Love v. Prudential Ins. Co. of America

• Decision Date: 10 October 1934
• Docket Number: 13921.
• Citation: 176 S.E. 333,173 S.C. 433
• Parties: LOVE v. PRUDENTIAL INS. CO. OF AMERICA.
• Court: South Carolina Supreme Court

176 S.E. 333

173 S.C. 433

LOVE v. PRUDENTIAL INS. CO. OF AMERICA.

No. 13921.

Supreme Court of South Carolina

October 10, 1934

Appeal from Spartanburg County Court; M. C. Foster, Judge.

Action by Lawrence E. Love against the Prudential Insurance Company of America. From an order sustaining a demurrer to the answer and striking certain paragraphs therefrom, defendant appeals.

Reversed.

The complaint was as follows:

The plaintiff, Lawrence E. Love, complaining of the defendant, the Prudential Insurance Company of America, a corporation, alleges:

1. That plaintiff is a natural person.

2. That the defendant is a corporation, duly organized, chartered and existing under and by virtue of the laws of one of the several states of the United States, and is engaged in the conduct of a health and life insurance business in the state of South Carolina, subject to the laws thereof, with place of business and agents in the county of Spartanburg, state aforesaid.

3. That, heretofore, on or about the 1st day of April, 1931, the plaintiff was visited at his home in the city of Spartanburg by one Marion D. Malone, agent of the defendant corporation and was solicited by the said agent to make application for a certain policy of insurance, issued by the defendant insurance company; that, in the course of the solicitation the said agent represented to plaintiff that, in consideration of the payment of a monthly premium of $2.64 the defendant insurance company would issue its policy to plaintiff, which would insure plaintiff against the risks of permanent and total disability and death, under the terms of which the defendant insurance company would pay to plaintiff immediately upon becoming totally and permanently disabled the sum of $500 in cash, and, in addition to the payment of the aforesaid sum in cash as a disability benefit, the defendant company would waive the payment of further premiums by the insured after the happening of such contingency, and would pay to the named beneficiary upon the death of the insured the further sum of $500; that, relying upon the aforesaid representations to be true, the plaintiff was induced by the representations of the said agent to make formal application for the issuance of a policy of insurance to him as insured, which plaintiff was led to believe, by the representation of the said agent, contained an embodiment of the above-stated features of insurance; and that, in due course, on or about the 20th day of April, 1931, the defendant insurance company issued and delivered to plaintiff its certain policy contract (Policy No. M 1360777), which plaintiff accepted and placed away in safekeeping upon being assured by the said agent that the said policy contained an embodiment of the insurance represented and applied for.

4. That, as plaintiff is informed and believes, the said representations were made by the said agent with full knowledge that the policy of insurance issued and delivered by the defendant insurance company did not contain the features of insurance represented; and that, in reliance upon the false and fraudulent representations of the said agent that the said policy contained a formal embodiment and expression of the features of insurance applied for, the plaintiff has been induced to pay to the defendant insurance company the stipulated monthly premium of $2.64 since April 20, 1931.

5. That, during the late autumn of 1932, the plaintiff became totally and permanently disabled on account of the loss of sight of both eyes, and, upon making application to the defendant insurance company for the immediate payment of the disability benefit of $500 in cash, which the said agent of the defendant company had represented would be paid in such cases, plaintiff was apprised by the defendant company, and so for the first time discovered that by the terms of the printed policy contract the insurance company had only bound itself to pay to the insured in event of total and permanent disability the face amount of insurance under the policy ($500) in forty quarter annual installments during ten years, each installment to be in the amount of $14.71, beginning after such total disability has existed continuously for a period of one year, and that the total amount of insurance under the policy, exclusive of the accidental death benefit, at any time after one or more of such installments have been paid, does or shall not exceed the commuted value of such of said installments as are not then due, computed at the rate of 3 1/2 per cent. interest per annum, compounded annually, which provision, as plaintiff is informed and believes, means that the amount payable as a death benefit upon the death of the insured is diminished by such amount or amounts as has been paid as disability benefits during the lifetime of the insured with the commuted adjustment for interest allowance on the unpaid installments above stated.

