W. M. Kirkland, Inc. v. Providence Washington Ins. Co., 20031

• Decision Date: 11 June 1975
• Docket Number: No. 20031,20031
• Citation: 216 S.E.2d 518,264 S.C. 573
• Court: South Carolina Supreme Court
• Parties: W. M. KIRKLAND, INC., Appellant, v. PROVIDENCE WASHINGTON INSURANCE COMPANY, Respondent.

Page 518

216 S.E.2d 518

264 S.C. 573

W. M. KIRKLAND, INC., Appellant, v. PROVIDENCE WASHINGTON INSURANCE COMPANY, Respondent.

No. 20031.

Supreme Court of South Carolina.

June 11, 1975.

Claude R. Dunbar, Spartanburg, for appellant.

James W. Hudgens of Ward, Howell, Barnes & Long, Spartanburg, for respondent.

BUSSEY, Justice:

Although not so denominated, this is a case wherein the appellant, Kirkland, seeks, in effect, a declaratory judgment that it is, under the facts involved, entitled to an equitable offset and relief incidental thereto. This case and allied litigation have pursued a somewhat meandering course and resulted in somewhat clouding the issues which in the final analysis are relatively simple. For a full understanding, however, it is first essential to give a fairly full factual background.

While only the appellant and respondent are still involved in this litigation the parties initially connected therewith in some capacity are quite numerous, the key ones being as follows:

1. Gene E. Phillips, who was,

(a) the sole general partner in Spartanburg Hamlet Limited Partnership (hereinafter referred to simply as Hamlet), which is the owner of Hamlet Gardens;

(b) the sole incorporator, director, president, etc. of Phillips Development Corporation, now bankrupt, which was the general contractor in the construction of Hamlet Gardens;

2. W. N. Kirkland, Inc., the appellant herein, subcontractor on Hamlet Gardens construction project;

3. C. Douglas Wilson Company, holder of first mortgage on Hamlet Gardens;

4. Caine Company, appointed receiver for Hamlet, insolvent;

5. Hartford Accident and Indemnity Insurance Company, which issued a general liability policy to Kirkland;

6. Providence Washington Insurance Company, the respondent, who issued a builder's risk policy to Hamlet.

On June 7, 1973, in the course of construction of Hamlet Gardens, an employee of Kirkland negligently caused a fire which resulted in damage, originally estimated by Kirkland to amount to $12,000, but later ascertained to be $9,894.93, apparently to the satisfaction of all parties. On October 18, 1973, Hamlet was placed in receivership, Phillips Development Corporation having been already adjudicated a bankrupt. Kirkland filed a mechanics lien against the Hamlet Gardens property in the amount of $27,572.72, which lien was later adjudicated to be a valid one.

Wilson commenced an action to foreclose its mortgage and all mechanics lien holders were either named or became party defendants therein. By answer, in the foreclosure action, Kirkland offered to offset the fire damage claim against it then estimated to be $12,000 against its mechanics lien thus reducing its claim under the mechanics lien to $15,572.72. The rights of the parties with respect to the proffered offset were never adjudicated in the foreclosure action, but when the same was finally determined, Kirkland participated in the distribution based on the remainder of the mechanics lien after deducting the proffered offset in the amount of $12,000.

The action with which we are presently concerned was commenced on December 10, 1973 by the appellant, Kirkland, against Caine Company, the receiver, the trustee in bankruptcy for the Phillips Development Corporation, and Hartford, the purpose of the action being to establish Kirkland's claimed right of a pro tanto offset, and to require Hartford to reimburse Kirkland for the discharge of Hartford's liability by Kirkland through such offset. In an amended and supplemental complaint dated February 25, 1974, Wilson, the holder of the first mortgage, was made a party and it was alleged that the amount of the fire damage had been ascertained to be the sum of $9,894.93, Kirkland reducing its claim for reimbursement by Hartford to that figure. Additional facts were alleged therein which we do not presently deem essential to our decision.

On February 22, 1974, Hamlet's insurer Washington, the respondent herein, paid under its policy the fire damage claim in the amount of $9,894.93. Such was approved by an order of the court in the foreclosure proceeding. Under said order and the subrogation receipt, all of the rights of Wilson, Hamlet, Gene E. Phillips, as general partner, and Caine Company, as receiver, in and to the fire damage claim against Kirkland were assigned to Washington. What, if any, claim Wilson ever had against Kirkland does not appear and neither does any such right of Phillips, as general partner, appear.

On March 25, Kirkland again filed a supplemental complaint wherein Washington was also made a defendant. The amount of the fire damage claim having been finally determined to the satisfaction of all parties, Hartford realized that it had to pay someone $9,894.93 and hence paid that amount into the court and was, by order of the court, relieved to any further liability. By a subsequent order, on May 4, 1974, the court dismissed the action as to all defendants except Washington. The cause finally came on for a hearing upon motions by both Kirkland and Washington asking for summary judgments in their respective favors, the lower court granting the motion of Washington by decree dated July 11, 1974. From such...