Smith v. Equitable Life Assur. Soc. of U.S.

• Decision Date: 28 April 1938
• Docket Number: 14675.
• Citation: 196 S.E. 879,187 S.C. 251
• Parties: SMITH et al. v. EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.
• Court: South Carolina Supreme Court

196 S.E. 879

187 S.C. 251

SMITH et al. v. EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.

No. 14675.

Supreme Court of South Carolina

April 28, 1938

Appeal from Common Pleas Circuit Court of Marlboro County; E. C Dennis, Judge.

Suit by Thomas H. Smith and another against the Equitable Life Assurance Society of the United States for a decree declaring in full force and effect two policies of insurance issued by the defendant on the life of the named plaintiff, and to prevent the enforcement of a lapse thereof on account of nonpayment of premiums when due under an extension agreement. From an adverse decree, the defendant appeals.

Reversed and remanded, with directions.

Thomas Lumpkin & Cain, of Columbia, for appellant.

Stevenson & Lindsay, of Bennettsville, for respondents.

BAKER Justice.

These suits were brought by the respondents against appellant for a decree declaring in full force and effect two policies of insurance issued by appellant on the life of the respondent Thomas H. Smith, and to prevent the enforcement of the lapse thereof on account of the nonpayment of the premiums when due under an extension agreement. The respondent Daisy H. Smith is a party to the cause only by reason of being the beneficiary designated in the policies. Hereinafter, the word "respondent" will have reference to only Thomas H. Smith, the insured.

The material facts of the cases are not in dispute. The two actions are identical, and the facts identical, except for difference in the number of the policies and the amount, and against one of the policies was a loan.

We draw heavily upon the decree of Judge Dennis in our statement of the facts, which follows:

The respondent purchased two policies from the appellant on May 20, 1919. The policies are what are commonly known as participating twenty year pay policies with disability and double indemnity features, the premium being payable on an annual basis on the above anniversary date; the annual premium on the $3,000 policy being $134.70, and on the $2,000 policy $89.80. The policy provided that they were on an annual basis, but the premium might be paid in semiannual or quarterly installments, upon the request of the insured, with the insurer's written approval, and upon the adopted rates for fractional premiums.

In January, 1933, the respondent became totally disabled because of arteriosclerosis of the coronary artery, and this disability was admitted by the appellant as of April 5, 1933. The disability provision of the policies in addition to the waiver of premiums provided for the payment to the insured of certain designated amounts beginning six months from proof of disability. The payment provided under the policies began in October, 1933, and were paid by the insurance company for that month and for November. The respondent's condition improved some, and he informed the appellant on November 10 1933, of his desire to attempt the resumption of his practice of medicine, and it was agreed that he should attempt work for a period of three months, and if at the end of that time he was unable to continue, the disability benefits would be resumed. He was and has been able to continue with his work, in a limited way, but it has been necessary for him, from time to time, to take frequent rest periods throughout the years. The payment by the company of all disability benefits under the policies was therefore discontinued, but of course remained a feature of the policies. The respondent paid the annual premium due on the policies May 20, 1934, but on May 20, 1935, it was inconvenient for him to pay the annual amount due on both policies so on May 30th he paid on the $134.70 premium the sum of $56.89 and on the $89.80 premium $33.67, and requested an extension for the payment of the balance to August 20, 1935, signing the usual extension agreement. Both the request for extension and the extension agreement were specific that there was no grace period beyond the extended date. At the same time plaintiff paid $61.74 as interest on a loan of $1,029 borrowed against the $3,000 policy. On August 19, 1935, the respondent left his home for one of his periodical rests, returning to Bennettsville about September 1st. Before leaving on his trip he had left with his secretary a check to be forwarded to the company for the balance of his premiums on the two policies in question, but in some way, through oversight, the check was not forwarded. All of the time, however, respondent testified he was under the impression that he had a grace period of 30 days in addition to the extended date. This was brought about by the fact that some of his policies did have such a grace period, and he was under the impression that it was the policies in question. However, immediately on his return he sent to the company check for balance of the premiums due, the company acknowledging receipt by its letter of September 2, which is in the record. The letter or receipt advised the respondent that the policies were temporarily lapsed, and inclosed a form of "Request for reinstatement." Also in the letter was the company's non-waiver receipt. This request for reinstatement was in the form of a certificate, and in part was as follows:

"I hereby certify and represent that I am in good health; that except as stated below, I have had no disease, illness or injury, have not consulted nor been treated by any physician or practitioner, have not been a patient in any hospital or sanitarium, and that there has been no change in the health record of my family, within the past five years.

I hereby agree that if the above numbered policy is reinstated by the Society, such reinstatement shall be based upon the representations contained in this declaration, which is personally signed by me; and that the reinstatement if granted shall not take effect until all premiums in arrears, with interest, have been duly paid during my continued good health."

On September 3, the respondent replied to the last-mentioned letter, in which he told the company it was impossible for him to sign a certificate that he was in good health, which fact was known to it, and on September 11th he received from the company a letter declaring the policies to be lapsed, and inclosing therein its check for $56.88, which was stated to be an excess deposit of $20.20 over the required amount under policy 2451-953 ($2,000 policy), and $36.68 over the required amount under policy 2,451,954. This check was immediately returned by the plaintiff to the defendant on September 12, 1935. Then on October 7, 1935, this check was resent to plaintiff along with another of its checks for $135.62; the last being the amount sent by the plaintiff to defendant on September 1st for the balance of his premiums on the two policies, and on October 9th both checks were returned by plaintiff to the defendant, who acknowledged receipt of them on October 23d, stating that the checks were being held unused and subject to the insured's order, without liability.

In 1931 the plaintiff had borrowed against his $3,000 policy the sum of $1,029, which with interest from May 20th to August 20th amounted to $1,044.56. The cash surrender value of this policy on that date was $1,480.41, which, together with the surrender value of $23.40 of additional insurance purchased...