6. That the provisions of the said policy do not embody the features of insurance, which plaintiff has been fraudulently induced by the defendant company to apply for and on which he has been induced to pay the stipulated monthly premium above stated; that plaintiff would not have applied for the issuance of, nor would he have accepted the delivery of the said contract or policy of insurance had it not been for the false and fraudulent representations of the defendant insurance company that the policy actually contained an embodiment of the features of insurance represented; that by reason of plaintiff's reliance upon the wrongful, false, and fraudulent representations of the defendant insurance company that he had been properly insured as represented, plaintiff has been induced to place himself in such position that he is no longer eligible for this type of insurance, which plaintiff would have otherwise secured had he not been wrongfully misled to believe that he had been insured by the defendant company as represented; and that, as a direct result of the aforesaid facts, fraud, and wrongful misrepresentations of the defendant insurance company, plaintiff has suffered actual damages in an amount equal to the actual difference between the value of the policy represented and the value of the policy actually delivered.

7. That, as a direct result of the wrongful acts of the defendant insurance company, the plaintiff has suffered damages, actual and punitive, in the full and just amount of $2,000.

Wherefore, plaintiff prays for judgment against the defendant for damages, actual and punitive, in the amount of $2,000, together with the costs and disbursements of this action, and for whatever other relief may appear to the court to be just and proper.

The order of Judge Foster sustaining the plaintiff's demurrer and striking out various defenses set up in the defendant's answer is as follows:

This is an action commenced by the plaintiff, Lawrence E. Love, against the defendant, the Prudential Insurance Company of America, a corporation, in the county court for Spartanburg county, by service of summons and verified complaint on the defendant on the 17th day of May, 1933. It is an action instituted by the plaintiff against the defendant for the recovery of damages, actual and punitive, for an alleged fraudulent and tortious breach of an alleged contract of insurance on the part of the defendant.

In due course thereafter, the defendant filed its answer, denying generally the material allegations of the complaint and setting up as special defenses to the action, first, the defense that there was fraud practiced by the plaintiff in the application for and the procurement of the contract of insurance; and, second, the defense that the plaintiff was not in sound health at the date of the issuance of the policy, an alleged condition precedent to the liability of the defendant for the risks insured against, in which event the liability of the defendant was to be limited to the amount of the premiums paid on the contract, which were to be returned by defendant. Based partly on allegations of fraud in the procurement of the policy of insurance on the part of the plaintiff, the answer of the defendant sets up generally an alleged counteraction for the cancellation of plaintiff's contract of insurance.

Thereafter, the plaintiff filed a special demurrer, demurring specially to the defense that fraud had been practiced by plaintiff in the procurement of the contract of insurance, to the defense that the plaintiff was not in sound health at the date of issuance of the policy, and to any alleged cause of action set up in defendant's answer for the cancellation of plaintiff's contract of insurance on the grounds of fraud in the application for and the procurement of the insurance contract. Contemporaneously with service of the demurrer, the plaintiff served on defendant notice of motion to strike the objectionable allegations from the defendant's answer on the grounds that the allegations enumerated are matters which the defendant has conclusively waived the right to assert and are prejudicial to the rights of the plaintiff. The demurrer and motion to strike both came before me for hearing at the same time, and both matters will be disposed of in the within order.

The plaintiff demurs to the defense of fraud in the application for and procurement of the contract of insurance on the grounds that the facts alleged are insufficient to constitute a defense, in that it appears on the face of the pleadings that the defendant insurance company has received the premiums on the policy of insurance forming the subject of the action for a period of two years and is now conclusively bound by the application and representations as true. The contract of insurance in question is a contract of life insurance,...