Hildreth v. United States Casualty Company

144 S.E.2d 641 (1965) 265 N.C. 565

David A. HILDRETH
v.
UNITED STATES CASUALTY COMPANY, a Foreign Insurance Corporation, Harry D. McLaughlin and Olin Niven.

No. 280.

Supreme Court of North Carolina.

November 10, 1965.

Beverly H. Currin, Charlotte, for plaintiff.

Carpenter, Webb & Golding, Charlotte, for defendant United States Casualty Company.

MOORE, Justice.

The sole question for determination on this appeal is whether the Company may maintain its cross-action for indemnity against its codefendant, McLaughlin, in plaintiff's action. The answer is "yes."

"An insurance agent is liable in damages for any loss sustained by the company arising from the agent's breach of duty * * Thus, if the agent issues a policy in violation of his instructions, he will be liable to the company for the amount of loss which it has been compelled to pay on such policy, together with the expenses incurred in connection therewith * * *." 44 C.J.S. Insurance § 159, pp. 834, 835. "It is ordinarily true that for breaches of duty involved in the contract of agency the principal may sue either for breach of contract for faithfulness or in tort for a breach of duty imposed by the same." Elam v. Smithdeal Realty & Ins. Co., 182 N.C. 599, 604, 109 S.E. 632, 18 A.L.R. 1210.

"A cross-claim for indemnification may be asserted by one original defendant against another when it is based on allegations of primary liability arising by law in respect of plaintiff's claim as opposed to merely secondary liability thereon of the cross-claiming defendant, as in cases of active and merely passive negligence, or of direct and merely vicarious liability." McIntosh: North Carolina Practice and Procedure (2d Ed.), Vol. 1, s. 1224.5 (1964 Pocket Part p. 159). Where two persons are jointly liable in respect to a tort, one being liable because he is the active wrongdoer, the other by reason of constructive or technical fault imposed by law, the latter, if blameless as between himself and his cotortfeasor, will ordinarily be allowed to recover full indemnity over against the actual wrongdoer. Steele v. Moore-Flesher Hauling Company, 260 N.C. 486, 133 S.E.2d 197; Greene v. Charlotte Chemical Laboratories, Inc., 254 N.C. 680, 120 S.E.2d 82; Standard Amusement Co. v. Tarkington, 247 N.C. 444, 101 S.E.2d 398; Hayes v. City of Wilmington, 243 N.C. 525, 91 S.E.2d 673. The doctrine of primary-secondary liability is based upon a contract implied in law. Hunsucker v. High Point Bending & Chair Co., 237 N.C. 559, 75 S.E.2d 768. The inquiry as to primary and secondary liability when properly pleaded and supported by evidence, is germane to plaintiff's cause of action. Greene v. Charlotte Chemical Laboratories, Inc., supra; Wright's Clothing Store v. Ellis Stone & Co., 233 N.C. 126, 63 S.E.2d 118.

Plaintiff asserts, in two aspects of the case, alternative rights of recovery. He alleges facts which he contends give right of recovery against the Company, but he alleges further that if no such right exists the facts are such as to entitle him to recover against the Agency. As against the Company, he contends he is entitled to recover on one of three theories: (1) Robinson purchased a policy of insurance from the Company's agent and in the issuance of the policy the agent acted within the scope of his actual authority as such agent, and the Company is bound by the terms of the policy; or (2) Robinson purchased a policy of insurance from the Company's agent and, even if the issuance of such policy was not within the scope of the agent's actual authority, such issuance was within the scope of the Agent's apparent authority and the Company is bound; or (3) Robinson purchased a policy of insurance from the Company's agent and, though no policy was ever actually issued, the Agent issued to Robinson a FS-1 certificate confirming that a policy of insurance was in effect, and, even though issuance of the certificate might not have been within the scope of the actual authority of the agent, it was within the scope of the agent's apparent authority and the Company is estopped by the issuance of the certificate to deny that the policy applied for and purchased was issued and in effect.

It will be observed that the transaction alleged by plaintiff, whatever the facts prove to be, concerns Robinson, the Company and its agent, McLaughlin. Plaintiff, for the purposes of this action, stands in Robinson's shoes. When the matter comes to trial plaintiff must, if he is to make out a case of liability on the part of the Company, show by evidence or admissions of defendants an agency relationship between McLaughlin and the Company, the scope thereof, and the respective duties and responsibilities as between said defendants. Once this is done and the true facts of the transaction are established, the liability of McLaughlin to the Company, if any, will arise as a matter of law, that is, as a matter of contract implied in law. The Company does not plead an indemnity agreement. It asserts that if it has incurred liability to plaintiff its liability is secondary and arose because of the wrongful conduct and breach of duty on the part of McLaughlin, which breach of duty was the direct cause of the liability, imposing primary liability on McLaughlin. The Company's cross-action is germane to plaintiff's cause of action and the court erred in striking it from the Company's answer.

Reversed.