Small v. Coastal States Life Ins. Co.

Citation241 S.C. 344,128 S.E.2d 175
Decision Date16 November 1962
Docket NumberNo. 17993,17993
PartiesD. Chaimer SMALL, Respondent, v. COASTAL STATES LIFE INSURANCE COMPANY, Appellant.
CourtUnited States State Supreme Court of South Carolina

Burroughs & Green, Conway, for appellant.

J. Reuben Long, Conway, for respondent.

TAYLOR, Chief Justice.

This appeal comes from the Civil Court of Horry County where plaintiff sought in companion actions payment on two health policies issued by the defendant. Plaintiff also sought an Order of the Court declaring the policies to be in full force and effect and an injunction against the defendant canceling said policies.

The answers admit the issuance of the policies and allege misrepresentations as to plaintiff's previous history of health in making application to the company for the policies. The representations were allegedly made with the intent of having the company rely thereon and the defendant contends that if plaintiff had revealed his previous disorders the defendant company would not have issued the said policies.

Upon completion of all the testimony both plaintiff and defendant moved for directed verdicts. The trial Judge, the Honorable Claude M. Epps, directed a verdict in favor of plaintiff for a money judgment covering the amount of plaintiff's claim, declared the policies valid and binding contracts, and enjoined and restrained defendant from canceling said policies so long as the premiums were kept paid within the required time.

Defendant contends here that the Court erred in failing to grant its motion for a directed verdict in that statements made by plaintiff in his application, which was incorporated in and attached to the policy, were warranties and not mere representations and that the only reasonable inference to be drawn from all the testimony was that there was a breach of warranty on plaintiff's part which would void the policy.

On February 25, 1960, the plaintiff, D. Chalmer Small, made written application to the defendant for a policy of health insurance after which Policy No. 451-0010987 was issued with an effective date of February 25, 1960. On August 18, 1960, plaintiff took out another health policy, No. 640-112430, with the same Company. The same agent took both applications and witnessed plaintiff's signature thereon.

Paragraph (a) of Additional Provisions of the Policy reads as follows:

'(a) The copy of the application, attached hereto, is hereby made a part of this contract and this policy is issued in consideration of the answers shown to the questions in the application and the payment in advance of the Initial Premium for the initial term ending on the First Renewal Date.'

Defendant's contention is that the answers to Paragraph 7 of the application were falsely made with intent to and did deceive the Company into issuing the policies. Such questions and answers read as follows:

'7. To the best of your knowledge, have you or your listed dependents, if any, ever had any of the following disorders:

* * *

* * *

'(4) Ulcer, gall bladder or stomach trouble? No

* * *

* * *

'(B) During the past 5 years, have you or or your listed dependents, if any, had any injuries or any physical or mental disorders other than those listed above or had any physical examination? No'

The testimony for both plaintiff and defendant was extremely brief and consisted of only plaintiff's testimony and that of two physicians called by defendant. Plaintiff testified as to the existence of the two policies, the payment of premiums, his hospitalization in April and May of 1961, and nonpayment of his claim by defendant. On cross-examination, he stated that he had been treated by Drs. Wilson and Smith for gastroenteritis or indigestion caused by stomach acid.

Dr. Wilson, witness for defendant, testified that he had treated the plaintiff in January, 1958. At the time plaintiff was admitted to the hospital, examination revealed no significant abnormalities and his final diagnosis was cardio spasms which is a spasm of a portion of the stomach and would be a form of stomach trouble. The doctor further testified that plaintiff stated his health had been good except for having indigestion for some years after eating which was usually relieved by eating Tums or expelling the gas, that plaintiff's past history is typical of what people call heartburn and could be caused by eating sweet potatoes. The other physician, Dr. Smith, testified that he had treated plaintiff in May, 1961, after the issuance of the policies, and at that time plaintiff was complaining of a severe chest pain. This pain could be caused by gastroenteritis which is related to the stomach and is generally speaking temporary. There is no evidence that plaintiff was informed as to this diagnosis or its consequences.

It is well settled that the law does not favor a forfeiture of rights under an insurance policy and this is especially true when an insurer attempts to void the policy after the occurrence of an event indicating liability.

In some jurisdictions it has been held that, in order to avoid a contract of insurance, a false representation of a material fact must have been fraudulently made with intent to deceive or defraud. In these jurisdictions, a representation, although material to the risk, if made in good faith, will not, because the statement is untrue, render the contract void or voidable. 45 C.J.S. Insurance § 473, p. 174; Metropolitan Life Insurance Co. v. Bates, 213 S.C. 269, 49 S.E.2d 201.

The answers in Paragraph 7 are required to be correct only to the best of the applicant's knowledge. There has been no showing that the plaintiff knowingly falsified these answers with intent to deceive Appellant Company into issuing the policies in question. The fact that an application is attached to an insurance...

To continue reading

Request your trial
11 cases
  • Lanham v. Blue Cross and Blue Shield
    • United States
    • United States State Supreme Court of South Carolina
    • May 6, 2002
    ...S.C. 461, 154 S.E.2d 834 (1967); Hood v. Security Ins. Co. of New Haven, 247 S.C. 71, 145 S.E.2d 526(1965); Small v. Coastal States Life Ins. Co., 241 S.C. 344, 128 S.E.2d 175(1962); Metropolitan Life Ins. Co. v. Bates, 213 S.C. 269, 49 S.E.2d 201(1948).2 Accordingly, contrary to the Court ......
  • Evanston Ins. Co. v. Agape Senior Primary Care, Inc.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • January 15, 2016
    ...Ins. Co., 444 S.E.2d 523, 524 (S.C. 1994); Johnson v. S. State Ins. Co., 341 S.E.2d 793, 794 (S.C. 1986); Small v. Coastal States Life Ins. Co., 128 S.E.2d 175, 177 (S.C. 1962). Within this context, the Court addresses the issues in this case. First, the Supreme Court of South Carolina in M......
  • Marlowe v. Reserve Life Ins. Co.
    • United States
    • United States State Supreme Court of South Carolina
    • July 16, 1973
    ...to assert such ground of forfeiture. Fludd v. Equitable Life Assurance Society, 75 S.C. 315, 55 S.E. 762, and Small v. Coastal States Life Ins. Co., 241 S.C. 344, 128 S.E.2d 175. The appellant admits that if the foregoing rule was applicable it would be estopped to rescind the contract by r......
  • COMMERCIAL INSURANCE CO. OF NEWARK, NEW JERSEY v. Smith
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • November 14, 1969
    ...the rule that parol evidence is competent to refute an allegation of procuring insurance by fraud." Small v. Coastal States Life Ins. Co., 241 S.C. 344, 128 S.E.2d 175, 178 (1962). We hold the evidence was relevant in refuting the scienter element of fraud. See also Investors Preferred Life......
  • Request a trial to view additional results
1 books & journal articles
  • Misrepresentations in insurance applications: dangers in those lies.
    • United States
    • Defense Counsel Journal Vol. 73 No. 2, April 2006
    • April 1, 2006
    ...612 (Ga. Ct. App. 1968); Youngblood v Allstate Fire Ins. Co., 349 So. 2d 462 (La. Ct. App. 1977); Small v. Coastal States Life Ins. Co., 128 S.E.2d 175 (S.C. 1962). But see, Southern Sur. Co. v. Fortson, 161 S.E.679, 684 (Ga. Ct. App. (18) See Friedman v. Prudential Life Ins. Co., 589 F. Su......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT