Ward v. Liberty Life Ins. Co., 17408
| Decision Date | 02 April 1958 |
| Docket Number | No. 17408,17408 |
| Citation | 232 S.C. 582,103 S.E.2d 48 |
| Court | South Carolina Supreme Court |
| Parties | Allahree P. WARD, as the duly qualified and acting administratrix of the Estate of James Alvin Ward, deceased, Appellant, v. LIBERTY LIFE INSURANCE COMPANY and Greer Federal Savings and Loan Association of Greer, S. C., Respondents. |
Johnson & Smith, Spartanburg, for appellant.
Sam R. Watt, T. Emmet Walsh, Spartanburg, Ansel Hawkins, Greer, Robert R. Scales, Jr., Greenville, for respondents.
Action for damages for fraudulent breach of an alleged undertaking by the defendants to procure and put in force a policy of insurance on the life of plaintiff's intestate. Plaintiff appeals from an order of nonsuit.
On July 1, 1954, James A. Ward, now deceased, and his wife (who, as administratrix of his estate, is appellant here) executed and delivered to Greer Federal Savings and Loan Association their note in the principal amount of $3,425.00, bearing interest at the rate of six per cent per annum, and payable, both principal and interest, in monthly installments of $28.91 commencing August 1, 1954, said installments to be applied first to payment of interest and then to payment of principal. The note was secured by mortgage of their home, executed and delivered contemporaneously. As part of the same transaction Mr. and Mrs. Ward agreed to pay to the Association monthly, in addition to the instalments on their note before mentioned, the sum of $3.05, to be held by the Association in an 'escrow account' for the purpose of payment by it of taxes and premiums for insurance as and when they should become due. Mr. and Mrs. Ward were given a 'Loan Account' book, in which were entered each monthly payment of $28.91, the amount of that payment applied to interest, and the balance of principal then remaining. They were also given an 'Escrow Account' card, on which were entered the monthly escrow payments and the payments made from that account for taxes and insurance.
The loan note contained, among others, the following provision: 'The said Association may at any time require the issuance and maintenance of insurance upon the life of any person obligated hereunder in a sum sufficient to pay this debt, with the Association as beneficiary, and, if the premiums are not otherwise, paid, the Association may pay said premiums and any amount so paid shall become a part of the principal sum due under this note'.
On May 19, 1955, Mr. Ward made application to Liberty Life Insurance Company for a 'decreasing term' policy of insurance on his life, naming Greer Federal Savings and Loan Association as the beneficiary, for the purpose of insuring payment of the balance of the loan in the event that he should die while any part of the loan was outstanding. Application for this policy was made through Mr. D. S. Robinson, who was the Secretary and Treasurer of Greer Federal Savings and Loan Association and also a licensed agent of Liberty Life Insurance Company. No premium was paid with the application, nor did the application state what the amount of the initial premium would be. It appears that in this type of policy the coverage, which initially is in the amount of the loan to be secured by it, diminishes as the loan obligation is reduced; and that the monthly premiums are likewise reduced during the life of the policy. The application which was signed by Mr. Ward, contained the following statements:
Under date June 2, 1955, the Medical Department of Liberty Life Insurance Company wrote Mr. Ward requesting that he have a physician examine him and complete the medical report required in connection with his application. On June 7, Mr. Ward's physician completed his examination and report; and the report was received at the company's home office in Greenville on June 16. The policy was prepared under date July 1 and forwarded by the home office to Mr. Robinson. It contained, among others, the following provision: . The initial monthly premium specified in the policy was $5.21. It was never paid.
The Wards made payment to the Savings and Loan Association on July 2, 1955, of $28.91 on the 'loan account' and $3.05 for the 'escrow account'. The amount in the escrow account, on that date, including this payment, was $36.60.
Mr. Ward was taken ill on July 30 and died on August 1, 1955. At that time the policy was still in the possession of Mr. Robinson, who returned it to the insurance company on August 1, 1955.
On February 4, 1956, Mrs. Ward, as administratrix of her husband's estate, instituted this action against the insurance company and the savings and loan association, seeking to recover $3,419.75 actual damages (stated in the complaint as being $3,425, the initial amount of the loan, less $5.21, the amount of the initial monthly premium on the policy applied for), and $25,000 punitive damages, for alleged fraudulent breach of the undertaking on the part of both defendants to procure and put in force the policy in question, said breach being accompanied by alleged fraudulent acts of Robinson as their common agent: (1) in not notifying Ward that the policy had been written and was in Robinson's possession; and (2) in not paying the initial premium either from the escrow account or out of funds of the savings and loan association.
The separate answers of the defendants denied the inculpatory allegations of the complaint and alleged: that the savings and loan association had never exercised its right to procure insurance on Ward's life; that the application for the policy had been the voluntary act of Ward himself; that the policy had been received by Robinson on or about July 12 or 13, having been sent to him by the insurance company for delivery to Ward upon payment of the initial monthly premium, which payment was never made; and that the policy had never been delivered and was never in force.
The facts as before narrated were covered in Mrs. Ward's testimony. The only other witness offered in her behalf was Mr. LeRoy Sellars, who testified that he was the secretary and loan officer of the First Federal Savings and Loan Association of Spartanburg, S. C., and was also licensed by Liberty Life Insurance Company to write decreasing term policies for the insurance of loans. The remainder of Mr. Sellers' testimony was, upon objection by defendants' counsel, excluded as incompetent. It was to the following effect: that in the form of loan note used by First Federal Savings and Loan Association there is a provision, relating to insurance upon the life of the borrower, identical with that hereinbefore quoted from the note in the case at bar; that applications for such insurance, naming First Federal Savings and Loan Association as beneficiary, are taken by him as agent of Liberty Life Insurance Company; that when such a policy has been issued it is delivered to him, and thereupon his...
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