Rex Ins. Co. v. Baldwin

Decision Date27 February 1975
Docket NumberNo. 1--974A142,1--974A142
Citation163 Ind.App. 308,323 N.E.2d 270
PartiesREX INSURANCE COMPANY, Defendant-Appellant, v. Myrtle BALDWIN, Plaintiff-Appellee.
CourtIndiana Appellate Court

John O. Worth of Clarkson & Worth, Rushville, for defendant-appellant.

Arvin R. Foland of Foland & Caldwell, Noblesville, for plaintiff-appellee.

LOWDERMILK, Judge.

Rufus Herbert Baldwin purchased a policy of insurance on his life from defendant-appellant, Rex Insurance Company (Rex), naming Myrtle Baldwin, his wife, beneficiary therein.

The policy was purchased on July 20, 1970. Rufus Herbert Baldwin died on November 25, 1972, and at the time of his death the policy issued by Rex was in full force and effect and all premiums accrued thereon were fully paid.

Plaintif-appellee, Myrtle Baldwin, gave Rex notice and proof of death of the insured and demanded payment of the full liability of the policy, which was $1,000.00.

Rex made no move to make payment under its policy and Myrtle went to the Indiana Insurance Commissioner, after which liability was denied by Rex, which then tendered back to Myrtle the premiums paid in the amount of $332.80 which she declined.

Rex, after review by the claim committee, denied liability under its policy, although the incontestable period of the policy of two years had expired some four months before Mr. Baldwin's death. Rex gave as the reason for the nonpayment that Mr. Baldwin received sick benefits from Delco Remy for hypertension; that there had been a court order for the discontinuance of support payments to children of a former marriage of Mr. Baldwin because of his bad health, all prior to the application for the policy.

Rex demanded that the appellee bring litigation in order to collect the $1,000.00.

Mr. Mingus Browder, manager of the Accounting Department and Death Claims Department, testified that after claim was made under the policy they determined that Mr. Baldwin, in response to the questionaire as to any disease or illness given by him at the time the policy was written, had answered 'No' and that the rejection could have been made on that basis alone.

Mr. Browder testified he was familiar with the incontestable clause of Rex's policy. Browder was generally familiar with Rex's policy provisions and the law pertaining to incontestable periods of life insurance. He further testified that the only exception contained in the Rex policy was for nonpayment of premium and additional loss, as set out in paragraph 18 of the policy which paragraph is not pertinent to the issues before us.

The complaint alleged Rex's failure to pay said policy was in wanton and willful disregard and completely unfounded and was done maliciously and, in effect, that Rex demanded litigation be brought in order for the plaintiff to receive the funds under this policy. The complaint asked for punitive damages.

Myrtle testified that she had expended over $1,000.00 in order to pursue collection of the policy and had worried about the problems until she had become ill.

A bench trial was had, at the conclusion of which the trial court found for the plaintiff and granted her judgment in the cause of action sued on in the sum of $1,000.00 and further adjudged that plaintiff recover from the defendant the sum of $2,500.00 as punitive damages.

Pursuant to Ind. Rules of Procedure, Appellate Rule 8.3(A)(7) appellant has grouped specifications 1, 2, 4, and 5 of its motion to correct errors into one argument and the same will be treated in this opinion as one.

These specifications are: (1) that punitive or exemplary damages are not recoverable in a breach of contract action and are contrary to law in the instant case; (2) the court's overruling defendant's motion to dismiss punitive damages at the conclusion of plaintiff's case was error; (4) the court erred in granting $2,500.00 punitive damages and $1,000.00 actual damages by its judgment; and (5) damages awarded were excessive.

This case was pleaded and presented as a claim for money damages for breach of an insurance contract. Rex contends that Mr. Baldwin, the insured, was under medical disability at the time he made an application to the company and indicated that he was in good health. Further, the matter was discussed with the Insurance Commissioner by Myrtle Baldwin, which Rex contends presented a good faith question as to whether or not fraud had been committed at the inception of the contract. Rex further contends that from the evidence the conduct of the defendant was not in any manner malicious or oppressive and formed no basis for awarding punitive damages; that no punitive damages could be awarded without a specific finding of fraud made by the court before an award of punitive damages would have been justified.

IC 27--1--12--6, Ind.Stat.Ann. § 39--4206a (Burns 1965), reads, in pertinent part, as follows:

'(3) That the policy, together with the application therefor, a copy of which application shall be attached to the policy and made a part thereof, shall constitute the entire contract between the parties and shall be incontestable after it shall have been in force during the lifetime of the insured for two (2) years from its date, or, at the option of the company after it shall have been in force for two (2) years from its date, except for nonpayment of premiums, . . .'

It is undisputed that the policy sued on was beyond the incontestable clause and that it was necessary that the suit be filed in order for Myrtle, the beneficiary, to recover on her decedent's policy.

Appellant Rex vigorously urges that the law does not recognize recovery of punitive damages in a breach of contract action. Rex relies for its authority principally on Standard Land Corp. of Ind. v. Bogardus (1972), Ind.App., 289 N.E.2d 803, and Meridian Mutual Ins. Co. v. McMullen (1972), Ind.App., 282 N.E.2d 558.

In Standard Land, supra, in the trial court's special findings of fact no fraud was found although it was found that the contract 'imports oppression' and there was a 'spirit of wanton disregard for the rights of Macke.' This court therein determined that as the trial court did not find fraud and did not find additional facts which required it in the interests of justice to grant punitive damages, that the plaintiff was not entitled to exemplary damages.

In Meridian Mutual, supra, a fire insurance policy was involved and the action was in two paragraphs, with the second being for punitive damages for harassment and bother caused by the company's refusal to pay. Again, this court determined that in Indiana punitive damages are not permitted in breach of contract situations and in that case the plaintiff had not shown...

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26 cases
  • Jones v. National Union Fire Ins. Co.
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    ...Co. v. Sharp, 264 Ind. 599, 349 N.E.2d 173 (1976); Riverside Ins. Co. v. Pedigo, 430 N.E.2d 796 (Ind.App.1982); Rex Ins. Co. v. Baldwin, 163 Ind.App. 308, 323 N.E.2d 270 (1975); Sexton v. Meridian Mut. Ins. Co., 166 Ind.App. 529, 337 N.E.2d 527 As noted above, however, Mr. Jones can be deem......
  • Henkin v. Skane-Gripen A.B.
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    ...coverage. Vernon Fire & Casualty Ins. Co. v. Sharp, 264 Ind. 599, 349 N.E.2d 173 (1976) (fire insurance); Rex Insurance Co. v. Baldwin, 163 Ind.App. 308, 323 N.E.2d 270 (1975) (life Mr. Henkin's allegations that Skane-Gripen and Bernhard Muskantor breached an implied duty of good faith and ......
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    ...919 (1970). What a reasonable insurer would do or not do is a negligence test. This I cannot accept. In Rex Insurance Co. v. Baldwin, 163 Ind.App. 308, 323 N.E.2d 270 (1975), the determinative factor was whether the insurer could in good faith dispute the claim. In Michael v. National Secur......
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    ...were so clear as to render the dispute over liability to be a heedless disregard of the consequences as in Rex Insurance Co. v. Baldwin, (1975) 163 Ind.App. 308, 323 N.E.2d 270. Neither is this a case in which the policy provisions were misrepresented to the beneficiary as in Travelers Inde......
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