Bradley v. Metropolitan Life Ins. Co.

• Decision Date: 02 October 1931
• Docket Number: 13250.
• Parties: BRADLEY v. METROPOLITAN LIFE INS. CO.
• Court: South Carolina Supreme Court

160 S.E. 721

162 S.C. 303

BRADLEY v. METROPOLITAN LIFE INS. CO.

No. 13250.

Supreme Court of South Carolina

October 2, 1931

Appeal from Common Pleas Circuit Court of Chester County; J. Henry Johnson, Judge.

Action by Cornelius Bradley, administrator, against the Metropolitan Life Insurance Company. Judgment for plaintiff, and defendant appeals.

Affirmed.

Hemphill & Hemphill, of Chester, and Elliott, McLain, Wardlaw & Elliott, of Columbia, for appellant.

Gaston Hamilton & Gaston, of Chester, for respondent.

JOHN W CREWS, A. A. J.

This action was commenced by service of summons and complaint on August 25, 1927, which complaint was duly answered. the cause came on for trial before Judge J. Henry Johnson and a jury April 8, 1929. At the call of the case for trial and before the commencement thereof, attorneys for appellant moved the court for an order requiring respondent to elect whether he would go to trial on contract or tort. The presiding judge refused this motion by appellant, ruling that the respondent did not have to elect because he construed the complaint to state only one cause of action, viz., a fraudulent breach of contract. Thereupon respondent said: "That is what we elect to stand on." At the conclusion of respondent's testimony appellant moved the court for a nonsuit upon the grounds set out in the record, including the ground that there was a total absence of testimony tending to establish fraud. This motion was refused. At the conclusion of all the testimony appellant moved for a directed verdict upon the grounds set out in the record, which was also refused. Appellant then submitted in writing to the presiding judge certain requests to charge which were refused. The case was after argument of counsel then submitted to the jury under instructions from the presiding judge as set out in the record and the jury rendered the following verdict: "We find verdict in favor of plaintiff. Actual damages. One Hundred Eighty-six Dollars plus Forty Dollars and Seventy cents interest. Punitive damages Two Thousand Dollars."

Thereupon appellant moved the court for a new trial upon the grounds set out in the record, which was refused, except that the presiding judge required respondent to renounce claim to a small portion of the interest given by jury which respondent did. Upon the verdict as reformed judgment was duly entered. Due notice of appeal from the rulings of the presiding judge his charge to jury, refusal to grant a new trial, and from the judgment, was entered within the time required by law.

The evidence introduced at the trial of the cause establishes the following facts:

On August 21, 1925, an agent of Metropolitan Life Insurance Company by the name of Pearson visited the home of Cornelius Bradley, who was at that time residing in Gastonia, N.C. The said Cornelius Bradley had two daughters, who resided with him at said place, whose names were: Lula Hafner and Ensley Bradley. The Bradleys are humble mill people. The insurance agent, Pearson, appears to have known the Bradley family sufficiently well as to make (at least once) extended visits and enter into lively and friendly discourses with the members thereof.

After visiting with the family an hour or so on August 21, 1925, he succeeded in securing the applications of Lula Hafner and Ensley Bradley for life insurance policies commonly known as "industrial policies." In the case of Ensley Bradley, application was made for a policy which paid $186 upon death of insured in consideration of a weekly premium rate of 10 cents. Lula Hafner died some time prior to the death of Ensley Bradley and the company duly paid the policy on her life.

Ensley Bradley died in February, 1926, at Fort Mill, to which place the Bradley family had previously moved. The policy issued upon the life of Ensley is the one now in question.

There are thirty-four exceptions. We do not deem it necessary to consider the assignments of error separately, but will state the principles that will dispose of all the exceptions.

The salient questions are:

1. Was there a contract of insurance in force?

2. Was there a breach of this contract accompanied by fraud, making a fraudulent breach of contract?

3. Did the agent, Adcock, act within the scope of his authority when he committed the alleged fraudulent acts of obtaining possession of the insurance policy and receipt book by deceit?

