Kaiser v. Carolina Life Ins. Co.

• Citation: 65 S.E.2d 865,219 S.C. 456
• Decision Date: 26 June 1951
• Docket Number: No. 16517,16517
• Parties: KAISER v. CAROLINA LIFE INS. CO.
• Court: South Carolina Supreme Court

Page 865

65 S.E.2d 865

219 S.C. 456

KAISER v. CAROLINA LIFE INS. CO.

No. 16517.

Supreme Court of South Carolina.

June 26, 1951.

N. A. Turner, Edward A. Harter, Jr., and H. Fletcher Padget, Jr., all of Columbia, for appellant.

C. T. Graydon, J. Bratton Davis, both of Columbia, for respondent.

STUKES, Justice.

This equitable action for the reformation of a life insurance policy and recovery of double indemnity for accidental death was tried by the court without jury or reference and resulted in judgment for plaintiff, whence defendant's appeal. The beneficiary was the mother of the insured. The latter procured the insurance in 1946 through his father who was then an agent of the insurer, afterward severing that connection to accept part-time employment with another life insurance company; he also farms. An Air Force veteran pilot, the insured re-entered the service as a First Lieutenant early in 1948. Engaged as such he was accidentally killed in a plane crash in Mississippi on December 5, 1948. The policy was then lost or mislaid but appellant promptly accepted and paid claim for the face amount of it, which was $2000, and denied liability for the same additional sum under the double indemnity provision. Payment to the beneficiary was under agreement that claim to the further benefit of double indemnity was unprejudiced thereby, and this suit was instituted in order to determine it. Meanwhile, the misplaced policy was found and was placed in evidence upon trial.

The portion of the policy entitled 'Privileges and Conditions' contains the following:

'Aviation Clause. The liability of the Company is limited in any event, or under any circumstances, to a payment not to exceed the legal reserve on this policy, or ten per cent of the face amount hereof, whichever is the greater, should the insured die while engaging in aeronautical operations except as a fare paying passenger on schedule passenger service between established airports within continental United States.'

For an additional annual premium of Three Dollars the policy also provided for double indemnity coverage and contained, among others, the following clause:

'Risks Not Assumed. This additional benefit shall not be payable provided such death resulted directly or indirectly from: (b) injuries contracted or sustained while participating in or in consequence of having participated in any submarine expedition or operations, or while in or on, or operating or handling any vehicle or mechanical device for aerial navigation, or in falling therefrom or therewith.' There were eight other excepted risks.

After resuming military flying service the insured made application for change in his policy, appellant endorsed it as follows, and the insured paid the required additional premium: 'In consideration of an annual premium of Five and No/100 dollars for each one thousand dollars of insurance, the limit of liability on the part of the Carolina Life Insurance Company as provided in the Aviation Clause under the Privileges and Conditions is voided. The provisions of said Aviation Clause shall, however, be and continue in full force and effect if at any time the additional annual premium stated as a consideration for this endorsement is not paid.'

Personal negotiations for the foregoing with the representatives of appellant were carried on in behalf of the insured by his father, the husband of respondent, and her case depends upon his testimony and the exhibits.

Appellant's contention is that the intention of the contracting parties was that the policy endorsement should affect only the Aviation Clause, which has been quoted above, and had no effect upon the provision for double indemnity, which excludes accidental death when flying. In the brief the questions involved on appeal are stated as follows but all need not be answered as will be seen:

1. Was it the mutual intent of the parties to have a contract of insurance without aviation restrictions on the double indemnity benefit?

2. If question one be answered in the affirmative, did the policy with the endorsement fail to constitute the true contract because of:

(a) mistake on the part of the insured induced by inequitable conduct, deceit, concealment or imposition of fraud on the part of the defendant?

(b) without disqualifying negligence on the part of the insured?

