Sutker v. Pennsylvania Ins. Co.

• Decision Date: 05 April 1967
• Docket Number: No. 1,No. 42665,42665,1
• Parties: Melvin SUTKER et al. v. PENNSYLVANIA INSURANCE COMPANY et al
• Court: Georgia Court of Appeals

Page 694

155 S.E.2d 694

115 Ga.App. 648

Melvin SUTKER et al. v. PENNSYLVANIA INSURANCE COMPANY et al.

No. 42665.

Court of Appeals of Georgia, Division No. 1.

April 5, 1967.

Rehearing Denied April 25, 1967.

Certiorari Denied June 8, 1967.

Syllabus by the Court

A petition sets out no cause, of action against an insurance company's agent or against the company for a tort founded upon contract in the failure of the agent to have issued to plaintiff a contract of insurance of a specified nature when it discloses no breach of duty imposed by law upon the agent.

Dr. Melvin Sutker and his wife, Mrs. Muriel Sutker, Brought suit against Pennsylvania Insurance Company and Neal Hornstein, d/b/a Hornstein Insurance Agency, seeking damages and reformation of an amendment to a 'Family Combination Automobile Policy.' The petition as finally amended contained six counts, the first three seeking damages and the last three seeking reformation, all of which except Counts 2 and 5, in which Mrs. Sutker is named plaintiff, were expressly abandoned on oral argument before this court. These two counts, though confusing as to the theory of recovery and conflicting in allegations of fact, make substantially the following case, as we understand the contentions of plaintiffs on appeal:

On October 21, 1962, the insurance company, through its agent Hornstein in Savannah, issued to Dr. Sutker a renewal 'Family Combination Automobile Policy' covering a Corvette and a Ford for a period of one year. On March 20, 1963, Dr. Sutker sold the Corvette and in its place purchased a Buick, at which time he instructed Hornstein by telephone conversation to issue to him a written amendment to the policy substituting the Buick for the Corvette and adding uninsured motorist coverage on both the Buick and the Ford up to $20,000 for each person and $40,000 for each accident. Hornstein assured Dr. Sutker that the written amendment would be issued shortly to cover the changes with appropriate premiums charged, and Dr. Sutker instructed him to mail the amendment to him as he was leaving the city the next day in the Ford for a vacation. Dr. Sutker did not receive the amendment prior to leaving and had no way of knowing until after an automobile collision with an uninsured motorist on March 24, in which his minor son was killed, that Hornstein had not prepared the amendment until March 25, which was received by the insurance company in its Atlanta office on March 26, and in doing so had not provided uninsured motorist coverage but had only substituted the Buick for the Corvette effective October 22, 1963. It was alleged that Hornstein was the duly authorized agent, employee, and servant of the insurance company acting in the prosecution of the company's business and within the scope of his authority.

Damages were laid at $20,000, the amount of the verdict and judgment recovered by Mrs. Sutker against the uninsured motorist, and reformation of the amendment was sought so as to include uninsured motorist coverage up to $20,000 for each person and $40,000 for each accident. Penalty and attorney's fees were also prayed. The trial court sustained the general demurrers of both defendants and dismissed the petition, and plaintiffs appealed.

Kravitch & Hendrix, Bart E. Shea, John W. Hendrix, Aaron Kravitch, Savannah, for appellants.

Richardson, Doremus & Karsman, W. Ward Newton, Brannen, Clark & Hester, Perry Brannen, Savannah, for appellees.

EBERHARDT, Judge.

On the first appearance of this case in this court we held that the amendment to the petition seeking reformation of the amendment to the insurance policy converted the action from one at law to one in equity, and accordingly we transferred the appeal to the Supreme Court. Sutker v. Pennsylvania Ins. Co., 114 G.App. 627, 152 S.E.2d 578. The Supreme Court remanded the case to this court, holding: 'In determining whether an action brought in the superior court is in equity or law both the allegations and the prayer must be examined, and where as in the case sub judice the reformation of a contract is prayed for but the allegations of the petition fail to allege fraud or mutual mistake, the action seeking a money judgment is one at law and not in equity. Accordingly, the Court of Appeals and not this court has jurisdiction of the appeal.' Sutker v. Pennsylvania Ins. Co., 223 Ga. 58, 153 S.E.2d 540.

