Dixon v. Nationwide Mutual Insurance Company

Ness, Justice

(dissenting):

This case involves defendant, Nationwide Mutual Insurance Company’s, termination of an insurance agency agreement with plaintiff, Wesley E. Dixon. Pursuant to Supreme Court Rule 46, the United States District Court has certified the following question for our determination.

Does Dixon under S. C. Code Ann. Section 38-37-940(2) (1976) have a private cause of action for termination of his agency agreement executed December 15,1980 and effective January 1,1981?

I would hold S. C. Code Ann. Section 38-37-940(2) (1976) does not afford a private cause of action for its violation.

We first encountered the question as to whether a private cause of action existed under S. C. Code Ann. Section 38-37-940(2) (1976) in G-H Insurance Agency, Inc. v. Travelers Insurance Companies, 270 S. C. 147, 153, 241 S. E. (2d) 534, 536 (1978). There, in a three to two decision this Court held an insurer could incur civil liability for wrongful termination under the statute. In a strong dissent, a minority of this Court determined that “[u]pon an examination of the 1974 Act, the conclusion is inescapable that the legislature intended to protect members of the public in their procurement of insurance” rather than create a private cause of action on the part of an agent.

Subsequently, in Garris v. Hanover Insurance Company, 630 F. (2d) 1001 (1980), the Fourth Circuit United States Court of Appeals held the retroactive application of the private enforcement provision of § 38-37-940(2), as construed by this Court in G-H Travelers, unconstitutionally violated the contract clause.

Two years later, in G-H Insurance Agency, Inc. v. Continental Insurance Company, 278 S. C. 241, 294 S. E. (2d) 336 (1982), we had occasion to review our Travelers holding in light of Hanover. At first glance, the Continental decision appears to be a reaffirmation of the Fourth Circuit’s determination that retroactive application of § 38-37-940(2) was unconstitutional. I feel our holding in Continental goes much further. While addressing the question of whether Continental Insurance Company should have been granted a summary judgment in light of our ruling in that case, Mr. Justice Littlejohn stated:

Such may be pursued on remand with the trial court taking into consideration the fact that we have now held the contested section, 38-37-910(2), unconstitutional as an impairment of contractural rights ... The section is clearly severable and our ruling does not affect any other provision of the Act. (Emphasis added.) 278 S. C. 249,294 S. E. (2d) at 340.

The clear effect of this language was to declare § 38-37-940(2) unconstitutional and sever it from the remainder of the Act. Consequently, I would overrule our decision in G-H Insurance Agency v. Travelers Insurance Company, supra, and hold that no private cause of action exists under § 38-37-940.

Littlejohn, J., concur.