Opinion
32878.
DECIDED MAY 5, 1950. REHEARING DENIED JUNE 14, 1950.
Complaint; from Fulton Superior Court — Judge Pharr. November 23, 1949.
Miller Head, for plaintiff.
MacDougald, Troutman, Sams Schroder, Gilmer A. MacDougald, Louis D. Yancey Jr., as amici curiae.
Powell, Goldstein, Frazer Murphy, J. Winston Huff, for defendant.
1. The motion to dismiss the writ of error is denied.
2. The special demurrers were meritorious and properly sustained by the trial court for the reasons stated in the opinion.
3. The exception to the ruling on the general demurrer is controlled by Southeastern Construction Company v. Glens Falls Indemnity Company, ante, p. 764.
DECIDED MAY 5, 1950. REHEARING DENIED JUNE 14, 1950.
The Southeastern Construction Company, suing for the use of E. M. Beckham, A. C. Pritchett and W. E. Beckham, a partnership, trading as E. M. Beckham Construction Company, as the plaintiff, brought an action against J. L. Smith, doing business as J. L. Smith Contracting Company and Glens Falls Indemnity Company in which the material allegations were essentially the same as those in Southeastern Construction Co. v. Glens Falls Indemnity Co., ante p. 764, to which we refer the reader here. Aside from the differences in the real parties plaintiff, and the amounts sought to be recovered, the two cases also differ in that in the former case the trial court passed upon the general demurrer only, whereas in this case a ruling was made sustaining the special demurrers also, to which exception was taken. The grounds of the special demurrers were: "There is a misjoinder of causes of action in that the plaintiff seeks in the same suit to recover against the principal on said bond the amount represented by the alleged indebtedness of the principal to plaintiff and to recover against the principal on said bond said amount and in addition thereto damages and attorney's fees. The petition as a whole is demurred to specially because the same is vague and indefinite in that it does not appear therefrom whether the plaintiff seeks to recover the alleged damages and attorney's fees from both defendants or from the defendant Glens Falls Indemnity Company only. Paragraph 10 of the petition is demurred to specially because the same is vague and indefinite and contradictory of the remaining allegations of the said petition in that it appears from paragraph 8 that the amount of the plaintiff's claim against J. L. Smith is $2224.04 and plaintiff alleges by paragraph 10 that both defendants are indebted to plaintiff in the sum of $3180.05, and for the further reason that as a matter of law the principal on said bond is not liable for damages or attorney's fees, and as a matter of law the surety is not liable for damages or attorney's fees. Paragraph 11 is demurred to specially and defendant moves to strike the same because the petition wholly fails to allege sufficient facts to entitle the plaintiff to recover damages or attorney's fees and because as a matter of law plaintiff is not entitled to recover damages or attorney's fees because of the alleged breach of the bond sued upon, the same not being a contract of insurance."
1. The motion to dismiss the writ of error, which is made in the brief of counsel for the defendant, on the ground that one of the parties defendant in the trial court was not named as a defendant in error in this court, is denied. When in an action on a bond the principal and the surety are made joint defendants, the cause of action is several though the defendants may be joined in one action ( Griffin v. H. C. Whitmer Co., 57 Ga. App. 203 (1), 194 S.E. 895, and cit.; Mulling v. Bank of Cobbtown, 36 Ga. App. 55, 135 S.E. 222); and where the petition is dismissed on the demurrer of the surety alone, the principal is not a necessary party defendant to the bill of exceptions sued out by the plaintiff, assigning error upon the judgment sustaining the surety's demurrer. McGaughey Bros. v. Latham, 63 Ga. 67. The Latham case is the leading case on the subject and has been followed numerous times by this court and the Supreme Court, down through Moore v. Harrison, 202 Ga. 814 ( 44 S.E.2d 551). For an excellent discussion of this point of practice, see Johnson v. Motor Contract Co., 186 Ga. 466 ( 198 S.E. 59).
2. The special demurrers all relate to the question of the right of the plaintiff to recover under Code § 56-706 the penalty and attorney's fees therein provided where it is made to appear that the company's refusal to pay was in bad faith, and will be considered here together. Whether or not the bond sued upon was such a contract of insurance as to come within the terms of Code § 56-706, there are no such facts alleged as to bring the case within the meaning of "bad faith" as used in that section. The term "bad faith" does not mean actual fraud; it means any frivolous or unfounded refusal in law or in fact to comply with the demand of the policyholder to pay according to the terms of the contract and conditions imposed by the statute. Cotton States Insurance Co. v. Edwards, 74 Ga. 220. Under the terms of the bond sued on and the contracts made a part thereof, the company's liability was in such a high degree of doubt as to furnish the company with probable cause for refusing payment, which probable cause negatives the imputation of bad faith. Travelers Insurance Co. v. Sheppard, 85 Ga. 751 ( 12 S.E. 18). And in view of the contrariety of opinion of the appellate courts of this and other States and the conflicts in our own decisions upon the question of the company's liability under such a bond and contracts as were here involved, it cannot be said that to test the question here is in bad faith. Northwestern Mutual Life Insurance Co. v. Ross, 63 Ga. 200; and see, Life Casualty Co. of Tenn. v. Freemon, 80 Ga. App. 443 (c) ( 56 S.E.2d 303). It follows that the court did not err in sustaining each of the special demurrers to the petition.
3. The questions presented by the general demurrer are identical with those in Southeastern Construction Co. v. Glens Falls Indemnity Co., ante, p. 764, this day decided, and are controlled thereby. As there held, the court erred in sustaining the general demurrer to the petition.
Judgment affirmed in part, and reversed in part. Gardner and Townsend, JJ., concur.