Summary
In Lawson v. Metropolitan Life Ins. Co., 169 S.C. 540, 169 S.E. 430, we also find the pleadings to be very similar to the case before us. There a motion was made to strike certain portions of the complaint on the same grounds as in the instant case.
Summary of this case from Blackman v. Ind. Life and Acc. Ins. Co., et alOpinion
13641
May 26, 1933.
Before SEASE, J. and GREENE, J., Union, October, 1930. Reversed and remanded.
Action by Albert A. Lawson against Metropolitan Life Insurance Company. Judgment for plaintiff, and defendant appeals.
The complaint read as follows:
The plaintiff herein, complaining of the defendant above named, would respectfully show:
I. That the plaintiff is a resident and citizen of the County of Union and State of South Carolina.
II. That the defendant is a corporation of great wealth and immense resources, organized and chartered under the laws of the State of New York, and, as such, is authorized to engage and is engaged in the business of soliciting, executing, and issuing contracts or policies of life and accident insurance; and that, in connection with such business, the said defendant maintains offices and agents and does business in the aforesaid County of Union and State of South Carolina, and that D.H. Wade is its agent in charge of defendant's said office in the aforesaid county and State.
III. That, on November 8, 1929, this plaintiff applied to the defendant for, and on November 11, 1929, the defendant, for and in consideration of the previous payment of the semi-annual premium of $11.90, issued and delivered to this plaintiff, its contract or policy of accident insurance, whereby it agreed and covenanted for a term of six months from November 9, 1929, to pay this plaintiff weekly indemnity of $25.00 during such part of the aforesaid term as he might be continuously and wholly disabled and prevented from performing his occupation.
IV. That, both at the time of the application for, and at the time of the receipt of, the policy or contract of insurance, described above, this plaintiff notified the defendant that he expected shortly thereafter to change his occupation from that of a mail carrier to that of a State Traffic Policeman, and specifically stated that, if this fact should in any wise affect the policy or change the amount of the weekly benefit, he did not want the policy, whereupon the defendant assured him and solemnly represented to him that such change would in no wise affect, alter, change, or violate the said contract of insurance or the benefits thereunder; and that it was solely and expressly in reliance upon such representations of the defendant that this plaintiff applied for the said policy, paid the said semi-annual premium of $11.90, and accepted the said policy of the defendant, all of which representations of the defendant were made with the false and fraudulent purpose of inducing this plaintiff to pay the said premium and to apply for and to accept the said policy of insurance, and which representation was made in spite of the fact that even then the defendant intended and purposed to violate the same in case this plaintiff should subsequently make any claim under the terms of the said policy.
V. That, after this plaintiff had paid the premium on the said policy, thereby putting the same in full force, and after this plaintiff had accepted the said policy and after this plaintiff had complied with all the other conditions of the said contract, all in reliance upon the aforesaid fraudulent representations of the defendant, and during the period of time covered by the said policy, this plaintiff did accidentally break his right arm, which accident wholly and continuously disabled and prevented this plaintiff from performing any and every kind of duty pertaining to his occupation for a period of eight weeks; that, during the period of such disability, the plaintiff duly notified the defendant of such accident and procured of the defendant its claim forms for filing proofs of injury under the aforesaid policy, and thereafter duly prepared and filed with the defendant the said claim forms covering such accident, which said claim forms the defendant duly accepted.
