Opinion
12617
March 14, 1929.
Before WHALEY, J., County Court, Richland, January, 1928. Affirmed.
Action by the National Loan Exchange Bank against the New York Life Insurance Company, Mary A. Buyck, and others. From an order sustaining plaintiff's motion to strike out certain allegations of the answer and sustaining demurrer to the counterclaim set up by Mrs. Buyck the latter appeals.
Following is the decree of Judge Whaley:
"This was a motion before me to strike out specified portions of the second paragraph of the answer of the defendant Mrs. Mary A. Buyck, and also a demurrer to a counterclaim set up by such defendant. The question as to both is whether such allegations in the answer are sufficient to allege a defense or counterclaim based on fraud on the part of plaintiff. In addition to the pleadings, the original life insurance policy, together with the assignment thereof, and the collateral note referred to in the answer, were submitted by agreement of counsel to me for consideration.
"Paragraph 4 of the complaint alleges that in September, 1926, Mr. and Mrs. Buyck executed and delivered to plaintiff their written assignment and transfer of the insurance policy to secure any indebtedness then held by plaintiff against Mr. Buyck and any liability of Mr. Buyck to plaintiff then due or to become due; such written assignment having been approved by the insurance company and thereafter delivered to plaintiff, together with the original policy.
"Paragraph 2 of the answer admits the execution and delivery of the assignment and transfer of the policy as security for a loan then made to Mr. Buyck by plaintiff, evidenced by a collateral note, but denies that the assignment was given with the purpose and intent of securing any indebtedness of Mr. Buyck to plaintiff other than the new loan then made. The answer does not allege any fraud in the preparation of the assignment itself or in the choice of the language thereof. The fraud alleged is not in taking the assignment of the policy, which was admittedly intended to secure the new note, but is alleged to inhere in plaintiff's effort to use the assignment to deprive Mrs. Buyck of the proceeds of the policy.
"The gist of the defense and counterclaim of Mrs. Buyck is that by concealment or silence plaintiff has perpetrated a fraud on her in attempting to use a paper executed by her for a purpose other than the one intended by her. The printed portion of the collateral note indorsed by Mrs. Buyck provides that the collateral described thereon was deposited with plaintiff `as collateral security for the payment of this and any other liability or liabilities of the undersigned (Mr. Buyck) to said Bank (plaintiff), due or to become due. * * * ' This clearly indicated to Mrs. Buyck that the policy was being deposited with plaintiff as collateral security for the new note, as well as for any other indebtedness of Mr. Buyck to plaintiff, then due or to become due. The written assignment attached to the insurance policy, on the form furnished by the company, duly signed by Mr. Buyck, as well as by Mrs. Buyck, as beneficiary, thereunder, contained language of similar import and effect, not merely printed but very plainly typewritten. Mrs. Buyck's attorney conceded in the argument before me the very apparent proposition that the language of the assignment of the policy was broad enough to cover the existing indebtedness held by plaintiff against Mr. Buyck — a judgment based on a note executed by Mr. Buyck. And the same is equally true of the collateral note indorsed by Mrs. Buyck.
"It is perfectly clear that both of these instruments put Mrs. Buyck on notice as to the effect of her signature thereto. The language was clear and unambiguous as to its effect. The typewritten portion of the assignment of the policy, containing the language in question, was short and simple. If she did not read what she signed, it was her duty so to do, and the legal effect is the same as if she had done so. It is not suggested that she could not read, or that her intelligence was such that she would not readily have understood the meaning of the simple language employed in these instruments in this connection, had she read them. It appears from her answer that she was the owner of other collateral which she deposited with the policy under the collateral note, and she must have been a woman of some business experience. Both instruments that she signed left no doubt of their purpose and effect to secure plaintiff in the existing indebtedness, as well as for the new loan.
"Since Mrs. Buyck knew, or is presumed to have known, that the policy was being placed as security for any existing indebtedness of Mr. Buyck to plaintiff, was there any duty resting on plaintiff to inform Mrs. Buyck as to the existence of the judgment, about which the fraudulent concealment or silence is alleged to have been committed?
