Smith v. Volunteer State Life Ins. Co.

• Decision Date: 19 November 1942
• Docket Number: 15469.
• Parties: SMITH v. VOLUNTEER STATE LIFE INS. CO.
• Court: South Carolina Supreme Court

22 S.E.2d 885

201 S.C. 291

SMITH v. VOLUNTEER STATE LIFE INS. CO.

No. 15469.

Supreme Court of South Carolina

November 19, 1942

Appeal from Common Pleas Court, of Marion County; T. S. Sense Judge.

Action by Annie M. Smith, as administratrix of the estate of T. Coke Smith, deceased, against the Volunteer State Life Insurance Company, a corporation, to recover actual and punitive damages for breach of life insurance policy and for fraudulent representations of insurer as to waiver of premiums. From a judgment for plaintiff, defendant appeals.

The complaints referred to in the opinion follow:

The complaint of plaintiff alleges:

"1. That the defendant is, and was at the times hereinafter stated, a corporation existing under the laws of one of the States of the United States with offices and agents in said State and was and is duly licensed to do business in South Carolina.

"2. That T. Coke Smith died intestate on or about the 1st of March, 1938, leaving as his sole surviving heirs-at-law, this plaintiff who is his wife and widow and the following children: Thomas Smith, age 13, Francis Smith, age 12, Charles Smith, age 11, George Smith, age 11 and Elizabeth Ann Smith, age 6.

"3. That plaintiff is the duly qualified and acting Administratrix of the Estate of the said late T. Coke Smith and as such is charged with the duty of collecting such money as may be due said Estate.

"4. That on or about the 1st day of March, 1919, the Southern States Life Insurance Company issued its certain policy of insurance No. 35058 on the life of T. Coke Smith in the principal sum of five thousand ($5,000.00) dollars; that the estate of T. Coke Smith was the designated beneficiary.

"5. That among other provisions of said policy, it was specifically provided that if the insured before attaining the age of sixty years, and after the policy had been in full force and effect, or from the payment of one annual premium and before default in the payment of any premium, upon said proof to the Company that the insured has become physically and incurably disabled by bodily disease or injury; the policy provided that in the event of such total and permanent disability that all future premiums will be waived and said policy continued in full force and effect, with all benefits just as the premiums were being regularly paid.

"6. That on or before the 1st day of April, 1927, and while the said policy of insurance was in full force and effect according to all its terms, the insured T. Coke Smith became totally and permanently disabled according to the terms of said policy; that said Southern States Life Insurance Company well knew of the physical condition of T. Coke Smith and well knew that he was totally and permanently disabled by bodily disease according to the conditions set out in said policy of insurance and well knew that he was entitled to have his premiums waived and said policy continued in full force and effect just as though the premiums were being regularly paid.

"7. That said Southern State Life Insurance Company and its General Agent, Fred Hines, with full knowledge of the total and permanent physical condition of the insured T. Coke Smith, and with intent to defraud the insured and his estate falsely, fraudulently planned, schemed and devised plans and methods by which said policy of insured might be cancelled, and the insured and his estate defrauded out of the amount of said policy of insurance. That in order for said Southern States Life Insurance Company and its General Agent, Fred Hines, to carry into force and effect its fraudulent plan and scheme and to further defraud the insured and his estate of its money and insurance; the General Agent, Fred Hines with the full knowledge that T. Coke Smith was totally and permanently disabled, went to the home of T. Coke Smith on or about the 1st of April, 1927, took the insured to Mullins for the purpose of examination with the view of waiving the premiums, had the insured examined by Dr. F. L. Martin and instructed the insured to return home and that he would never have to pay any further premiums on said policy of insurance; that the examination of Dr. Martin fully satisfied the Southern States that the insured was totally and permanently disabled.

"8. That the insured returned home feeling secure that his insurance was in full force and effect and that his estate was protected to the extent of the said policy of insurance.

"9. That plaintiff is informed and believes that the Southern States and its General Agent, Fred Hines, did nothing further by way of notice to the insured; that the insured was advised to rest content and that nothing further was necessary to be done by him, that his premiums were waived and he was fully protected.

