*1 ROWELL, Agency, Appellant, David Insurance Rowell d/b/a COMPANY, HARLEYSVILLE MUTUAL Re- INSURANCE spondent.

(250 111) S. E. *2 David M. and Donald E. Jonas of Ratchford Ratchford H. Altman /. Cooper, & Columbia and Samuel and Graham Fuller, Charleston, Jr. of Altman & Sturgis, appellant. for Linton, Sinkler, Charles H. P. and John both of Gibbs Simons, Charleston, Gibbs & respondent. for 21, November

Lewis, Chief Justice: insurance agent was an under Appellant for its termination either which provided written contract cause, notice to the written sixty days without upon party, contract, to the execution of agency other. Subsequent Act No. 1177 of the 1974 Assembly adopted General to automobile lia- Assembly, relating Acts of General insurance, which contained provision prohibiting bility be- contracts insurer insurance agency cancellation of it insurance with of automoble placed cause of the volume for cover- mandate statutory on account agent contract to terminate its effort agency Respondent’s age. of the statutory violation allegedly prohibi- appellant, relief tion, injunctive litigation rise to present gave such cancellation. to prevent is whether the application

The sole issue presented cancellation of insurance agency against prohibition 1177, as an un- in Act No. contracts, operates as contained contractual right the existing constitutional impairment the parties. between to cancel the agency agreement 110 1177, Act contended that the No.

Appellant provisions the cancellation of prohibiting agency agreements, from terminating agency agreement precluded respondent contended, case; in this to the contrary, while respondent can- that the application statutory prohibition against cellation as an unconstitutional operated to terminate their parties’ existing agency The material facts are not in agreement. dispute. for the General order to better Assembly, provide automobile insurance needs of the of this liability people enacted the Automobile South Carolina Reparation Reform Act of 1974 No. 1974 Acts of the Gen- (Act eral codified Assembly, currently Stat. Section et 38-37-10 It of the 1976 Code of was based seq. Laws). con- following findings unchallenged legislative tained in II Section of Article of Section thereof: *3 finds and declares that auto- hereby Assembly “The General and necessity has become legal practical mobile insurance for such .individuals; necessity but notwithstanding on a volun- are denied coverage insurance such individuals of or nonrenewal cancellation, basis rejection, tary through and without arbitrarily, capriciously, insurance automobile objective which, heretofore, reasons, of intolerable as a result to the inferior risks have been consigned numbers of such in- rates, discriminations other unfair coverages, high Risk and other residual risk plan justices Assigned insurance markets.” in the enactment of the purpose legislative general as 38-37-110(1) is now set forth Code Section

statute follows: to effect a its intention reform complete keeping insurance and insurance South automobile practices individuals, the General as the same

Carolina pertain this article are: that declares the purposes Assembly insurance risk such automobile every To provide (1) criteria established on the basis of the is insurable which

Ill herein shall be entitled to automobile from automobile insurance insurer of the choice on applicant’s the basis rates, of the same . . . such insurer provided by to all other or insureds applicants within . . . the falling risk and applicable territorial classification plan promulgated Commissioner with the approval Commission. Therefore, one of the basic for the enactment purposes of Act No. under which all provide system drivers in South would be Carolina able to obtain automobile insurance without discrimination for such among applicants insurance. The statute this accomplishes placing and insurers the agents mandatory all duty accept risks, insurable 38-37-920; Code Sections 38-37-310 and Section which through 38-37-940(2) provides: No insurer (2) automobile insurance shall cancel its representation by agent because of primarily the volume of automobile insurance with it placed on ac- agent count of the mandate of nor because of coverage the amount of the automobile agent’s insurance business which the insurer has deemed it reinsure in the Facility. the effect of the limita- determining foregoing statutory

tion cancel on the must agency agreements, we keep in mind the status of in this (1) respondent’s operation involved, interests (2) (3) pur- enactment of the poses accomplished by prohibition. considerations, When viewed in the of these it light clearly appears no vested contract possesses to constitutional subject this case. protection

While it is true generally that vested rights under a contract executed to a prior enactment are legislative to constitutional subject no such protection, constitu- tional can be claimed where vested protection are not involved.

