Riggs v. Home Mutual Fire Protection Ass'n

August 22, 1901. The opinion of the Court was delivered by This is an appeal from an order sustaining a demurrer to the complaint based upon the ground that it does not state facts sufficient to constitute a cause of action. The "Case" contains the following statement: "A demurrer was interposed as set out in the ``Case,' and duly served on plaintiff's attorneys, who returned the same the next day with the following indorsement: ``Returned because demurrer does not state wherein the complainant is insufficient' (signed by plaintiff's attorneys)." The case was heard by his Honor, Judge Watts, on the 23rd day of May, 1900, "at which time the three grounds of demurrer were presented in written form." The Judge ruled that the demurrer was in proper form, and he made an order sustaining the demurrer, from which plaintiff appeals on the several grounds set out in the record. For a proper understanding of the questions presented by this appeal, copies of the following papers as set out in the record should be incorporated by the Reporter in his report of the case, to wit: the complaint, the demurrer, the order of the Circuit Judge, and the exceptions thereto.

The first exception raises a question of practice which will first be disposed of. Prior to the comparatively recent amendment to Rule 18 of the Circuit Court, it was not necessary to make any statement in writing when a demurrer was interposed to a complaint upon the ground that the facts stated therein were not sufficient to constitute a cause of action; and the effect of that amendment was simply to require the demurrent to state, in writing, "wherein the pleading objected to is insufficient;" but the rule, as amended, does not state, in express terms, when this must be done; though the language used necessarily implies that it may be done at the hearing below — "the grounds upon which said motion is made, must be reduced to writing by the counsel submitting the same, or taken down by thestenographer under the direction of the Court." This language shows clearly that if the grounds are reduced to writingat the hearing, either by the counsel or the stenographer, that will be sufficient; and this, as we understand, has been the uniform practice ever since the rule was amended. This is what was done in the present case, as is shown by the fact that the grounds are incorporated in the order from which this appeal was taken. And as the object of the amendment was to make it appear to this Court what points were considered and passed upon by the Court below, we think that the requirements have been fully met in this case. The first exception is, therefore, overruled.

The other exceptions need not be considered seriatim, as they substantially raise the single question, whether a person, holding two policies of insurance, such as those described in the complaint, amounting in the aggregate to the sum of $2,000, can, after receiving the sum of $1,000 in satisfaction of the full amount, and delivering up to the agent of the insurance company the said policies of insurance to be cancelled, in pursuance of an agreement to that effect, maintain an action upon the said policies, without first paying back or tendering to the insurance company the amount so received by him under said agreement, even though he alleges that he was induced to enter into such agreement and to carry out its terms by the fraud and false representations of the agent of the insurance company. This question has been conclusively determined adversely to the view contended for by appellant by the decision of this Court in the recent case of Levister v. Railway Company, 56 S.C. 508, where this Court held that one, who has sustained injuries by the alleged negligence of a railway company, and, for a valuable consideration, has released the company from all liability therefor, cannot maintain an action for damages sustained without first returning, or offering to return, the consideration so received, even though he alleges that such release was obtained by fraud. It is true, as contended for by counsel for appellant, that in the case cited the action was ex delicto, while here it is ex contractu; but it is an entire mistake to suppose that this Court either said or implied that the rule there laid down applied only to cases of tort and not to cases ex contractu.. On the contrary, this Court, after laying down the fundamental principle based upon the plainest principles of justice and fair dealing, that it would be fraud to allow a person, after executing a release of all claims against another in consideration of a sum of money paid to him, to repudiate the obligations which he assumed by executing the release, and at the same time retain the benefits which he received by executing the release; and after stating that the authorities elsewhere are in conflict, proceeds to cite our own case ofMcCorkle v. Doby, 1 Strob., 396, which was an action excontractu and not an action ex delicto, and to quote therefrom as follows: "It is generally affirmed as a rule, that fraud avoids all contracts. But it would be more correct to say, fraud makes all contracts voidable, for it is at the option of the party to be effected by the fraud, whether or not he will treat the contract as void and rescind it. The right to rescind, however, is subject to this restriction, that if, after the discovery of the fraud, one party still avails himself of the benefit of the contract or permits the other to proceed with the execution of it, he will thereby be held to have waived the tort and affirmed the contract" — citing the case of Campbell v. Fleming, 1 Ad., El., 40, which was a caseex contractu.. It is quite clear, therefore, that there is no foundation whatever for the assumption that this Court, in Levister's case, recognized any such distinction as that contended for by counsel for appellant, but that, on the contrary, the decision in that case was based upon a fundamental principle founded in the plainest principles of justice, and alike applicable to cases ex contractu as well as cases ex delicto.

