Life & Casualty Ins. Co. of Tennessee v. Smith

• Decision Date: 15 April 1935
• Docket Number: 24268.
• Citation: 179 S.E. 744,51 Ga.App. 122
• Parties: LIFE & CASUALTY INS. CO. OF TENNESSEE v. SMITH.
• Court: Georgia Court of Appeals

179 S.E. 744

51 Ga.App. 122

LIFE & CASUALTY INS. CO. OF TENNESSEE v. SMITH.

No. 24268.

Court of Appeals of Georgia, First Division

April 15, 1935

Syllabus by Editorial Staff.

"Bad faith," within statute making insurer liable for damages and attorney's fees for refusal in "bad faith" to pay loss, is not equivalent of actual fraud, but is any frivolous or unfounded refusal in law or in fact to comply with policyholder's requisition to pay according to terms of contract and conditions imposed by statute, and is negatived by probable cause for refusing payment (Civ. Code 1910, § 2549).

Error from Superior Court, Upson County; Wm. E. H. Searcy, Jr. Judge.

Suit by Willie Smith against the Life and Casualty Insurance Company of Tennessee. Judgment for plaintiff, and defendant brings error.

Affirmed on condition.

James R. Davis, of Thomaston, for plaintiff in error.

W. M Dallas, of Thomaston, for defendant in error.

Syllabus OPINION.

GUERRY Judge.

Plaintiff sued the defendant company to recover under a life insurance policy, under which he was beneficiary. He alleged in his petition that the policy was in effect at the time of the death of the insured; that notice of such death was in due time properly submitted to the company, and that his continued demands for payment was refused by the company. The company defended on the ground that the insured had within two years prior to the issuance of the policy been treated by a physician for a serious disorder or disease, to wit, goiter and extreme nervousness, and that under a provision of the policy it was only liable for the return of the premiums. The evidence for the defendant sustained its defense, while the evidence for the plaintiff denied it. The jury found for the plaintiff the full amount of the policy together with damages and attorney's fees. Defendant excepts to the finding by the jury of the last two items. Held:

1. Section 2549 of the Civil Code (1910) allows damages and attorney's fees to be recovered against an insurance company in a suit against it on an insurance policy only when "it shall be made to appear to the jury trying the same that the refusal of the company to pay said loss was in bad faith."

2. "The terms 'bad faith' are not the equivalent of actual fraud, but they mean any frivolous or unfounded (italics ours) refusal in law or in fact to comply with the requisition of the policyholder to pay according to the...