Opinion
13938
November 7, 1934.
Before SEASE, J., Charleston, April, 1933. Affirmed.
Actions by Georgie M. Lilienthal, by Thomas J. Williams and May A. Williams, by Fannie Mendelsohn, by Moses J. Mendelsohn, by Harry Mendelsohn, by Bessie Goldstein and by Max I. Krawcheck, against the South Carolina Public Service Company. From an adverse judgment, plaintiffs appeal.
The order of the trial Judge was as follows:
ORDERThe cause of action stated in the complaint in this case is for an alleged breach of the contract of sale, under which plaintiff purchased from defendant certain corporate securities, and promised plaintiff to refund the amount paid by plaintiff for the securities at any time plaintiff requested the same. That upon demand of the plaintiff that defendant repurchase the securities, the defendant refused to comply with said demand and thereby broke the contract so made. Plaintiff seeks punitive damages for the alleged breach by defendant of the contract.
The defendant in due course served notice on plaintiff's attorneys of application to the Court for an order striking from the complaint under Section 478, Volume 1 of the 1932 Code of Laws, the following portion of Paragraph three: "and advised the defendant, at the time of making such payment to it, that such amount constituted a large part of her life's savings, that she depended upon the income thereof and that she might at any time need the whole or any part of the money paid by her to it for the securities purchased by her from it," and the following portions of Paragraph four thereof: "a large part of her life's savings, as aforesaid, and being in urgent need of money, * * *" that the defendant's breach of contract was accompanied by various and sundry fraudulent acts, the defendant, its agents and servants, having falsely and fraudulently represented to the plaintiff that the aforesaid securities constituted a first mortgage on the plant of the defendant, in the City of Charleston, State aforesaid, that they were worth fully the amount asked for by defendant, and that the defendant would be in a position at any time plaintiff desired it to refund the money to her; and instead of refunding to the plaintiff her money as it had agreed to do, the defendant fraudulently caused and procured an offer to be made to the plaintiff to exchange her securities together with an additional sum in cash for securities in another corporation, said fraud consisting in representations made to her that upon the payment by her of the sum of Sixty ($60.00) Dollars and the delivery by her of the securities theretofore issued to her, she would receive certain gold bonds which were worth at least as much money as the plaintiff had theretofore paid to the defendant for the securities delivered by it to her, which representations were untrue and known to the defendant, its agents and servants, to be untrue, and which representations were made for the purpose of inducing the plaintiff to surrender the securities theretofore delivered by the defendant to the plaintiff in an attempt to be relieved of its liability for failure to refund the money theretofore paid by the plaintiff to the defendant * * * and punitive." Upon the ground that said portions of said paragraphs are irrelevant, redundant and immaterial.
After a very full argument by counsel for plaintiff and defendant and due consideration, I have reached the conclusion that the motion of the defendant should prevail.
In the case of Martin v. Seaboard Air Line Railway Co., 70 S.C. 848 S.E., 616, the Supreme Court of this State said: "Due administration of the law and dispatch of public business are promoted by encouraging the use of the proper means to eliminate all irrelevant matter before the trial begins."
And in the case of Holland v. Spartanburg Herald-Journal Co., 166 S.C. 454, 165 S.E., 203, 206, 84 A.L.R., 1336, the Court said: "Many times has the word `irrelevant' been defined by the Courts. The definition * * * taken from Pomeroy's Code Remedies, is quite clear and to the point to the effect that it must make an issue `which has vital connection with the plaintiff's cause of action.'"
Therefore, the question is, Are punitive damages recoverable in this case? If they are not the allegations which it is sought to remove from the complaint have no "vital connection" with plaintiff's cause of action and should, therefore, be stricken out.
In the case of Welborn v. Dixon, 70 S.C. 108, at page 115, 49 S.E., 232, 234, 3 Ann. Cas., 407, the Supreme Court decided: "There is no doubt as to the general principle that in an action for breach of contract the motives of the wrongdoer are not to be considered in estimating the amount of damages, and that he is only liable for such damages as are the natural and proximate result of the wrongful act. When, however, the breach of the contract is accompanied with a fraudulent act, the rule is well settled, certainly in this State, that the defendant may be made to respond in punitive as well as compensatory damages."
There is no allegation in the complaint showing any fraudulent act that accompanied the alleged breach of the contract, the subject of the complaint. It is stated therein "that the defendant's breach of contract was accompanied by various and sundry fraudulent acts" but the acts stated to have been fraudulent are that defendant "falsely and fraudulently represented to the plaintiff that the aforesaid securities constitute a first mortgage on the plant of the defendant in the City of Charleston, State aforesaid, that they were worth fully the amount asked for by defendant, and that defendant would be in a position at any time plaintiff desired it to refund the money to her," etc. * * * All of which, if true, were false representations and promises in the making of the contract, but assuredly constituted no acts either fraudulent or otherwise accompanying the alleged breach of the contract. The mere statement that the breach of the contract was accompanied by various and sundry fraudulent acts is nothing but a conclusion of law, and the allegations following that statement do not sustain but rather contradict the conclusion of law.