VI. That, while the plaintiff was so disabled and while the defendant, under the terms of its said policy, was bound to pay the plaintiff the sum of $25.00 per week during the period of such disability, the defendant, acting through D. H. Wade, who is said particulars was acting within the scope of his employment as an agent of the defendant and in furtherance of its business, tendered to this plaintiff weekly indemnity covering the period of such disability at the rate of $9.00 per week; that, when this plaintiff refused such tender, the defendant, acting through D.H. Wade, who was there acting within the scope of his employment as agent of the defendant, in order fraudulently to induce this plaintiff to accept the said tender which was made in the form of a check with the notation thereon that the same was in full settlement to date of this plaintiff's claim under his aforesaid policy, stated and represented to this plaintiff that a mistake had been made in the amount of the check, and that the defendant would subsequently right the same and pay the plaintiff such difference as might be necessary so as to bring the plaintiff's weekly benefits under said policy during such disability up to $25.00 per week and accordingly just to go ahead, take the check, and cash it, even though the agent D.H. Wade then and there knew, as he subsequently stated to this plaintiff, that the defendant intended to and was going to refuse to pay the said claim at the rate of $25.00 per week; and that this false and fraudulent statement and representation by the defendant's said agent, who, in such particulars, was acting within the scope of his employment as such agent, was made solely for the purpose of inducing this plaintiff to accept the said check, which check was marked in full settlement of this plaintiff's claim, to the end that the plaintiff might be cheated and defrauded out of his rightful payments of $25.00 per week during the period of his disability in accordance with the defendant's representations and the terms of its said policy.
VII. That, while this plaintiff was disabled and after he had refused the fraudulent tender of weekly benefits under the terms of said policy at the rate of $9.00 per week, a premium became due on said policy; that, when the defendant acting through D.H. Wade, who in said particular was acting within the scope of his employment as defendant's agent, called on this plaintiff to collect said premium, this plaintiff expressed his reluctance to pay any additional premiums on said policy until he had been paid by the defendant, pursuant to its representations, his weekly benefits covering his present disability at the rate of $25.00 per week; that, in reply to this statement of the plaintiff, the defendant, acting through D.H. Wade, who then and there was acting within the scope of his employment, in order to influence this plaintiff into paying the semi-annual premium on said policy then due, and in order to cheat and defraud him, knowingly falsely stated to the plaintiff that he (the said plaintiff) would in just a few days receive payment of his weekly benefits covering his then disability at the rate of $25.00 per week, and that the tender of weekly benefit during such disability at the rate of $9.00 per week was all due to a mistake which was then being corrected; and that this plaintiff, induced solely by such false and fraudulent representations of the defendant's agent, then and there acting within the scope of his employment as such agent, which representations the defendant, acting as aforesaid, then and there knew to be false and untrue, as the said agent of the defendant, acting within the scope of his employment as such agent, subsequently informed this plaintiff and divers others, and which representations were made for the express purpose of inducing the plaintiff to pay the defendant the semi-annual premium of $11.90, then due on the aforesaid policy, paid the defendant the premium then due under his said contract of insurance with the defendant upon the express understanding that the weekly benefit payable to this plaintiff during his then disability was at the rate of $25.00 per week and upon the further express understanding that the weekly benefits then due this plaintiff for his then disability under his said policy would shortly be paid him at the rate of $25.00 per week.
VIII. That all the said representations by the defendant, acting through its said agent D.H. Wade, who in said particulars was acting within the scope of his employment, were false and were known at the time the same were made to be false, and were made solely for the purpose of enabling the defendant to cheat and defraud this plaintiff out of his rightful weekly benefits under the said policy and to cheat and defraud this plaintiff out of the aforesaid $11.90 paid as premium on said policy as set forth in Paragraph VII hereof; that the defendant, subsequent to such false and fraudulent representations, fraudulently refused to pay this plaintiff his weekly benefits under the said policy covering his period of disability at the rate of $25.00 per week for the said eight weeks he was continuously disabled, representing a total of $200.00 due this plaintiff by the defendant under the said policy, all to the plaintiff's injury and damage, and this plaintiff believes that the reason the defendant refuses to pay the said weekly benefits at such rate is because subsequent to the delivery of the said policy and prior to the plaintiff's injury he changed his occupation from that of a mail carrier to that of a State Traffic Policeman, all in spite of the fact that the defendant repeatedly and solemnly represented to the plaintiff, as set forth above, that such change in his occupation would not in any wise affect the weekly benefits provided for in said policy or in any wise invalidate the policy, and in spite of the fraudulent and false other representations of the defendant, hereinabove set forth.