"10. That the insured believed and relied upon the acts and representations of the Southern States Life Insurance Company as made by its agent Fred Hines; that the insured did not know that said representations and acts were false and fraudulent and intended to defraud the insured and defeat his rights under said policy of insurance; that the acts and representations of Southern States Life Insurance Company and its agent Fred Hines were wilful, wanton, malicious and fraudulent and intended solely to defraud the insured and to defeat the rights of the estate of the insured.

"11. That the acts and representations of Southern States Life Insurance Company and its agent Fred Hines were wilful, wanton, fraudulent in the following particulars:

"(a) In going to the home of the insured, procuring the policy of insurance, taking the insured to Dr. F. L. Martin for an examination to ascertain whether or not insured was totally and permanently disabled within terms of policy.

"(b) In having insured examined and advising insured that he was, according to the examination, totally and permanently disabled.

"(c) In advising the insured that his premiums were waived and that his policy would be continued in full force and effect and that he would never have to pay further premiums unless his condition improved.

"(d) In taking insured's policy of insurance from the insured for the purpose of making necessary entries thereon pertaining to the insured's disability; and not returning said policy of insurance with proper entries thereon.

"(e) In failing to notify insured that his premiums were not waived and his policy continued in full force and effect it did not intend to waive said premiums and continue in full force and effect said policy.

"12. That as a result of said wilful, wanton, malicious and fraudulent acts on the part of Southern States Life Insurance Company and its agent, Fred Hines, this plaintiff has suffered damages in the sum of twenty-nine hundred ($2,900.00)dollars.

"13. That on or about the 1st of March, 1931, defendant, Volunteer State Life Insurance Company purchased and took over all the assets of said Southern States Life Insurance Company, including real estate, stocks, bonds, mortgages, notes and policies of insurance; which were the property of the Southern States Life Insurance Company; that this defendant assumed responsibility for the payment of all the debts and obligations of said Southern States Life Insurance Company including the amount due this plaintiff.

"14. That defendant is justly due and owing this plaintiff the sum of twenty-nine hundred ($2,900.00) dollars.

"Wherefore plaintiff demands judgment against the defendant for the sum of twenty-nine hundred ($2,900.00) dollars and for the costs of this action. (Duly verified.)"

This is the judgment roll embracing the record in the case instituted by Mrs. Annie M. Smith, as administratrix of the estate of T. Coke Smith against The Volunteer State Life Insurance Company, a corporation, in the Court of Common Pleas for Marion County, South Carolina, on June 14, 1939, and subsequently removed to the federal court.

The complaint of plaintiff alleges:

"1. That defendant is and was at the times herein stated a corporation existing under the laws of one of the States of the United States, is and was licensed and doing business in South Carolina as a life insurance company; that T. Coke Smith died intestate on or about March 1, 1938, leaving as his sole surviving heirs-at-law this plaintiff, who is his wife and widow, and the following children: Thomas, age 11 Francis, age 10, Charles, age 9, George, age 9, and Elizabeth Ann, age 4.

"2. That plaintiff is the duly qualified and acting administratrix of the estate of the said late T. Coke Smith, and, as such, is entitled to collect such money as may be due the estate of T. Coke Smith, and to discharge generally the duties of an administratrix as provided and required by law.

"3. That on or about March 1, 1919, Southern States Life Insurance Company issued its certain policy of life insurance No. 35058 on the life of T. Coke Smith in the principal sum of Five Thousand ($5,000.00) Dollars; that the estate of T. Coke Smith was the designated beneficiary in said policy; among other provisions the said policy specifically provided for waiver of premiums if the insured, before attaining the age of sixty years and after the policy has been in force or effect, or from the payment of one annual premium, and before default in the payment of any premiums, upon said proof to the Company that the insured has become physically and incurably disabled by bodily injury or disease, the policy provides that in the event of such total and permanent disability that all future premiums will be waived and said policy continued in full force and effect, with all benefits, just as though the premiums were being regularly paid.

"4. That on or about April 1, 1927, and while said policy of insurance was in full force and effect, according to all...