Silliman v. International Life Ins. Co.

• Decision Date: 09 August 1916
• Parties: SILLIMAN v. INTERNATIONAL LIFE INS. CO.
• Court: Tennessee Supreme Court

Page 273

188 S.W. 273

SILLIMAN v. INTERNATIONAL LIFE INS. CO.

Supreme Court of Tennessee.

August 9, 1916.

Appeal from Chancery Court, Giles County; Walter S. Bearden, Chancellor.

Suit by Mattie I. Silliman against the International Life Insurance Company. From a judgment for plaintiff, defendant appeals. Bills dismissed.

See, also, 131 Tenn. 303, 174 S. W. 1131, L. R. A. 1915F, 707.

E. E. Eslick, of Pulaski, for appellant. Childers & Woodward, of Pulaski, for appellee.

BUCHANAN, J.

The case turns on the construction of the words "not in good faith" as used in the first section of chapter 141, Acts of 1901, page 248. The Insurance Company has appealed from a decree awarding against it a recovery for a certain sum as a penalty denounced by the Act, and insists that under the evidence, which is free from material dispute, and under a correct construction of the Act, and particularly the words above quoted, that the decree is erroneous.

We think the point is well made. The words "not in good faith" are antithetical in meaning to the words "in good faith." The words "not in good faith" imply a lack of good or moral intent as the motive for the refusal to pay a loss. They describe the state of mind which underlies and causes the act of refusing to pay. It is the existence of this state of mind as the cause of the act, and the resulting damage to the victim of the act, which the statute penalizes, just as our laws, intended to punish and suppress crime, look, not to the act which damages society and perhaps destroys its victim, but to the intent or motive which caused the act and the resulting public and private damage.

It was not the purpose or intent of the legislation embodied in section 1 of the Act that refusal to pay a demand, made by a policy holder after occurrence of a loss and within 60 days after making the demand, should, at all events and without more, confer on the policy holder a right to the penalty. Such is by no means a true construction of the words employed. The right to recover is not an absolute one. It is conditional. There can be no recovery of the penalty where the right to recover the face of the policy has been forfeited by nonpayment of the premiums at their due date. Thompson v. Insurance Co., 116 Tenn. (8 Cates) 557, 92 S. W. 1098, 6 L. R. A. (N. S.) 1039, 115 Am. St. Rep. 823.

In another of our cases the conditional character of the right to recover the penalty is pointed out, and it is said:

"The statute does not penalize insurance companies for defending suits brought against them, even though they should ultimately lose. They may defend in good faith, and we cannot say that the surety company did not act in good faith in interposing its defense in the case before us. Without doubt there was enough in the case to justify a contest, seeing the difficulty attendant upon the construction of the contract as a whole, including the rider, and also the deduction that must be made from the amount sued for, in view of the fact that the warehouse receipts were not wholly unsupported by grain in store." Grain Co. v. Weaver, 128 Tenn. (1 Thomp.) 609, 163 S. W. 814.

Construing the statute in another case, we said:

"It authorizes the penalty referred to, provided that it shall be made to appear to the court or jury trying the case that the refusal to pay the loss was not in good faith, and provided, further, that the imposition of the liability shall be within the discretion of the court or jury trying the case, and be measured by the additional expense, loss, and injury thus entailed. We think the chancellor was well within his judicial discretion in refusing a decree for the penalty in this cause upon the ground that the evidence on behalf of the insured clearly discloses that when the firemen entered the building after the discovery of the fire, and extinguished the fire, they and other persons who visited the building later discovered evidence that, in some way not explained on the record, bolts of goods in the tailor shop, inclosed in glass cases, were dampened and smelled strongly of gasoline or coal oil, clearly justifying a suspicion that the fire was of dishonest origin. While this is true, the evidence would not sustain a defense based on that ground, and no such defense was made, yet we think there was sufficient ground for the denial of the penalty." Harowitz v. Fire Ins. Co., 129 Tenn. (2 Thomp.) 691, 168 S. W. 163.

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