"There was no peculiar or confidential relationship between plaintiff and Mrs. Buyck. They were dealing at arm's length in the ordinary business relationship of creditor and debtor. Plaintiff had a right to assume that Mrs. Buyck had read what she had twice signed. It could further assume, as she did not inquire as to the existence of any other indebtedness, either that she had been informed concerning same, or else that she did not care for the information. Indeed, it could well have been supposed that her husband had informed her in the premises, since she made no inquiry. Mr. Buyck's indebtedness was a matter of public record. That plaintiff owed Mrs. Buyck no duty to speak or explain under the admitted circumstances is plain. Plaintiff had the right to rely on what Mrs. Buyck had signed as protecting it, according to the clear meaning of the language used. That she did not seek to protect herself is, unfortunately, what too many do, only to awaken to the realization that material rights have been lost by their carelessness or indifference. For such result there is no panacea in the law. Chemical Co. v. Youngblood, 58 S.C. 56, 59, 36 S.E., 437; Whitman v. Ry., 107 S.C. 200, 92 S.E., 861, L.R.A., 1917-F, 717; Oxweld Acetylene Co. v. Davis, 115 S.C. 426, 106 S.E., 157; Colt Co. v. Kinard, 126 S.C. 205, 119 S.E., 581; Colt Co. v. Britt, 129 S.C. 226, 123 S.E., 845; Colt Co. v. Robinson, 137 S.C. 224, 135 S.E., 312.
"That there can be no fraud by silence when there is no duty to speak, and that the allegations here make no confidential relation requiring disclosure by plaintiff is beyond question. 26 C.J., 1077; Campbell v. Kinlock, 9 Rich. (43 S.C.L., 300); Chicora Fertilizer Co. v. Duncan, 91 Md., 144, 46 A., 347, 50 L.R.A., 401; Sankey v. McElevey, 104 Pa., 265, 49 Am. Rep., 575. The result is that the second ground of the demurrer must be sustained and that the motion to strike out must be granted in all of its three particulars. It need only be added, as to the first particular of the motion to strike, that it is irrelevant for Mrs. Buyck to undertake to deny the purpose and intention of the instrument that she signed, under the considerations advanced above, and in the absence of fraud relating to the execution thereof.
"The sixth ground of the demurrer is also well taken, in my opinion, under the authority of Lenhardt v. French, 57 S.C. 493, 35 S.E., 761, and Cheraw Motor Co. v. Rainwater, 125 S.C. 509, 119 S.E., 237, and is therefore sustained. The counterclaim is admittedly ex delicto, and the doctrine of the Lenhardt case that such cannot be set up in an action of contract has never been questioned, but, on the contrary, is affirmed in the Rainwater case.
"Plaintiff did not insist on the first ground of the demurrer, which does not go to the merits, but all other grounds were argued and insisted upon before me. I do not deem it necessary, however, to pass upon such other grounds, since the ones upon which this order is based are sufficient to dispose of the matter.
"It is therefore ordered and adjudged that the motion to strike out be, and the same is, hereby granted as to all three of its particulars; and that the demurrer be, and the same is, hereby sustained upon the second and sixth grounds."
Messrs. D.W. Robinson, and D.W. Robinson, Jr., for appellant, cite: If facts pleaded entitled defendant to relief on any theory, it is a good defense: 133 S.C. 209-10; 134 S.C. 50. As to demurrer: 141 S.C. 113; 144 S.C. 68; 141 S.C. 369; Id., 209; 142 S.C. 372; 140 S.C. 48; 108 S.C. 264-5; 141 S.C. 173. Not necessary that pleading allege fraud in direct terms: 139 S.C. 231. Papers sued on make a contract: 141 S.C. 532; 6 R.C.L., 641; 27 S.C. 382; 42 L.R.A. (N.S.), 849. As to admission of parol evidence: 144 S.C. 221; 6 R.C.L., 835; 139 S.C. 231; 131 S.C. 439; 126 S.C. 359. Competent to explain an ambiguity: Stearns on Suretyship (2d Ed.), 203; 139 S.C. 229. To show consideration: 132 S.C. 39; 13 S.C. 332; 141 S.C. 537. To show fraud: 139 S.C. 232; 104 S.C. 227; 111 S.C. 42; 136 S.C. 502; 125 S.C. 43; 103 S.C. 405; 20 S.C. 507; 57 A.S.R., 627; 68 A.S.R., 70, 73; 4 Rawle, 141; 26 Am. Dec., 125; 10 R.C.L., 1059; 75 Am. Dec., 671; 70 S.C. 115; 69 S.C. 330. Subrogation: 51 S.C. 124; 10 S.C. 245; 76 S.C. 568; Stearns on Suretyship (2d Ed.), 429, 430, 448; Jones on Pledges Col. Sur. (2d Ed.), Sec. 517-a, 521; 5 Pom. Eq. Jur. (4th Ed.), 2344; 108 U.S. 264; 114 S.C. 226; 117 S.C. 426; 76 S.C. 568; 139 S.C. 405. As to volunteers: 137 S.C. 343; 5 Pom. Eq. Jur. (4th Ed.), 2347, 2343; 139 S.C. 418; 136 S.C. 213. Additional grounds: 145 S.E., 628; 144 S.C. 492. Mr. J.B.S. Lyles, for respondent, cites: Fraud is never presumed: 58 S.C. 56; 96 S.C. 240. Where written agreement free from ambiguity it must be construed by Court. 104 S.C. 286; Id., 311; 116 S.C. 77. As to demurrer: 142 S.C. 372; 141 S.C. 173; 57 S.C. 493; 125 S.C. 509; Secs. 410, 411, Code Proc. Beneficiary has no vested interest in insurance policy: 139 S.C. 23; 137 S.E., 202; 222 Fed., 204. There can be no fraud without damage: 26 C.J., 1167, 1171; 5 S.C.L., 31; 12 S.C.L., 489; 127 S.C. 386; 65 S.C. 490; 24 How., 407. Continued performance by party induced by fraud to enter into executory contract, after knowledge of fraud estops from recovery for loss occasioned by deceit: 85 Fed., 740; 105 Fed., 573; 52 L.R.A., 745. Minority rule: 140 A.S.R., 509.
