Noisette v. Ismail

Decision Date19 April 1989
Docket NumberNo. 1365,1365
Citation299 S.C. 243,384 S.E.2d 310
CourtSouth Carolina Court of Appeals
PartiesLurline NOISETTE, Respondent, v. Bassem ISMAIL, B.G. Owens d/b/a Auto Refurbishing, Penn National Insurance Company, Aetna Casualty and Surety Company and Allstate Insurance Company, Defendants, of whom Penn National Insurance Company and Allstate Insurance Company are Appellants, and B.G. Owens d/b/a Auto Refurbishing is Respondent. Appeal of PENN NATIONAL INSURANCE COMPANY and Allstate Insurance Company. . Heard

Stephen E. Darling, and Bert G. Utsey, III, both of Sinkler & Boyd; and David M. Collins, of Buist, Moore, Smythe & McGee, Charleston, for appellants.

Arnold S. Goodstein, and Mary A. Marwick, both of Goodstein & Goodstein, Summerville; Peggy M. Chandler and Mary Duncan Shahid, both of Belk, Howard, Cobb & Chandler, Charleston, for respondents.

Jon Austen, of Wise & Cole, Charleston, for defendants.


This declaratory judgment action brought by Lurline Noisette arises out of an automobile accident on February 14, 1982, involving a car in which Noisette rode as a passenger and a car driven by Bassem Ismail and owned by B. G. Owens, doing business as Auto Refurbishing. Noisette obtained a $60,000 judgment against Ismail in an earlier action brought on February 15, 1983. Noisette now seeks a declaratory judgment concerning the question of whether Pennsylvania National Mutual The trial court held both insurance companies owed coverage to Owens at the time of the accident and held Penn National primarily liable and Allstate secondarily liable to Noisette for the judgment obtained by Noisette against Ismail. It also ordered Penn National to pay Owens $8,000 in attorney fees "for the cost of Owens' defense" of Noisette's action against Ismail. Both Penn National and Allstate appeal. We affirm in part, vacate in part, reverse in part, and remand.

                Casualty Insurance Company ("Penn National") and Allstate Insurance Company ("Allstate") provided garage liability insurance coverage to Owens at the time of the accident and, if so, the question of whether the coverage embraced the accident involving Noisette and Ismail.   Owens filed, so far as is pertinent here, [299 S.C. 246] a cross-complaint against both Penn National and Allstate for breach of contract

Before addressing the merits of this appeal, we must first determine the proper scope of our review. Penn National and Allstate argue this is an equity action and, therefore, we should review the decision of the trial court to see if it is supported by the preponderance of the evidence. Noisette and Owens, however, contend this is a law case and, consequently, we must affirm the trial court if there is any evidence that reasonably supports its decision. Townes Associates, Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976).

A declaratory judgment action is like a chameleon. Its color is determined by its background, i.e., the underlying action. See Jacobs v. Service Merchandise Co., 297 S.C. 123, 375 S.E.2d 1 (Ct.App.1988) (the character of a declaratory judgment action is determined by the main purpose of the complaint); cf., e.g., DesPortes v. DesPortes, 157 S.C. 407, 154 S.E. 426 (1930) (equity may entertain an action to construe a will under the Uniform Declaratory Judgments Act); Jacobs v. Service Merchandise Co., supra (a declaratory judgment action to determine the parties' rights under a written easement agreement is an action at law). An action for a declaratory judgment is a statutory action. 26 C.J.S. Declaratory Judgments § 104 at 234 (1956); see S.C. CODE ANN. §§ 15-53-10 et seq. (1976) (statutes conferring power on courts of record to grant declaratory judgment); Doernberg and Mushlin, The Trojan Horse: How the Declaratory Judgment Act Created a Cause of Action and Expanded Federal Jurisdiction While the Supreme Court Wasn't Looking, 36 UCLA L.Rev. 529, 583 (1989) ("Beyond question, the [Declaratory Judgment] Act created a cause of action...."). Unless the cause of action and the relief sought in a declaratory judgment action are distinctly equitable, the action will be considered one at law. 1 See Laub v. Wills, 72 Ohio App. 496, 53 N.E.2d 530, 533 (1943) (an action for a declaratory judgment "is an action at law unless the allegations of the petition or other pleadings ... state a cause of action such as was recognized as an equitable action before the adoption of the Code of Civil Procedure...."); 22A Am.Jur.2d Declaratory Judgments § 2 at 671 (1988) ("Insofar ... as the right to have declarations made is distinctly granted by statute, it has been said that it would seem out of place not to consider the right a legal one even though it may at the same time, in some instances, be in the nature of those heretofore denominated 'equitable.' "); 26 C.J.S., supra § 105 at 236 ("Declaratory relief may take on the color of either equity or law, depending on the issue presented."); 22A Am.Jur.2d, supra § 4 at 627 ("[D]eclaratory relief was unknown at common law...."); 26 C.J.S., supra § 105 at 235 ("[A]n action for a declaratory judgment is not a suit in equity...."); cf. Newberry Mills, Inc. v. Dawkins, 259 S.C. 7, 190 S.E.2d 503 (1972) (an action brought pursuant to statutes permitting a taxpayer to contest the validity of a tax is an action at law); Murphy v. Valk, 30 S.C. 262, 267, 9 S.E. 101, 103 (1889) ("The law as to the mechanic's lien is purely statutory, and therefore in that sense the rights given by it may be called legal....").

