Davis v. Bankers Life & Cas. Co.

• Decision Date: 28 July 1955
• Docket Number: No. 17044,17044
• Citation: 88 S.E.2d 658,227 S.C. 587
• Parties: Benjamin H. DAVIS, Respondent, v. BANKERS LIFE and CASUALTY COMPANY, Appellant.
• Court: South Carolina Supreme Court

Page 658

88 S.E.2d 658

227 S.C. 587

Benjamin H. DAVIS, Respondent, v. BANKERS LIFE and CASUALTY COMPANY, Appellant.

No. 17044.

Supreme Court of South Carolina.

July 28, 1955.

Williams & Henry, Greenville, Moore & Mouzon, Charleston, for appellant.

Leatherwood, Walker, Todd & Mann, Greenville, for respondent.

TAYLOR, Justice.

This appeal arises out of an action brought in the Greenville County Court for the wrongful cancellation of an insurance contract.

Timely motions were made for nonsuit and directed verdict but overruled and the case submitted to the jury who found for plaintiff $12 actual damages and $1,500 punitive damages. Thereafter, motions for Judgment Non Obstante Veredicto or for a new trial in the alternative were made and overruled.

On April 1, 1952, appellant issued its hospital and sick benefits policy to respondent. On the 14th of July, 1953, respondent received from appellant's home office a written notice stating that the policy had lapsed and instructing him to destroy his policy, that it was worthless; and in order that he not have a false sense of security, the policy should be destroyed, or to apply for reinstatement and pay the current premium due.

Approximately two weeks thereafter, respondent received another such notice, and having previously checked with his bank and ascertained that the check which he had sent to pay the premium had been cashed by appellant, he undertook to contact appellant's local agent through whom he had purchased the policy but was unsuccessful; and the action out of which this appeal arises was brought for the wrongful, fraudulent, and unlawful lapsing and canceling of the said policy.

Appellant contends that the lapse notices were sent by mistake and had no effect upon the legal status of the policy; that the premium had been paid and the policy was still in force and effect. Therefore, respondent was not in position to maintain an action for its wrongful cancellation and cites the following cases as authority for its position: Cunningham v. Independence Insurance Company, 182 S.C. 520, 189 S.E. 800; Hollings v. Bankers Union of the World, 63 S.C. 192, 41 S.E. 90; Herndon v. Continental Casualty Co., 144 S.C. 448, 142 S.E. 648; Kelly v. Guaranty Fire Ins. Co., 176 S.C. 275, 180 S.E. 35; Moore v. Standard Mutual Life Ass'n of South Carolina, 191 S.C. 196, 4 S.E. 2d 251; and Bailey v. North Carolina Mutual Life Ins. Co., 173 S.C. 131, 175 S.E. 73.

It is admitted by appellant that the records of the local office showed that the policy was paid up until September 1, 1953, with thirty days grace; that the lapse notices, which is the procedure followed by it when policies are declared lapsed, were sent from the home office; and that the contents were expected to be believed and acted upon accordingly by the policy holder. One of appellant's agents testified that he had talked with respondent on a number of occasions and that he could not give him extended coverage because of his age.

Respondent was unable to locate the agent from whom he purchased the policy and appellant was unable to shed any light upon his whereabouts and offered no reason for the lapse notices being sent to respondent except to say that it was a mistake and even this was not evidence but a conclusion on the part of those at the local office; therefore, there is no direct explanation for appellant's action. However, one of appellant's agents testified that he had had barber work done at respondent's place of business and on a number of occasions had discussed insurance with him and had told him that he was ineligible for extended coverage because of his age. Respondent testified that he was in bad health back in August and doing little work prior to his receipt of the cancellation notices and that it was during this period that appellant's agent had been discussing the question of insurance with him from time to time while having his barber work done. From this testimony, the jury might have reasoned that appellant knowing respondent's state of health through its agent sent the cancellation notices with the intention of avoiding payment of any claims arising out of the illness.

In the recent case of McLaughlin v. Brotherhood of Railroad Trainmen, 216 S.C. 233, 57 S.E.2d 411, 414, this Court, quoting from Shuler v. Equitable Life Assurance Society of United States, 184 S.C. 485, 193 S.E. 46, states:

"By the weight of authority, where an insurer wrongfully cancels, repudiates, or terminates the contract of insurance, the insured may at once pursue either of three courses: (1) He may...