The rule is well settled that general the to con- right is limitations, tract not without but is subject to rea- sonable in order to regulations protect overriding Law, 16 Am. Constitutional interest. (2d), public Jur. Section 375. was the State of South Carolina licensed

Respondent to sell insurance after it under the laws and regula- qualified license, however, no vested tions of State. This granted the State, in this but was to to sell insurance respondent subject issued the State accepted by respondent forth in 38-5-70: the reservations set Code Section following shall, as a condition for the Every privi- company in this into and business doing pay lege entering duties now or prescribed all and perform taxes all hereafter law. added). (Emphasis a The fact the business of insurance serves vital In fact, interest be cannot questioned. pres- public ent statute contains the that “auto- legislative finding has a necessity mobile insurance become legal practical for individuals.” facts, into its entered

Under these with charged with appellant, knowledge relationship subject Carolina was to legis- South operate privilege were serve changes necessary lative when such change stated in Dantzler v. This interests. principle public Callison, 177: 230 C. 94 S. S. continue, can vested when

No person acquire business, is licensed, once in a or which trade profession under the control subject legislative regulation police for such may as changed power, regulations prescribed interest, without modified by legislature, public con- the action to charge subjecting interfering tract or vested rights. discretion, vested with broad exercise of its control businesses regulatory interest, determine,

affected with a public but what mea- what the interests of require, only of such interests. protection sures are Law, Section Constitutional (2d), Am. Jur. *5 The has determined that the interests public that all require drivers secure automobile insurance that such insurance made insurers, must be available includ- on a ing respondent, are non-discriminatory basis. These areas of concern proper legislative and regulation, and validity legislative judgment on these matters is not questioned. Only method to regulatory accom- adopted such is plish in purpose challenged this case. shown,

As the insurer is can- previously from prohibited either contract agency because volume of celling automobile with it insurance because placed agent of agent’s the amount of the business which the insurer deems it reinsure. It is that can- undisputed of an contract cellation because of the agent’s foregoing reasons would circumvent the materially legislative purpose to make on non-discriminatory available basis automobile to all from drivers the insurer of the applicant’s choice.

The on the restriction present to cancel the agency contract does not affect contracts between respondent but policyholders, on operates solely respondent’s rela- with its the sale insurance, of an tionship agent area within the peculiarly State’s The regulatory power. is

restriction limited to the solely evil sought remedied. fact, it is now the General cor- apparent Assembly concluded that its rectly assure automobile insur- ance to all coverage drivers be thwarted might insurer through simple expedient cancelling an con- agent’s tract because volume business placed with it by with the mandate of agent the statute. compliance The cancellation in no prohibition against way affected any to cancel legal appellant’s con- respondent agency effect tract. Its retaliation only prevent by or other insurers those who against agents complied with the law. determined that the Assembly General inter-

ests the far reaching reforms automobile insur- required ance enacted under coverage provisions Act No. 1177. all in- These reforms made were applicable agents assure the terms of the surers. order to compliance statute, certain enforcement were enacted, among provisions them the cancellation agency present prohibition against contracts. The determination of enforcement measures what *6 the of were of the interests the necessary protection public rested within the broad discretion of the Assembly. General This record is that the any regulations devoid of showing were not reasonable. adopted termination against that “the prohibition The argument necessary not achieve the public of contracts was agency Insur- Act,” the decision in G-H relying upon Co., Travelers Insurance Inc. v. The ance Agency, the such and that inclusion of 241 S. E. (2d) S. C. is without merit. no public purpose, served prohibition case, insurance agent that an pos- that we held independent for the termination wrongful of sessed cause action private out so we holding, pointed of its agency relationship. the the cancellation was against that of provision adoption and benefit in the of application not limited its purpose of insurance agents, the to the exclusion recognizing public the afforded such the dual of protection provision. aspect case, the G-H Insurance Agency Our holding of contracts agency cancellation provision' prohibiting renders such to enforce compliance, provision not system no adopted by legislature less of part Act 1177. with the of No. secure compliance provisions other enforcement The adequate provisions presence to hold that the for this Court inclusion affords no ground no served of the cancellation provision public purpose. had no vested to sell insurance right Since respondent measures the reasonable this adopted laws insur- with the the sale of regulating enforce compliance no constitutional rights respondent. ance violated was, therefore, in The lower court error holding any rights respondent. No. 1177 Act impaired re- and cause reversed judgment accordingly manded. concur. JJ., and Gregeory,

Rhodes : and Littlejohn (dissenting) Ness, Justices We court dissent would affirm trial respectfully order.

Rowell entered into a binding agreement and Harleysville As a duties in October their establishing asset, valid this contract was protected by property of both the state and federal con- clauses stitutions.

