Galphin v. Pioneer Life Ins. Co.

• Decision Date: 25 July 1930
• Docket Number: 12955.
• Parties: GALPHIN v. PIONEER LIFE INS. CO.
• Court: South Carolina Supreme Court

154 S.E. 855

157 S.C. 469

GALPHIN v. PIONEER LIFE INS. CO.

No. 12955.

Supreme Court of South Carolina

July 25, 1930

Appeal from Common Pleas Circuit Court of Greenwood County; H. F Rice, Judge.

Action by George Galphin against the Pioneer Life Insurance Company. Judgment for plaintiff, and defendant appeals.

Affirmed.

Mann & Plyler, of Greenville, and Park and McDonald, of Greenwood for appellant.

W. H. Nicholson and Mays & Featherstone, all of Greenwood, for respondent.

STABLER J.

This is an action to recover disability benefits under an insurance policy issued to the plaintiff by the defendant company. The policy was for $5,000 and contained a disability clause providing for the payment to the plaintiff of $10 per month for each $1,000 of insurance in case of his total and permanent disability.

The complaint is in the usual form. The plaintiff, after setting out the above-mentioned facts, alleged that, subsequently to the issuance of the policy, he became totally and permanently disabled as contemplated by its provisions; that thereafter he made demand upon the company for the payment of the monthly benefits of $50, but that payment was refused.

The defendant pleaded a general denial, and, in addition, set up several special defenses. It was alleged that the policy contained the express provision that it should not become of force unless it was delivered to the plaintiff and the first premium paid by the insured while in good health; that this provision was violated, in that the premium was paid and the policy delivered while the insured was in bad health, he having suffered a stroke of paralysis theretofore. It was further pleaded that before the policy was left in the possession of the plaintiff, the time for its delivery having elapsed, the company required the insured to furnish a health certificate as to his physical condition; that he did at that time make such certificate, in which he stated that he had had no sickness, except biliousness, since making the original application for the insurance; that this statement was false, in that the insured had theretofore suffered a stroke of paralysis and had been confined to his bed for a considerable time under the care of a physician; and that such misrepresentation was a fraud upon the defendant and relieved it from all liability under the terms of the policy. It was also alleged that the policy was surrendered and canceled on March 8, 1927, by mutual agreement of the parties, in consideration of the return to the plaintiff of all premiums paid by him, amounting to $297.74; and that the plaintiff executed a release, surrendered the policy, and accepted and retained the refunded premiums as consideration therefor.

The case was tried in the court of common pleas for Greenwood county before Judge Rice and a jury. Motions for a nonsuit and for a directed verdict were made and refused. A verdict was found for the plaintiff, and, from judgment entered thereon, the defendant appeals.

There are a number of exceptions, but the assignments of error may be considered under three general heads: (1) Error in admission of testimony; (2) error in the court's charge to the jury; and (3) error in refusing defendant's motion for a directed verdict. We will consider these in order.

The testimony shows that the insured was a well-known citizen of the town of Ninety Six, and apparently was on the best of terms with the company's agent, DeVore, who persuaded him, he says, to drop his insurance in the Pacific Mutual Company and to take insurance with the defendant. On May 28, 1925, respondent made application to the defendant for a policy of insurance in the sum of $5,000. On July 20, he amended his application by requesting that an additional policy in the sum of $3,000 be issued on the same plan; and the company issued both policies. There is no contest about the $3,000 policy, and it is not involved in this appeal.

