Huestess v. South Atlantic Life Ins. Co.

• Decision Date: 01 March 1911
• Parties: HUESTESS et al. v. SOUTH ATLANTIC LIFE INS. CO. [D1]
• Court: South Carolina Supreme Court

70 S.E. 403

88 S.C. 31

HUESTESS et al. v. SOUTH ATLANTIC LIFE INS. CO. ^[D1]

Supreme Court of South Carolina

March 1, 1911

Appeal from Common Pleas Circuit Court of Marlboro County; R. W Memminger, Judge.

Action by Maggie B. Huestess, executrix, and the executors of the last will and testament of J. B. Huestess, deceased, against the South Atlantic Life Insurance Company. Judgment for defendant, and plaintiffs appeal. Reversed and remanded for new trial.

McColl McColl & Le Grand, for appellants. Willcox & Willcox and Livingston & Muller, for respondent.

GARY A. J.

This is an action on a policy of life insurance, issued the 26th of December, 1907, to Joseph B. Huestess, who died on the 9th of August, 1908. After denying certain allegations of the complaint the defendant, by way of defense, alleged "that said policy was procured through fraud on the part of Joseph B. Huestess, the insured, said fraud consisting in the following facts, to wit:

"(a) Part 1 of the application for insurance, under which said policy No. 5949 was issued, contains the following agreement on the part of the insured: (1) I agree that this application, and the answers made to the medical examiner, in part 11 of said application, shall be the basis of the contract between the parties hereto and shall be conclusive upon any person, having or claiming any interest in any policy to be issued. *** (4) That the truthfulness of each statement is material to the risk, and is the sole basis of the proposed contract. [Signed] Joseph B. Huestess.

"(b) Part 2 of said application for insurance, under which said policy No. 5949 was issued, contains the following agreement on the part of the insured: 'I hereby warrant and agree that all the aforesaid statements and answers, and all those contained in part 1 of this application, are true, and offered to the company as consideration for the policy.' [Signed] Joseph B. Huestess.

"(c) Among the statements and answers in said part 2 so warranted to be true are the following: '(5a) State all diseases or injuries you have had during past five years, that have required medical or surgical treatment. Ans. None.' '(9a) Has any physician at any time expressed the opinion that your urine contained albumen or sugar? Ans. No. (b) How long since have you consulted a physician, and for what ailment? Ans. Not at all.'

"(d) That, as defendant is informed and believes, the answers above quoted, were not true when made, but on the contrary they were false, and so known to the said Joseph B. Huestess; that the said Joseph B. Huestess had required medical treatment during five years immediately preceding the date of said application; that a physician had previous to the date of such application expressed the opinion that the urine of said Joseph B. Huestess contained albumen, or sugar, or both, and that the said Joseph B. Huestess had, previous to the date of said application, consulted a physician."

At the close of all the testimony, the defendant's attorneys made a motion for the direction of a verdict, which was granted, and the plaintiffs' appealed.

The first question that will be considered is whether there was error on the part of his honor the presiding judge in sustaining the following ground, upon which the motion for the direction of a verdict was made: "Because the undisputed evidence is to the effect that certain material warranties were made by insured in his application as a part of the contract, and as the consideration for the issuing of the policy sued on; and is further to the effect that these warranties were false when made, and were at the time known by the assured to be false." The burden rested upon the defendant to prove that the facts set out in its answer were true. The presiding judge ruled that the answer charges conscious fraud. It is admitted that the answers to the questions were not in the handwriting of the deceased, but were inserted by the physician selected by the defendant to make the examination of the insured.

The presiding judge, in ruling upon the foregoing ground of the motion, said: "The only question which could possibly be urged as one that could be submitted to the jury is, whether or not the false statements of these answers--the answers to these questions--were put into the application by the insured himself, or were put in there by the agent of the company, or some one else unknown to him, against his consent, and in fraud and deception of him."

The record contains the following ruling of the presiding judge: "Mr. Le Grand: We want to show that the knowledge of Mr. Huestess' condition was told to Mr. Fass, and brought on from him to the company, and the company, having known, went on and issued the policy. The Court: Yes; I think it is relevant on the ground to show whether he made a fraud."