In the case of Alexander v. DuBose, 73 S.C. 21, at page 30, 52 S.E., 786, 789, the Supreme Court said: "Both in law and in equity, it is essential that the facts and circumstances which constitute fraud should be set out clearly."
Referring again to the case of Holland v. Spartanburg Herald-Journal Co., 166 S.C. 454, 165 S.E., 203, 205, 84 A.L.R., 1336, in which the order of the Circuit Judge is adopted as a part of the Supreme Court decision, the following statement is noted: "It is the settled rule of this State that such damages only are recoverable for the breach of a contract as `naturally and proximately' result therefrom. Nor will the fact that such contract is breached with willful or fraudulent intent alter this established standard for assessing damages or permit the allowance of punitive damages."
The Holland case has been followed in the case of Hall v. Insurance Corporation, 169 S.C. 384, 169 S.E., 78, 79, in which it is stated by the Court that: "`Acts of willfulness will support punitive damages in tort cases * * * but will not in suits arising ex contractu.' * * * There may have been in the instrument an allegation of `intent to defraud' on the part of the defendant as to the breach of the contract, but there was not set forth any charge of a fraudulent act on the part of the defendant as to the alleged breach."
In the case of Bennett v. Dodge Brothers Corporation, 169 S.C. 389, 169 S.E., 80, the complaint alleged that the failure of an automobile manufacturer to carry out an agreement to take back repair parts was willful and wanton and with intent to defraud the dealer out of the amount he had invested in such parts to his damage in a stated amount, actual and punitive. The Supreme Court decided that the allegations did not support recovery of punitive damages.
So, in Lawson v. Metropolitan Life Insurance Co., decided in the month of May of this year by our Supreme Court, and reported in 169 S.C. 540, 169 S.E. at page 430, it was alleged in the complaint that after the issuance and delivery of an accident policy and after payment of premium and compliance with all the conditions thereof, insured became disabled through accident and that the company broke its contract and fraudulently refused to pay insured his weekly benefits, representing total of specified amount due insured under the policy. The Supreme Court decided that the foregoing portions of the complaint should be stricken out as irrelevant, as were the allegations therein that the insured relied on the fraudulent representations of insurer and that the insurer intended to defraud insured and that as a direct result of the high-handed, illegal, fraudulent and grasping conduct of the insurer, insured was cheated, deceived and imposed on.
It is, therefore, ordered that the allegations in the complaint objected to as hereinabove set forth do not set forth a cause of action for punitive damages and do not form any part of the complaint for actual damages, and the same are hereby stricken out and deleted from the complaint as being irrelevant, redundant and immaterial, and that the amount recoverable under the terms of the complaint if plaintiff finally prevails in this suit, after the above-mentioned allegations have been stricken out, is the sum of Eight Hundred Fifty-five ($855.00) Dollars, with interest as authorized by law.
And it is so ordered.
Messrs. Shimel Rittenberg, for appellants, cite: Damages: 8 R.C.L., 459; 83 S.C. 501; 65 S.E., 638; 91 S.C. 417; 74 S.E., 1067; 78 S.C. 327; 58 S.E., 1013; 151 S.C. 484; 149 S.E., 246; 17 C.J., 746; 106 S.W. 292; 214 Mass. 552; 97 S.W. 621; 266 F., 688; 161 S.C. 540; 159 S.E., 923; 151 Va., 706; 144 S.E., 635. As to actual and punitive damages: 169 S.C. 400; 169 S.E., 83; 167 S.C. 309; 166 S.E., 343; 166 S.C. 475; 165 S.E., 188; 147 S.C. 333; 145 S.E., 196; 19 C.C.A., 429; 51 L.R.A., 353; 73 F., 196; 100 Miss., 132; Ann. Cas., 1914-A, 323; 34 L.R.A. (N.S.), 740; 212 U.S. 539; 61 L.Ed., 480.
Messrs. Hagood, Rivers Young, for respondent, cite: Damages for breach of contract: 166 S.E., 350; 70 S.C. 108; 166 S.C. 454; 165 S.E., 203; 169 S.C. 384; 169 S.E., 78; 169 S.E., 433; 70 S.C. 8; 83 S.C. 503; 91 S.C. 417; 78 S.C. 327; 157 S.C. 484; 214 Mass. 552; 32 Ky., 531.
November 7, 1934. The opinion of the Court was delivered by
For the reasons stated by his Honor, Judge Sease, in his order, which will be reported, the judgment of the Circuit Court is affirmed.
MESSRS. JUSTICES CARTER and BONHAM concur.
MR. ACTING ASSOCIATE JUSTICE C.T. GRAYDON did not participate.