Able v. Pilot Life Ins. Co.

• Decision Date: 04 January 1938
• Docket Number: 14594.
• Citation: 194 S.E. 628,186 S.C. 26
• Parties: ABLE v. PILOT LIFE INS. CO.
• Court: South Carolina Supreme Court

194 S.E. 628

186 S.C. 26

ABLE v. PILOT LIFE INS. CO.

No. 14594.

Supreme Court of South Carolina

January 4, 1938

Appeal from Common Pleas Circuit Court of Greenville County; G Dewey Oxner, Judge.

Action by Mattie G. Able against the Pilot Life Insurance Company on a life insurance policy. From an adverse judgment, the defendant appeals.

Affirmed.

Smith Wharton & Hudgins, of Greensboro, N. C., and Haynsworth & Haynsworth, of Greenville, for appellant.

C. G Wyche, of Greenville, for respondent.

STABLER Chief Justice.

This action was brought on July 2, 1936, to recover the sum of $1,000 alleged to be due the plaintiff as beneficiary under a policy of insurance issued by the defendant company on the life of one Carlos Harth Able, Jr. As a defense, the defendant pleaded that "the policy was issued upon the express condition that it should not take effect until it had been delivered to the insured, and the first premium thereon actually paid during the lifetime and good health of the insured"; and that, upon information and belief, on the date the policy was delivered the insured was not in good health, but was then confined in a Greenville hospital suffering from spinal meningitis, from which he subsequently died.

The case was tried before Judge Oxner and a jury on May 17, 1937. At the close of the testimony, each side moved for a directed verdict. Both motions were refused, and the jury found for the plaintiff $1,000, with interest.

While there are two exceptions, only one question is presented by the appeal: Was the trial judge in error in refusing defendant's motion for a directed verdict?

The record discloses that on May 8, 1936, application was made by Able to the defendant company, through its agent, H. H. Woods, for a policy of life insurance in the sum of $1,000. He was examined on May 9th by Dr. Bishop, the company's physician, who reported him to be a good risk. Pursuant to the application and the report, the policy, dated May 14, 1936, was issued to the defendant. It contained a provision that it would not take effect until it had been delivered to the insured and the first premium had been actually paid during the lifetime and good health of the insured.

The plaintiff testified that on Saturday morning, May 16, 1936, Woods came to her home to deliver the policy, and that she told him her son Carlos was sick, and that she would rather he would come back about 10 o'clock Monday morning, as she desired to devote her time to her son; that when Woods returned on Monday morning, she advised him that Carlos had been taken to the hospital and that he was a very sick boy; that she then paid the agent the quarterly premium and he gave her a receipt therefor and delivered the policy to her; and that he did this after she had told him of the insured's condition. The plaintiff's daughter also testified that she was in the hall and heard this conversation between her mother and the insurance agent at the time the policy was delivered. Woods testified practically to the same effect, except that he claimed to have delivered the policy before the plaintiff advised him that her son had been taken to the hospital. He admitted, however, that the plaintiff did not deceive him in any way, but told him the truth about the whole matter. In short, the testimony showed that the insured was suffering with a serious illness at the time the policy was delivered, and that Woods, the defendant's agent, knew that he was ill and in the hospital. It is conceded that there was no fraud on the part of the insured or of his mother, the plaintiff, who paid the premium for him.

Under this testimony, and other evidence in the case, the question of waiver by the company of the quoted provision of the policy was undoubtedly one for the jury, and was properly submitted to them by the trial judge. Provisions of this kind in life insurance policies have been before this court a number of times, and it has been uniformly held that such a provision may be waived by the company's agent delivering the policy. The principle is so well established that a discussion of it would seem unnecessary. However, we will refer to some of the cases.

In Pearlstine v. Phoenix Ins. Co., 74 S.C. 246, 54 S.E. 372, 373, the court said: "The rule adopted in this state and the large majority of the states of the Union is that an insurance company cannot avail itself of provisions in the policy that it should be void if certain facts therein mentioned as essential to the insurance should be found not to exist when these facts were known to the agent not to exist when the policy was issued through him, and the existence of such facts and the knowledge of the agent may be proved by parol." While this decision had to do with fire insurance, it has been frequently quoted from and the principle therein stated applied by this court in life insurance cases.

We find the following in Fludd v. Assurance Society, 75 S.C. 315, 55 S.E. 762, 764: "The knowledge of an agent acquired within the scope of his agency is imputable to his principal, and, if an insurance company, at the inception of the contract of insurance, has knowledge of facts which render the policy void at its option, and the company delivers the policy as a valid policy, it is estopped to assert such grounds of forfeiture."

And in Rogers v. Atlantic Life Insurance Company, 135 S.C. 89, 133 S.E. 215, 220, 45 A.L.R. 1172: "If Tiller, the general agent of the company, knew or was told before the insurance was issued that a bump or tumor had been removed from the face of James A. Rogers, his knowledge of these facts was imputed to the insurance company, and the question of waiver on the part of the company was properly submitted to the jury."

And also in Galphin v. Poineer Life Insurance Company, 157 S.C. 469, 154 S.E. 855, 858: "The jury was instructed that it was not disputed that the insured was in bad health on September 14, and, if the policy was delivered to him on that date, then it was void, unless the agent knew of his sickness, in which case his knowledge would be imputed to the company. The appellant complains that this was error for the reason that 'knowledge of the agent of the fact that the plaintiff had at that time suffered a stroke of paralysis would not be imputed to the company in that it would be a fraud upon the company for the benefit of the insured of which he ought not to be allowed to take advantage.' In disposing of the exception raising this question, we call attention to the recent case of Ayers v. Insurance Company, 148 S.C. 355, 146 S.E. 147, and authorities cited in the opinion. The principle is well-established that the insurer is bound by the acts of its agent acting within the scope of his authority, even though the agent is actuated by a fraudulent intent; and that the rights of the insured are not affected thereby unless he participated in the fraud. In the case...