New York Life Ins. Co. v. Greer

• Decision Date: 12 June 1933
• Docket Number: 13649.
• Citation: 169 S.E. 837,170 S.C. 151
• Parties: NEW YORK LIFE INS. CO. v. GREER.
• Court: South Carolina Supreme Court

169 S.E. 837

170 S.C. 151

NEW YORK LIFE INS. CO. v. GREER.

No. 13649.

Supreme Court of South Carolina

June 12, 1933

Appeal from Common Pleas Circuit Court of Greenville County; G Dewey Oxner, Judge.

Suit by the New York Life Insurance Company against Addie E. Greer, a person non compos mentis, and Florrie V. Greer, who filed a counterclaim. From a judgment for defendants, plaintiff appeals.

Affirmed.

Thomas Lumpkin & Cain, of Columbia, for appellant.

Mauldin & Love, of Greenville, for respondents.

STABLER Justice.

The following material facts appear in the record for appeal: On April 13, 1927, the plaintiff insured the life of the defendant, Addie E. Greer, in the sum of $2,500. The contract contained total and permanent benefit provisions, and stipulated that, should disability result from insanity, such benefits would be paid to the beneficiary, Mrs. Florrie V Greer, instead of to the insured. The policy lapsed for nonpayment of the premium due October 9, 1929, and thereafter, on November 18, the insured applied for its reinstatement. In her application she made certain representations as to her health, etc., as indicated by the following questions and answers:

"Are you now, to the best of your knowledge and belief, in the same condition of health as you were when this Policy was issued? Yes.

" Within the past two years have you had any illnesses, diseases or bodily injuries or have you consulted or been treated by any physician or physicians? No."

On November 20, 1929, the policy was reinstated; on March 14, 1931, the insured was adjudged insane; in April, 1931, a claim for disability was filed with the company, which gave no notice to the insured or to the beneficiary as to whether such claim was allowed or rejected, but on September 1, 1931, brought this suit for the purpose of effecting the judicial rescission of the reinstatement of the policy, on the ground that the representations made in its procurement were false and fraudulent. It was alleged that the defendant, Addie E. Greer, was a person non compos mentis, and upon application the court appointed a guardian ad litem to represent her. The insured and the beneficiary both filed answers denying all allegations of fraud, and, in addition, the defendant, Florrie V. Greer, sought by way of counterclaim to recover benefits in the sum of $200 and interest, claimed to be due under the policy by reason of the alleged total and permanent disability of the insured. As a defense to the counterclaim the plaintiff set up the allegations of fraud contained in its complaint.

By direction of the defendants, the case was placed on calendar 1; the plaintiff thereafter, on the ground that the suit was one in equity, made a motion to transfer it to calendar 2, which was refused. When it was called for trial, plaintiff moved to have the equitable issues heard and determined in advance of the legal issues. This motion was overruled, and the action was tried as one at law on the counterclaim. At the conclusion of the testimony, plaintiff made a motion for a directed verdict in its favor and also a motion for a decree in conformity with its prayer for relief. These motions were likewise refused, and the case was submitted to the jury, who found for the defendant, Florrie V. Greer, the amount of disability indemnity prayed for. Plaintiff thereafter renewed its motion for a decree in its favor notwithstanding the verdict and also made a motion for a new trial, generally, but the presiding judge refused to disturb his former rulings or to interfere with the verdict of the jury.

The company now appeals to this court, and by several exceptions imputes error to the trial judge in refusing to transfer the case from calendar 1 to calendar 2; in refusing to determine the equitable issues raised by the pleadings; in refusing to enter a decree in conformity with the relief prayed for; in refusing to direct a verdict for plaintiff; in permitting equitable issues to be determined solely by the verdict of the jury; in overruling plaintiff's motion for a decree notwithstanding the verdict; and in refusing to grant a new trial.

Counsel for appellant obtained permission of the court to review the following cases, with a view of having them overruled or modified: Fludd v. Life Assurance Society, 75 S.C. 315, 55 S.E. 762, 763; Southeastern Life Insurance Company v. Palmer, 120 S.C. 490, 113 S.E. 310, 311; Prudential Insurance Company v. Wilburn, 168 S.C. 30, 166 S.E. 786, 787. In these cases it was held that the insurer had no right to have the question of fraud in the procurement of the policy adjudicated as an equitable issue, for the reason that the company had an adequate remedy at law. A consideration of appellant's contentions in this respect will dispose of most of the questions raised by the exceptions. If its views are accepted by the court, then its position that the trial judge committed error must be sustained; if, however, such views are rejected, it follows that the court below was right in his holdings as to procedure.

In the Fludd Case, the beneficiary, on the death of the insured, brought an action on the policy. The company, by its answer, affirmatively alleged that the policy was procured by fraud, and moved for an order referring its equitable defense to the master to take testimony thereon. This motion was refused, the court holding that the action was a strictly legal one, and that the plaintiff was entitled to trial by jury. On appeal this court, in affirming the holding of the court below, said: "The fact that fraud is alleged in procuring the instrument sued on does not make an issue cognizable only in equity, as such issue may be tried in the legal action. Price v. R. R. Co., 38 S.C. 199, 201, 17 S.E. 732; Griffin v. R. R. Co., 66 S.C. 77, 44 S.E. 562. All the rights which the insurance company could maintain in an action for cancellation on the ground of false representation are available as a defense alleging forfeiture in a suit on the instrument. It was, therefore, perfectly proper to deny the equitable relief sought, inasmuch as defendant had a complete and adequate remedy at law"--citing cases.

In the Palmer Case, upon the death of the insured, the company did not wait to be sued by the beneficiary, but brought its action, a bill in equity, asking that two policies issued upon the life of Palmer be rescinded because of alleged fraudulent representations in their obtention. The beneficiary denied all allegations of fraud, and set up by way of counterclaim the amount alleged to be due on the policies. The company moved to strike out the counterclaim and to refer the allegations of fraud as an equitable issue which the trial judge refused. This court, in affirming the judgment below, held that, as the counterclaim arose out of the same transaction which formed the foundation for plaintiff's claim, defendant was entitled to interpose it, and said: "The defendant had the right to interpose the answer she did. It sets up a purely legal demand for the recovery of money only. The appellant in this case...