Gordon v. Fidelity & Cas. Co. of N. Y.

• Decision Date: 07 June 1961
• Docket Number: No. 17796,17796
• Court: South Carolina Supreme Court
• Parties: Curties H. GORDON, Respondent, v. FIDELITY & CASUALTY COMPANY OF NEW YORK, Appellant.

Page 509

120 S.E.2d 509

238 S.C. 438

Curties H. GORDON, Respondent, v. FIDELITY & CASUALTY COMPANY OF NEW YORK, Appellant.

No. 17796.

Supreme Court of South Carolina.

June 7, 1961.

Fulmer, Barnes & Verner, Columbia, for appellant.

Edens, Woodward & Butler, Columbia, for respondent.

MOSS, Justice.

This is a fraud and deceit action to recover actual and punitive damages, brought by Curtis H. Gordon, the respondent herein, against Fidelity & Casualty Company of New York, the appellant herein.

The complaint alleges that the respondent was a career soldier in the United States Army, and that on January 22, 1958, he obtained from the appellant a liability insurance policy covering a motor scooter, and by the medical coverage of said policy, the appellant agreed:

'To pay all reasonable expenses incurred within one year from the date of accident for necessary medical, surgical, x-ray and dental services, including prosthetic devices and necessary ambulance, hospital, professional nursing and funeral services * * *.'

The complaint alleges that on October 1, 1958, the respondent, while riding the insured motor scooter from his home to Fort Jackson, was injured by being struck by an automobile, and as a result thereof he was hospitalized in the government hospital at Fort Jackson for a period of twelve days, and there had to undergo treatment by various physicians for his injuries. It is also alleged that on May 11, 1959, that the respondent submitted to the appellant a statement showing the course of treatment and hospitalization he had undergone at the Fort Jackson hospital, as a result of his injury on October 1, 1958. The respondent demanded of the appellant the payment of $383.50, which he asserted was the reasonable cost of his hospitalization, and such amount was based upon the appraisal of two Columbia physicians and taken from the prevailing rates of the Columbia Hospital. It is further alleged that the appellant refused to pay the aforesaid claim on the ground that the respondent had incurred no expenses for the hospitalization and medical treatment received at the Fort Jackson hospital. The parties to this action agreed that 'the plaintiff incurred no expense or made no cash outlay since he was a soldier and treated at the Fort Jackson hospital.'

The complaint alleges that the respondent explained to an agent of the appellant, at the time the medical coverage portion of the policy was issued, that he was a soldier and, if injured, he would be confined to an army hospital for treatment and the agent stated 'these facts made no difference.' It is also alleged that at the time the medical coverage insurance was purchased that the agent of the appellant knew that if the respondent received medical treatment at an army hospital that no expense would be 'incurred' by him as required by the terms of the policy, but the agent remained silent thereabout, all of which the respondent alleges constituted a fraud upon him.

The complaint further alleges that the appellant knew that under the medical coverage of the policy in question it would not pay for medical and hospital treatment when furnished to the respondent at a government hospital, but this fact was not disclosed to the respondent. It is further alleged that this related to a material matter known to the appellant, but unknown to the respondent, and a legal duty was imposed upon the appellant to communicate such to the respondent. It is further alleged that the silence on the part of the appellant amounted to a representation known to be false, but relied upon by the respondent as being true.

The appellant interposed a demurrer to the complaint on the ground that it affirmatively appears from the complaint that the respondent had not incurred any necessary medical and hospital expense on account of his injuries, for the reason that such medical care and treatment as he did receive was furnished by an army hospital at no cost or expense to him, and the appellant is not liable for the reasonable value of such medical care and treatment under the terms of the insurance policy set forth in the complaint. The second ground of the demurrer is that the complaint shows that the respondent had the policy in question from January 22, 1958, until the date of his accident, which was October 1, 1958, before he discovered it did not contain the coverage which he believed it to contain, which was ample opportunity for him to learn what it provided, and negates the cause of action for fraud and deceit predicated upon alleged representations and silence of the agent of the appellant at the time of the issuance of the policy.

The demurrer was heard by the Honorable John W. Crews, Judge of the Richland County Court, and he overruled such on the ground that the complaint stated a cause of action for fraud and deceit. This appeal followed.

