Welch v. Missouri State Life Ins. Co.

• Decision Date: 17 June 1935
• Docket Number: 14096.
• Citation: Welch v. Missouri State Life Ins. Co., 176 S.C. 494, 180 S.E. 447 (S.C. 1935)
• Parties: WELCH v. MISSOURI STATE LIFE INS. CO. et al.
• Court: South Carolina Supreme Court

180 S.E. 447

176 S.C. 494

WELCH v. MISSOURI STATE LIFE INS. CO. et al.

No. 14096.

Supreme Court of South Carolina

June 17, 1935

Appeal from Common Pleas Circuit Court of Charleston County; A. L Gaston, Judge.

Action by Silas S. Welch against the Missouri State Life Insurance Company and another. Judgment for plaintiff, and defendants appeal.

Affirmed in part, reversed in part.

Thomas Lumpkin & Cain, of Columbia, and Nathaniel B. Barnwell, of Charleston, for appellants.

J. C Long, of Charleston, for respondent.

FISHBURNE Justice.

This action was commenced in the court of common pleas for Charleston county by the plaintiff against the defendant on October 8, 1932, for the recovery of $3,000 damages, actual and punitive, for the alleged wrongful and fraudulent breach of a life insurance policy, No. 823385, in the face amount of $1,000, issued to the plaintiff by the defendant on November 17, 1930, and for its alleged wrongful refusal to reinstate the same.

The defendant denied the material allegations of the complaint, and alleged that the policy had become lapsed for nonpayment of the premium extension agreement entered into between the parties and maturing June 17, 1932; and that the application for the reinstatement of the policy contract was declined because the condition of plaintiff's health had rendered him uninsurable since the date of the lapse, under defendant's rules and regulations pertaining to underwriting. It specifically denied that the lapse of the policy or the declination of the application for reinstatement was due to any wrongful, fraudulent, or malicious act on its part, but on the contrary alleged that the termination of the contract of insurance was due to the failure of the insured to pay the extension agreement referred to. After the commencement of the action, the General American Life Insurance Company offered to substitute itself as a party defendant to the suit, but the plaintiff would not agree to the dismissal of the Missouri State Life Insurance Company as a party. Thereupon, the General American Life Insurance Company was joined as a party defendant; it having assumed the obligation to pay death losses maturing under policies issued by the Missouri State Life Insurance Company.

The case was heard at the spring, 1934, term of court, before Judge Arthur L. Gaston and a jury, and resulted in a verdict in favor of the plaintiff for the sum of $625 actual damages, and $375, punitive damages.

At the proper stage of the trial, the defendant made a motion for a nonsuit, which motion was refused; and when all the testimony had been completed the defendant made a motion for the direction of a verdict upon the grounds that the testimony was susceptible of only one inference; that being that the policy had lapsed for nonpayment of the premium extension agreement maturing June 17, 1932; and that the defendant had not been guilty of any wrongful, fraudulent, or malicious act, either in connection with the lapse of said policy, or the refusal to reinstate same. This motion was denied. A motion for a new trial was also denied.

The testimony of the plaintiff, most of which is admitted, tends to prove the following facts:

On November 17, 1930, the defendant issued two policies of insurance upon the life of the plaintiff, numbered 823385 and 823386, in the face amount of $1,000 each. The annual premium on each policy was $43.10. This action involves only one policy, that numbered 823385, and consequently all references hereafter made are to the policy bearing this number, and not to policy numbered 823386; this latter policy having been brought into the case solely for the purpose of establishing an alleged course of dealing between the plaintiff and the defendant with reference to the payment of premiums.

The first annual premium was paid in cash by the plaintiff to the defendant upon the delivery of the policy, that is, on November 17, 1930. When the second annual premium became due, on November 17, 1931, plaintiff settled it by the payment of $6.10 in cash, and by the execution and delivery of an extension agreement for $37, to become due and payable March 17, 1932.

When this extension agreement became due on March 17, 1932, being unable to pay same all in cash, the plaintiff paid $6 in cash, and executed and delivered to the defendant another premium extension agreement in the amount of $31, to mature June 17, 1932. The total cash thus paid by the plaintiff, amounting to $12.10, plus the amount represented by the extension agreement, aggregated $43.10, the full amount of the annual premium.

The controversy in this case centers around the alleged failure of the plaintiff to pay the premium extension note maturing June 17, 1932; the alleged fraudulent act of the defendant in declaring the policy lapsed as of that date; and its refusal to reinstate the same.

The plaintiff testified that for a period of about 14 years he had held various policies issued to him by the defendant, and that a course of conduct had been established between them with reference to the payment of premiums, in consequence of which the defendant did not insist upon prompt payment; that frequently the company received and accepted from him in connection with the payment of premiums on these various policies premium extension notes, with postdated checks, payable beyond the due date of the extension agreements; that he relied on this practice of indulgence extended to him by the defendant; and that this custom was followed by him and the defendant with reference to the payment of the premium extension notes in connection with policy No. 823385.

As confirmation of this practice by the defendant, he offered in evidence a letter written to him on March 25, 1932, from Columbia, by Mr. Marion Rich, general agent in this state of the defendant:

"March 25, 1932.

Mr. Silas S. Welch, Adams Run, S. C.

Policies No. 823385-6-Welch

Dear Mr. Welch: We are in receipt of a letter from the Home Office advising that the check of $13.48, post-dated April 1, 1932, had been received together with properly signed extension agreements dated to mature June 17, 1932, which represents settlement covering balance of the annual premiums due November 17, 1931, on the above policies.

Although the check is dated beyond the extension agreements due March 17, 1932, a special extension of time is being granted to April 1, at which time the check will be presented for payment.

With best wishes, I am,

Yours faithfully,

MR:LS Marion Rich, General Agent."

It will be noted that this letter is dated eight days after the maturity date of the March 17th extension agreement, and that the check therein referred to was postdated to April 1st.

Plaintiff further testified that about a month prior to June 17, 1932, the defendant mailed to him two premium extension agreements, one relating to each policy, so drawn as to mature August 17, 1932, but that he refused to sign and return these extension agreements or send the small cash payment provided, for the reason that they contained the recital, " that although no part of the annual premium due on the seventeenth day of November, 1931 on Policy No. 823385 had been paid," etc.; his contention being that he had actually paid a part of this annual premium, to wit, $6.10, which was forwarded to the company along with the premium extension agreement maturing March 17, 1932, and had forwarded the sum of $6 in connection with the premium extension agreement maturing June 17, 1932.

Feeling assured that the recital was incorrect, he testified that he wrote a letter to the defendant's general agent at Columbia, prior to June 17, and in time to have received a reply before said date, requesting another premium extension agreement, with correct recital as to the amount he had already paid.

It is admitted, or not denied, that the plaintiff was in ill health for two or three weeks prior to June 17, 1932, and on June 20th he was admitted to a hospital in Charleston. On the following day, June 21st, he underwent a serious operation for the removal of stones from his kidneys. He remained in the hospital for four weeks, and was confined to his home for an additional period of six weeks thereafter.

He also testified that prior to his admission to the hospital he was daily expecting the corrected premium extension notes, but did not receive them.

On June 18, 1932, ...