Kennedy v. Henderson

• Decision Date: 21 July 1986
• Docket Number: No. 22592,22592
• Citation: 289 S.C. 393,346 S.E.2d 526
• Parties: William D. KENNEDY and Patricia W. Kennedy, Respondents, v. Floyd E. HENDERSON, Jr., Metro Enterprises of Greenville, Inc., Builders, Inc. and Sentry Insurance Company, Defendants, of whom Sentry Insurance Company is Appellant. Appeal of SENTRY INSURANCE COMPANY.
• Court: South Carolina Supreme Court

Page 526

346 S.E.2d 526

289 S.C. 393

William D. KENNEDY and Patricia W. Kennedy, Respondents, v. Floyd E. HENDERSON, Jr., Metro Enterprises of Greenville Inc., Builders, Inc. and Sentry Insurance Company Defendants of whom Sentry Insurance Company is Appellant Appeal of SENTRY INSURANCE COMPANY.

No. 22592.

Supreme Court of South Carolina.

Submitted March 26, 1986.

Decided July 21, 1986.

Richard M. Kennedy, III, of Kennedy & Price, Columbia, for appellant.

David B. Ward, of Horton, Drawdy, Ward & Johnson, Greenville, for respondent.

FINNEY, Justice:

This is an action for damages by the respondents (Kennedys) against the defendant builder and his insurance company, the appellant (Sentry), for alleged misconduct by the builder. We reverse.

The Kennedys engaged the builder to construct a dwelling-house type building to be used as a nursery. They advanced eleven thousand ($11,000.00) dollars to be placed in trust and used for labor and materials. The builder never commenced construction on the building nor returned the monies paid to him.

The builder is a licensed builder under the laws of South Carolina and the rules and regulations of the South Carolina Residential Home Builders Commission. As a condition to licensing, the appellant Sentry issued a surety bond in the amount of ten thousand ($10,000.00) dollars as per S.C.Code Ann. § 40-59-70(b) (1976).

The surety bond provides that:

Whereas, above bonded principal is required in Section 7(b) of the Act to furnish the Commission with a bond as one method of complying with one of the conditions upon which license is granted:

Now Therefore the condition of this bond is such that if the above bonded principal shall in all respects comply with the rules and regulations pertaining to construction standards and health and safety requirements promulgated by the South Carolina Residential Home Builders Commission, then this obligation shall be void....

The Kennedys seek recovery of damages from the builder and the appellant insurance company on two theories: 1) breach of trust; and 2) negligence by the appellant Sentry in refusing to pay the bond claim. Sentry demurred to the Kennedys' action. The trial court overruled the demurrer on the ground that a novel issue was presented and it should not be decided on demurrer. See e.g. Springfield v. Williams Plumbing Supply Co., 249 S.C. 130, 153 S.E.2d 184 (1967); Revis v. Martin, 260 S.C. 347, 195 S.E.2d 715 (1973); and Vaden v. College Heights Subdivision, 261 S.C. 509, 201 S.E.2d 113 (1973).

Sentry contends the trial court erred in overruling the demurrer. We agree. On consideration of a demurrer, the complaint must be construed liberally in favor of the pleader and sustained if facts alleged, and inferences reasonably deducible therefrom, entitle the plaintiff to relief on any theory of the case. Blandon v. Coleman, 285 S.C. 472, 330 S.E.2d 298 (1985). Springfield v. Williams Plumbing Supply Co., supra, is often relied upon as a basis for denying a demurrer where novel issues are present or are involved. This Court, in Springfield, qualified its holding as follows:

If a plaintiff has clearly not alleged facts sufficient to constitute a cause of action, a demurrant is, of course, entitled to have his demurrer sustained and be saved the expense and trouble of a trial. For this reason, the above quoted rule should not, we think, be followed except in cases where there is real cause for doubt, or it is clear that the ends of justice may well be promoted by a trial on the merits.

All novel issues are not inappropriate for resolution by demurrer. See e.g. Brown v. South Carolina Insurance Co., 284 S.C. 47, 324 S.E.2d 641 (S.C.App.1984); Swinton v. Chubb & Son, Inc., 283 S.C. 11, 320 S.E.2d 495 (S.C.App.1984).

The legal question presented in this case is whether the alleged wrongful acts of the builder fall within the purview of the protection extended by the surety bond. No issue is articulated concerning the adequacy of the surety bond to meet the statutory scheme or the rules and regulations promulgated by the South Carolina Residential Home Builders Commission. The Kennedys argue that the purpose of a surety bond is "to protect the public from the financially irresponsible builder," Watson v. Harmon, 280 S.C. 214, 312 S.E.2d 8 (S.C.App.1984), and therefore, they...