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PHARR v. CANAL INS. CO.

July 15, 1958

FRANCES PHARR, RESPONDENT,
v.
CANAL INSURANCE COMPANY, APPELLANT. CHARLES W. PHARR, RESPONDENT, V. CANAL INSURANCE COMPANY, APPELLANT. C.E. WARREN, RESPONDENT, V. CANAL INSURANCE COMPANY, APPELLANT. RUFUS SMITH, RESPONDENT, V. CANAL INSURANCE COMPANY, APPELLANT.



The opinion of the court was delivered by: Moss, Justice.

July 15, 1958.

Each of the respondents commenced an action against Roosevelt Bush on October 24, 1953. The attorneys for the respondents contacted the appellant and advised it of the pending claims. Pursuant to this notice, the appellant employed the law firm of Dowling & Dowling of Beaufort, South Carolina, to represent Bush, the insured. These attorneys requested, and the attorneys for the respondents granted an indefinite extension of time in which to answer, or otherwise plead to the complaints. The appellant, through its counsel, made several unsuccessful attempts to contact Roosevelt Bush, the insured. These efforts were by personal visits to the home of the insured and by letter.

The appellant did on March 22, 1954, institute an action in the Court of Common Pleas for Jasper County, South Carolina, against Roosevelt Bush, the insured. This action was based upon the grounds that Roosevelt Bush had failed to co-operate as required by the insurance contract. The appellant asked for declaratory relief upon this issue. Roosevelt Bush defaulted. The respondents herein were not made parties to this action for a declaratory judgment. The record shows that on April 28, 1954, a declaratory judgment was rendered, which determined that the appellant, Canal Insurance Company, was not legally obligated to defend the actions pending against Roosevelt Bush, nor to pay any sum which the said Roosevelt Bush might become obligated to pay by reason of the actions of the respondents then pending against him. Counsel for the appellant, upon the rendition of the declaratory judgment in its favor, withdrew their appearances in the actions which the respondents had instituted against Bush, and notified counsel for the respondents of such action.

After the appellant had obtained a declaratory judgment against Bush, the insured, and had withdrawn its appearance in the actions pending against Bush by the respondents, the Court of Common Pleas for Jasper County, South Carolina, rendered judgment against Bush in favor of the respondents herein. Thereafter, demand was made by the respondents' counsel that the appellant pay these judgments. The appellant refused, and after nulla bona returns had been made upon executions issued by the respondents against Bush, the insured, these actions were instituted by the respondents against the appellant in Jasper County. A change of venue was granted from Jasper County to Greenville County, South Carolina.

It was stipulated by counsel for all parties that the complaint in the case of Frances Pharr, one of the respondents herein, and the answer of the appellant, would serve as the pleadings to be used by this Court in rendering a decision which shall be effective and binding in the four pending cases.

The complaint alleges that the appellant issued and delivered to Roosevelt Bush the automobile liability policy hereinabove referred to, and that such was in full force and effect on the date of the accident by which the respondent suffered injury. It was further alleged that the appellant agreed to pay all damages caused by the negligent operation and use of the insured's truck, and that on July 2, 1952, the respondent was damaged by the negligent operation of the said truck by Roosevelt Bush, the insured. It is then alleged that the respondent brought action against Roosevelt Bush in the Court of Common Pleas for Jasper County, South Carolina, and recovered a judgment against the insured for the sum of $20,000.00, based upon the negligence of the insured in the operation of the insured's truck. It was then alleged that to the extent of $5,000.00, the appellant Insurance Company is liable to the said respondent, pursuant to the terms of the automobile liability policy, issued by it to Roosevelt Bush.

The appellant filed an answer asserting as defenses to said action, a general denial; the declaratory judgment appellant secured against Bush; that there was no privity of contract between the respondent and appellant; and that the insured had failed to co-operate with the appellant, thereby relieving the appellant of any liability under the terms of the automobile liability policy.

These cases were tried before the Honorable J. Robert Martin, Jr., Resident Judge of the Thirteenth Judicial Circuit, and resulted in directed verdicts in favor of the respondents for the amounts prayed for in their respective complaints. The appellant also made a motion for nonsuit and directed verdict on the grounds of the defenses which were set forth in its answer, to which reference has hereinbefore been made.

The cases are before this Court upon a number of exceptions and raise four questions. (1) Was the declaratory judgment obtained by the appellant, which adjudicated that Bush had failed to comply with the terms of the insurance contract, a bar to the present actions? (2) Was there privity of contract between the respondents and the appellant? (3) Was there error in failing to direct a verdict in favor of the appellant on the ground that the evidence showed a breach of the insurance contract by Bush, or in the alternative, should this question have been submitted to the jury for determination? (4) Was there error on the part of the trial Judge in holding that the respondents had met the required burden of proof, and in directing a verdict in favor of the respondents?

The appellant asserts that the declaratory judgment obtained by it, which adjudicated that the insured had failed to comply with the terms of the insurance contract, was a bar to the present actions. The appellant sought to offer in evidence the declaratory judgment roll but the trial Judge refused to allow its introduction in support of the appellant's defense that the declaratory judgment was a bar to these actions. The appellant also asserts that the court permitted respondents to make a collateral attack upon the declaratory judgment of the Court of Common Pleas for Jasper County.

Section 10-2003 of the 1952 Code of Laws of South Carolina, which is one section of the "Uniform Declaratory Judgments Act", provides that:

"Any person interested under a * * * written contract or other writings constituting a contract or whose rights, status or other legal relations are affected by a * * * contract * * * may have determined any question of construction or validity arising under the * * * contract * * * and obtain a declaration of rights, status or other legal relations thereunder."

Section 10-2004 of said Act provides:

"A contract may be construed either before or after there has been a breach thereof."

It is provided in Section 10-2008 of said Act that:

"When declaratory relief is sought all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights ...


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