Rearden v. State Mut. Life Ins. Co.

• Decision Date: 04 April 1908
• Citation: 60 S.E. 1106,79 S.C. 526
• Parties: REARDEN v. STATE MUT. LIFE INS. CO.
• Court: South Carolina Supreme Court

60 S.E. 1106

79 S.C. 526

REARDEN v. STATE MUT. LIFE INS. CO.

Supreme Court of South Carolina

April 4, 1908

Appeal from Common Pleas Circuit Court of Saluda County; R. C Watts, Judge.

Action by Lula Rearden against the State Mutual Life Insurance Company. From a judgment for plaintiff and an order denying a new trial, defendant appeals. Affirmed.

Nelson & Nelson and B. W. Cranch, for appellant.

Thurmond & Ramage, for respondent.

POPE C.J.

Lula Rearden, the plaintiff, brought this action against the defendant to recover $1,000, and interest thereon from March 1, 1907, under a policy of insurance issued by the defendant company on the life of her husband Walter F. Rearden, on the 7th day of September, 1906; the said Walter F. Rearden having died on the 31st day of January, 1907. The defendant admitted that it had issued the policy referred to, the said policy of insurance, and gave as its reasons for not paying the policy that the insured made false statements as to his health when insured. The case came on for trial before his honor, Judge Watts, and a jury. After hearing the testimony and the charge of his honor the jury returned a verdict in favor of the plaintiff against the defendant for $1,020. A motion was made for a new trial, which was refused by the circuit judge thereupon the defendant appealed upon the following eight exceptions. We will now consider these exceptions in their order.

1. Because his honor erred in permitting the witness Timmerman over objection of counsel, to testify as to W. M. Hazel soliciting business in the community in which Rearden lived, said testimony being intended to show notice to Hazel of said Rearden's condition; the error being that the company was only bound by the written statements of the insured contained in his application, and knowledge to the agent under the terms of said application was not knowledge to the company.

There was no objection to this testimony, because W. M. Hazel was the agent of the defendant and solicited insurance for the defendant in the community where Rearden lived. His name was signed to the application for insurance. Any knowledge or information relating to Rearden's (the assured's) conditions was the knowledge of the defendant while the agent was acting within the scope of his authority as such agent. As to what effect such testimony of Hazel would have upon the defendant was a matter for after consideration. Certainly the testimony itself was competent. This exception must be overruled.

2. Because his honor erred in holding: "I think I am bound by the decision of Madden against insurance company. There they say that if the agent has any knowledge that knowledge is imputed to the company, and if they have got an agent going out soliciting insurance, and he has knowledge of the fact that a man makes his application that he is making a mistake about it, and he has notice of the fact, then I think that would be notice to the company. I know it is true with fire insurance companies. I don't know much about life insurance companies. They are the smartest people on the face of the globe. Let the courts pass one rule to-day, and they will frame a rule to meet it the next. Several years ago I tried strictly to carry out these contracts as made by these parties, but I was in error in doing it. The Supreme Court said so. So I will rest on the Madden Case this time"-the error being (1) that the policy was issued upon the written application of the insured, wherein he agreed that the company was only bound by the statements therein contained, and was not bound by any statements, promises, or information made by, or given by, or to, the person soliciting or taking this application for a policy of insurance, unless such statements, promises, or information be reduced to writing, and all presented to the officers of the company at the head office in this application; (2) that the remarks of his honor were stating what he believed to be the facts to the jury, to wit, what this company and all insurance companies did in reference to making rules and thereby evading the decisions of the courts against them, which was prejudicial to the defendant, and in violation of section 26 of article 5 of the Constitution of South Carolina, in reference to judges charging upon the facts.

It is alleged that the circuit judge made a mistake in declaring that he was bound under the decision of the Supreme Court of this state in the case of Madden v. Insurance Co., 70 S.C. 295, 49 S.E. 855. When a decision of the Supreme Court of this state is quoted as authority for a ruling by a circuit judge no mistake is made, provided such ruling bears upon the point at issue before the judge who quotes the case. "When the insured at the time of making application showed to agent of insurer an inventory of the stock of goods, and the agent said, 'It is all right,' the insurer thereby waives its right to afterwards insist that such inventory does not conform to the iron-safe clause." All the circuit judge meant was that the Case of Madden just quoted was an authority to him for ruling that an agent within the scope of his authority as such would bind his principal by the admission so made; that if the agent has knowledge, such knowledge would be imputed to the principal. An insurance company as a corporate entity must conduct its business through the means of agents; and, where such agents have knowledge of important facts bearing upon the corporate business, the knowledge of such agents is the knowledge of the corporation, if acquired within the scope of the agency. It is useless to diagnose by high-sounding phrases and artfully constructed sentences any other effect of agency, as was well said by this court in the case of Fludd v. Assurance Society, 75 S.C. 320, 55 S.E. 762: "The knowledge of an agent acquired within the scope of his agency is imputable to the principal; and if an insurance company, at the inception of the contract of insurance, has knowledge of facts which render the policy void at its option, and the company delivers the policy as a valid policy, it is estopped to assert such ground of forfeiture." Gandy v. Insurance Co., 52 S.C. 228, 29 S.E. 655. The appellant seeks to parry the force of this law by quoting the case of Metropolitan Insurance Company quoted in Insurance Journal of January, 1908, and reported in 91 P. 609 (Cal.), as follows: "The application stipulated that the answers were true, and were the basis of the contract, and, if false, the policy should be void; that only the officers had authority to determine whether the policy should issue, and no statements of the soliciting agents should be binding unless presented in writing to the officers. The applicant falsely stated that he had never had paralysis, while the agent had knowledge to the contrary. Held, that knowledge by the company would be waiver of the misstatement, but such knowledge of the soliciting agent, when not communicated to the company, was not knowledge to the latter. The agent had no authority to waive the misrepresentation....