Johnson v. Wabash Life Ins. Co., 18189

• Decision Date: 26 March 1964
• Docket Number: No. 18189,18189
• Citation: 244 S.C. 95,135 S.E.2d 620
• Parties: Berlene D. JOHNSON, Respondent, v. WABASH LIFE INSURANCE COMPANY, Appellant.
• Court: South Carolina Supreme Court

Page 620

135 S.E.2d 620

244 S.C. 95

Berlene D. JOHNSON, Respondent, v. WABASH LIFE INSURANCE COMPANY, Appellant.

No. 18189.

Supreme Court of South Carolina.

March 26, 1964.

Willcox, Hardee, Houck, Palmer & O'Farrell, Florence, for appellant.

Gasque, Seals & Gasque, Marion, for respondent.

MOSS, Justice.

The appellant, Wabash Life Insurance Company, on December 3, 1962, issued a hospital insurance policy to Berlene D. Johnson, the respondent herein. By the terms of said policy, the appellant agreed to pay to the insured certain hospital and surgical expense incurred by her.

The respondent instituted this action alleging that while the aforesaid policy was in full force and effect she was hospitalized in the McLeod Infirmary, in Florence, South Carolina, there receiving medical and surgical treatment from February 16, 1963 through March 24, 1963. She also alleges that she filed a claim for the benefits due her under said policy and the appellant refused to honor or pay said claim.

The appellant admitted the issuance of the aforesaid policy of insurance and that the respondent had been hospitalized, as is above set forth, but refused to pay the claim upon two grounds: (1) That there were misrepresentations in the application of the respondent as to her previous physical condition; and (2) That the respondent was hospitalized for a condition that existed prior to the effective date of the policy, and such was not covered under the terms of the policy. During the course of the trial, the appellant abandoned the first defense and relied solely on the defense that the illness for which the respondent was hospitalized was for a condition that existed prior to the effective date of the policy.

This case came on for trial before the Honorable Louis Rosen, Presiding Judge, and a jury, at the 1963 September term of the Court of Common Pleas for Marion County. The appellant, at appropriate stages of the trial, made motions for a nonsuit and a directed verdict upon the ground that the hospitalization of the respondent, for which she was claiming benefits under the policy, was for illness, the cause of which originated prior to the issuance of the policy, and that the claim was made within the two year contestable provision thereof. When this motion was refused, the appellant consented to a jury verdict for the amount of the claim, reserving the aforesaid policy defense. The appeal here is from the refusal of the Trial Judge to direct a verdict in favor of the appellant upon the ground stated.

The appellant contends that the respondent had a pre-existing kidney condition, medically described as hydronephrosis and cystitis, for sometime prior to the date of the policy and that the hospitalization for which the respondent claims compensation was for the same kidney condition that had so existed. The respondent admits that her illness, for which she was subsequently hospitalized, pre-existed the issuance of the policy in question. It is the position of the respondent that the appellant waived the provisions of the insurance contract and is estopped from relying thereon.

There is abundant undisputed evidence that the respondent advised the agent of the appellant of her physical condition at the time the application for the insurance in question was taken. The husband of the respondent testified that he told the agent of the appellant at the time the application for the insurance was taken that 'If you got any disease listed in your book that she hasn't got, I like to know it.' In the application of the respondent, a negative answer was given to the question of whether the respondent had ever had a kidney disease. The testimony shows that when the policy in question was delivered to the respondent and she discovered that the information which she had given to the agent, as to her physical condition, had not been clearly and correctly stated in the application, such policy was returned to the agent to correct the application. Later, the policy was returned to the insured without any change being made therein.

The pertinent provisions of the policy of insurance in question provides as follows:

Wabash Life Insurance Company * * * 'does hereby insure the person whose name appears as the Insured in the Schedule immediately below against loss by reason of hospital and surgical expense incurred by the Insured * * * resulting from sickness of which the cause originates while this policy is in force * * * to the extent herein provided, subject, however, to all conditions and provisions herein contained or endorsed hereon.'

'No claim for loss incurred or disability * * * commencing after two years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this policy.'

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 the policy are ambiguous or where they are capable of two reasonable interpretations that construction will be adopted which is most favorable to the insured. 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...