The presiding judge also allowed the plaintiffs, over the objection of the defendant's attorneys, to introduce testimony for the purpose of showing that the insured sustained a reputation for honesty, uprightness, and fair dealing.

The following appears in the report of the physician, who examined the insured: "(a) Was the urine examined, passed in your presence? Yes. (b) Color? Light amber. (c) Clear or turbid? Clear. (d) Reaction? Acid. (e) Sp. Gravity? 1,022. (f) Does it contain sugar? No. (g) Test used? Bismuth & Ly Peless. (h) Does it contain albumen? No. (i) Test used? Hect & Acid. (k) Have you found it necessary to examine the urine more than once? If so, give particulars. No."

The said physician had known the deceased for 16 years.

Clarence Huestess, son of the deceased, testified as follows: "Q. State what happened relative to this insurance. A. Mr. Webster introduced father to Mr. Fass, and he wanted to take out insurance, and father then told him he thought there would be no use, as he had tried before to get out insurance here at Bennettsville--been examined by every physician. And Mr. Fass wanted to know what was the trouble, and father told him it was kidney trouble, and he told him--then Mr. Fass told him--he wanted to give him a chance to get out insurance: that he could get him through all right. He wanted a chance to get him examined by his physician. Q. Who was his physician? A. Dr. Hamer, at McColl. Q. What then? A. He told him he had just gotten a similar case through for a Mr. Gibson of North Carolina of some disease of that kind; and he wanted father to let him examine him, and give him a chance. Q. Mr. Fass told your father? A. Yes, sir."

Mrs. Maggie B. Huestess testified as follows: "Q. Do you know Mr. Fass? A. Yes, sir. Q When did you first see him? A. In front of our home. Q. He came to your home? A. Yes, sir. Q. Well, state what you heard him saying, if anything, concerning insurance? A. Well, he came in the house to Mr. Huestess, and they were talking insurance, and he asked him to let him insure his life, and he told him there was no use to ask him, because he had been turned down."

There is no direct or positive testimony tending to show that the insured intended to practice a fraud upon the defendant, other than the mere inference, arising from the signing of the application for insurance, containing the answers alleged to be false. The fact that the agent Max Fass, after being informed that the insured had kidney disease, and had been examined for insurance, and had been turned down by every physician in Bennettsville, should have desired that the deceased be examined by the company's physician, so as to give him a chance for insurance, coupled with the statement that he had just gotten a similar case through for a Mr. Gibson of North Carolina of some disease of that kind, tends to show that the agent wanted the deceased examined by a physician, who would pass him, whether he had kidney troubles or not. And the statement of the physician in his report to the company that the urine passed in his presence was light amber in color, clear, contained neither sugar nor albumen, and that he did not find it necessary to examine the urine more than once, although the deceased was then, and had been for several years suffering from Bright's disease, tends to show that Fass and the physician had the same object in view. Under these circumstances, the question whether the insured was guilty of conscious fraud should have been submitted to the jury.

The second ground of the motion was as follows: "Because there is no sufficient evidence to show waiver of any of its rights, by the defendant company." "The burden of proof rested upon the defendant to show that the policy was forfeited, and when the circuit judge decided that the testimony was sufficient to establish that fact, he invaded the province of the jury, it being susceptible of more than one inference." Madden v. Ins. Co., 70 S.C 295, 49 S.E. 855. "When an insurance company issued a policy and accepted the premium, and there is testimony tending to show that at time of issuance of policy it had notice that insured was not true owner, this is sufficient to go to the jury, tending to show that defendant is estopped from claiming the policy was void from its inception, because assured was not sole owner." (Syllabus.) Graham v. Ins. Co., 48 S.C. 195, 26 S.E. 323, 59 Am. St. Rep. 707. "The question before us is whether the principal is estopped by conduct to assert a forfeiture, the assertion of which is inconsistent with the principal's conduct in accepting the premium and delivering the policy as a valid policy, when, if the forfeiture was not intended to be waived, such policy would be void in its inception. On this question, we do not see room for two opinions. The knowledge of an agent acquired within the scope of his agency, is imputable to the principal." Gandy v. Insurance Co., 52...