Sutker v. Pennsylvania Insurance

Eberhardt, Judge. On the first appearance of this case in this court we held that the amendment to the petition seeking reformation of the amendment to the insurance policy converted the action from one at law to one in equity, and accordingly we transferred the appeal to the Supreme Court. Sutker v. Pennsylvania Ins. Co., 114 Ga. App. 627 (152 SE2d 578). The Supreme Court remanded the case to this court, holding: “In determining whether an action brought in the superior court is in equity or law both the allegations and the prayer must be — 650 — examined, and where as in the case sub judice the reformation of a contract is prayed for but the allegations of the petition fail to allege fraud or mutual mistake, the action seeking a money judgment is one at law and not in equity. Accordingly, the Court of Appeals and not this court has jurisdiction of the appeal.” Sutker v. Pennsylvania Ins. Co., 223 Ga. 58 (153 SE2d 540). The trial court construed the petition as an action ex contractu and sustained the general demurrers on that basis. Plaintiffs contend vigorously in this court, however, that this is not a suit upon an insurance contract, written or oral, but is a tort action seeking damages because of the misfeasance or nonfeasance of Hornstein, as the servant and agent of the insurance company, in negligently failing to procure a written amendment to the insurance policy which would have provided the requested uninsured motorist coverage. It is contended that there was an oral contract between plaintiffs and Hornstein which created a legal duty on Hornstein’s part to procure the written amendment as requested, and that the neglect or omission of that duty and the misfeasance of Hornstein in carrying out the duty, acting within the scope of his employment as servant or agent of the insurance company, constitutes a tort for which Hornstein is personally liable and for which the company is jointly liable under the doctrine of respondeat superior. The gist of plaintiffs’ contention is that they have elected under Code § 105-105 to waive suit on contract and to sue both defendants for a tort founded upon a contract with Hornstein, and we will so treat the case. Mauldin v. Sheffer, 113 Ga. App. 874 (150 SE2d 150). No contention is made that the Uninsured Motorist Act (Ga. L. 1963, p. 588, as amended; Code Ann. § 56-407.1), applicable to policies issued or delivered after January 1, 1964, is involved here. Since we conclude that this case does not fall within the class of cases where a suit for tort founded upon contract can be maintained, we assume, but do not decide, that the allegations of the petition sufficiently show that Hornstein made a legally binding promise to Dr. Sutker which he negligently breached, proximately resulting in the loss complained of, and — 651 — that Mrs. Sutker is a proper party plaintiff in Counts 2 and 5. Defendants contest these assumptions and make other contentions with which it is unnecessary to deal in our view of the case. In Mauldin v. Sheffer, 113 Ga. App. 874, supra, we reviewed the cases dealing with tort founded upon contract, and we will not reiterate all that was said there. The following quotations should suffice: “From the foregoing authorities it can be seen that it is not in every case where a contract has been breached that a right accrues to the opposite party to make an election [Citations]. The rule which affords an election to sue ex delicto or ex contractu in cases involving a breach of a duty implied by reason of a contractual relation has been applied to contractual relations between principal and agent, bailor and bailee, attorney and client, physician and patient, carrier and passenger or shipper, master and servant, and possibly other well recognized relations. . . From the authorities to which we have referred and from others which we have examined, the rule may be fairly deduced that in order to maintain an action ex delicto because of a breach of duty growing out of a contractual relation the breach must be shown to have been a breach of a duty imposed by law and not merely the breach of a duty imposed by the contract itself. [Citations]. This is consistent with the definition of a tort set forth in Code § 105-101. ‘Duty imposed by law’ as used in this context means, of course, either a duty imposed by a valid statutory enactment of the legislature or a duty imposed by a recognized common law principle declared in the reported decisions of the appellate courts of the State or jurisdiction involved. The question in this case then resolves itself to whether the petition sufficiently alleges the violation of such a ‘duty imposed by law.’ ” Recoveiy has been allowed in this state for failure to keep property insured where the defendant is shown to be plaintiff’s agent. Thomas v. Funkhouser, 91 Ga. 478 (18 SE 312) (defendant was apparently plaintiff’s specifically appointed general agent rather than an insurance agent or broker). Recovery has also been allowed in an action ex contractu for the breach of a contract of agency to secure insurance. Bell — 652 — v. Fitz, 84 Ga. App. 220 (66 SE2d 108) (defendant was a warehouseman holding plaintiffs’ goods); Farmers & Merchants Bank v. Winfrey, 89 Ga. App. 122 (78 SE2d 818) (defendant bank agreed with plaintiff to procure insurance on property conveyed by plaintiff to secure a loan); Home Bldg. & Loan Assn. v. Hester, 213 Ga. 393 (99 SE2d 87) (loan association agreed to procure term life insurance to cover balance due on loan); Consumers Fin. Corp. v. Lamb, 217 Ga. 359 (122 SE2d 101) (automobile dealer and finance company agreed to procure credit life insurance as agents for plaintiff). And see Beiter v. Decatur Fed. Sav. &c. Assn., 222 Ga. 516 (150 SE2d 687), where recovery was allowed to the limit of the life insurance policy which defendant savings and loan association undertook, as agent of plaintiff, to procure and keep in force on the life of plaintiff’s husband, as additional security for the loan, but which it failed to do, falsely representing that the insurance was in force and retaining the monthly premiums which plaintiff paid on the non-existent policy; Farlow v. Barton, 60 Ga. App. 287 (3 SE2d 777), involving questions of evidence in a suit for breach of contract by the seller of an automobile to procure collision insurance on the automobile sold; Atlas Auto Finance Co. v. Atkins, 79 Ga. App. 91, 95 (1) (53 SE2d 171), where defendant was allowed to plead in recoupment against the foreclosure of a title retention contract the failure of plaintiff to provide insurance on the automobile involved; and North American Loan &c. Assn. v. Dykes, 58 Ga. App. 457 (198 SE 831), which upheld a cause of action as for a tort where the petition alleged that defendant, in purchasing a retention-of-title contract on plaintiff’s automobile preparatory to refinancing it with plaintiff’s permission, exceeded and misrepresented the authority given by plaintiff and caused insurance on the automobile to be canceled. It will be observed that the above cases allowing recovery for breach of contract to procure insurance do not involve insurance agents or brokers but deal with agency relationships of a general nature where the promisor undertook to procure insurance as an incident of that relationship, which was itself in some instances an incident of some other relationship, such — 653 — as bailor-bailee, mortgagor-mortgagee, debtor-creditor, etc. Absent actionable fraud and deceit, however (Seabrook v. Underwriters Agency, 43 Ga. 583; Williams v. Neal, 52 Ga. App. 553 (183 SE 650); Crozier v. Provident Life &c. Ins. Co., 53 Ga. App. 572 (186 SE 719); Clark v. Kelly, 217 Ga. 449 (122 SE2d 731), conformed to in Kelly v. Georgia Cas. &c. Co., 105 Ga. App. 104 (123 SE2d 711); Pope v. Ledbetter, 108 Ga. App. 869 (134 SE2d 873)), it appears settled that there is no liability in tort for failure of the defendant insurance agent or broker to procure or have renewed a policy of insurance where the defendant is the insurance company’s agent and not the plaintiff’s agent. Georgia Ins. Serv. v. Wise, 97 Ga. App. 461 (103 SE2d 445); Fields v. Goldstein, 97 Ga. App. 286 (102 SE2d 921), affirmed “after careful consideration” in 214 Ga. 277 (104 SE2d 337). See Renas v. Atlanta Realty Co., 97 Ga. App. 590 (103 SE2d 637), where it does not appear clearly on what theory the demurrable suit was brought. And there is no liability in contract for failure of defendant insurance agent or broker to perform a promise to procure a modification of a policy absent an agency relationship between plaintiff and defendant. Fields v. Goldstein, supra. And see Renas v. Atlanta Realty Co., supra. Perhaps the rule of these latter cases in regard to liability of the agent in contract is that where suit is brought against the agent of the insurer for breach of contract to issue insurance and the agency is disclosed, the agent is not liable where he has not made an individual undertaking or comes under some other exception to the general rule. But whatever may be the rule in regard to the liability in contract of an insurer and its agent for failure to effect insurance in accordance with an oral understanding between plaintiff and the insurer’s agent, it is clear that the cases dealing with tort actions for negligent failure to procure or renew insurance are consistent with the principles enunciated in Mauldin v. Sheffer, 113 Ga. App. 874, supra, and the cases cited therein, viz., absent a contract which raises a duty imposed by law, such as the duties flowing from an agency relationship, there is no tort liability for breach of the contract. Since plaintiffs have chosen to treat Hornstein as the agent of the insurance company, and — 654 — since our attention has not been called to any other “duty imposed by law” which either Hornstein or the insurance company owed to plaintiff, the petition failed to state a cause of action for tort founded upon contract. Accordingly, the judgment must be Affirmed. Felton, C. J., and Hall, J., concur.