IX. That, by reason of the aforesaid breach of its contract of insurance, accompanied by the aforesaid acts with intent to defraud, the plaintiff has been forced to undergo great suffering by reason of his actual need for the sums rightfully due him under said policy; and as direct result of the said high-handed, illegal, fraudulent, and grasping conduct of the defendant, as hereinabove set out, this plaintiff has been terribly worried and annoyed, cheated, deceived, imposed on, deprived of money long since due him, deprived of his rights as a policyholder, and has suffered hardships, all to his damage, actual and punitive, in the sum of $3,000.00
Wherefore, this plaintiff prays judgment against the defendant, Metropolitan Life Insurance Company, for the sum of $3,000.00 and for the costs of this action.
Messrs. Elliott, McLain, Wardlaw Elliott and Sawyer Sawyer, for appellant, cite: Terms of a written contract cannot be varied by prior oral agreement: 107 S.C. 200; 92 S.E., 861; 101 S.C. 221; 85 S.E., 585; 108 S.C. 411; 32 C.J., 1129; 68 S.E., 387; 47 S.E., 681; 103 S.C. 494. Insured must read policy which he accepts: 77 S.C. 187; 57 S.E., 766; 129 S.C. 226; 123 S.E., 845; 78 S.C. 419; 108 S.C. 411; 127 S.E., 270; 124 S.C. 211; 117 S.E., 351. Principal not bound by illegal contract made by agent without authority: 2 C.J., 837; 101 S.C. 450. As to avoidance of contract for fraud: 77 S.C. 187; 57 S.E., 766; 103 S.C. 494; 88 S.E., 360; 78 S.C. 419; 131 S.C. 12; 127 S.E., 270; 156 S.C. 529; 153 S.E., 568; 15 Fed., 158. Fraudulent breach of contract consists of breach of contract accompanied by acts of fraud: 70 S.C. 108; 49 S.E., 232; 160 S.E., 721.
Messrs. J.G. Hughes and Donald Russell, for respondent, cite: Knowledge of agent acquired within scope of agency imputable to principal: 52 S.C. 224; 29 S.E., 655; 79 S.C. 526; 60 S.E., 1106; 81 S.C. 152; 62 S.E., 1; 88 S.C. 37; 70 S.E., 295; 49 S.E., 855; 77 L.Ed., 76; 94 U.S. 574; 24 L.Ed., 291; 117 S.C. 437. As to actionable false representation: 162 S.C. 316; 144 Ark. 422; 222 S.W., 712; 159 P., 660; 10 Rich., 311; 77 S.E., 683.
May 26, 1933. The opinion of the Court was delivered by
In this case the plaintiff seeks damages growing out of a policy of accident insurance issued to him by the defendant company. The defendant made a motion before Judge T.S. Sease to strike out certain portions of the complaint — about two-thirds by volume — on the ground of irrelevancy. The motion was denied, and the case went to trial, a verdict for $23.80 actual and $1,500.00 punitive damages resulting. Defendant appealed.
At the outset we are confronted with the crucial question as to the nature of the action. Does the complaint state a cause of action for breach of a contract of insurance entered into by plaintiff and defendant; or does it — such contract being repudiated — state a cause of action in tort for fraudulent representations inducing plaintiff to enter into the contract? The motion to strike was based upon the former theory, while Judge Sease evidently held to the latter. For an understanding of this issue, the complaint will be reported.
A casual reading shows that the complaint contains some allegations appropriate to an action ex delicto and others appropriate to one ex contractu, Paragraphs I and II being appropriate to either.