It is elementary that in passing upon a demurrer, the Court is limited to a consideration of the pleading under attack, and all of the factual allegations thereof that are properly pleaded are, for the purpose of such consideration, deemed admitted. It has also been held that when a fact is pleaded, whatever inferences of law or conclusions of fact may properly arise from it, are to be regarded as embraced in such averment. Roper v. South Carolina Tax Commission, 231 S.C. 587, 99 S.E.2d 377, and Outlaw v. Calhoun Life Ins. Co., 236 S.C. 272, 113 S.E.2d 817. However, the filing of a demurrer by the appellant does not admit that it was guilty of fraud and deceit because this allegation constitutes nothing more than a conclusion of the pleader which is not admitted by the demurrer. Alderman v. Bivin, 233 S.C. 545, 106 S.E.2d 385, and Warr v. Carolina Power & Light Co., 237 S.C. 121, 115 S.E.2d 799.

In this action for fraud and deceit, the respondent, in order to state a good cause of action, must allege (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity; (5) his intent that it should be acted upon by the person; (6) the hearer's ignorance of its falsity; (7) his reliance on its truth; (8) his right to rely thereon; (9) and his consequent and proximate injury. Jones v. Cooper, 234 S.C. 477, 109 S.E.2d 5; Mishoe v. General Motors Acceptance Corporation, 234 S.C. 182, 107 S.E.2d 43; Outlaw v. Calhoun Life Ins. Co., 236 S.C. 272, 113 S.E.2d 817. It is essential that the facts and circumstances which constitute the fraud should be set out clearly. Bookhart et al. v. Central Electric Co-op., Inc., 222 S.C. 289, 72 S.E.2d 576. The complaint must allege facts which would afford a basis upon which a jury could properly find support for each of the elements above set forth, and if the complaint fails to allege facts to support any one of the elements of fraud and deceit, then the complaint is fatally defective. Able v. Equitable Life Assur. Society of United States, 186 S.C. 381, 195 S.E. 652, and Warr v. Carolina Power & Light Co., supra.

Comparatively recently, many liability insurers have included in their policies, provisions under the terms of which the insurer undertakes to pay for medical expenses, within specified limits, incurred as a result of the condition or use of the property in connection with which the liability insurance is written. The liability of the insurer for medical expenses under such a provision depends upon the construction of the particular language used in the contract.

It is a well settled rule that the terms of an insurance policy must be construed most liberally in favor of the insured and where the words of a policy are ambiguous, or where they are capable of two reasonable interpretations, that construction will be adopted which is most favorable to the insured. Pitts v. Glens Falls Indemnity Company, 222 S.C. 133, 72 S.E.2d 174. However, in cases where there is no ambiguity, contracts of insurance, like other contracts, must be construed according to the terms which the parties have used, to be taken and understood in their plain, ordinary and popular sense. If the intention of the parties is clear, the Courts have no authority to change the contract in any particular. The Court has no power to interpolate into the agreement between the insurer and the insured a condition or stipulation not contemplated either by the law or by the contract between the parties. Chastain v. United Ins. Co., 230 S.C. 465, 96 S.E.2d 464.

Here, the appellant agreed 'to pay all reasonable expense incurred' for necessary medical and surgical service. There is no uncertainty or ambiguity in the language of the policy. It is too plain to call for judicial construction. The words used must be taken in the plain and ordinary sense in which they are generally used and understood. What legal interpretations should be given to the words 'expense incurred'?

In the case of Drearr v. Connecticut General Life Ins. Co., La.App., 119 So.2d 149, 151, the plaintiff was a war veteran and was confined in a government hospital for treatment of and surgery for a duodenal ulcer. He had an insurance policy which contracted to pay him for the expense incurred for hospital charges and services. He brought an action to recover the amount of an alleged bill rendered by the Veterans' Administration for his hospital charges and services. The suit was defended on the ground that the plaintiff was entitled to free treatment at said government hospital and incurred no expense whatsoever in connection with any of the services rendered him. The trial Court held that the veteran, who had executed the required statement under oath regarding his inability to pay for hospitalization was entitled to free care at the veterans' hospital and could not be charged therefor, and, therefore, he had incurred no expense within the meaning of the insurance policy. In affirming the holding of the lower Court, the Court of Appeal of Louisiana said:

"Incur emphasizes the idea of liability * * *'. Webster's New...