Taylor v. Palmetto State Life Ins. Co.

• Court: South Carolina Supreme Court
• Citation: Taylor v. Palmetto State Life Ins. Co., 196 S.C. 195, 12 S.E.2d 708 (S.C. 1940)
• Decision Date: 31 December 1940
• Docket Number: 15192.
• Parties: TAYLOR v. PALMETTO STATE LIFE INS. CO.

12 S.E.2d 708

196 S.C. 195

TAYLOR v. PALMETTO STATE LIFE INS. CO.

No. 15192.

Supreme Court of South Carolina

December 31, 1940

Tobias & Turner, of Columbia, and Samuel R. Watt, of Spartanburg, for appellant.

Carlisle Brown & Carlisle, of Spartanburg, for respondent.

FISHBURNE Justice.

On November 1, 1937, the defendant, Palmetto State Life Insurance Company, issued its policy of insurance upon the life of one Bernice Campbell, the daughter of the plaintiff in the sum of $750, in which policy the plaintiff was named as beneficiary. The policy was what is known as a straight life contract, payable upon the death of the insured and provided, among other things, that in the event the insured should die by her own hand, whether sane or insane, the liability of the insurer would be limited to a return of the premiums paid.

On February 19, 1939, the insured, who was employed in a restaurant in the city of Spartanburg, was found dead in her room at a local hotel. An inquest was held and the finding of the coroner's jury, after viewing the body and hearing the evidence, was that Bernice Campbell came to her death as the result of an overdose of narcotic, supposed to be morphine. The attending physician's certificate was to the same effect. A syringe used for morphine injections was found in the handbag of the insured, and the doctor testified to several perforations on the forearm of the deceased indicating punctures which might have been made by the needle of the syringe. A special investigator of the defendant happened to be in the city of Spartanburg, and on learning of the circumstances attending the death of the insured, went to the home of the plaintiff on February 24, 1939, along with the local agent of the defendant, and, upon payment of the sum of $230.20, obtained from her a complete release and discharge. When this payment was made to the plaintiff she delivered the policy of insurance to the agent and the company thereafter refused to return it to her upon demand, and refused to pay the face value of the same. Of the above amount $30.20 covered the premiums paid, and $200 represented the consideration paid for the release.

The plaintiff alleges that the agents of the defendant, pursuant to a fraudulent plan and scheme, falsely represented to her that her daughter had committed suicide, and that the insurance company was under no liability under the insurance contract except to return the amount of the premiums which had been paid by the insured. The complaint further alleges "That by reason of defendant's breach of its insurance contract aforesaid, accompanied by the fraudulent securing and retaining of the said insurance policy and its false and fraudulent misrepresentations aforesaid, plaintiff has been damaged in the sum of Two Thousand Nine Hundred Ninety and No/100 ($2,990.00) Dollars, actual and punitive damages."

The defendant pleaded a general denial, and by way of special defense set up the release which, as alleged, it had obtained without fraud and misrepresentation, and which constituted a complete discharge from any further liability on the policy contract; and further alleged that the plaintiff was not entitled to maintain the action because she had retained the amount paid for the release, and had never returned or tendered said sum to the defendant. By way of reply the plaintiff alleged that the release was obtained through fraud and misrepresentations, but the reply contained no allegation of repayment or tender.

Upon the conclusion of the plaintiff's testimony, the defendant moved for a nonsuit, but the Court deferred its decision and made no ruling thereon until after the completion of the defendant's testimony. The defendant likewise made a motion for a directed verdict, which was refused. The Court announced that it would grant a nonsuit as to punitive damages, but would submit the case to the jury as though the action had been brought on the original contract of insurance. The jury were thereupon charged that if the plaintiff was entitled to recover anything it would be the difference between the amount paid and the face value of the policy, with interest from February 24, 1939. The trial resulted in a verdict for $540.98, representing the difference between the amount paid for the release and the face value of the policy.

One of the appellant's assignments of error is that the Court erred in changing the cause of action from one in tort for fraud and deceit into an action ex contractu. This issue will be referred to later in our discussion.

We think the Court erred in overruling the defendant's motion for a nonsuit which was made upon the ground that the consideration received by the plaintiff for the compromise settlement, culminating in the execution of the release, was retained by the plaintiff and not repaid, nor tendered to the defendant, and for this reason the action at bar was not maintainable.

We presume that no doubt exists as to the soundness of the general proposition that where a party to a compromise desires to set aside or avoid a release duly entered into and be remitted to his original rights, he must place the other party in statu quo by returning or tendering the return of whatever has been received by him under such compromise, if of any value, and so far as possible, any right lost by the other party in consequence thereof. This rule obtains even though the contract of settlement was induced by the fraud or false representations of the other party. The rationale of the doctrine is that by electing to retain the property the party must be conclusively held to be bound by the settlement. The rule applies to actions ex contractu as well as to actions ex delicto. Riggs v. Home Mutual Fire Protection Association of South Carolina, 61 S.C. 448, 39 S.E. 614; Lawrence v. Durham Life Ins . Co., 166 S.C. 203, 164 S.E. 632; Levister v. Southern R. Co., 56 S.C. 508, 35 S.E. 207; Cook v. Hartford Fire Ins. Co., 168 S.C. 283, 167 S.E. 148; King v. Pilot Life Ins. Co., 181 S.C. 238, 187 S.E. 369; 15 C.J.S., Compromise and Settlement, § 41, page 762.

Ordinarily, the consideration received for a release should be returned or tendered before an action is instituted, or contemporaneously with the institution thereof. Brown v. Walker Lumber Co., 128 S.C. 161, 122 S.E. 670; Harrison v. Southern R. Co., 131 S.C. 12, 127 S.E. 270.

The testimony of the plaintiff leaves no sort of question but that she fully...