Smith v. Union Central L. Ins. Co.

July 15, 1919. The opinion of the Court was delivered by This is an appeal from the ruling of his Honor, the presiding Judge, that the plaintiff is entitled to a trial by jury.

The allegations of the complaint, material to the question involved, are as follows:

"That on or about the 15th day of March, 1906, the plaintiff entered into a contract with E.D. Byers, general agent of Union Central Life Insurance Company, by the terms of which contract, among other things, the plaintiff was to solicit and write insurance for the Union Central Life Insurance Company, for a period of nine years, and as part compensation for plaintiff's services he was to receive a certain per cent. of the first year's premiums on all policies written by plaintiff, and as a further compensation, plaintiff was to receive a certain per cent. of renewal premiums on the policies for a period of nine years, to wit, nine renewals on each policy. The rate of commission which plaintiff was to receive and the time for which he was to receive the renewals are more fully set forth in the contract.

"That the plaintiff entered upon his duties as agent of the defendant company, and wrote a large number of policies, of which policies a large number are now in force, but the defendant company has failed and refused to account to the plaintiff for the commissions and for renewals due plaintiff under the terms of the contract heretofore referred to and made a part of this complaint, and defendant company has failed and refused to give plaintiff proper credit for large sums of money turned over to defendant by plaintiff."

The prayer of the complaint is for judgment in the sum of $4,639.39.

In order to understand fully the nature of the account, it will be necessary to refer to the contract, which will be reported in full.

The defendant demanded an itemized statement of the account, whereupon the plaintiff's attorneys served several typewritten sheets of paper, embracing, in all, about 134 separate items, involving transactions in relation to various insurance policies issued upon the lives of numerous persons. As an illustration of the general character of the account, it will only be necessary to refer to sheet No. 1, which will be reported.

The reasons assigned by his Honor, the presiding Judge, are thus stated in his order:

"This matter comes before me upon a motion made by the defendant: First, to transfer this case from calendar No. 1 to calendar No. 2 for trial and disposition on that calendar by the Court, or by reference; and, second, for an order referring it to the master. The motions are resisted on the part of the plaintiff upon the ground that this is an action for the recovery of money only, and is properly on calendar No. 1 for trial by a jury. The contention on the part of the defendant is that the cause is not one for the recovery of money only, but that it is really and in effect an action for an accounting, and for the recovery of such amount as may be found due upon the accounting. * * * My opinion, fromthe inspection of the pleadings and papers used before me atthe hearing, and the statements of counsel as to what isinvolved, is that the case could best be tried by a referee, andthat it is a difficult case for a jury to pass upon intelligently,on account of the large number of items in the disputedaccount. On this account I would refer the case, if I werenot impelled to the conclusion, that the plaintiff is entitled to a jury trial of the case, as a matter of right. * * * The Court has held that the length of such an account will not give the trial Judge authority to refer such a case. Smith v.Bryce, 17 S.C. 539. * * * I am, therefore, of the opinion, under the authorities, as I understand them, that the action is one for the recovery of money only, and that I cannot refer the case, without the consent of both parties; and, therefore, a jury trial must be had. Both motions are, therefore, overruled, for the reason, as indicated, that Ihave no authority under the law to grant them, and not fromthe standpoint of the exercise of discretion, I have in thematter."

There are two reasons why his Honor, the presiding Judge, erred in ruling that the plaintiff was entitled to a trial by jury: In the first place, the fact, as shown by the contract, that the plaintiff as agent was intrusted with the collections of money for the benefit of his principal created a fiduciary relation between them, and entitled either of them to invoke the equitable aid of the Court by way of an accounting. And, in the second place, the accounts are so complicated that a trial by jury would not afford adequate relief.

Our conclusions are sustained by the following authorities:Kerr v. Steamboat Co., Cheves Eq. 189; Devereux v.McCrady, 46 S.C. 133, 24 S.E. 77; Price v. Middleton,75 S.C. 105, 55 S.E. 156; Trum v. Mikell, 105 S.C. 230.89 S.E. 645, and cases cited; Rainwater v. Bank, 108 S.C. 206,93 S.E. 770; 4 Pom. Eq. Jur., sec. 1421, and note.

