Hyde Ins. Agency, Inc. v. Dixie Leasing Corp.

215 S.E.2d 162 (1975)

26 N.C. App. 138

HYDE INSURANCE AGENCY, INC. v. DIXIE LEASING CORPORATION.

No. 7528SC150.

Court of Appeals of North Carolina.

June 4, 1975.

*164 Van Winkle, Buck, Wall, Starnes, Hyde & Davis by Albert L. Sneed, Jr., Asheville, for plaintiff.

McGuire, Wood, Erwin & Crow by James P. Erwin, Jr., and Charles R. Worley, Asheville, for defendant.

BROCK, Chief Judge.

After the hearing on plaintiff's motion for summary judgment under Rule 56, the trial judge proceeded to make what he termed "Findings of Fact." Summary judgment should be entered only where there is no genuine issue as to any material *165 fact. If findings of facts are necessary to resolve an issue as to a material fact, summary judgment is improper. There is no necessity for findings of fact where facts are not at issue, and summary judgment presupposes that there are no triable issues of material fact. Although findings of fact are not necessary on a motion for summary judgment, it is helpful to the parties and the courts for the trial judge to articulate a summary of the material facts which he considers are not at issue and which justify entry of judgment. The "Findings of Fact" entered by the trial judge, insofar as they may resolve issues as to a material fact, have no effect on this appeal and are irrelevant to our decision. See Lee v. King, 23 N.C.App. 640, 643, 209 S.E.2d 831 (1974); Eggimann v. Board of Education, 22 N.C. App. 459, 464, 206 S.E.2d 754 (1974); 6 Moore's Federal Practice ¶ 56.02[11] (2d ed. 1974).

It should be noted at the outset that this is not a controversy between an insurer and an insured. The insurer, Travelers Insurance Company, is not a party to this action. The controversy here is between what appears to be a corporate insurance agent or broker and an insured.

Plaintiff contends it is entitled to recover the short rate premium because defendant cancelled the policy. Defendant contends it is obligated to pay only the pro rata daily rate of the annual premium in accordance with plaintiff's agreement. Plaintiff contends that, if it should be determined that plaintiff made such an agreement, an agreement to accept less than the short rate premium is unenforceable because it is forbidden by statute. The trial judge ruled with the plaintiff. We reverse.

The prohibition against discrimination in rates, as provided by G.S. §§ 58-44.3, 58-44.5, 58-54.4(8)c, 58-131.18, 58-248.2, and 97-104.2, is directed to insurers, agents, brokers, and other representatives of insurers. Only one of the above sections of the statutes, G.S. § 58-44.5, mentions the insured. It provides that an insured shall not knowingly receive or accept a prohibited reduction of premium. There is nothing in the record presently before us which suggests that defendant knew the premium rate promised by plaintiff was a prohibited rate. The sanctions provided by statutes for violations of the antirebate provisions are directed to the insurers, agents, brokers, or other representatives. The statutes do not declare that contracts in violation of the antirebate provisions are void. See Headen v. Insurance Co., 206 N.C. 270, 173 S.E. 349 (1934); McNeal v. Insurance Co., 192 N.C. 450, 135 S.E. 300 (1926); Gwaltney v. Assurance Society, 132 N.C. 925, 44 S.E. 659 (1903).

"The fact that an antirebate statute has been violated does not vitiate the contract of insurance, nor entitle the insurer to obtain a reformation of the contract. In the absence of a legislative expression of intent to the contrary, an insurer cannotat least, as against an innocent insured who is not in pari delictoaccept and retain benefits, and then plead as a defense its own violation of a statute prohibiting the granting of discriminations as to rates, as by setting up that such contract is void for discrimination. For the courts are not disposed to go beyond the expressed intention of the legislature and declare a forfeiture of policies when the legislature has not done so. In other words, the insurer cannot say that the contract of insurance is void because of a violation of an antirebate statute for the purpose of defeating the insured, and thus take advantage of its own wrong." 5 Couch on Insurance 2d § 30:64 (2d ed. 1960) (Footnotes omitted.).

In the case presently before us, the defendant has fully performed its part of the alleged contract by allowing plaintiff to continue coverage as requested by plaintiff and has offered to pay at the rate agreed to by plaintiff. The benefit to plaintiff was an opportunity to compete with the coverage offered to defendant by Allstate Insurance Company. Plaintiff's ultimate inability *166 to offer competitive coverage does not alter the fact that defendant forewent the opportunity to cancel plaintiff's coverage at the time it first notified plaintiff to cancel its coverage.

The Supreme Court of North Carolina, in Robinson v. Life Co., 163 N.C. 415, 79 S.E. 681 (1913), quoted, with approval from Vance's Treatise on Insurance, as follows:

"`When, however, the statutes imposing conditions upon doing business by the foreign insurer merely prohibit the making of the contract without compliance with their terms, the question as to the rights of the parties becomes of much greater difficulty. In accordance with the general rule that a contract that is prohibited is illegal, and therefore void, it would follow that neither one of the parties would take any rights under the contract, or could enforce the agreement against the other. Yet to apply this general doctrine to a contract made under such circumstances as usually attend the making of a contract of insurance would work great hardship and be manifestly unjust. The party insured cannot, without great difficulty, discover whether the insurer has complied with all the statutory requirements or not; and while it is true that the statutes imposing these conditions upon the insurer are public acts, and therefore presumed to be known to all, yet it would be unreasonable to require that every person to whom a corporate insurer offers a contract of insurance should make an exhaustive investigation in order to discover whether his co-contractor has been fully qualified to make the agreement that is proposed, which is a question of fact. It would seem that the insured has a right to presume that the insurer has complied with all the requirements of law. Accordingly, it is held by the great weight of authority that when the insured attempts to enforce such a contract, made in good faith, against the unlicensed insurer, the latter will be estopped to escape liability under the contract by pleading his own infraction of law. The same principle of estoppel, however, does not apply when the insurer is endeavoring to enforce some right under the contract against the insured. The plaintiff, not having legally qualified himself to make the contract under which he sues, has no standing in law or equity when he attempts to enforce it.'" 163 N.C. at 421-422, 79 S.E. at 684.

The Court went on to say:

"The citation from Vance marks the difference in the relations of the parties to the contract under these circumstances, and demonstrates that they are not in equal fault. "It is there said `that the insured has the right to assume that the insurer has complied with all the requirements of the law,' and that `the latter will be estopped to escape liability under the contract by pleading his own infraction of law,' and that the insured may maintain an action upon the contract when the insurer cannot." 163 N.C. at 422, 79 S.E. at 684.

We think the foregoing rationale is sound and that it is applicable to the case sub judice. If the defendant can establish the contract as alleged by it, and if there is no showing that defendant knowingly accepted a prohibited premium rate, the plaintiff should not be allowed to plead the illegality of its contract and benefit from its own wrongdoing to the detriment of the defendant.

We are unable to reconcile the calculations by defendant of the amount due, under the agreement it alleges, with the pleadings and interrogatories. However, we leave that calculation to the finders of the facts in the event defendant is successful in establishing the agreement it alleges.

We hold that plaintiff has failed to show that there is no genuine issue as to a material fact and that the granting of plaintiff's motion for summary judgment was error.

*167 Reversed and remanded.

MORRIS and HEDRICK, JJ., concur.