Some of the exceptions make the point that, under the old rule, established as far back as Lord Coke's time, in Pinnel'sCase, 5 Coke Rep., 117, that the payment of a less sum than the whole amount due, at maturity or afterward, cannot be a satisfaction of the debt. That rule has been the subject of much comment, and dissatisfaction with it has been expressed by several Judges. But in this State it has been expressly recognized in several cases.Eve v. Mosely, 2 Strob., 203; Hope v. Johnston. Carvis, 11 Rich., 135, and others, and must still be recognized by us, if it is applicable to the present case; though in one of our cases (Bolt v. Dawkins, 16 S.C. at page 214), it is spoken of as "an artificial rule which has no foundation in reason and ought not to be extended." But this ancient rule has been modified in several respects, as may be seen by consulting the notes to the case of Cumber v. Wane, 1 Smith Lead. Cas., marg. page 146, and the note appended to the case of Hope v. Johnston Carvis, supra, by that accomplished Reporter and learned lawyer, the late Jas. S.G. Richardson. The modification to which we desire to call special attention (if, indeed, it can be properly termed a modification), is that it is now well settled that it applies only to liquidated debts and has no application to unliquidated claims; and this, it seems to us, is implied by the very terms of the rule; for if the claim is unliquidated, it cannot be known, with any certainty, what is the amount really due; whereas, if the claim has been liquidated by the agreement of the parties, there can be no dispute as to the amount really due at the time of the making of the contract. Thus in the 1st vol. of that valuable work now in the course of publication, "Cyclopedia of Law and Procedure," at page 329, in an article prepared by that distinguished text-writer, Judge Seymour D. Thompson, it is said: "Where a claim is unliquidated or in dispute, payment and acceptance of a less sum than claimed, in satisfaction, operates as an accord and satisfaction; as the rule that the receiving of a part of the debt due under an agreement that the same shall be in full satisfaction is no bar to an action to recover the balance, does not apply where the plaintiff's claim is disputed or unliquidated" — citing a number of cases, amongst which is Baird v. United States, 96 U.S. 430, in which the late Chief Justice Waite, in delivering the opinion of the Court, says: "It is, no doubt, true that the payment by a debtor of a part of his liquidated debt is not a satisfaction of the whole, unless made and accepted upon some new consideration; but it is equally true, that, where the debt is unliquidated and the amount is uncertain, this rule does not apply. In such cases the question is, whether the payment was in fact made and accepted in satisfaction." So that the only remaining inquiry is whether the plaintiff's claim was liquidated or unliquidated. If it was the latter, as we think it was, then the plaintiff cannot invoke the rule first considered; for, as we have seen, it does not apply to such a case. The precise nature of the policies sued upon do not appear, as copies of the policies are not set out as exhibits to the complaint, as is usually done; for the obvious reason that he alleges in his complaint that upon the payment of the sum of $1,000, which he agreed to receive in full satisfaction of his claim, he delivered up the said policies of insurance to the agent of the insurance company to be cancelled; and it is but reasonable to assume that they were cancelled. We can only determine, therefore, whether these policies were "open policies," which are most commonly used, or "valued policies," by an inspection of the terms in which they are described in the complaint; and we do not find there a single allegation which would impart to these policies the character of valued policies; but, on the contrary, they appear to have been open policies, such as are ordinarily in use. For the difference between these two kinds of policies, see 13 Am. and Eng. Encyl. of Law (2d ed.), at page 102 et seq. It is there said: that by an "open" policy, "the amount of liability is left ``open,' to be determined according to the actual loss, either by agreement of the parties, or upon proof in compliance with its terms, or with the rules of evidence." Whereas "a ``valued' policy is one in which the amount payable in case of loss is fixed by the terms of the policy itself, as where property is insured, valued at or ``worth' a specified amount;" and on the next page, in speaking of the "test of valued policy," it is said: "While the words ``valued at,' etc., are generally used in such a policy, any language disclosing the intent of the parties that proof shall be required of the value of the property in case of loss, is sufficient to constitute a valued policy." Now the allegations of the complaint, so far from showing that these policies contain any such language, rather implies the contrary; for it is alleged in the 6th paragraph of the complaint that the plaintiff gave to the defendant "due notice and proof of the fire and loss," as required by said policies. It is clear, therefore, that the allegations of the complaint fail to show that these policies were "valued" policies, or were anything more than the usual "open" policies. It follows, therefore, that the claim of the plaintiff, as shown by his complaint, was nothing more than an unliquidated claim, the amount of which had never been adjusted or ascertained either by the agreement of the parties or otherwise; and hence the ancient rule, derived from Pinnel's case, has no application to this case. While, therefore, the allegations of the complaint may be sufficient to show that the plaintiff once had a good cause of action against the defendant, yet as it shows, also, that such claim has been fully satisfied and discharged by agreement between the parties, just about two years before this action was commenced, there was no error in sustaining the demurrer.

The judgment of this Court is, that the order and judgment of the Circuit Court be affirmed.