Opinion
39203.
DECIDED NOVEMBER 17, 1961. REHEARING DENIED NOVEMBER 30, 1961.
Fraud, etc. Screven Superior Court. Before Judge Usher.
Sam F. Lowe, Jr., for plaintiff in error.
Hilton Hilton, L. H. Hilton, contra.
1. The petition sufficiently alleged that the fraud of the defendant insurance company for which the plaintiff seeks redress was committed by the defendant by its authorized agents.
2. When an insurance company engaged in the business of selling life insurance policies does actually sell such a contract to the plaintiff, the fact that its agents misrepresented the nature of the contract entered into by denominating it a profit sharing contract rather than a policy of life insurance does not relieve the insurer of its liability resulting from false representations as to the nature, form and character of the policy, as against the contention that what was being purchased was not an insurance policy but some other sort of contract.
3. Under the provisions of former Code § 56-519, a person who has been induced to purchase a contract of insurance because of the false and fraudulent representations of an agent of the insurance company may, within the period of the statute of limitation, bring an action at law against it to recover premiums paid out by him. Since this section provides a statutory remedy upon proof of the misrepresentations, with a different measure of damages from that applicable to fraud actions generally, it is not necessary for the plaintiff to prove that the statements were sufficient to sustain a common-law action for deceit, nor to rescind the contract and tender back any benefits received thereunder before maintaining the action.
4. The allegations of the answer to which the general demurrer was sustained afforded no defense in view of what is here held, and were properly stricken.
DECIDED NOVEMBER 17, 1961 — REHEARING DENIED NOVEMBER 30, 1961.
The allegations of the petition brought by the plaintiff Sidney J. Morgan against the defendant Bankers Fidelity Insurance Co. are in substance that Bankers Fidelity Insurance Co., acting by and through designated agents of the defendant and another named corporation, made certain representations to the plaintiff with respect to the sale of what was termed a profit sharing contract but which in truth and fact was a twenty payment life insurance policy insuring the life of plaintiff with various and sundry options provided therein. It is further alleged that each and all of the representations were made in connection with and as an inducement to persuade the plaintiff to purchase an option on a certain number of shares of the common stock of the defendant company and the purported profit sharing contract to be issued by it, which representations were alleged to be false, fraudulent, material and made with intent to deceive the plaintiff, who relied thereon to his damage in the amount of $400 premium paid on May 6, 1959, and an additional $400 paid on May 6, 1960, together with 7% interest from the date of the respective payments; and $500 was claimed as attorneys fees based upon an allegation that the defendant below had acted in bad faith from the inception of the matters complained of; had been stubbornly litigious, and had caused the plaintiff unnecessary trouble and expense in employing counsel for the purpose of filing and prosecuting the action.
The defendant filed a general demurrer to the petition which was overruled by the court. It also filed an answer denying the material allegations of the petition and by way of further answer alleged that the plaintiff had made written application for the life insurance policy, which policy was delivered to the plaintiff and a written receipt obtained therefor; that the application clearly stated that it was an application for a life insurance policy which was issued and delivered in accordance with the application; that the receipt contained the important conditions of the policy set out in plain, simple English language which in no way referred to the representations set out in the petition. Copies of the application and receipt are attached as exhibits to the answer.
It is alleged that had the plaintiff continued the payment of premiums for the period of twenty years, the policy of insurance would have returned to the plaintiff more money than had been paid into the company, while at the same time providing the minimum of $5,000 of life insurance protection throughout the twenty-year period, plus benefits from matured coupons left on deposit with the company.
Plaintiff accepted delivery of the policy and retained the same, making payment of the first two annual premiums. The following provision appeared in large print on the back page of the policy delivered to the plaintiff: "The Company shall not be bound by any promise or representation heretofore or hereafter made by or to any agent or person other than as above."
The answer alleges that by accepting and retaining the policy of insurance the plaintiff ratified any alleged misrepresentations (though defendant denies any misrepresentations were made) and plaintiff is not entitled to recover on the allegations in the petition.
These recited allegations of the answer were demurred to by the plaintiff; the demurrer was sustained and the allegations stricken.
Bankers Fidelity Life Insurance Co., as plaintiff in error, assigns error upon the overruling of its demurrer to the petition and the sustaining of the demurrer to that portion of its answer referred to above.
1. A plaintiff seeking to hold a defendant liable for the acts of its agent committed within the scope of the agent's authority may allege such agency simply by stating that the defendant, acting through its named agent, did the act in question. This allegation is sufficient as against both general and special demurrer. Conney v. Atlantic Greyhound Corp., 81 Ga. App. 324 (2) ( 58 S.E.2d 559). The fact that it is also alleged in the petition that the named agents were agents for both the defendant and another corporation in selling applications for the stock options directed to such corporation does not alter this rule. While the two corporations were acting in concert in selling the stock options, the direct allegation that the defendant, through its authorized agents, made the misrepresentations upon which the suit is based is a sufficient allegation of fact, if proved, to bind this defendant.
