Leggett v. Cotton

224 S.E.2d 235 (1976) 29 N.C. App. 331

Robert LEGGETT and Mozetta Leggett
v.
W. K. (Kenneth) COTTON, d/b/a Cotton Insurance Agency and North Carolina Insurance Placement Facility.

No. 758SC940.

Court of Appeals of North Carolina.

May 5, 1976.

Dees, Dees, Smith, Powell & Jarrett by John W. Dees, Goldsboro, for plaintiffs-appellants.

Smith, Anderson, Blount & Mitchell by Samuel G. Thompson, Raleigh, for defendant-appellee.

ARNOLD, Judge.

Plaintiffs in this case alleged that defendant did not use reasonable diligence in performance of his promise to procure fire insurance. "It is well established in this State that, if an insurance agent or broker undertakes to procure for another insurance against a designated risk, the law imposes upon him the duty to use reasonable diligence to procure such insurance and holds him liable to the proposed insured for loss proximately caused by his negligent failure to do so." Mayo v. Casualty Co., 282 N.C. 346, 353, 192 S.E.2d 828, 832 (1972); Wiles v. Mullinax, 267 N.C. 392, 148 S.E.2d 229 (1966); Kaperonis v. Underwriters, 25 N.C.App. 119, 212 S.E.2d 532 (1975); Musgrave v. Savings and Loan Assoc., 8 N.C. App. 385, 174 S.E.2d 820 (1970). The plaintiffs have the election to sue for breach of contract or in tort for negligence to enforce liability. Johnson v. Tenuta & Co., 13 N.C. App. 375, 185 S.E.2d 732 (1972), citing Bank v. Bryan, 240 N.C. 610, 83 S.E.2d 485 (1954).

"``[T]he better considered decisions on the subject are to the effect that while the agent or broker in question was not obligated to assume the duty of procuring the policy, when he did so, the law imposed upon him the duty of performance in the exercise of ordinary care, . . ..' [Citation omitted] ``If a broker or agent is unable to procure the insurance he has undertaken to provide, he impliedly undertakes—and it is his duty—to give timely notice to his customer, the proposed insured, who may then take the necessary steps to secure the insurance elsewhere or otherwise protect himself. [Citations omitted] When under these circumstances, the broker fails to give such notice, he renders himself liable for the resulting damage which his client suffered from lack of insurance.'" Musgrave v. Savings and Loan Assoc., supra, 8 N.C.App. at 393, 174 S.E.2d at 825.

In considering whether the trial court erred in directing a verdict for the defendant in a jury case we must view the evidence in the light most favorable to plaintiffs. Evidence appears that defendant undertook the procurement of fire insurance for plaintiffs, and that two weeks expired before he forwarded the application for plaintiffs' insurance to the Fire Insurance Operating Bureau. Moreover, it appears from the evidence that plaintiffs were given no notice concerning the delay in forwarding the application, which had to be approved before coverage could be provided, but were told instead that the policy had not arrived. Whether this evidence was sufficient to prove that defendant failed to exercise reasonable diligence to procure the insurance was for the jury.

The judgment directing verdict for defendant is

Reversed.

MORRIS and HEDRICK, JJ., concur.