The opinion of the court was delivered by: Stukes, Chief Justice.
July 31, 1958.
This appeal is from judgment for plaintiff upon the pleadings. The complaint alleged the facts which were found in the prior action of Taylor against the present respondent, appeal in which is reported as Taylor v. United States Casualty Co., 229 S.C. 230
, 92 S.E.2d 647. Reference to it will minimize repetition here. The delict of appellants in the failure to refund to Taylor the premium upon, and thereby effect the lawful cancellation of, the policy upon which the former action was brought, was alleged, whereby respondent suffered the loss of the amount of the judgment, costs and expenses in that action and appeal, which it had paid.
In their brief appellants summarize their answer as follows, quoting from page 2 of the brief:
"The first defense, (1) denies specifically any negligence on the part of the defendants resulting in loss to plaintiff; (2) alleges that the loss sustained in the Taylor case was caused by plaintiff's wrongful cancellation of the insurance policy and not defendants' failure to return the premium to Taylor; (3) denies all liability for cost of appealing the Taylor case to this Court, which defendants neither participated in or authorized.
"The second defense pleads the sole negligence of the plaintiff in wrongfully cancelling the Taylor policy as a defense to the cause of action set forth in the amended complaint.
"The third defense pleads the contributory negligence of the plaintiff in wrongfully cancelling the Taylor policy as a defense to the cause of action set forth in the amended complaint."
Reference is had to appellants' foregoing outline of their answer: (1) of the first defense is sham and frivolous in view of the finding in the Taylor case and the testimony therein of Mr. Hiers, himself. (2) and (3) of the first defense will be considered infra.
The foregoing anticipates the fate of (2) of the first defense. Appellants' wrongful failure to remit the premium to respondent caused it to cancel the policy, with the resulting liability to Taylor. Again, appellants would shield themselves from liability for their wrong by hiding behind a direct and proximate result of it, which they should have foreseen. Such a position is patently illogical and no authority has been cited or found for it.
With reference to (3) of the first defense: Before the court upon the motion in the instant case was a letter from respondent's attorney to appellants, dated August 8, 1955, advising of the pendency of motions before the trial court in the Taylor case for judgment n. o. v. and for new trial. It contained notice that respondent would look to appellants for payment of the judgment and reimbursement of expenses if entered against it, and appellants were were invited to have their counsel assist in the argument of the motions. An additional exhibit was another letter from respondent's attorney to appellants, dated September 6, 1955, advising of adverse ruling upon the motions, enclosing a copy of the order and repeating respondent's position that the ultimate liability would be upon appellants. This letter also advised that notice of appeal had been filed and asked for appellants' "reaction" as to perfecting the appeal and, quoting from the letter, "What you would like to have done in regard to this?" The costs of appeal were pointed out and that the printing and other expenses would be included in the final liability, if the appeal should be lost. There was no response by appellants to these letters, which appear to have been ignored. (Respondent went forward with the appeal which was lost and Taylor's judgment was affirmed.) It was the duty of appellants to voice at that time their opposition to appeal, if they were opposed. Under the circumstances, silence amounted to acquiescence. There is no contention that the appeal was frivolous; the wisdom of it cannot be judged by the result alone. Nor is there contention of impropriety in the amounts of the costs, expenses and attorney's fee. Like the others, this defense is without merit.
It is well settled by general rule that the failure of an agent of an insurer to comply with the instructions of the latter, whereby loss to it results, is liable over to the insurer. 29 Am. Jur., Insurance, Sec. 104 et seq.; Westchester Fire Ins. Co. v. Bollin, 106 S.C. 45, 90 S.E. 327. Annotations, Ann. Cas. 1917B, 493; Ann. Cas. 1918C, 1042; 22 L.R.A., N.S., 509; L.R.A. 1915A, 860, and 106 A.L.R. 1397. From the last cited we quote the opening statement of the editor.
"If an insurance company which is entitled under the terms of a policy to cancel or reduce the risk directs its agent to cancel or reduce same, it is his duty to do so with reasonable promptness, and if he negligently or willfully fails to carry out peremptory instructions to cancel or reduce he is liable to the insurer for the amount which it is required to pay in settlement of the loss."
Respondent forwarded the policy to the insured on September 14, 1953, with notice to him and to appellants that the balance of the premium must be paid by September 28. It was timely paid by the insured to appellants but they neglected to forward it to respondent who on October 7 cancelled the policy for non-payment of the premium. Appellants then forwarded it, asking that the policy be continued but respondent notified appellants and the insured that the cancellation would not be rescinded, and returned the remittance to appellants who failed to refund it to the insured and had not done so at the time of the Taylor case, according to the testimony of Mr. Hiers at the trial of it. Undoubtedly, appellants failed in their duty as agents, as was frankly admitted by Hiers in his testimony at the trial of the Taylor case.
Judgment upon the pleadings is a drastic procedure but it will be granted in proper cases. Pertinent provisions of the Code of 1952 follow:
Section 10-654. "Sham and irrelevant answers and defenses may be stricken out on motion and upon such terms as the court ...