South Carolina Elec. & Gas Co. v. Aetna Life Ins. Co., 17235
| Decision Date | 12 December 1956 |
| Docket Number | No. 17235,17235 |
| Citation | 230 S.C. 340,95 S.E.2d 596 |
| Court | South Carolina Supreme Court |
| Parties | SOUTH CAROLINA ELECTRIC & GAS COMPANY, Respondent, v. AETNA LIFE INSURANCE COMPANY et al., Appellants. |
Joseph L. Nettles, Robinson, McFadden & Dreher, Columbia, for appellants.
McLain & Sherrill, Arthur M. Williams, Jr., Columbia, for respondent.
By separate policies Aetna Life Insurance Company and thirty-seven other insurance companies covered all of the real and personal property of South Carolina Electric & Gas Company against loss or damage by fire, liability under each policy being limited to the proportion of any such loss or damage that the amount of the policy should bear to the total coverage. Plaintiff brought this action against said companies, alleging that as the result of a fire on June 27, 1950, that had damaged and partially destroyed a Westinghouse generator belonging to it and located in its Saluda hydro-electric station in Lexington County it had sustained loss within the coverage of said policies in the amount of $132,181.95, and that the several defendants had denied liability; and praying judgment against them in that amount with interest from July 27, 1950, said amount and interest to be apportioned among them in accordance with the coverage of the respective policies.
Defendants, answering, alleged inter alia:
1. That the damage to the generator was not within the coverage of their policies, but was caused by mechanical breakdown or electrical injury;
2. That prior to the electrical or mechanical failure of June 27, 1950, the generator had been operated in a defective condition of which plaintiff knew or should have known, and that such operation greatly increased the hazard of damage and consequently relieved defendants from liability because of the provision in each policy that 'this company shall not be liable for loss occurring while the hazard is increased by any means within the control or knowledge of the insured'; and
3. Upon information and belief, that the real party in interest in the action is not the plaintiff, but The Underwriters at Lloyd's, an English organization, which has paid the plaintiff on account of the loss here complained of and is in reality the beneficiary of the action.
Two motions were thereafter made by certain of the defendants and argued before the Honorable Joseph R. Moss, then presiding in the Eleventh Judicial Circuit, towit:
a. To require plaintiff to reply to the new matter alleged in the answer; and
b. 'For an order requiring the plaintiff to permit these defendants to inspect and copy, or in the alternative to furnish these defendants with authentic copies of such books, records, papers, correspondence and documents in its possession or under its control relating to the matters referred to hereinbelow.
1. The records showing the cost of the portions of the Westinghouse generator alleged in paragraph four of the complaint as damaged, the year in which this equipment was purchased, the depreciation rate charged on this equipment, the amount of the accumulated depreciation and the net investment of the plaintiff in this equipment on the date of the alleged damage.
2. All policies of insurance covering this damaged equipment issued by companies other than the named defendants.
3. All records of payments received by the plaintiff on account of damage to the equipment mentioned in the complaint, including the records showing the name of the parties making payment, the dates, the amounts of the payments, and the circumstances surrounding these payments.
4. All correspondence, documents and papers relating to any payments made to the plaintiff or to the liability of any party making such payments.'
At the hearing of these motions plaintiff attached to its brief a copy of its policy with Lloyd's and a copy of a 'loan receipt' given by it to Lloyd's under date January 26, 1953. To both of these we shall later refer in more detail. On November 30, 1954, Judge Moss issued his order requiring plaintiff to reply to the new matter set out in the answer, and further ordering 'that within ten days from the date of this order the plaintiff permit these defendants to inspect and copy or, in the alternative, furnish them with authentic copies of the books, records, papers, correspondence and documents in its possession or under its control relating to the matters referred to in the defendants' motion'. From this order no appeal is before us.
Plaintiff then replied: denying that it had done or failed to do anything to increase the hazard within the meaning of the policies; denying that it had operated the generator at any time in a defective condition or in an improper manner, denying that The Underwriters at Lloyd's had paid it on account of the loss here involved as alleged in the answer; and admitting 'that in connection with the said loss the plaintiff has borrowed a sum of money under a Loan Receipt agreement, a copy of which has been furnished to the defendants'.
Following plaintiff's reply, three motions on the part of the defendants were made and argued on December 6, 1955, before the Honorable J. Woodrow Lewis, then presiding in the Eleventh Judicial Circuit, towit:
1. For an order requiring Lloyd's Underwriters to be substituted as plaintiff in the cause in the stead of South Carolina Electric & Gas Company.
2. For an order requiring the plaintiff or its attorneys 'to produce any and all agreements as to attorneys' fees to be paid out of the proceeds of any recovery which might be obtained in said action and to allow the defendants to inspect and make copies of the same, or, if said agreements be not in writing, then to state under, oath what said agreements are'.
3. To continue the cause beyond the term.
Judge Lewis disposed of these three motions in a single order, dated December 6, 1955. The motion to continue was granted. Appeal here is from his rulings on the two others, and also from so much of his order dated April 6, 1956, settling the record on appeal, as excluded from the transcript of record defendants' two motions before Judge Moss, and his order thereon dated November 30, 1954, to which we have hereinbefore referred.
The Lloyd's policy, described therein as 'Excess Machinery Insurance', insured against loss or damage directly caused by accident to the insured objects described in an attached schedule. It excluded from coverage, inter alia, loss from fire outside the insured object and loss from accident caused by fire. Liability was limited to the amount of the assured's ultimate net loss in excess of $10,000, and total liability for loss from any one accident was limited to $150,000. It defined 'ultimate net loss', with respect to property of the assured damaged or destroyed, as the actual cash value thereof at the time of the accident, such value to be ascertained with proper deduction for depreciation. It defined 'accident' as 'a sudden and accidental breaking, deforming, burning-out or rupturing of the object or any part thereof which manifests itself at the time of its occurrence by immediately preventing continued operation or by immediately impairing the functions of the object, and which necessitates repair or replacement before its operation can be resumed and its functions restored'.
The 'loan receipt' reads as follows:
'$122,281.95
January 26, 1953 'This is to acknowledge receipt from Messrs. Mendes & Mount, as Attorneys for Lloyd's Underwriters, of the sum of One Hundred Twenty-two Thousand, Two Hundred Eighty-one and 95/100 Dollars ($122,281.95), as a loan and repayable only to the extent and in the manner hereinafter provided from any net recovery which the undersigned shall make from any person or persons, corporation or corporations, on account of loss occurring on June 27, 1950, causing damage to the 40,625 KVA Westinghouse Generator, Serial No. 486-8318, of Unit #1, of the Saluda Hydro-Electric Plant, Lake Murray, South Carolina.
'Payment from the funds of such recovery shall be in the following order of preference, and for the following purposes:
'1. Payment of all expenses of suit against such person or persons, corporation or corporations, including time of attorneys in preparing pleadings, preparation for trial, trial of case and in prosecuting or defending any appeal that might be taken.
'2. Repayment to Messrs. Mendes & Mount, as Attorneys for Lloyd's Underwriters, the balance...
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