Lucas v. Garrett

• Decision Date: 21 January 1947
• Docket Number: 15906.
• Parties: LUCAS et al. v. GARRETT et al.
• Court: South Carolina Supreme Court

41 S.E.2d 212

209 S.C. 521

LUCAS et al. v. GARRETT et al.

No. 15906.

Supreme Court of South Carolina

January 21, 1947

Appeal from Common Pleas Court of Greenville County; J. Robert Martin, Jr., Judge.

Action by S.W. Lucas and another, partners in trade under the firm name of Lucas & Roberson, suing as trustees for the St. Paul Fire & Marine Insurance Company against David H. Garrett and another to recover for loss or damage by the fire to certain cotton owned by plaintiffs while being transported on a truck owned and operated by named defendant. From an adverse judgment, defendants appeal.

Under policy insuring cotton merchant against loss or damage to cotton by fire and other specified hazards and containing a pro rata clause respecting "other insurance", the quoted term was intended to embrace other insurance of the same nature taken out by insured or the owners of the cotton and had no application to a mandatory policy required of a motor carrier respecting goods transported by it, so as to authorize the carrier's insurer upon payment of loss by fire to goods belonging to merchant, to invoke the pro rata clause and obtain contribution from the merchant's insurer for payment of the loss.

Mann & Arnold, of Greenville, for appellants.

Stephen Nettles, of Greenville, for respondents.

OXNER Justice.

The real controversy on this appeal is between St. Paul Fire & Marine Insurance Company and American Fire &amp Casualty Company, and the question to be determined is whether the loss hereinafter mentioned should be borne by American alone or prorated between the two insurers.

Lucas & Roberson are cotton merchants of Greenville, South Carolina. David H. Garrett is a common carrier by truck of cotton and other commodities. On April 4 1944, Lucas & Roberson delivered forty bales of cotton to Garrett for transportation from Anderson to Pickens, South Carolina. The shipment was damaged by fire while in transit, resulting in a net loss of $2,373.36.

At the time of the fire the carrier held a merchantile floater policy in the amount of $3,500, issued by American, which insured the legal liability of the carrier for loss and damage to cotton and other commodities while being transported on the particular truck here involved. This policy carried the form of endorsement required under the regulations of the Public Service Commission made in conformity with the provisions of Section 8511 of the Code of 1942. Under the terms of this endorsement, American agreed to pay 'any shipper or consignee for all loss of or damage to all property belonging to such shipper or consignee, and coming into the possession of the Insured in connection with its transportation service, for which loss or damage the Insured may be held legally liable * * *.'

Also in effect at the time of the fire were three policies, identical in form and aggregating $8,500, issued by St. Paul to Lucas & Roberson. They insured against fire and other specified hazards cotton in bales owned by Lucas Roberson, 'or held by them in trust, or on commission, or on joint account with others, or sold but not delivered.' The insurance is stated to be for the benefit of those 'whom it may concern', i. e., those having an interest in the cotton held by Lucas & Roberson. The cotton is covered while located 'in all or any of the stores, presses, warehouses, sheds, yards, railroad yards, wharves, or while in transit in, or while on any of the streets in the United States of America, excluding the State of Massachusetts and State of New York.'

Lucas & Roberson turned the damaged cotton over to St. Paul who paid them $4,646.72, representing the sound value of the shipment, and took a subrogation receipt whereby Lucas & Roberson assigned to St. Paul all their rights against the carrier and any other who might be liable for the loss, and authorized St. Paul to bring suit in their name against such parties. St. Paul later sold the cotton for $2,273.36, so that the net loss was $2,373.36.

Thereafter Lucas & Roberson brought this action against the carrier, Garrett, and his statutory insurer, American, to recover the amount of the loss. On a former appeal, 208 S.C. 292, 38 S.E.2d 18, we held that Lucas & Roberson could not sue in their own right for the loss as they were not the real parties in interest. As a result of this decision, an amended complaint was filed in which it was alleged that Lucas & Roberson brought the action at the instance and request of, and as trustees for, St. Paul in conformity with the terms of the subrogation receipt and assignment.

The only defense in the answer which we need consider is the contention of the carrier and his insurer that the loss should be borne by both insurers and prorated between them on the basis of the amount of insurance written by each. More specifically, it is claimed that, since the St. Paul policies were in the amount of $8,500 and the American policy was for $3,500 and as the loss was $2,373.36, St. Paul should bear 85/120 of the loss, or $1,681.13, and American should pay 35/120, or $692.23.

The case was tried to the Court without a jury. It was conceded that the issue involved was solely one of law to be determined from the documentary evidence. The Court below held that St. Paul should not be required to contribute to the loss and awarded judgment against the carrier and American for the full amount of the loss, with interest and costs, from which said defendants prosecute this appeal.

Appellants seek a reversal of the judgment of the Circuit Court upon two grounds: (1) It is contended that American's insurance was concurrent with that of St. Paul and, therefore, under the general law the loss should fall on the two insurers equitably in proportion to the insurance carried. (2) It is said that even though the policies do not constitute concurrent insurance, that under the terms of the St. Paul policy, St. Paul expressly agreed to pay its pro rata part of the loss if there was other insurance upon the property. These grounds will be considered in the order stated.

Before entering into a discussion of concurrent insurance, it may be helpful to refer to certain well-established principles governing the general rights and liabilities of the parties. It is clear that the carrier was liable to the shipper for the damage sustained to the shipment of cotton. Piero v Southern Express Co., 103 S.C. 467, 88 S.E. 269. The procurement of cargo insurance by the carrier was not optional but mandatory. It is required by statute for the protection of the shipper or the owner of the cargo. Under the terms of the endorsement required by the Public Service Commission and attached to American's policy, 'a direct obligation by the insurer to the shipper is created and such endorsement constitutes an unconditional and absolute promise by the insurer to pay to the shipper any loss or damage to the cargo for which the carrier could be held liable.' McIntosh v. Whieldon et al., 205 S.C. 119, 30 S.E.2d 851, 854. Upon payment of the loss, St. Paul was subrogated to all the rights of Lucas & Roberson against the carrier of the cotton. Globe & Rutgers Fire Insurance Co. v. Foil, 189 S.C. 91, 200 S.E. 97. Lucas & Roberson were under no obligation to the carrier to take out insurance on this cotton. If the carrier had paid the loss, he would not have had a right by subrogation against St. Paul. The distinction now sought to be made is succinctly stated in Luckenbach et al. v. W. J. McCahan Sugar Refining Co. et al., 248 U.S. 139, 39...