The $5,000 policy, dated July 15, 1925, contained the following provision as to the payment of premiums: "This policy shall not take effect until the first premium shall have been paid while the insured is in good health." As to disability benefits, it provided: "If, before attaining the age of sixty years and while this policy is in full force and there is no default in payment of premiums thereunder, the Insured shall become totally and permanently disabled by bodily injury or disease so that he is and will be permanently continuously and wholly prevented thereby from performing any work or performing the duties of any occupation for remuneration or profit, then upon receipt of due proof while this policy is in full force, that such total disability exists and has existed continuously for a period of not less than thirteen weeks, the Company will waive payment of further premiums falling due hereunder during the term of such disability, and will pay to the Insured during the term of such disability following the first thirteen weeks a monthly income of Ten Dollars for each one thousand dollars of face amount of this policy. The first payment of such monthly income shall be made as of the date of receipt of such proof. The continuous existence of total disability for a period of thirteen consecutive weeks will be regarded by the Company as presumptive evidence of the permanence of such disability."

The plaintiff testified that when the policy was delivered to him in July, he did not actually pay the premium in cash, but had an agreement with the agent of the company to keep the policy in good standing until the insured started to gin in the fall, at which time he would pay, it appearing that the plaintiff was engaged in the business of ginning cotton. The appellant complains that the admission of this testimony was error, for the reason that it tended to vary the terms of the written contract, which provided that the policy should not go into effect until the initial premium was actually paid; and for the further reason that the parol agreement was void under the statute of frauds (Civ. Code 1922, § 5517), in that it was for the purchase of a contract of insurance for the value of more than $50.

The exceptions raising these questions are without merit. The provision in the policy relied on by the appellant was written into it by the company for its own benefit, and the condition named may be waived by it or its agent. 37 C.J. 406. As held by the Court in Williams v. Insurance Company, 112 S.C. 436, 100 S.E. 157, 160: "Payment may be effected by many mediums; and the parties may forego that part of the contract which prescribes prepayment by waiver of it." There was evidence that the policy was delivered in July by the local agent, and that credit was extended the insured for payment of the initial premium. As the agent had authority to deliver the policy and collect the premium, he possessed the implied authority to vary the mode and time of payment. With regard to the contention that the agreement violated the statute of frauds, it is only necessary to say that, if the policy was delivered at the time of the alleged oral agreement-- and the respondent so testified and the jury so found--such delivery removed the transaction from the operation of the statute.

When the plaintiff introduced the policy in evidence, he did not offer the paper called the supplemental application, claimed by appellant to have been made by the insured on September 14. The appellant complains that the court erred in not requiring him to do so, for the reason that such application was a part of the policy. Even if we should concede--as we do not, under the conflicting evidence as to the delivery of the policy--that this paper was a part of the policy, failure to introduce it at the time the policy was offered did no harm to the defendant, as it was later received in evidence and the plaintiff was cross-examined concerning it.

The plaintiff was also questioned about what happened at the time the representatives of the company saw him in March, 1927, for the purpose of having him sign a release and surrender the policy. He testified that the policy was read to him in part, and that he was told that it was not good, and that, unless he surrendered it, the company would take legal action to procure it, and that the representatives of the company would not make a favorable report as to the disability benefits under the $3,000 policy.

The appellant's contention is that this testimony of Galphin was directed to an attack on the release as being fraudulent or procured by overpersuasion, and that it was not subject to such attack without some allegation of support. It appears to be a well-established practice, however, that the plaintiff is not required to anticipate the defense of a release which he knows is outstanding, but which he deems invalid; he may plead his cause of action without reference to it in the complaint. The defendant may set up the release in its answer as a defense and may then exercise its right to move the court for an order to require the plaintiff to reply to that portion of the answer; but, should it fail to procure such order, the plaintiff would have the right to offer evidence in denial or avoidance of the release, although he has filed no reply. See Levister v. Railway Company, 56 S.C. 508, 35 S.E. 207; McDowell v. Railway Company, 113 S.C. 399, 102 S.E. 639; 34 Cyc. 1068-1094.

It is admitted that a release of liability for tort may be attacked collaterally; but the appellant argues that, where the relationship between the parties is contractual, the rule does not apply. We can see no reason, however, why it should not apply equally in one case as in the other. The release itself is a contract, and the attack is against such contract in both cases....