The trial court construed the petition as an action ex contractu and sustained the general demurrers on that basis, Plaintiffs contend vigorously in this court, however, that this is not a suit upon an insurance contract, written or oral, but is a tort action seeking damages because of the misfeasance or non-feasance of Hornstein, as the servant and agent of the insurance company, in negligently failing to procure a written amendment to the insurance policy which would have provided the requested uninsured motorist coverage. It is contended that there was an oral contract between plaintiffs and Hornstein which created a legal duty on Hornstein's part to procure the written amendment as requested, and that the neglect or omission of that duty and the misfeasance of Hornstein in carrying out the duty, acting within the scope of his employment as servant or agent of the insurance company, constitutes a tort for which Hornstein is personally liable and for which the company is jointly liable under the doctrine of respondeat superior. The gist of plaintiffs' contention is that they have elected under Code § 105-105 to waive suit on contract and to sue both defendants for a tort founded upon a contract with Hornstein, and we will so treat the case. Mauldin v. Sheffer, 113 Ga.App. 874, 150 S.E.2d 150. No contention is made that the Uninsured Motorist Act (Ga.L.1963, p. 588, as amended; Code Ann. § 56-407.1), applicable to policies issued or delivered after January 1, 1964, is involved here.

Since we concluded that this case does not fall within that class of cases where a suit for tort founded upon contract can be maintained, we assume, but do not decide, that the allegations of the petition sufficiently show that Hornistein made a legally binding promise to Dr. Sutker which he negligently breached, proximately resulting in the loss complained of, and that Mrs. Sutker is a proper party plaintiff in Counts 2 and 5. Defendants contest these assumptions and make other contentions with which it is unnecessary to deal in our view of the case.

In Mauldin v. Sheffer, supra, we reviewed the cases dealing with tort founded upon contract, and we will not reiterate all that was said there. The following quotations should suffice: 'From the foregoing authorities it can be seen that it is not in every case where a contract has been breached that a right accrues to the opposite party to make an election (Citations). The rule which affords an election to sue ex delicto or ex contractu in cases involving a breach of a duty implied by reason of a contractual relation has been applied to contractual relations between principal and agent, bailor and bailee, attorney and client, physician and patient, carrier and passenger or shipper, master and servant, and possibly other well recognized relations. * * * From the authorities to which we have referred and from others which we have examined, the rule may be fairly deducted that in order to maintain an action ex delicto because of a breach of duty growing out of a contractual relation the breach must be shown to have been a breach of a duty imposed by law and not merely the breach of a duty imposed by the contract itself. (Citations). This is consistent with the definition of a tort set forth in Code § 105-101. 'Duty imposed by law' as used in this context means, of course, either a duty imposed by a valid statutory enactment of the legislature or a duty imposed by a recognized common law principle declared in the reported decisions of the appellate courts of the State or jurisdiction involved. The question in this case then resolves itself to whether the petition sufficiently alleges the violation of such 'duty imposed by law."

Recovery has been allowed in this state for failure to keep property insured where the defendant is shown to be plaintiff's agent. Thomas v. Funkhouser, 91 Ga. 478, 18 S.E. 312 (defendant was apparently plaintiff's specifically appointed 'general' agent rather than an insurance agent or broker). Recovery has also been allowed in an action ex contractu for the breach of a contract of agency to secure insurance. Bell v. Fitz, 84 Ga.App. 220, 66 S.E.2d 108 (defendant was a warehouseman holding plaintiffs' goods); Farmers & Merchants Bank v. Winfrey, 89 Ga.App. 122, 78 S.E.2d 818 (defendant bank agreed with plaintiff to procure insurance on property conveyed by plaintiff to secure a loan); Home Bldg. & Loan Ass'n v. Hester, 213 Ga. 393, 99 S.E.2d 87 (loan association agreed to procure term life insurance to cover balance due on loan); Consumers Financing Corp. v. Lamb, 217 Ga. 359, 122 S.E.2d 101 (automobile dealer and finance company agreed to procure credit life insurance as agents for plaintiff). And see Beiter v. Decatur Federal Savings & Loan Ass'n, 222 Ga. 516, 150 S.E.2d 687, where recovery was allowed to the limit of the life insurance policy which defendant savings and loan association undertook, as agent of plaintiff, to procure and keep in force on the life of plaintiff's husband, as additional security for the loan, which it failed to do, falsely representing that the insurance was in force and retaining the monthly premiums which plaintiff paid on the non-existent policy; Farlow v. Barton, 60 Ga.App. 287, 3 S.E.2d 777, involving questions of evidence in a suit for breach of contract by the seller of an automobile to procure collision insurance on the automobile sold; Atlas Auto Finance Co. v. Atkins, 79 Ga.App. 91, 95(1), 53 S.E.2d 171, where defendant was allowed to plead in recoupment against the foreclosure of a title retention contract...