The opinion of the court was delivered by: Legge, Justice.
April 11, 1956.
This is an action for fraudulent breach of a contract of automobile liability insurance. During the trial, appellant made timely motions for nonsuit and for direction of verdict, which were refused; and after the jury had returned a verdict in favor of respondent in the amount of $1,000.00 actual damages, appellant moved for judgment n. o. v. or, failing in that, for new trial, which motion was also refused. This appeal is from the orders refusing the motions for directed verdict and for judgment n. o. v. or, alternatively, new trial.
The allegations of the complaint were substantially as follows:
That in May, 1953, respondent's automobile driver's license was suspended, and under the South Carolina Motor Vehicle Safety Responsibility law it became necessary for him to file with the State Highway Department a certificate of insurance in order to have his license reissued; that such coverage became what is known as an "assigned risk", and was assigned to appellant, and respondent paid to appellant's agent $15.00 on account of the premium; that thereafter, having been notified that the balance of the premium was $48.75, he paid it on September 26, 1953, and proceeded to operate his automobile in the belief that the policy was in force; that on or about October 10, 1953, he suddenly received notice that the policy was cancelled, no reason therefor being given; that he has since been unable to obtain insurance; and that his premium has been retained by appellant. Further, that the acts of appellant and its agents in taking respondent's money, keeping it, and cancelling his policy without returning lent scheme on the part of appellant to cheat and defraud him; and that because of such acts and scheme respondent's money has been converted by appellant to its own use, and he has had records placed against him with the State Highway Department which otherwise would not have been placed against him, has been rendered unable to comply with the South Carolina Motor Vehicle Safety Responsibility Law, and has been embarrassed and humiliated and deprived of the use of his automobile, to his damage in the sum of $2,500.00, actual and punitive damages.
Appellant, answering, alleged, in addition to a general denial, that the application for a policy had been made to the South Carolina Automobile Assigned Risk Plan by respondent through the Hiers-Clarkson Insurance Agency of Rock Hill, which was not an agent of appellant; that pursuant to notification by the Assigned Risk Plan, the application and the deposit of $15.00 required by the Plan were submitted to appellant, and thereupon, pursuant to the statutory requirement appellant issued the policy subject to its terms and conditions and those of the Assigned Risk Plan; that thereafter, not having received payment of the premium, it proceeded, under the statute laws of this State, to notify respondent, through his agent, Hiers-Clarkson Insurance Agency, that unless the premium were received by September 24, 1953, the policy would be cancelled as provided for by statute and the policy provisions; that the premium payment not having been so received, appellant on October 7, 1953, sent notice to respondent, to Hiers-Clarkson Insurance Agency, and to the State Highway Department, that the policy was cancelled as of October 20, 1953; and that after such notice of cancellation, Hiers-Clarkson by letter dated October 9, 1953, forwarded to appellant the amount of the premium, $48.75, which appellant declined to accept and promptly returned.
The Act of the General Assembly approved February 14, 1952, XLVII Stat. at L. p. 1853, and known as the Motor Vehicle Safety Responsibility Act, appears in the 1955 Code Supplement as Sections 46-701 through 46-750.33. Pertinent to the matter before us are certain of its provisions.
