated the distinction between "standard" and "nonstandard" risks and mandated that insurance for all drivers be provided at equalized rates based on a uniform rating and classification system to be developed by the South Carolina Insurance Commissioner.

The appellant alleges that prior to passage of the 1974 Act, it had a considerable volume of "nonstandard" automobile business written through The Travelers Insurance Companies at the higher "nonstandard" rates. According to the complaint, the respondent, anticipating that Travelers was going to cancel the contract with the appellant, notified the appellant on July 18, 1975 that its agency contract with appellant was being terminated effective August 18, 1975. Travelers terminated the agency agreement with appellant on July 24, 1975, and the appellant alleges the cancellation by the respondent was an attempt to avoid writing the "nonstandard" business which had been previously placed by appellant with Travelers. The appellant claims that the respondent's conduct specifically violates the provision of the 1974 Act which is presently codified as S.C.Code § 38-37-940(2) (1976) and which states that:

No insurer of automobile insurance shall cancel its representation by an agent primarily because of the volume of automobile insurance placed with it by the agent on account of the statutory mandate of coverage nor because of the amount of the agent's automobile insurance business which the insurer has deemed it necessary to reinsure in the Facility.

As a result of the termination of the agency relationship, the appellant alleges that its business has been greatly damaged and that, if the termination is allowed to remain in effect, it will suffer irreparable harm to its business. In its prayer, appellant asks that the respondent be enjoined from terminating the agency relationship and that it be awarded damages in the amount of $500,000 actual and punitive.

The appellant's action was instituted on August 4, 1975. A hearing on the temporary relief sought was held before the Honorable Clyde A. Eltzroth and an injunction Pendente lite was issued on October 31, 1975. Judge Eltzroth concluded that, if the temporary injunction were not granted, the appellant would suffer irreparable harm. This was based on his finding that, if the respondent were allowed to terminate the agency relationship, a "domino effect" would likely ensue whereby other companies represented by the appellant would also terminate the appellant in order to avoid writing the large book of "nonstandard" business with the ultimate result that appellant would represent no companies. Pursuant to Code § 15-55-60, Judge Eltzroth, by order dated November 10, 1975, set an injunction bond of $2,000, this amount having been agreed to by the parties.

The respondent subsequently moved on September 30, 1976 to have the injunction bond increased. In connection with this motion, the respondent also sought to have the action transferred to the non-jury, equity calendar for trial. After conducting a hearing, the Honorable Walter J. Bristow ordered that the action be transferred to the equity calendar and that the amount of the bond be increased to $50,000. This appeal followed.

We first consider the question of whether Judge Bristow erred in transferring the action to the equity calendar.

The appellant first contends that S.C.Code § 15-23-60 (1976) grants it an absolute right to a trial by jury. This contention is without merit. In pertinent part, § 15-23-60 provides that "(a)n issue of fact in an action for the recovery of money Only . . . must be tried by a jury . . . ." (Emphasis added.) The present action, however, is not one for the recovery of money Only for the appellant also seeks permanent injunctive relief. The action has both legal and equitable attributes and § 15-23-60 is inapplicable.

The appellant next contends that, even if Code § 15-23-60 does not vest it with an absolute right to trial by jury, the overwhelming character of the action is, nevertheless, legal because: (1) the action is based on a tort; ¹ and (2) its main concern in bringing the action is to recover damages with the permanent injunction sought being merely incidental.

The appellant's argument that the present action is one at law solely because of its contention that it is based upon a tort is without merit. This argument ignores the fact that an action sounding in law may be transformed to one in equity because equitable relief is sought. See, 1 Am.Jur.2d, Actions § 7...