Paragraph III very clearly sets forth the issuance and delivery by the defendant to the plaintiff upon his application of a contract or policy of accident insurance providing for a weekly indemnity of $25.00. Paragraph V alleges that, after the plaintiff had paid the premium on the policy, thereby putting it in full force, had accepted it, and had complied with all other conditions of the contract, and, during the period of time covered by the policy, he became wholly disabled through an accident and was thereby continuously prevented from carrying on his work for a period of eight weeks. Paragraph VIII avers, inter alia, that the defendant fraudulently refused to pay the plaintiff his weekly benefits under the policy at the rate of $25.00 per week for the eight weeks during which he was disabled, "representing a total of $200.00 due this plaintiff by the defendant under the said policy." These allegations indicate very forcibly an ex contractu action; but if, in view of those allegations appropriate to an ex delicto action, the question may be held an open one up to this point in the complaint, it seems to be settled beyond peradventure by the succeeding and final paragraph (IX), which sets forth the amount of damages claimed and the acts of the defendant relied upon by the plaintiff to establish his claim. This paragraph specifically refers such damages to defendant's "breach of its contract of insurance," alleges that plaintiff had undergone great suffering "by reason of his actual need for the sums rightfully due him under said policy," and sets out that he had been deprived of "money long since due him" and of "his rights as a policyholder." In view of these allegations, we cannot construe the complaint otherwise than as stating a cause of action ex contractu. And even if it could be said that it is doubtful whether such action is on contract or in tort, the doubt must be resolved in favor of the former. Spratt B. L. Association v. Roper, 160 S.C. 240, 158 S.E., 495, and cases cited. We may add that plaintiff's counsel in their printed argument before this Court, despite the fact that Judge Greene submitted the case to the jury as one ex delicto, maintain that the action is one for fraudulent breach of contract.
Having reached this conclusion with reference to the nature of the action, we turn to a consideration of the motion to strike. Paragraphs IV, VI and VII may be grouped together. They would be appropriate to an action in tort for fraudulent representation, but are not relevant to one for breach of the contract; and the motion to strike should have been granted as to them. In addition, it may be said with reference to Paragraph VI, that there is no allegation therein that defendant's agent succeeded in his effort to induce plaintiff to accept a check in payment for his disability at the rate of $9.00 per week. We may also group together certain other language which defendant sought to strike: From Paragraph V, the words "all in reliance upon the aforesaid fraudulent representations of the defendant," and, from Paragraph IX, the words "accompanied by the aforesaid acts with intent to defraud, and as direct result of the said high-handed, illegal, fraudulent and grasping conduct of the defendant," and "cheated deceived, imposed on." These expressions are clearly handmaidens of the allegations sounding in tort which we have already held to be irrelevant, and should have been stricken out.
Defendant's motion also covered the whole of Paragraph VIII. While this paragraph contains some allegations appropriate to an action ex delicto, it also includes allegations appropriate and necessary to the statement of a cause of action for breach of the contract, namely, the allegations to the effect that the defendant refused to pay the plaintiff the weekly benefits to which he was entitled under the policy, the complaint containing no other allegations of refusal to pay. The allegations sounding in tort have, under our construction, no place in the complaint, and, if the motion had been directed against them alone, it would have been error not to grant it. But as defendant sought to strike out, along with these allegations, also those allegations which constitute a part of the cause of action ex contractu, the trial Judge correctly refused the motion. Givens v. Electric Co., 91 S.C. 417, 74 S.E., 1067; Dougan v. Van Riper, 109 Ore., 254, 198 P., 897; Valley Lumber Co. v. McGilvery, 16 Idaho, 338, 101 P., 94; Bunker Hill Co. v. Polak (C.C.A.), 7 F.2d 583.
The errors we have found in the refusal to strike necessarily vitiate all subsequent proceedings. The judgment of the Circuit Court is therefore reversed, and the case remanded to that Court for a new trial in accordance with the views herein expressed.
MR. CHIEF JUSTICE BLEASE and MESSRS. JUSTICES CARTER and BONHAM concur.