One is to the effect that after the State Highway Department shall have suspended the driver's license of a person because of conviction or forfeiture of bail, on a charge of driving while under the influence of intoxicating liquor, such license shall not thereafter be issued to him until he shall have given proof of financial responsibility, Section 46-750.1, by filing with the Highway Department: (1) a written certificate of an insurance carrier authorized to do business in this state, certifying that there is in effect, for his benefit, a motor vehicle liability policy covering such liability to the amount of $5,000.00 for injury to or death of one person, and to the amount of $10,000.00 for injury to or death of two or more persons, in any one accident, and to the amount of $1,000.00 for injury to or destruction of property of others in any one accident; or (2) a bond conditioned for like protection; or (3) a certificate of the State Treasurer certifying that such person has deposited with him cash or securities to the value of $11,000.00 for the satisfaction of any judgment that might thereafter be placed in execution against such person because of bodily injury or death or property damages resulting from the ownership or operation of a motor vehicle by such person after such deposit has been made. Sections 46-702, 46-750.4, 46-750.5, 46-750.8, 46-750.12, 46-750.13. The other is contained in Section 46-720, which provides that the Insurance Commissioner, after consultation with insurance companies authorized to issue automobile liability policies in this state, shall approve a reasonable plan for the equitable apportionment among such companies of applicants for such policies who are in good faith entitled to such policies but are unable to procure them through ordinary methods. Concededly such a plan has been so approved, was in effect during the period with which we are concerned, and was and is known as the Assigned Risk Plan. While all of the details and rules of the Plan are not set forth in the record here, the following matters appear undisputed:
2. If the applicant makes application through another person, such person is known as the "producer of record", and the applicant designates him as such in the application.
3. A deposit of $15.00 is required to be forwarded with the application to the South Carolina Assigned Risk Plan at the office of the Plan in Columbia, S.C.
4. The Plan then assigns the risk to an insurance company in accordance with its rules, and so advises the company, transmitting to it at the same time the completed application and the deposit of $15.00, which is to be applied on the premium of the policy.
5. The company to which the risk has been thus assigned must, within two working days after receipt of the application and deposit, issue the policy or bind the risk. If the company declines to accept the risk, it is required to notify the applicant, and his producer, of such rejection, and that the applicant has the right of appeal to the Governing Committee of the Plan; and the company must also furnish the Insurance Commissioner and the Manager of the Plan with a notice of the rejection and the reasons therefor.
6. If the applicant is eligible for insurance under the Plan, his producer of record is entitled to an allowance, to be paid by the company to which the risk is assigned, for his services rendered in connection with the application.
There is no substantial dispute as to the facts in the present case, which, in brief, were as follows:
On April 14, 1953, respondent was convicted of driving his automobile while under the influence of intoxicants, and thereupon his driver's license was suspended by the State Highway Department for a period of six months. Code 1952, Sections 46-343, 46-348. Thereafter, having been notified by the Highway Department that this driver's license could not be restored until he had given proof of financial responsibility as required by Section 46-750.1, he tried to obtain a policy of liability insurance through one agency, and, failing there, went on August 31, 1953, to the Hiers-Clarkson Insurance Agency in Rock Hill, where he was informed concerning the Assigned Risk Plan, filled out and signed the form of application for insurance under the Plan, and gave to the Hiers-Clarkson Insurance Agency $15.00 to cover the deposit required to be made with the application. Mr. Hiers, of Hiers-Clarkson, testified that none of the companies that his agency represented would voluntarily accept such a risk, and that therefore application for the coverage had to be made to the Assigned Risk Plan. Neither he nor his agency had ever represented United States Casualty Company.
Following receipt of the application, Mr. S.C. Southard, Manager of the Assigned Risk Plan, wrote on September 3, 1953, to Mr. D.M. Bullen, Vice-President of United States Casualty Company, at the company's New York office, informing him that in accordance with the rules of the Plan respondent's risk was assigned to appellant, and that the "Producer of record" was J.M. Hiers. With the letter was enclosed the application and the $15.00 deposit. Copy of the letter was sent to J.M. Hiers.
Under date September 14, 1953, the New York office of appellant wrote to Hiers-Clarkson Agency as follows:
"Hiers-Clarkson Insurance Agency
339 East Main Street
Rock Hill, South Carolina
"Insured — John B. Taylor
Address — 873 Cedar Street, Rock Hill, York, South Carolina
Policy Number — AP-232650
Policy Period — 9-10-53 to 9-10-54
Policy Limits — BI 5/10,000 PD 5,000
Policy Premium — $63.75 (37.50 26.25)
Deposit Paid $15.00 Amount Due ...