Broome v. Travelers Ins. Co.

• Decision Date: 03 May 1937
• Docket Number: 14474.
• Parties: BROOME v. TRAVELERS INS. CO.
• Court: South Carolina Supreme Court

191 S.E. 220

183 S.C. 413

BROOME v. TRAVELERS INS. CO.

No. 14474.

Supreme Court of South Carolina

May 3, 1937

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

Action by Annie Broome against the Travelers Insurance Company. From a judgment for plaintiff, defendant appeals.

Affirmed.

Osborne & Butler, of Spartanburg, and Hemphill & Hemphill, of Chester, for appellant.

Hamilton Gaston & Hamilton, of Chester, for respondent.

STABLER Chief Justice.

This is an action for the alleged fraudulent breach of a contract of insurance. It appears that on June 22, 1927, the defendant insured the life of the plaintiff under a group policy theretofore issued by it to the Highland Park Manufacturing Company, of which the plaintiff was an employee. The individual certificate furnished her by the defendant fixed the amount of her insurance at $1,000. Both the policy and the certificate provided that the insurer would waive, upon being furnished due proof of total permanent disability of the insured, further payment of premiums and would pay to her the amount of insurance then in force on her life in a fixed number of installments of her own choosing.

The complaint originally contained two causes of action, so denominated. It was sought by the first to recover actual damages in the sum of $1,000 alleged to be due the plaintiff as disability benefits. The second was for the fraudulent breach of contract, for which damages were asked in the sum of $2,000. On the call of the case, the defendant moved that the plaintiff be required to elect on which cause of action she would proceed, and her counsel thereupon stated that she would go to trial on the second-for the fraudulent breach of contract. The plaintiff was then permitted, on motion, to amend that cause of action by alleging that she had been injured and damaged in the sum of $1,000 actual damages and $2,000 punitive damages, and to change her prayer to conform to these allegations.

It was alleged that, in the summer of 1931, while the policy and the certificate of insurance were in full force and effect, the plaintiff became, and has been ever since, permanently and totally disabled, suffering with "a general physical weakness, low blood pressure, weakness of the heart, a chronic ulcerated stomach, and curvature of the spine" that, at the time of the commencement of her disability, she notified the defendant's agents of her condition and demanded payment of the amount due her, but that the company fraudulently refused to furnish her blanks on which to make claim for disability benefits; that it represented to her that, if she would continue to pay her premiums until her employer opened up its mill, which was then shut down, her claim would be paid, and that it thereby fraudulently persuaded her to pay the premiums until October 29, 1931 after which time it refused to accept further payments; and that the company, knowing of her disability, unlawfully canceled and repudiated the insurance contract, basing its action upon the claim that the premiums were not paid although it knew that the payment of premiums, under the terms of the policy and the certificate, was waived by it from and after the commencement of plaintiff's disability.

The defendant, answering, admitted the issuance of the group policy of insurance and of plaintiff's individual certificate thereunder, but alleged that on November 2, 1931, the Highland Park Manufacturing Company failed to pay the premium then due, and that both the policy and the certificate, for that reason, had lapsed as of that date. A general denial was interposed to other allegations of the complaint.

During the trial, Judge Oxner, upon motion of the defendant, granted a nonsuit as to punitive damages but refused to do so as to actual damages. A motion for a directed verdict was overruled and the jury found for the plaintiff $1,000. From judgment entered this appeal is taken.

While the exceptions are thirteen in numer, they raise but three questions, as stated and argued by counsel for the appellant:

"(1) Could the plaintiff recover actual damages for total and permanent disability when she had elected to proceed under the second cause of action for fraud, when no fraud was proven?

(2) Did the proof show that the plaintiff was totally and permanently disabled under the terms of the policy involved and the decisions of this Court?

(3) Could the plaintiff recover in the absence of a showing that she had furnished proofs of her alleged disability while the policy was still in force?"

First. Judge Oxner, in overruling the motion for a directed verdict as to actual damages, said: "The contention of the defendant is, in substance, that an action for fraudulent breach of contract is the same as one for fraud and deceit. I do not think the two are the same by any means. It is true that it has recently been held by the Supreme Court that an action for alleged fraudulent breach of contract is one ex delicto; but, as above stated, it doesn't follow from this holding that, in an action for fraudulent breach of contract, that if the plaintiff fails to prove fraud, then his cause of action for actual damages goes out. Unquestionably, this is true, because in several of the recent cases that have gone up to the Supreme Court, where the Supreme Court found that there was no evidence of fraud to warrant a verdict for punitive damages, the verdict was allowed to stand as to actual damages. A very recent decision is that of Welch v. Missouri State Life Insurance Company, 176 S.C. 494, 180 S.E. 447. In the Welch Case, if the contention of the defendant here is correct, when the Court found that there was no evidence of fraud, it would have been necessary for the Court to have reversed the entire judgment below."

The argument of appellant here is simply this: In an action for the fraudulent breach of contract accompanied by a fraudulent act, "if a plaintiff proves a fraud, he can get both actual and punitive damages, but if he does not prove fraud he not only cannot recover punitive damages but he cannot recover actual damages since the recovery of both depends upon the establishment of his proof that he has been defrauded." In their consideration of this question, counsel for the appellant have devoted a large part of their brief-which shows much study and investigation-to a discussion of numerous decisions of this court, from which, as pointed out, certain principles seem clear. While these decisions are authority for what they hold, it is not claimed that they are decisive of the question here presented. We cite a few of these cases: Welborn v. Dixon, 70 S.C. 108, 49 S.E. 232, 3 Ann.Cas. 407; Prince v. State Mutual Life Insurance Company, 77 S.C. 187, 57 S.E. 766; Givens v. North Augusta Electric & Improvement Company, 91 S.C. 417, 74 S.E. 1067; Winthrop v. Allen, 116 S.C. 388, 108 S.E. 153; Sullivan v. Calhoun, 117 S.C. 137, 108 S.E. 189; St. Charles...