March 14, 1929. The opinion of the Court was delivered by
This is an appeal from an order of his Honor, Judge Whaley, of the County Court of Richland County, sustaining a motion by the plaintiff to strike out certain allegations of the answer and sustaining a demurrer to a counterclaim set up by the defendant Mrs. Buyck.
The facts developed appear to be as follows:
On December 1, 1920, the New York Life Insurance Company issued a policy upon the life of Jefferson E. Buyck for $3,000. The beneficiary named was his wife, the defendant Mary A. Buyck.
On December 10, 1926, the insured, Jefferson E. Buyck, made a note to the plaintiff bank for $2,267.89 payable March 10, 1927, with certain interest and attorney's fees, and put up as collateral a certain note and insurance policy in question. The collateral note provided that the collateral security was pledged "for the payment of this and any other liability or liabilities of the undersigned to the said bank, due or to become due, or which may hereafter be contracted or existing. * * * In case of sale for any cause, after deducting all costs or expenses of every kind for collection, sale or delivery, the said bank may apply the residue of the proceeds of the sale or sales so made, to pay either one or more or all of the said liabilities to the said bank, whether then due or not. * * *"
On the back of the note was a guaranty by Mary A. Buyck reading thus: "In consideration of the making, at the request of the undersigned, of the loan evidenced by the within note upon the terms thereof, and of the sum of one dollar, the undersigned, jointly and severally, hereby guarantee to The National Loan Exchange Bank of Columbia its successors, endorsers or assigns, the prompt payment of the said loan when due. * * * "
On September 10, 1926, Jefferson E. Buyck and Mary A. Buyck had executed in due form an assignment of the policy to the bank, reading thus: "For value received, We being of legal age, hereby assign and transfer unto National Loan Exchange Bank, of Columbia, S.C. the Policy of Insurance known as No. 7554250, issued by the New York Life Insurance Company upon the life of Jefferson E. Buyck, of Columbia, S.C. and all dividend, benefit and advantage to be had or derived therefrom, subject to the conditions of the said Policy, the Rules and Regulations of the Company, and to any indebtedness to the New York Life Insurance Company against said Policy No. 7554250 — Assignment is given to secure any notes or indebtedness now held by said bank and signed by me, and all such notes or indebtedness which may hereafter be held by such bank until paid."
(Evidently the note of December 10th was a renewal of a note given in September.)
Prior to the making of the September note and the December renewal, the bank held as assignee a note given by Jefferson E. Buyck to the Merchants' Bank of Columbia, dated October 1, 1922, due one year after date, for $1,792.90, with certain interest and attorney's fees. On September 23, 1924, the bank obtained judgment upon this note against Jefferson E. Buyck for $2,129.23, which was duly entered. No part of it had been paid when the note of September, 1926, was given; it was then an outstanding liability of Jefferson E. Buyck to the bank.
Jefferson E. Buyck died in August, 1927. The bank claimed the right to apply the proceeds of the insurance policy to the outstanding judgment for $2,129.23 which it held against Jefferson E. Buyck, as well as to the note of December 10, 1926, for $2,267.89. The defendant, Mary A. Buyck, denied this claim.
Action was then begun against the insurance company by the bank upon the assigned policy. The company answered admitting its liability upon the policy for $2,600.78 ($3,000 less an admitted deduction), and asked leave to pay that amount into Court, in view of the contest between the bank and Mary A. Buyck, and be discharged. On January 13, 1928, the Court passed an order allowing the company to hold said amount subject to the further orders of the Court.
The Court is entirely satisfied with the decree of his Honor, Judge Whaley, and it is accordingly affirmed.
MR. CHIEF JUSTICE WATTS and MESSRS. JUSTICES BLEASE, STABLER and CARTER concur.