Moore v. Palmetto State Life Ins. Co.

Decision Date11 December 1952
Docket NumberNo. 16692,16692
Citation73 S.E.2d 688,222 S.C. 492
PartiesMOORE v. PALMETTO STATE LIFE INS. CO.
CourtSouth Carolina Supreme Court

Mays, Featherstone & Bradford, Greenwood, for appellant.

Nicholson & Nicholson, Greenwood, for respondent.

OXNER, Justice.

In an action to recover the amount of a policy of accident insurance applied for by her husband in which she was to be named as beneficiary, respondent was awarded judgment against appellant insurance company for $1,000. The major question for determination is whether the evidence is sufficient to sustain the judgment.

On March 3, 1951, respondent applied to one of appellant's agents for a policy of accident insurance on her life and also submitted an application for a similar policy for $1,000 on the life of her husband, who was a truck driver engaged in long distance hauling. Each application was accompanied by a deposit of 20cents for which a receipt was given, wherein it was stated:

'It is understood that this deposit will be returned if the application is not approved by the company.'

The insurance company offered testimony to the effect that the application for the policy on the life of respondent's husband was declined on March 19, 1951, because he was engaged in a hazardous occupation, and that notice to that effect was sent to the district office with direction to notify the applicant of the rejection and refund the deposit. One of the agents also testified that about six weeks later, respondent was notified of the rejection of her husband's application and there was tendered to her the deposit of 20cents.

The foregoing testimony of the agent was denied by respondent who testified that she was never notified of the rejection of the application until after her husband was accidentally killed on June 3, 1951. Her testimony as to what transpired after the filing of the application on March 3, 1951, was as follows:

'The next time I saw an agent of Palmetto State Life Insurance Company was five weeks later. Mr. Newell came to my house collecting on some life insurance I already had and on a policy like that on myself. He brought my policy back that day.

'Q. Now what was said, if anything, in regard to the policy for which this application was written? A. I asked him where was my husband's policy like mine, did it not come back. He said, 'No, I haven't heard anything from it, but I'm not sure whether it will go through or not. We just wrote worlds of them and haven't had time to get them all back.'

'Q. We wrote worlds of them and I have not had time to get them all back. Was anything else said with regard to that policy on that date? A. Except that I asked him did he want to just put that on my premium or let it stand. He said to let it stand and in a few days he'd see.

'Q. When was the next time that you transacted with anyone? A. It was five weeks because at the time I took out this policy I only had a small life insurance policy and they only collected every five weeks.

'Q. What was said at that time with regard to your policy, the policy in question here, the one for which application was given? A. I asked him that day if my husband's policy had come in. He said it didn't. I said, 'Do you want to put it on my premium?' He said, 'Let it stand. There was some policies came in. I'm pretty sure it might have come in that bunch.' I told him my husband said that if it wasn't going through, he wanted to take out the insurance with another company. He said, 'I'll let you know in a few days.'

'Q. Did he let you know? A. No, he did not.

'Q. When was the next time you saw or heard anything from the agent of the Palmetto State Life Insurance Company? A. On Saturday morning after my husband was buried the Monday morning.

'Q. When was your husband killed? A. June 3rd.

'Q. You heard from them on what day? A. Saturday morning following that.

'Q. Who came to see you? With whom did you talk? A. I don't remember his name. At that time I was in the end. My niece went to the door. She told me it was the Palmetto Insurance agent.

'Q. Did you hear the conversation? A. Yes, I heard him tell her he was collecting for the Palmetto State Life Insurance Company. She came into the house and told me and I gave her the money. I told her that before you say anything to him about his being dead, unless he mentions it to you about the policy, first, you ask him did he bring the policy before you tell him he is dead. She went back and asked him. He told her to tell me that Mr. Newell wasn't with the company any more, the man that wrote the policy. He would have the manager to come to see me about it Monday morning.

'Q. What happened then? A. Instead of waiting until Monday morning, he left and was gone about 30 minutes and comes flying in there with a statement saying my husband was turned down because of being a truck driver at the time he took that out.'

