Welch v. New York Life Ins. Co.

• Decision Date: 07 December 1936
• Docket Number: 14392.
• Citation: 189 S.E. 809,183 S.C. 9
• Parties: WELCH v. NEW YORK LIFE INS. CO.
• Court: South Carolina Supreme Court

189 S.E. 809

183 S.C. 9

WELCH v. NEW YORK LIFE INS. CO.

No. 14392.

Supreme Court of South Carolina

December 7, 1936

Appeal from Common Pleas Circuit Court of Colleton County; J. Henry Johnson, Judge.

Action by John C. Welch against the New York Life Insurance Company. From a judgment on a verdict awarding actual and punitive damages, defendant appeals.

Affirmed.

BAKER and BONHAM, JJ., dissenting.

The order of Judge Johnson refusing motion for a new trial follows:

The above-entitled cause was tried before me and a jury at the May term of the court of common pleas for Colleton county at Walterboro, S. C., and a verdict was returned by the jury for the plaintiff in the amount of $1,000 and interest as actual damages and $950 punitive damages. The matter now comes before me on the motion of the defendant for a new trial upon seven grounds with various subdivisions as set forth in the said motion. After hearing the argument of counsel and after mature consideration of the matter, I am of the opinion that the motion for a new trial should be refused.

At the proper stages in the trial the defendant duly made motions for a nonsuit, for a direction of verdict, and for a mistrial, all of which were refused.

The first ground for a new trial is that the court erred in refusing to grant a nonsuit on the ground that insufficient testimony was offered to make out a cause of action against the defendant, and further because the court erred in refusing to grant a nonsuit in that:

(a) The plaintiff could not recover on account of the provision in the application to the effect that payment to the company could be made only by bank draft or certified check, which mode of payment was not followed.

(b) Because the plaintiff adopted Mrs. Olney, the agent of the defendant, as his own agent.

(c) Because there was no testimony tending to show waiver of the terms of the policy by the defendant company.

I think beyond question that the testimony adduced by the plaintiff was susceptible of more than one reasonable inference, one of which was that the defendant was liable for the wrongful and fraudulent breach of the contract and, therefore, the nonsuit should not have been granted on the first ground.

Considering the further grounds pressed for a nonsuit, (a) and (c) together, the testimony of the plaintiff was clearly susceptible of the inference that the provision of the application had been waived, it appearing that as a part of the same transaction the plaintiff had received certain policies of insurance, the premiums on which had been paid in a manner other than that specified in the provision of the policy relied upon. It would have been improper, therefore to have granted the motion for a nonsuit on these grounds.

With reference to the contention that Mrs. Olney, the agent of the defendant, had been adopted as the agent of the plaintiff, it is to be observed that section 1911 of the Code of 1932 provides as follows: "A person who acts for another than himself in negotiating a contract of insurance by an insurance company or association, for the purpose of receiving remuneration therefor, shall be held to be the company's or association's agent, whatever conditions or stipulations may be contained in the policy contract." To the same effect are sections 7970 and 7971.

It is the opinion of the court that the testimony did not show that Mrs. Olney had been adopted as the agent of the plaintiff and in any event it would be impossible to say that that fact was the only inference which might be drawn from the testimony adduced and it was, therefore, proper to submit the matter to the jury.

It is contended that the court erred in refusing to direct a verdict for the defendant on the ground that the only inference to be drawn from the testimony was that no contract of insurance had been entered into with the plaintiff by the defendant as the payment had not been made in the mode prescribed by the application and on the further grounds:

(a) That there had been no breach of the contract or breach with fraudulent act.

(b) That plaintiff had adopted Mrs. Olney as his agent as a result of which no obligation devolved on the defendant.

(c) That the defendant did not receive the premiums, nor deliver to the plaintiff an official receipt or policy.

(d) That in delivering the first two policies the defendant had received a certified check or bank draft to its order and, therefore, there had been no waiver.

