Winburn v. Insurance Co. of North America

Decision Date24 October 1985
Docket NumberNo. 0596,0596
Citation287 S.C. 435,339 S.E.2d 142
CourtSouth Carolina Court of Appeals
PartiesCharles WINBURN, Appellant, v. INSURANCE COMPANY OF NORTH AMERICA and G. Pinckney Darby, Respondents. . Heard

Patrick F. Stringer of Stringer & Stringer, Charleston, for appellant.

Wade H. Logan, III and Susan Taylor Wall of Holmes, Thomson Logan & Cantrell, Charleston, for respondent, Insurance Co. of North America.

G. Pinckney Darby, pro se.


This is an action for fraud and negligence. The trial court granted the motion of the respondent Insurance Company of North America (INA) for an involuntary nonsuit and the motion of the respondent G. Pinckney Darby for a directed verdict. Charles Winburn appeals. The questions on appeal concern the sufficiency of the evidence as to Winburn's causes of action for fraud and for negligence and the admission and exclusion of certain evidence. We affirm in part, reverse in part, and remand for new trial.

I. Sufficiency of Evidence

We deal first with the issue of whether the trial court correctly granted the respondents' respective motions for involuntary nonsuit and directed verdict as to Winburn's causes of action for fraud and for negligence.

In determining this question, we must review the evidence and all inferences reasonably deducible therefrom in the light most favorable to Winburn, the nonmoving party. Woodward v. Todd, 270 S.C. 82, 240 S.E.2d 641 (1978); Vacation Time of Hilton Head Island, Inc. v. Lighthouse Realty, Inc., 286 S.C. 261, 332 S.E.2d 781 (Ct.App.1985). Our task, then, is to decide whether there was sufficient evidence to warrant submitting the case to the jury under either theory.

Winburn, a resident of Aiken, South Carolina, owned a twenty-six foot diesel trawler on which Coastal Production Credit Association held a lien. The trawler sank on March 18, 1980, while tied up at a dock on the Folly River near Folly Beach, South Carolina. The next day, Charles Peyton, in whose care Winburn had entrusted the boat, notified Winburn's wife of its sinking. Peyton also notified INA, the insurance company from whom Winburn had purchased marine insurance.

INA immediately contacted Darby, a marine surveyor and adjuster. It asked him to investigate the boat's sinking, "assess the situation," and report his findings to INA.

Darby inspected the damage and later spoke to Winburn and Winburn's wife by telephone. Darby, whom the Winburns understood was an adjuster for INA, told Winburn the trawler had been raised.

Winburn asked Darby who he could use to repair the trawler. Darby mentioned there were two marine mechanics in the Folly Road area, Port City Marine and Charles Berger. Winburn inquired whether Berger was a good mechanic. Darby implied Berger was a competent mechanic by telling Winburn he had used Berger in the past to repair his own boat and had faith in him. Winburn asked Darby to contact Berger for him.

After talking with Winburn, Darby called Berger and requested him to call Winburn. Berger did so and Winburn authorized him to repair his boat.

Shortly thereafter, Darby filed with INA an initial report of his findings. He estimated repair costs would not exceed $7,000.

Berger began to work on the trawler. He subsequently submitted to Darby an itemized statement for the repair work he had completed on the boat and for the repair work remaining to be done. Invoices attached to the statement totaled $6,337.24. Darby also received from Doug Wakefield a statement in the amount of $200 for raising the sunken craft. Darby forwarded both statements to INA and recommended they be paid, less the amount of the deductible.

Within a matter of days, INA issued a check in the amount of $5,037.24 made payable to Winburn and to Coastal Production. Winburn, however, refused to endorse the check. He was dissatisfied with Berger's work and concerned about the boat not being operational.

A meeting at Coastal Production's office followed. In attendance were Darby, Winburn, Berger and his wife, and Thomas M. Ervin, who represented Coastal Production. Berger's wife complained to Winburn about Berger not being paid for his work. Berger stated he could not complete the repairs unless he was paid everything he was to receive for the job.

Winburn did not want to endorse the check as long as the boat was not running. Darby told Winburn, however, that Berger was a "good mechanic" and assured Winburn that if Winburn would endorse the check he would "see to it that [Berger] fixed the boat."

Ervin endorsed the check for Coastal Production and gave it to Winburn. He refused once again to sign the check.

Sometime after the meeting, Winburn ran into Berger near the dock. Berger looked to Winburn "like he had lost his last friend." Because he felt sorry for Berger, Winburn endorsed the check and gave it to him. Winburn later testified he would not have endorsed the check had it not been for Darby's prior assurances.

Berger performed additional repair work on the trawler and INA sent Winburn a check in the amount of $769.60 to pay for it. Winburn, however, refused to endorse the check.