Timely motions were made by appellant for a nonsuit and a directed verdict upon the ground that no policy was ever issued. These motions were refused and the case submitted to the jury, resulting in a verdict for respondent in the sum of $1,000. Thereafter the trial Judge likewise refused a motion by appellant for judgment non obstante veredicto.

Considering the testimony, as we must, in the light most favorable to respondent, we have this situation: Application for the policy was made on March 3, 1951. Although appellant contends that it did not write accident policies on long distance truck drivers and its agents had been so instructed, respondent was not notified of this fact and the application was not rejected until March 19th, or about sixteen days after it was received. About three weeks after this rejection, upon inquiry by respondent as to the status of the application, the agent said that he had not 'heard anything from it'. Respondent then asked what should be done with the premium deposit, and was told by the agent 'to let it stand and in a few days he'd see.' About two or three weeks prior to the death of her husband, respondent again inquired as to whether the policy had been issued and was advised by the agent that some policies had come in and that he was 'pretty sure it (the policy) might have come in that bunch.' Respondent then told him that her husband had said that if the application 'wasn't going through, he wanted to take out the insurance with another company', to which the agent replied: 'I will let you know in a few days'. Respondent heard nothing further until after the death of her husband when she was notified that the application had been rejected and was tendered the deposit of 20cents.

It must be conceded that there is no evidence of formal acceptance of the application of the issuance of a policy by appellant. The crucial questions are whether there was an implied acceptance and whether the circumstances are such as to estop appellant from asserting that there was no contract of insurance.

'An application for life insurance is a mere offer or proposal and until accepted, no contractual relationship exists between the applicant and the insurance company.' Keller v. Provident Life & Accident Ins. Co., 213 S.C. 339, 49 S.E.2d 577, 582. In order to constitute a contract, there must be 'either an actual acceptance, or such circumstances as may imply acceptance, or estoppel from denying acceptance.' McGrath v. Piedmont Mutual Insurance Co., 74 S.C. 69, 54 S.E. 218, 220. 'Contracts may be implied from circumstances as well as by written papers and oral agreement, and insurance contracts are no exception to the rule as numerous cases, textbooks, and digests clearly attest.' Reck v. Prudential Insurance Company of America, 116 N.J.L. 444, 184 A. 777, 778.

'There is a conflict in the authorities as to whether legal obligations arise only after a contract of insurance has been made, or whether in certain circumstances a legal duty arises, from the relationship created during the negotiations between an applicant for insurance and the insurance company, to act promptly upon the application, and to inform the applicant whether the offer is accepted or rejected.' Bekken v. Equitable Life Assurance Society of United States, 70 N.D. 122, 293 N.W. 200, 209. This decision contains an extended review of the cases. According to one view, mere delay or inaction, however unreasonable, by an insurance company in acting upon an application cannot afford a basis of liability. The authorities supporting this view state that insurance companies are under no duty to act upon applications, or to accept or reject them within a reasonable time. It is said that if there is no contract, there is no duty. One of the leading cases supporting this view of Munger v. Equitable Life Assurance Society of United States, D.C., 2 F.Supp. 914. The other view is that an insurance company is under a legal duty to take prompt action on an application for insurance and give timely notice to the applicant of its action, particularly where a deposit on the premium has been made, and that under certain circumstances an insurance company may incur liability for negligent delay in acting upon an application or in failing to notify the applicant after his application is rejected.

In Insurance Law and Practice by Appleman, Volume 12, Section 7226, it is stated:

'The more liberal, and probably the better rule, is to the effect that an insurance company obtaining an application for insurance is under a duty to accept it or to reject it within a reasonable time, and is liable if it delays unreasonably in acting thereon. It must also act with reasonable promptness in delivering a policy. And even though it appears that the insurer may have rejected the application, if it delays unduly in notifying the applicant of such rejection, it may be held liable as if it had accepted the risk. By failure to act upon an application duly made, the period of delay may be so unreasonable as to estop the insurer from denying liability. A retention...

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