Here, the underlying action neither alleges an equitable cause of action nor seeks equitable relief. As we noted at the beginning, Noisette's complaint merely seeks a declaration regarding whether Penn National and Allstate provided Owens certain insurance coverage at a particular time and whether any such coverage embraced a particular accident.

We therefore hold that Noisette's action for declaratory judgment is an action at law. See Felton v. Chandler, 201 Ga. 347, 39 S.E.2d 654 (1946) (wherein a declaratory judgment action held to be one at law since the prayer for relief did not seek injunctive or other equitable relief and the petition's allegations did not make out a case for equitable relief).


Penn National contends the trial court erred in finding that it provided coverage to Owens at the time of the accident, that the amount of the coverage was $100,000, that it is bound by the judgment obtained by Noisette in her action against Ismail, and that it, and not Allstate, provided primary coverage for the accident. Penn National also challenges the trial court's award of attorney fees to Owens.


We address first Penn National's argument that the trial court erred in finding that Penn National provided coverage to Owens at the time of the accident.

In reviewing this finding, we must view the evidence and all its reasonable inferences in the light least favorable to Penn National, the losing party below. Doremus v. Atlantic Coast Line R. Co., 242 S.C. 123, 130 S.E.2d 370 (1963); Sweat v. Crawford, 292 S.C. 324, 356 S.E.2d 147 (Ct.App.1987).

Penn National first points to the absence of any insurance application, policy, binder, or other written record indicating either that Owens was its insured at the time of the accident or that it had received a premium payment from Owens for the insurance. The absence of any such written record, however, does not doom the trial court's finding of coverage.

According to the evidence, on May 1, 1975, Penn National and the Bulwinkle Agency, a general agent for several insurance companies, entered into an agency agreement. By the agreement, Penn National authorized Bulwinkle "to receive and accept proposals for insurance including binding authority, covering such ... risks as [Penn National] may ... authorize to be insured." Garage liability is a risk Penn National had authorized Bulwinkle to insure. On November 20, 1981, Owens went to Bulwinkle, made application for garage liability insurance coverage in the amount of $100,000, and paid Bulwinkle $200 "to put a policy in[to] effect." Rebecca Funk, Bulwinkle's office manager and vice-president, wrote Owens a receipt and handed it to him. She told Owens that Penn National insured him from that "moment on." Owens walked out of Bulwinkle's "thinking [he] was insured."

We think the evidence just summarized is sufficient to support the trial court's finding that Penn National was obligated to provide garage liability coverage to Owens on the date of the accident. The evidence shows quite clearly that Penn National's general agent, Bulwinkle, issued Owens an oral binder and accepted a premium charge from him. At least in the case of automobile insurance, a binder may be given orally and "may be evidenced by such things as a receipt for premiums tendered to an agent who had the apparent authority to bind the insurance company." 7 Am.Jur.2d Automobile Insurance § 5 at 451-52 (1980).

But Penn National questions whether, as the trial court found, Bulwinkle had the apparent authority to bind it to a garage liability insurance contract on November 20, 1981, the day Owens went to Bulwinkle to buy the insurance.

Penn National claims it had divested Bulwinkle of all authority to write new business on its behalf before November 20, 1981, and had twice sent Bulwinkle letters instructing Bulwinkle not to bind it to any more new business until further notice.

The letters, however, expressly allowed Bulwinkle to make changes in existing policies. Moreover, Penn National did not terminate its agency relationship with Bulwinkle until June 27, 1983, over 15 months after Owens' vehicle was involved in the accident with Noisette.

The restriction Penn National attempted to place on Bulwinkle's authority to bind it to new business did not relieve Penn National from possible liability on the policy Bulwinkle sold Owens. As one...

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