The case of Devereux v. McCrady, 46 S.C. 133,24 S.E. 77, in which Mr. Chief Justice McIver, who wrote the opinion, in Smith v. Bryce, 17 S.C. 538, dissented, shows that the rule announced in the last mentioned case is not applicable. In the case of Devereux v. McCrady the Court quoted with approval the following language of Mr. Pomeroy in his work on Equity Jurisprudence, vol. IV, p. 472. sec. 1421:

"The instances in which the legal remedies are held to be inadequate, and, therefore, a suit in equity for an accounting proper are: (1) Where there are mutual accounts between the plaintiff and the defendant, that is, where each of the two parties has received and paid on the account of the other; (2) where the accounts are all on one side, but there are circumstances of great complication, or difficulties, in the way of adequate relief at law; (3) where a fiduciary relation exists between the parties, and the duty rests upon the defendant to render an account."

The Court also quoted with approval the following language of Chancellor Harper, in Kerr v. Steamboat Co., Cheves Eq., page 194:

"Though it may not be easy to define, by a general rule, the class of cases in which a bill will lie for an account, yet I think there can be no doubt with respect to the present one. That an equitable jurisdiction exists, in case of complex and intricate accounts, between whatever parties, though an action might be maintained at law, and though no recovery be needed, the authorities have settled beyond question. Such is the conclusion of Justice Story, whose work was cited in argument."

In connection with the language just quoted, we desire to call special attention to the words of his Honor, the presiding Judge, which we have italicized, to show that he refused the reference solely on the ground that he did not have the power to order it. The practical effect of sustaining the order refusing the reference is to hold that a reference cannot be ordered in any case involving an account, as it will be difficult to find a case in which the account is more complex, as well as involving a fiduciary relation.

The case of Devereux v. McCrady, 46 S.C. 133,24 S.E. 77, is cited with approval in Sigwald v. Bank, 74 S.C. 473,55 S.E. 109; Price v. Middleton, 75 S.C. 105, 55 S.E. 156. and Construction Co. v. Manufacturing Co., 78 S.C. 169.58 S.E. 765. In the case of Price v. Middleton the Court uses the following language, in construing the case of Smithv. Bryce, 17 S.C. 538:

"Equity, it is true, cannot take jurisdiction of an ordinary action at law on an ordinary account, merely because the trial will involve many items. Smith v. Bryce, 17 S.C. 538. But this cannot be regarded as ordinary action at law on an account, as, for instance, an action by a merchant, on a single account against his customer, for there the charges and credits may be readily established by simple proof of the books, or, at most, of the items by one or two persons, and the subtraction of one from the other establishes the balance. Here the rights of the parties can only be determined by an accounting of the entire export business, probably involving many transactions in foreign countries and possibly requiring evidence from those countries; and even when the books are proved, and the correctness of the items established, intricate complications and statements will be requisite to ascertain the balance of profit for each year. No argument is necessary to show that the performance of such a tax could not be expected from a jury, with the opportunity which an ordinary trial affords Torequire that it be attempted would not only make a justjudgment extremely improbable, but would tend to bringtrial by jury into disrepute." (Italics added.)

This language of Mr. Justice Woods shows clearly that his construction of the case of Smith v. Bryce, 17 S.C. 538, is very different from that announced by his Honor, the Circuit Judge, 106 S.C. 25, 90 S.E. 161. See, also,McCabe Co. v. Colleton Co., 106 S.C. ___, 90 S.E. 161.

The rule is thus stated in 1 Corpus Juris, 621, 622:

"Courts of equity have jurisdiction over all trusts, for the purpose of compelling an accounting; and the existence of any confidential or fiduciary relation is sufficient to invoke such jurisdiction, whenever the duty arising out of such relation rests upon one of the parties to render an account to the other. This rule is not restricted merely to express trustees, but applies equally to trusts created by implication of law."

In 1 R.C.L., p. 222, it is said: "As Courts of equity now entertain concurrent jurisdiction with the Courts of law in matters of account, a decision as to the proper tribunal must, as a rule, be governed by considerations of convenience and adequacy; and this is determined by the facts pertaining to each individual cause of action and the relief sought."

And on page 223 of the same volume, we find the following: "That there are complicated accounts is ordinarily a good reason for a Court of equity taking jurisdiction of matters of accounting, although they are all on one side."

The principles announced in Smith v. Bryce, 17 S.C. 538, are in entire accord with the foregoing authorities, but the facts were very different from those in the case under consideration.

The principle announced in Wilson v. York, 43 S.C. 299,21 S.E. 82, is in no respect whatever at variance with our conclusion in the present case. In Wilson v. York, supra, a previous order had been made by a Circuit Judge that the plaintiff was entitled to a trial by jury; therefore a succeeding Circuit Judge did not have the power to change that order. Furthermore, although the account in that case was lengthy, there was no complexity in it.

Reversed.

MESSRS. JUSTICES HYDRICK and FRASER concur.

MESSRS. JUSTICES WATTS and GAGE dissent.