4. Should the presiding judge have directed a nonsuit for the defendant upon the grounds set out in the record? 5. Should the presiding judge have directed a verdict upon the grounds set out in the record?

The cause of action was named, by the presiding judge, action for fraudulent breach of an insurance contract.

The theory of plaintiff's case and plan of trial appears to be that the insurance company's refusal to pay a valid insurance policy on the life of Ensley Bradley constituted breach of an insurance contract. The manner of obtaining possession of the insurance policy and receipt book from Cornelius Bradley, administrator of the estate of Ensley Bradley, constituted fraud. The insurance company challenges the charge of breach and denies a fraudulent act connected therewith, and denies that the acts of the agent, Adcock were within the scope of his authority.

The court agrees with the presiding judge in his interpretation of the complaint as setting forth only one cause of action, and the case will be treated as an action for damages for fraudulent breach of contract.

It appears not to be a disputed fact that on August 21, 1925, the appellant insured the life of one Ensley Bradley by issuing to her what is commonly known in insurance circles as an "industrial life insurance policy," payable at death to her estate.

It is earnestly and ably argued by appellant that it was justified and had a legal right to refuse payment of claim made by respondents for the face value of the policy because of certain representations and stipulations contained in the application and policy. This refusal to pay, the respondents contend, constituted breach of the policy contract. That portion of the application and provision of the policy under consideration, as aforesaid, is quoted as follows: The application contains this provision: "I hereby declare that the Statements recorded above and on the reverse side thereof are true and complete and I agree that any misrepresentation willfully made shall render the policy void and that the policy shall not be binding upon the Company, unless upon this date I shall be alive and in sound health."

The following is an excerpt from the policy: "If the insured *** has within two years before the date hereof been attended by a physician for any serious disease or complaint on or before said date, has had any pulmonary disease *** the Company may declare this policy void and the liability of the Company in the case of such declaration in the case of any claim under this policy shall be limited to the return of the premiums paid on the said policy, as aforesaid."

The appellant relied upon this provision as justification for its refusal to pay the claim and contended that the insured died of pulmonary tuberculosis and a physician on several occasions attended her within two years prior to the date of said policy.

It will be observed that the appellant in presenting its defense to the charge of breach of contract necessarily opened wide the door and let into the controversy the application for the policy and the policy itself, including all its provisions. The two paragraphs hereinabove quoted seem to be the bone of contention between the litigants.

It will not be amiss for the court to at least examine so much of the application of the policy as is material to the issue of breach of contract, since this is the pivotal point upon which rests the other questions involved. A close scrutiny and analysis of the provisions herein quoted necessarily urge the consideration of the facts, circumstances, and character of the misrepresentations on the part of the insured and the facts and circumstances surrounding the particular disease of which the insured died, to wit, pulmonary tuberculosis. Was there on the part of the insured "any misrepresentations willfully made?" Had the insured been attended by a physician within two years prior to date of policy "for any serious disease or complaint"? Did insured have "any pulmonary disease"? As aforesaid, appellant contends that insured had had within two years a physician to attend her for a "serious disease," also that she died from pulmonary tuberculosis, the serious disease for which she was attended.

The insured agreed that any misrepresentations willfully made shall render the policy void. It therefore appears that in order for there to have been fraud as to the pre-existing condition of the health of the insured as contended for by appellant, it was incumbent upon it to show that insured willfully, intentionally, and consciously made misrepresentations to the company as to the condition of her health and thereby induced it to deliver the policy to the insured. It manifestly follows that in order for appellant to prevail in its contention on this point, the duty devolved upon it to present in the trial of the case clear and convincing evidence to the same degree as would be necessary to prove and convict of fraud in any other case. Evidently the jury failed to find the evidence in the case clear and convincing that the insured knew or should have known that she was suffering from any serious disease or complaint, or that she knew she had pulmonary tuberculosis and, in the absence of this knowledge, how could it be said that she "willfully" misrepresented the facts to the insurance company-- willfulness, in this...