C. Ed Crosby commenced this action against Protective Life Insurance Company (Protective) for actual and punitive damages for fraud in the issuance of life insurance for his daughter, or in the alternative for reformation of the policy on the basis of mutual mistake. The trial judge granted Protective’s motion for summary judgment on the fraud cause of action. Following a trial, the judge reformed the policy to provide additional death benefits. Protective appeals. We reverse.
Crosby contacted Ronald Keith Williams, a sales agent for Protective, to purchase $50,000.00 life insurance coverage for himself and $25,000.00 coverage on each of his three children. Williams informed Crosby that Protective did not offer the term life insurance coverage Crosby desired for his youngest child, Cynthia, who at that time was eighteen and one-half years of age. Term life insurance was not available for persons under age twenty. Crosby purchased $50,000.00 life insurance for himself and $25,000.00 for each of his two
In July 1985 Cynthia was killed in an automobile accident. Crosby says that at this point he read the policy and rider and discovered Cynthia’s insurance only provided $4,000.00 coverage. According to Crosby, at the time he purchased the rider he believed he was purchasing $20,000.00 coverage on Cynthia’s life. Upon Protective’s refusal to pay more than $4,000.00, Crosby commenced this suit.
The case was tried before a judge. Crosby testified Williams informed him during their initial discussions that one “unit” of coverage under the children’s rider represented $5,000.00, and that they had discussed obtaining $20,000.00 coverage for Cynthia. Crosby stated that he had relied upon Williams’ representations in obtaining the insurance. Williams, however, testified that he informed Crosby that the maximum insurance he could presently obtain for Cynthia would be $10,000.00. Williams also testified he was aware that one children’s rider unit equalled $1,000.00 and discussed with Crosby the possibility of obtaining 5 units or $5,000.00 insurance on Cynthia, an amount sufficient to cover burial costs.
The trial judge found there was sufficient evidence to reform the contract to provide $20,000.00 insurance for Cynthia. The judge found Crosby mistakenly believed he was purchasing $20,000.00 insurance for Cynthia. According to the judge, this finding was supported by the fact that Crosby initially sought $25,000.00 coverage for each child, and by the fact that $4,000.00 coverage is comparatively minimal. Despite Williams’ testimony, the judge also found that the contract as written was a result of a mistake by Williams, acting as agent for Protective.
The judge further found that the children’s rider provided for Cynthia also violated Protective’s own underwriting policies. At the time of the application, Cynthia was eighteen and one-half years of age. According to the policy, a children’s rider cannot be issued to a child over eighteen years
MUTUAL MISTAKE
On appeal of an action in equity tried by a judge alone without a reference, this Court has jurisdiction to find facts in accordance with its own view of the preponderance of the evidence.
Commercial Union Assurance Co. v. Castile,
283 S. C. 1,
In our view the evidence does not demonstrate a mutual mistake. While the record supports a finding that Crosby was mistaken as to the amount of coverage actually obtained, there is no clear and convincing evidence of such a mistake by Williams as agent for Protective. Reformation is the remedy by which writings are rectified to conform to the actual agreement of the parties.
Crewe v.
Williams testified that one children’s rider unit was worth $1,000.00 and that he was unfamiliar with any insurance company which defined a children’s rider unit in an amount other than $1,000.00. Although Crosby claimed a conversion provision under the children’s rider was not explained to him, Williams testified he had discussed the conversion provision with Crosby. Under this provision, once Cynthia reached the age of nineteen and one-half, one year following the application date, Crosby could convert her rider on his policy to her own policy at five times the unit amount, without evidence of insurability, to provide $20,000.00 coverage on Cynthia.
Unlike the trial judge, we are not persuaded Cynthia was ineligible for coverage under the rider, or that even if she was ineligible, this amounts to clear and convincing evidence of mutual mistake regarding the amount of coverage. Cynthia’s inclusion under the children’s rider was not contested by Protective. Moreover, Protective presented evidence from a Mr. Walker, who had been employed in the life insurance business since 1947, that age in this sense referred to “attained age,” or a person’s age on their previous birthday. The trial judge interpreted age to mean what is known in the insurance business as “nearest age.” Under this terminology, since Cynthia was over eighteen and one-half years of age on the date of the application, she would be nineteen years old for purposes of eligibility under this rider. We are unsure from the record which of these methods pertained to this rider. In our opinion, however, even if Williams were mistaken as to whether Protective utilized attained age or nearest age for purposes of this rider, this does not illustrate any mistake on his part as to the amount
UNILATERAL MISTAKE
The court found in the alternative that even if there was a mistake solely on Crosby’s part, the mistake was occasioned “by the fraud, deceit or imposition of the defendant company through its agent both in direct representations and in drafting a needlessly and [sic] ambiguous contract of insurance.” A court of equity may reform a contract where the mistake is not mutual but unilateral and has been induced by the fraud, deceit, misrepresentation, concealment of imposition in any form of the party opposed in interest to the reformation without negligence on the part of the party claiming the right, or where the mistake is accompanied by very strong and extraordinary circumstances showing imbecility or something which would make it a great wrong to enforce the agreement.
Shaw v. Aetna Casualty and Surety Insurance Co.,
274 S. C. 281,
We do not find sufficient evidence of any fraud, deceit, misrepresentation or imposition, or of any strong and extraordinary circumstances, to justify reformation of the insurance contract. Prior to trial, the judge granted Williams’ and Protective’s motions for summary judgment on Crosby’s fraud cause of action. Aside from this ruling, however, the evidence does not demonstrate misrepresentation or deception amounting to imposition on Protective’s part. Williams and Walker both testified that it was common in the insurance business to refer to coverage under a children’s or spouse’s rider to a life insurance policy as “units.” Moreover, Crosby has been employed in the insurance business for years as a claims adjuster in worker’s compensation. Crosby testified that although he did not read the policy when he received it, he later read it and had no trouble ascertaining that one unit of coverage was the equivalent of $1,000.00.
Based on our review of the record, we find no evidence of a mistake by Protective in providing $4,000.00 coverage for Cynthia to justify reformation on the basis of mutual mis
For the reasons stated above, the judgment appealed from is
Reversed.