2. Fraud may consist of a misrepresentation of a material fact as to the subject matter of a contract the actual result of which is to substitute a subject matter different from that which the vendor believed he was purchasing. Mosely v. Johnson, 90 Ga. App. 165, 167 ( 82 S.E.2d 163); Crowell v. Brim, 191 Ga. 288 (1) ( 12 S.E.2d 585). This is true whether, as in the Mosely and Crowell cases, the plaintiff seeks to rescind the contract, or whether, as in the cases of Aderhold v. Zimmer, 86 Ga. App. 204 ( 71 S.E.2d 270) and Brown v. Ragsdale Motor Co., 65 Ga. App. 727 ( 16 S.E.2d 176) he seeks to affirm the contract and recover damages.
3. Code § 56-519 in effect at the time of this transaction in 1959, provides as follows: "It shall be unlawful for any person, firm or corporation to make or cause to be made any fraudulent or false representations as to the form, nature and character of the policy offered for sale, and no person shall sell a different form or character of policy from that which he represents himself as selling, or make any other material misrepresentation as to the benefits accruing under any policy which he sells or offers for sale. Any note or other evidence of debt given in consideration of said policy shall be null and void and any premiums paid on such policy may be recovered by such policyholder in any court having jurisdiction thereof."
This Code section provides a statutory remedy by imposing a statutory penalty. Questions of whether it should be given a liberal or strict construction are irrelevant for, where a statute provides in plain terms for the enforcement of its subject matter there is no room for construction, but the unambiguous language of the statute must be given effect. Salmon v. Floyd County, 151 Ga. 313 ( 106 S.E. 280). "It is a fraud . . . for an insurance company to represent that the contract of insurance entered into contains provisions whereby the policyholder, at the expiration of a certain period, provided the policy is maintained in force, may have the right and privilege of obtaining a loan from the company thereon, and to issue and deliver to such person a policy of insurance which does not contain such provisions." Life Casualty Ins. Co. v. Walker, 62 Ga. App. 819, 821 ( 10 S.E.2d 124). The decision in the Walker case (in which the insured was making weekly payments on the policy) is further to the effect that the statute of limitation for bringing an action under Code § 56-519 is under Code § 3-1002, four years from the time the fraud was or should have been discovered. It thus appears that mere affirmance of the contract by payment of premiums, where the action is in fact brought within four years from the delivery of the policy, is not sufficient to prevent the plaintiff from suing to recover the premiums paid on the ground that such plaintiff did not exercise due diligence in ascertaining the fraud and repudiating the contract at the time of delivery. The statute does not require, as in cases of rescission for fraud ( Dunn v. Citizens Southern Co., 47 Ga. App. 600 (1), 171 S.E. 170) that the benefits of the contract be promptly restored, nor that if the contract be affirmed the measure of damages be the loss actually sustained by the plaintiff. The penalty for the misrepresentation is that any obligation of the plaintiff to pay be voided, and his premiums be returned, regardless of whether or not he has received benefits under the policy issued. Since the purpose of former Code § 56-519 is to place on insurance companies a direct penalty for statements of their agents declared therein to be unlawful, the company cannot, merely by inserting in its contract a provision that it is not to be bound by the acts of such agents, relieve itself from the effect of the law, regardless of whether the contract so written was accepted by the insured or not. "Not even estoppel can legalize or vitalize that which the law declares unlawful and void. If so, the conduct of individuals, whether independently or collusively, could render any and all laws invalid and impotent." Flournoy v. Highlands Hotel Co., 170 Ga. 467, 471 ( 153 S.E. 26); Code § 102-106.
The petition set out a cause of action for recovery of premiums based on the agent's fraud in the procurement of the policy of insurance, and was accordingly not subject to demurrer based only on the grounds that it failed to set forth a cause of action and that it showed on its face that the plaintiff was not entitled to recover anything from the defendant.
4. It was conceded in oral argument by counsel for defendant that, if Code § 56-519 is applicable and controlling, the allegations of the answer which were stricken on demurrer would afford no defense. Having held that Code § 56-519 is applicable, it follows that the court below was correct in sustaining the demurrer to portions of the answer referred to in the statement of facts.
The trial court did not err in overruling the general demurrer to the petition nor was there error in sustaining the demurrer to the portions of the answer to which we have referred.
Judgment affirmed. Carlisle, P. J., and Eberhardt, J., concur.