We readily recognize legislature reg- interest; however, ulate certain in the this industries is confined to contracts and authority does prospective contracts. Contrac- empower alter existing *7 attained, tual once for and should rights, solemnly bargained to prey recision. legislative the examined and interpreted courts have Many impair- the limitation. As stated Connecticut ment of contract Co., Accident & Indemnity Court O'Connor Hartford 484, A. (1921): 115 486 the the methods remedy

“The Legislature may regulate contract, as well as future but it under a a past of procedure the a restrictions enforcement of cannot new impose contract, lessen its value and benefit materially so as past either party.” in Act an 1177 to evince intent the There nothing event, contracts. existing to disturb any legis- legislature to the law must succumb constitutional superiority lative law, and the clear of contracts import impairment is that an individual’s right, acquired property provision contract, alteration, will not be can- subject form a the legislature. enlargement cellation 116 Garrison, al., et

In Federal Land Bank Columbia v. 255, E. 308 struck down 185 S. C. 193 S. Court (1937), a to circumscribe the of a statute which attempted It was institution to foreclose mortgage. argued a lending exercise of as valid legislature, power, police could lenders from enact appropriate legislation prevent rejected a windfall. The court the arguments receiving be exercised to existing could power abrogate police the claim that the Likewise rights. rejected Loan & Home Building U. S. Court decision of Supreme 231, Blaisdell, 398, Association v. 78 U. S. 54 S. Ct. 290 L. Ed. 413 in constitutional doc- created any change (1934) trine. The Blaisdell has not recast S. C. opinion clearly of contractual Constitution’s against impairment prohibition rights.1 Doe, 246 Pulliam v. S. C.

More recently this considered the E. Court power S. 861 (1965), (2d) the insurance industry. regulate legislature his uninsured Pulliam, under sought recovery the plaintiff accident where there as the result motorist coverage between the vehicles. During contact was no physical accident, the to the and prior coverage period motorist statute to the uninsured require physical amended The Court recovery. contact was a condition precedent amendment could not be applied in Pulliam held the statutory contract with- terms of coverage to alter the of pre-existing of con- out contravening prohibitions Co., Allstate also, Travelers Ins. Co. v. Ins. tracts clause. See Hender al., et 155 S. (2d) (1967); 249 S. C. al., 127, 232 Evans, et S. E. 268 S. C. son v.

(1977). are even more compelling. in this appeal

The facts held that the to terminate without correctly right trial judge formed the basis for for right cause was bargained he found that respondent Additionally, consent. the original 1 Wright, author Contract of Professoar see Comment Also Constitution, page 119. Clause

117 unless it exer- would to sustain enormous losses continue Hence, cised its terminate. he reasoned pro- termination the value hibiting original destroyed contract.

Moreover, not 1177 was we do believe Act primarily G-H Ins. designated Agency, subserve public purpose. 147, Inc. v. The Co., Travelers Ins. 241 E. 270 S. C. S. 534 we held (2d) that the (1978), public purpose act was “to assure automobile insurance non-discriminatory Id., 241 This coverage.” S. at 536. (2d) page achieved reform in the prospectively comprehensive not by interfering system, retrospectively premium rating Additionally, contracts. penalties existing Insurance Commissioner the Act authorize the provided for certificate company’s revoke an suspend less of the Act. The than six months violation pri- Act, non-discriminatory to assure mary public purpose can be achieved coverage, automobile insurance through statute. enforcement Accordingly, provisions existing be interference with the of contract cannot justified by Acme Act 1177 is interest. v. asserting Treigle Association, 408, 189, 196, Homestead 27 U. 56 S. S. Ct. L. Ed. 80 575 (1936). Court, Supreme cases of U. S.

The two most recent 1505, S. New 431 U. S. 97 Ct. Jersey, U. S. Trust Co. v. Steel Com and Allied Structural L. Ed. 52 92 (1978), (2d) pany L. Ed. Spannaus, (1978), et al., . . . hold, U. “ S. ^[1] . . . egislation adjusting , S. Ct. 2716, 57 be must contracting parties responsibilities a character appropriate and of reasonable conditions Id. at justifying adoption.” public purpose atCt. S. contrac- terms of respondent’s 1177 nullifies express

Act in dis- unexpected liability imposes tual obligations alter It preexisting amounts. cannot applied abling *9 contracts without of contract clause violating of both constitutions. would affirm the trial

We court. judgment McMURTREY, Respondent-Appellant, Raymond Nell M. v. William McMURTREY, Jr., Appellant-Respondent. McMURTREY, Respondent, Nell M. Raymond William McMURT REY, Jr., (two cases) Appellant.

(249 (2d) 503) S. E.