Yarborough v. Bankers Life & Cas. Co.

• Decision Date: 15 April 1954
• Docket Number: No. 16862,16862
• Court: South Carolina Supreme Court
• Parties: YARBOROUGH v. BANKERS LIFE & CASUALTY CO.

Page 359

81 S.E.2d 359

225 S.C. 236

YARBOROUGH v. BANKERS LIFE & CASUALTY CO.

No. 16862.

Supreme Court of South Carolina.

April 15, 1954.

DuRant, DuRant & Rogers, Manning, T. P. Taylor, Isadore S. Bernstein, Columbia, for appellant.

James Hugh McFaddin, Manning, for respondent.

OXNER, Justice.

In each of the three causes of action stated in the complaint, it is alleged that the defendant fraudulently breached a contract of insurance made with plaintiff. After entering a general denial, the Company alleged that the three policies referred to in the complaint were cancelled by the plaintiff and that it had returned to him all unearned premiums. On the trial of the case, a nonsuit was granted as to the first cause of action, but refused as to the other two. The jury returned a verdict in favor of the plaintiff for $7.50 actual damages and $100 punitive damages. On this appeal, defendant contends (1) that there is no evidence of breach of contract; (2) that the evidence is insufficient to show that the breach, if any, was accompanied by a fraudulent act so as to permit the recovery of punitive damages; and (3) that the verdict was excessive and the result of passion and caprice.

The defendant offered no testimony. That of the plaintiff, which consisted largely of documentary evidence, disclosed the following:

On April 20, 1950, defendant issued to plaintiff three health and accident policies. The one involved in the first cause of action, which was nonsuited, called for a monthly premium of $8.35. The other two policies, styled 'Family Group Surgical or Medical Expense Policy' and 'Preferred Family Group Hospital Policy', provided for monthly premiums of $3.50 and $4.00, respectively. Each of these policies allowed a grace period of ten days for the payment of premiums, during which time the insurance would continue in force. It was further provided: 'This policy may be renewed only with the consent of the Company. The Company's acceptance of each renewal premium shall constitute its consent to renew.'

After this issuance of the policies on April 20, 1950, it is conceded by the defendant that they were 'renewed from month to month up to and including the 20th day of March 1951.' During this period the wife of plaintiff, who was included as an assured, suffered an illness necessitating hospital treatment. She had varicose veins and an operation was performed. Her gallbladder was also x-rayed but no stones were found. A claim for this illness was paid. Shortly thereafter this controversy arose.

On February 26, 1951, which was within the grace period, plaintiff paid the premiums due February 20th. He requested a receipt, but none was given. The Company failed to send the usual notice of premiums due March 20th. In a letter written March 22nd, the Company acknowledged receipt of the 'renewal premium of $7.50'. (This necessarily referred to the February premiums on the two policies in controversy which the plaintiff paid on February 26th). The Company then entered into a lengthy discussion of the difficulty in fixing rates on health policies, stating that these were 'newer forms of insurance' for which there was no experience table for rate making purposes comparable to that available in fixing rates on older forms of insurance, such as life and fire. After this somewhat irrelevant discourse, plaintiff was asked to sign and return a rider which was enclosed and was told that 'in all other regards your policy will remain the same and the rider will serve as a make-shift adjustment.' Finally, the letter concluded: 'We consider this the only fair course of action we can take now, but if you do not agree, simply send us the policy with a request for refund within ten days from the date hereof, and we will refund the premium stated above.'

The rider mentioned, which was to be attached to and form a part of the 'Family Group Surgical or Medical Expense Policy' and to be effective as of February 20, 1951, provided that as to plaintiff's wife, the policy would not cover any thing of which 'any affection of the gall bladder or biliary tract' was the sole or contributing cause.

The foregoing letter of March 22nd was answered by the plaintiff on March 26th. He expressed regret at the action taken by the Company, and stated: 'Of course, we have never had any idea of dropping or discontinuing any of the policies.' He further advised the Company: 'I haven't received any premium notice for March so I did not know whether to send premium and as the result I haven't mailed them because I hate to spend good money for something I can't depend on. I appreciate the nice business in the past and would like to continue in future as in past so if for any reason we can not begin here and carry on as before will you please be so kind as to refund the last $15.85 payment.'

After a long delay, the Company replied on May 10, 1951, as follows:

'In accordance with your request we are enclosing herewith our check for $15.85. This represents the full refund of all money tendered after February 20, 1951 on Casualty Policies No. 50133233, 50133234 and 50133235, issued to Luther Yarborough.

'All three policies are now terminated.'

During the interval of approximately six weeks between the plaintiff's letter of March 26th and the Company's reply of May 10th, plaintiff paid the premiums on all three policies due March 20th, aggregating $15.85, and also the premiums due April 20th. Including the premiums due February 20th and paid on February 26th, plaintiff had actually paid since February 20th premiums aggregating $47.55. It follows that the statement of the Company in the letter of May 10th that $15.85 represented 'the full refund of all money tendered after February 20th' was incorrect.

At this point in the controversy, plaintiff turned the matter over to his attorney, who on May 16th wrote the Company that he was holding the check for $15.85 pending the receipt of a further sum of $31.70 which should be refunded. On May 29th, the Company replied that a thorough check of its records showed that no premium payments were received 'for premiums due after February 20, 1951', and as the insured had received full coverage to that date, 'no refund may be made of such premiums.' It was also stated that if the insured had receipts showing payments other than those...