It was admitted that, at the time of the transaction in question, Mrs. M. H. Olney, who received the money from the plaintiff, was a duly licensed agent of the defendant company, and it was likewise admitted that she received and accepted from the plaintiff the money for the policies and delivered a receipt therefor, but that neither she nor the company ever delivered the policies nor returned the plaintiff's money.

I am of the opinion that beyond any question the testimony was susceptible of the inference and that the company, through its agent, Mrs. Olney, did enter into a contract with the plaintiff for the delivery of the policies, and it would have been error to direct a verdict for the defendant on the ground requested.

I am further of the opinion that the testimony is susceptible of the inference that in not making delivery of the policies or returning the money, the defendant, through its agent, Mrs. Olney, was guilty of a wrongful and fraudulent breach of the contract in that the testimony is clear that the defendant's agent received the money and did not deliver the policies and that the company, although cognizant of the facts, did not correct the situation.

My observations with reference to the motion for nonsuit dispose of the contention that the plaintiff had adopted Mrs. Olney as his agent.

I do not believe that the ground (c) is a valid contention in that, as Mrs. Olney was the agent of the defendant company in the transaction, as was a reasonable inference to be drawn from the testimony, then in that event the receipt of the premiums by Mrs. Olney constituted the receipt by the company and her receipt, as agent of the company, delivered to the plaintiff operated to bind the company.

Nor do I perceive the validity of contention (d) in that the testimony shows that in so far as the plaintiff was concerned the payment of the premiums for the last two policies was made in the same manner as was the payment for the first two policies, which first two policies were in due course received by the plaintiff, and about which there is no issue in this case.

The third ground made for a new trial is that the court erred in refusing to direct a verdict for the defendant as to punitive damages for the alleged reason that the evidence was indicative only of the willful breach of contract and is not sufficient to establish fraud.

As above stated, the testimony is undisputed that the defendant's agent received the money and the policies were not delivered nor the money refunded. The testimony is also undisputed to the point that the company, when learning of the fact, refused either to issue the policies or to refund the money.

The testimony was reasonably susceptible of the inference that the defendant, through its agent, accepted the money of the plaintiff with no intention of delivering the policy in accordance with the contract made.

Under the cases of Williams v. Commercial Casualty Insurance Company, 159 S.C. 301, 156 S.E. 871; Bradley v. Metropolitan Life Insurance Company, 162 S.C. 303, 160 S.E. 721; and the very recent case of Bradley v. Washington Fidelity Nat. Insurance Company, 170 S.C. 509, 171 S.E. 243, 247, I am sure that the issue of punitive damages was properly submitted to the jury.

In the last-mentioned case this court, speaking through the then Chief Justice Blease, said: "It is the duty of insurance companies and their agents to carry out their contracts. It is clearly a violation of their duty to practice fraud or deception in the making of these contracts, or in their performance. In this case there is not only evidence to show that the agent of the company fraudulently acted in his dealings with the insured, but it may be fairly inferred from that evidence that some one with more authority than the agent had some information from the records in the hands of the company that the alleged fraud had been committed, and made no effort to right the wrong."

The statement there made, in my opinion, is clearly applicable to the facts in this case. I do not believe that our courts will allow any insurance company to escape liability in a state of facts such as has been here presented wherein the perpetrator of the fraud was, as is the case here, a duly authorized agent of the insurance company.

The fourth ground relied upon as the basis for a motion for a new trial is that the court erred in refusing to order a mistrial in that the plaintiff had asked on several occasions certain questions seeking to bring out testimony ruled incompetent by the court. The testimony referred to was not manifestly incompetent or prejudicial, nor was it adduced for the purpose of influencing the jury even if it might be argued that same was inadmissible.

In the course of the trial I had at one time held such testimony competent, but during the argument to the jury, I thought it best to regard such testimony as incompetent, ordered it stricken by the stenographer, instructed the jury to disregard it, and, upon objection, refused to allow counsel for the plaintiff to argue it. At the end of my charge to the jury, I again instructed the jury to disregard any testimony to the effect that the defendant company had at any time agreed to refund the money to the plaintiff and any argument that may have been...