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Administrative Law Court
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SC Administrative Law Court Decisions

SCDOI vs. Roy B. Gainey

South Carolina Department of Insurance

South Carolina Department of Insurance

Roy B. Gainey

Adelaide Kline, Esquire

For Petitioner

Roy B. Gainey, Pro Se




This matter comes before this tribunal pursuant to S.C. Code Ann. §§ 1-23-600(B) and 38-43-130 (Supp. 1997) upon Respondent's request for a contested case hearing regarding Petitioner's decision to revoke Respondent's resident insurance agent's license. The South Carolina Department of Insurance seeks revocation of Respondent's license for allegedly violating South Carolina's insurance laws by wilfully deceiving or dealing unjustly with the citizens of the State in failing to transmit promptly or pay all or a portion of collected premiums. A contested case hearing was held Friday, July 31, 1998 at the Administrative Law Judge Division.

Petitioner failed to establish by a preponderance of the evidence that Respondent violated the insurance laws. Thus, Petitioner's request that Respondent's license be revoked is denied.


Having carefully considered all testimony, exhibits, and arguments presented at the hearing of this matter, and taking into account the credibility and accuracy of the evidence, I make the following findings of fact by a preponderance of the evidence.

Beginning on April 5, 1995, Respondent was employed with Capitol Security Insurance Company (Capitol), as a sales manager until he was demoted to agent in June of 1997. The following events, which are not in dispute, precipitated his termination from employment and the Department's decision to seek revocation of his license. On Friday, October 3, 1997, Respondent transmitted collected premiums totaling $2,681.60 to Capitol's home office in Louisville, Kentucky using his laptop computer. Pursuant to Capitol's policy that agents set the deposit date within two days of the transmission date, Respondent set the deposit date of his transmission for Sunday, October 5, 1997. However, because night deposit boxes were unavailable to Capitol's agents, it was impossible for Respondent to make the deposit on Sunday. Even so, Respondent failed to deposit the premiums in a banking institution on Monday, October 6, or Tuesday, October 7. On Wednesday, October 8, 1997, Respondent ran several errands with the premiums stored inside the glove compartment of his unlocked car. After the third stop, Respondent discovered that the premiums were missing. Respondent immediately reported the theft to his District Manager Roger Graham and followed all necessary company policies regarding the robbery. Respondent informed Mr. Graham that he did not make the deposits on Monday or Tuesday because he forgot to take the premiums with him when he left home on those days. Respondent's employment with Capitol terminated on November 20, 1997. On November 25, 1997, Capitol notified Respondent by letter, that he was responsible for the portion of the stolen premiums not covered by insurance($949.68), and required him to reimburse Capitol within 30 days of the notification.

At the time of this incident, Capitol had internal written policies regarding the collection of insurance premiums by its agents, and the methods to be used for depositing premiums. All agents and managers were trained on company policies and procedures, including a policy requiring transmission of collected premiums via laptop computers prior to actually depositing the premiums in a designated business account. This policy dictated that agents should not set the actual deposit date out farther than two days from the date of the transmission. Capitol also required all agents to transmit every Friday any premiums collected during the week.

The issues for presented for determination are: (1) whether a preponderance of the evidence exists to support a finding by the Director that the Respondent wilfully deceived or dealt unjustly with the citizens of the State by failing to forward premiums to Capitol Security Insurance Company, and (2) whether the Director abused his discretion when he elected to revoke Respondent's license to conduct the business of insurance in the State of South Carolina.


In civil cases, generally, the burden of proof rests upon the party who asserts the affirmative of an issue. 29 Am. Jur. 2d Evidence § 127 (1994); Alex Sanders, et al., South Carolina Trial Handbook § 9:3 Party With Burden, Civil Cases (1994). The Department is the party asserting the affirmative in this case; therefore, the Department must prove by a preponderance of the evidence that Respondent wilfully deceived or dealt unjustly with the citizens of the state in violation of S.C. Code Ann. § 38-43-130(3) (Supp. 1997). The preponderance of the evidence "is evidence which is of the greater weight or more convincing than the evidence which is offered in opposition to

it . . . ." Black's Law Dictionary 1182 (6th ed. 1990). "The preponderance of the evidence means such evidence as, when considered and compared with that opposed to it, has more convincing force and produces in the mind the belief that what is sought to be proved is more likely true than not true." Sanders, supra, § 9:5 Quantum of Evidence in Civil Cases (1994), (citing Frazier v. Frazier, 228 S.C. 149, 89 S.E.2d 225 (1955)). The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of fact. See South Carolina Cable Television Ass'n v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992).

S.C. Code Ann. § 38-43-130 grants the Director the authority to revoke or suspend an agent's license if that agent has "wilfully deceived or dealt unjustly with the citizens of this State." S.C. Code Ann. § 38-43-130 (Supp. 1997) (Emphasis added). "Deceived or dealt unjustly" includes, for purposes of the statute, "failure to transmit promptly or pay all or a portion of the amount of an insurance premium when the agent . . . received payment from a customer. . . ." S.C. Code Ann. § 38-43-130(3) (Supp. 1997). To warrant a finding of a violation under § 38-43-130(3), the evidence must establish that an agent not only deceived or dealt unjustly with the citizens of the state, but also that he did so wilfully. A wilful act is "done with the specific intent to fail to do something the law requires to be done. . . . A wilful act differs essentially from a negligent act." Black's Law Dictionary 1599 (6th ed. 1990) (Emphasis added). The letter from Respondent's District Manager notifying him of his monetary responsibility advises that his failure to deposit the premiums was a negligent act. By its very definition, a wilful act is not a negligent one. No evidence was presented to show Respondent acted wilfully when he failed to deposit the premiums. For this tribunal to order the sanction of revocation of Respondent's license, it must find that his action, or lack thereof, was wilful. The Department failed to prove by a preponderance of the evidence that Respondent wilfully deceived or dealt unjustly with Capitol or the citizens of this State.

As the matter has already been determined based on the lack of evidence that Respondent acted wilfully, the issue of whether Respondent failed to transmit promptly or pay collected premiums does not require discussion by this tribunal.


IT IS THEREFORE ORDERED that Petitioner's request that Respondent's insurance agent's license be revoked for violating S.C. Code Ann. § 38-43-130(3) is denied.



John D. Geathers

Administrative Law Judge

August 26, 1998

Columbia, South Carolina

Brown Bldg.






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