Berger never completed repairs on the trawler. Winburn talked to Darby several times about the matter and also twice contacted Eva Poole of INA. At no time did Darby either go to see about the boat or attempt to determine whether Berger had completed the itemized repairs. INA also sent no one either to look at the trawler or to inquire of Berger about the repairs he was supposed to have made. As late as August 5, 1980, however, INA and Darby knew Winburn's boat was not operating.

Winburn hired another mechanic the following summer.

Winburn later brought the instant action alleging three causes of action. At trial, he elected to proceed against Darby on the basis of fraud and against INA and Darby on the basis of negligence.

A. Fraud

Underlying Winburn's fraud action are the claims that Darby made fraudulent representations regarding Berger's competency as a marine mechanic and that Darby induced Winburn to endorse the insurance check by fraudulently representing he would guarantee Berger would complete the repairs on the trawler.

To establish actionable fraud, there first must be a false representation. Woodward v. Todd, supra; Emerson v. Powell, 283 S.C. 293, 321 S.E.2d 629 (Ct.App.1984). The false representation, however, must be one of fact as distinguished from the mere expression of an opinion. Gilbert v. Mid-South Machinery Co., Inc., 267 S.C. 211, 227 S.E.2d 189 (1976); 37 C.J.S.Fraud § 10 at 226-27 (1943). As a general rule, fraud cannot be predicated on a statement that constitutes an expression of an intention. 37 C.J.S. Fraud § 11 at 231 (1943); see Greer Bank & Trust Co. v. Waldrop, 155 S.C. 47, 151 S.E. 920 (1930).

Further, an actionable representation cannot consist of a mere broken promise, even if a party acts in reliance on the promise. 37 C.J.S. Fraud § 11 at 231-33 (1943); see Page v. Pilot Life Insurance Co., 192 S.C. 59, 5 S.E.2d 454 (1939); Crozier v. Provident Life & Accident Insurance Co., 53 Ga.App. 572, 186 S.E. 719 (1936). An action in fraud, however, can be based on an unfulfilled promise to perform in the future made with a present undisclosed intention not to perform and for the purpose of inducing one to sign a paper or do some other act. Jones v. Cooper, 234 S.C. 477, 109 S.E.2d 5 (1959).

The record is devoid of any evidence Darby's representations were false when Darby made them. Evidence that Berger did not subsequently repair Winburn's boat is insufficient, without more, to prove Berger was not a good marine mechanic. The truth or falsity of a representation must be determined as of the time it was made or acted on and not at some later date. Austin v. Tire Treads, Inc., 21 N.C.App. 737, 205 S.E.2d 615 (1974); 37 C.J.S. Fraud § 17c at 251 (1943). Inferences of fact, like fullbacks on football teams, do not ordinarily run backward. Childress v. Nordman, 238 N.C. 708, 78 S.E.2d 757 (1953).

In any case, Darby's representations that Berger was a good mechanic were nothing more than mere expressions of an opinion. See 37 Am.Jur.2d Fraud and Deceit § 46 at 73 (1968); cf. Springer v. Bank of Douglas, 82 Ariz. 329, 313 P.2d 399 (1957) (a statement by bank official that a person was a good businessman and that he would recommend going into business with him held to be a mere expression of an opinion).

Darby's assurance to Winburn that he would make certain Berger repaired the trawler if Winburn would sign the endorsement constituted at most a mere expression of intention, absent some evidence that Darby, at the time he gave his assurance to Winburn, entertained no intention of keeping his promise. The record, however, contains no evidence of this kind.

While it is true Darby failed to keep his promise, evidence of mere nonperformance of a promise is not sufficient to establish either fraud or a lack of intent to perform. 37 Am.Jur.2d Fraud and Deceit § 60 at 92-93 (1968); 37 C.J.S. Fraud § 116 at 440-41 (1943); see Jones v. Cooper, supra. Nonobservance of a promise may support an inference of a lack of intent to perform only when it is coupled with other evidence. 37 C.J.S. Fraud § 116 at 441 (1943). Here, there is no other evidence.

The trial court, therefore, properly directed a verdict in Darby's favor on the cause of action alleging fraud.

B. Negligence

Winburn's negligence action involves allegations that INA and its alleged adjuster Darby negligently made certain misrepresentations to him, negligently adjusted his claim, acted in bad faith and unreasonably in processing his claim, and negligently failed to ensure repairs were made on his boat after affirmatively assuming the duty to see that they were performed.

1. Negligent Misrepresentation

Winburn argues the evidence supports the conclusion the defendants, through Darby, negligently misrepresented Berger to be a competent marine mechanic and...

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