U.S. Fidelity & Guaranty Co. v. Security Fire & Indem. Co.

• Decision Date: 04 August 1966
• Docket Number: No. 18548,18548
• Citation: 248 S.C. 307,149 S.E.2d 647
• Court: South Carolina Supreme Court
• Parties: UNITED STATES FIDELITY AND GUARANTY COMPANY, Respondent, v. SECURITY FIRE AND INDEMNITY COMPANY, Norman Turbeville and Willie LeeHemingway, Defendants, of which Security Fire and Indemnity Company isAppellant.

Page 647

149 S.E.2d 647

248 S.C. 307

UNITED STATES FIDELITY AND GUARANTY COMPANY, Respondent, v. SECURITY FIRE AND INDEMNITY COMPANY, Norman Turbeville and Willie LeeHemingway, Defendants, of which Security Fire and Indemnity Company isAppellant.

No. 18548.

Supreme Court of South Carolina.

Aug. 4, 1966.

Nettles & Thomy, Dalton B. Floyd, Jr., Lake City, for appellant.

Belser, Belser & Baker, Columbia, for respondent.

LEWIS, Justice.

The question for decision in this appeal is whether an insurer who certifies a policy of motor vehicle liability insurance to the State Highway Department as proof of financial responsibility for an insured, showing the expiration date of the policy so certified, is required to subsequently give the ten days' notice to the Department of the termination of the policy, as provided in Section 46--702(7)(h), 1965 Supplement to the 1962 Code of Laws, before the policy can effectively terminate according to its terms?

On August 30, 1964, Willie Lee Hemingway was involved in a collision with a vehicle driven by Norman Turbeville. Turbeville was injured in the accident and subsequently, in an action brought by him, recovered judgment against Hemingway in the amount of $10,029.24. Turbeville had in force a liability insurance policy issued by plaintiff, United States Fidelity and Guaranty Company, containing the statutory uninsured motorist coverage. Section 46--750.33 et seq., 1965 Supplement to the 1962 Code of Laws. Hemingway, against whom the judgment was obtained, had been previously issued a liability policy by defendant, Security Fire and Indemnity Company. Question arose between plaintiff and Security as to which was liable for the payment of the judgment obtained against Hemingway. Security denied liability under its policy upon the ground that it had lapsed for nonpayment of premium. If Security's policy was in force, of course, it would be liable for the payment of the judgment obtained against its insured Hemingway. If it was not in force, then Hemingway was an uninsured motorist and liability would fall on plaintiff under the uninsured motorist coverage provided in its policy.

Security issued its policy to Hemingway on August 20, 1963 under the South Carolina Assigned Rick plan for a term of one year, expiring on August 20, 1964. On April 30, 1964, pursuant to the requirement of the South Carolina Highway Department, Security filed an SR--22 Form (Financial Responsibility Insurance Certificate) with the Department, certifying the existence of coverage of Hemingway under the policy. The policy was described on the SR--22 Form as 'Current policy Number AC 14207 effective from 8/20/63--8/20/64;' and the form contained the following certificate: 'This certification is effective from April 18, 1964, and continues until canceled or terminated in accordance with the financial responsibility laws and regulations of this State.'

Sometime prior to the expiration date of the policy, Security gave notice to the insured Hemingway that the policy term expired on August 20, 1964 and would be renewed if the renewal premium was paid at least fifteen days prior to such expiration date. The renewal premium was not paid.

The insured Hemingway was involved in the collision in question on August 30, 1964, which was subsequent to the expiration date of August 20, 1964, as shown in the policy and the certification thereof to the Department. However, it is conceded that no ten days' written notice of cancellation or termination of the policy had been given by Security to the Highway Department as set forth in Section 46--702(7)(h), the pertinent language of which is as follows:

'(h) Notice required to cancel certified policy; cancellation by subsequent policy. When an insurance carrier has certified a motor vehicle liability policy under § 46--748 or 46--749, the insurance so certified shall not be cancelled or terminated until at least ten days after a notice of cancellation or termination of the insurance certified shall be filed with the Department, except that a policy subsequently procured and certified shall at 12:01 A. M., on the effective date of its certification, terminate the insurance previously certified with respect to any motor vehicle designated in both certificates.'

Upon the denial of liability by Security, this action for declaratory judgment was brought by plaintiff to determine whether it or Security was liable for the payment of the foregoing judgment. While Turbeville and Hemingway were made parties, the controversy here is between plaintiff and Security. The issues were referred to the Master for Richland County and tried upon an agreed statement of facts. The Master concluded that the policy of Security afforded coverage for its insured Hemingway at the time of the collision, because of the failure of Security to give the statutory ten days' written notice of termination of its policy to the State Highway Department; and that in any event Security was estopped to assert that its policy was not in full force and effect. The report of the Master was affirmed by the circuit court and Security has appealed from such judgment. In view of our conclusion that the policy of Security remained in effect because of the failure to give the statutory notice, it becomes unnecessary to consider the question of estoppel.

It is the contention of plaintiff, sustained by the master and lower court, that Security, having certified its policy to the Highway Department, could not terminate it without giving to the Department the ten days' notice required by Section 46--702(7)(h) and that, since such notice had not been given, the policy continued in full force and effect on August 30, 1964, the date of the aforesaid accident.

Security on the other hand takes the position that notice is required to be given to the Department of the cancellation or termination of a certified policy only where the insurer for some reason desires to cancel or terminate the policy before the expiration of the term for which it was originally written and that such notice is not required to terminate coverage at the expiration of the term stated in the policy. Additionally, Security argues that, even if notice is required to be given in order to terminate the policy at the end of the term stated therein, sufficient notice was given in this case by virtue of the filing by defendant of the SR--22 Form upon which the expiration date of the policy was shown.

This decision turns upon the proper...