Respondent's husband (insured's father) testified that in 1948 when the insured anticipated re-entering the Air Force as a pilot he, the witness, went to Mr. Gillespie, the Columbia District Manager of appellant, so advised him and inquired about the provisions of the policy. The following is from transcript of the testimony at this point:

'Q. Was anything said about the double indemnity clause? A. Yes, I told him this policy carried double indemnity and I wanted to know if that provision could be made to take care of aviation and he said it could, and I asked him could it be made to take care of double indemnity and he said yes.

'Q. Did he give you any paper for your son to sign? A. Yes, before I left he gave me a paper for my son to fill out in order to determine further information so they could arrive at the rate of increase to be paid on the policy in order to take care of it.'

Afterward application form was signed by the insured and filed with the policy for endorsement. After the policy was endorsed it was returned to the insured and before or at the same time there was delivered by mail to him or his father and agent an inter-departmental communication of the Company which respondent introduced in evidence, over appellant's objection, as exhibit 3, and it is referred to in the record as the 'pink slip'. It informed the district manager that action had been taken on the policy by the company and, quoting: 'Full aviation coverage granted.' Relying upon it and its prior delivery, the witness said, the additional premium was paid. The witness examined the policy after endorsement, but quoting him, 'overlooked' the lack of separate endorsement of the double indemnity clause.

After the death of insured the witness filed claim in behalf of his wife, the beneficiary and talked with an agent of the Company, Mr. Swygert, who mentioned that the policy contained double indemnity. The witness later called at the office of the District Manager to obtain check and was disappointed that it was only for the face amount of the policy, which he declined to accept. After a few days he saw the District Manager and also Mr. Cheatham who was the Company's Auditor and Supervisor of Claims. The witness understood from the manager, before the issuance of the endorsement, that the latter would change the policy to include death by aviation in the double indemnity, but after death the manager said not. The interview with Mr. Cheatham was at the suggestion of the manager's clerk who had attempted to deliver the check. Mr. Cheatham told the witness that the claim papers were in order and that settlement was delayed on account of the claim for double indemnity, which was reinsured in another company and effort would be made to collect and pay it. After several days the check for $2000 was accepted upon agreement that the claim for the additional double indemnity benefit was unaffected. Mr. Cheatham showed the witness a telegram from the reinsurer to the effect that double indemnity was not payable. Mr. Cheatham said that before receipt of the telegram he thought double indemnity was payable.

On cross examination the witness said that he began employment with appellant in December 1945 and after training with Mr. Swygert went on his own as a solicitor. Five or six months later he left appellant's employ and went with Kansas City Life Insurance Company and has since solicited business for it, writing ordinary and double indemnity policies. He is a college graduate and former school teacher. His son, the insured, attended college and university for three years. His wife, the beneficiary, is also a college graduate. The witness and insured understood the provisions of the Aviation Clause of the policy. The witness had all of the transactions with appellant in reference to the policy and endorsement.

On re-direct examination the witness said that Mr. Gillespie (appellant's District Manager) definitely represented to him that the policy endorsement, quoting, 'covered both the face of the policy and double indemnity.' Mr. Cheatham, appellant's Auditor, told the witness that he similarly understood the endorsement until he received the telegram (from the reinsurer).

The foregoing and the policy and 'pink slip' constituted respondent's case on the facts. Appellant's evidence will now be similarly reviewed.

Its District Manager, Mr. Gillespie, testified in behalf of appellant and denied that he made any representation with respect to the policy endorsement affecting the double indemnity clause and, on the contrary, told the insured's father that the extra premium which was paid for the endorsement did not affect the double indemnity clause; and the appellant company does not under any conditions or for any premium eliminate any of the exceptions from liability for double indemnity. He has been in the life insurance business for thirty years and does not know of any company which follows a different practice in this respect. When death claim was first prepared it was for the sum of $2000 and the father of the insured signed it. Exhibit No. 3, the 'pink slip', was an inter-office communication from appellant's ordinary department to the district office, addressed to the manager of the latter and not intended to go to the policyholder but in this case it was unintentionally mailed to the insured with the policy.

The Auditor and Claims Supervisor, referred to in the foregoing resume of respondent's evidence, also testified and categorically denied any admission of liability of the company for double indemnity. He also denied knowledge of any...