This аction was brought to recover actual and punitive damages for the alleged fraudulent failure of the defendant-appellant, North Carolina Mutual Life Insurance Company, to pay the face amount of an insurance policy issued on the life of Jessiе M. Gavin, deceased. Plaintiff was the wife of the deceased and the named beneficiary under the policy.
As a result of solicitation by an agent of appellant, Jessie M. Gavin submitted an application to appellant for life insurance and a poliсy was issued on May 28, 1973, in the face amount of $1,000.00. No, physical examination was required. The insured died on November 23, 1973 and a claim was filed shortly thereafter.
Appellant refused to pay the claim because of the alleged failure of the insured to disclose in his application for the insurance a preexisting illness. After the claim was filed, the respondent (beneficiary) was twice visited by agents of appellant attempting to secure from her a release of appellant’s liability under the policy. She initially refused to do sо but during the second visit she signed a purported release and received a check for $51.30, representing a return of the premiums paid on the pqlicy. Shortly thereafter respondent brought this suit on the policy alleging that appellant’s agent fraudulently induced her to sign the release. Appellant answered denying that the release was fraudulently obtained and further alleged that the policy was void because of the fraudulent failure of the deceased to disclqse his preexisting illness when he applied for insurance.
Original counsel for appellant died after the trial in the lower court and the filing of briefs in this appeal. Appellant’s present counsel therefore participated only in oral argument, at which time they successfully moved to be allowed to file additional portions of the trial record, without which there would have been no basis fqr the consideration of the exceptions filed by apрellants.
The exceptions on appeal charge error in the refusal of the trial judge to grant appellant’s mqtion for a continuance and also renew appellant’s contention that its motion for a directed verdict should have been granted.
Upon the call of the case for trial, appellant moved for a cqntinuance on the ground that a doctor, a material witness, was unavailable to testify. This motion was. granted at 4 p.'m., on the first day of trial so that the doctor could appear the next day. Hе did not appear and a second motion fqr a continuance was made and denied. It is argued that the failure to grant the last motion was error.
A motion for a continuance because qf the absence of - a' material witness is addressed to the discretion оf the trial judge, and his ruling thereon will not be
It is apparent that the testimony of the absent medical witness concerned an illness of the deceased prior to the time the insurance application was signed. There was no dispute as to the actual state of the insured’s health; the testimony was' undisputed that he had suffered a priqr material illness which was not disclosed on the application for insurance. The crucial disputed issue was why this admitted prior illness was not disclosed in the aрplication. Since there is no showing that the doctqr could have testified to any fact other than this admitted prior illness, his failure to testify could not have prejudiced appellant. The record consequently fails to show that the denial o¡f the motion for a cоntinuance constituted an abuse of discretion.
This action was based upon the alleged fraudulent breach o¡f the insurance contract. The rule has long been followed in this State that the breach of a contract committed with fraudulent intent, and accompanied by a fraudulent act will entail liability for punitive as well as actual damages.
Wright v. Public Savings Life Insurance Company,
262 S. C. 285,
In order to sustain the verdict for actual damages it was necessary to show that the pojicy of insurance was in full force and effect at the time of the death of the insured. It was conceded that all premiums due on the policy had been paid and that the policy was in full force and effect at the death of the insured, with resulting liability of appellant thereunder, unless it was voided by the alleged fraudulent failure qf the insured to reveal on the apрlication for the policy a prior material illness.
The insured could not read or write and signed the application for the insurance by “touching the pen”. Since the insured could not read or write, the agenf filled out the application. There was testimony that thе agent did not ask
In qrder to void the policy on the ground of misrepresentations in the application, it was necessary for appellant to show that such misrepresentations were those of the insured and not those of appellant’s own agent. Ordinarily, when an agent undertakes to fill out an application for an illiterate applicant who can not read or write, it becomes the agent’s duty to make the appropriate inquires so that the information written on the application will corrеctly reflect the answers of the applicant.
It has been properly held that “an insurer cannot rely upon the falsity of answers in an application where such answers were inserted by an agent of the insurer engaged in preparing the application, entirely on his own motion and without the knowledge of or the direction of an inquiry to the insured, even though the insurer would not have issued the policy had truthful statements been made.” 43 Am. Jur. (2d), Insurance, Section 1102. See alsou
Atlantic Life Insurance Company v. Beckham,
240 S. C. 450,
In view of the inability of the insured to read or write and the inference frоm the testimony that the agent of the appellant inserted the answers contained in the application without making the necessary inquiries of the insured, the trial judge properly held that the evidence
The remaining issues concern the effect of the alleged “release” signed by the respondent, purporting to relieve appellant of all liability under the policy in consideration of the return of the premiums paid.
Although the release wаs not placed in evidence, the pleadings and statements in the record apparently concede that respondent signed a statement at the instigation of appellant’s agents, in which she acknowledged receipt of the return of the premiums paid on the policy and purported to relieve the appellant of liability for all claims thereunder. Appellant contends that the release and return of premiums, as a matter of law, terminated all of its liabilities under the policy. Respondent, on the o.thеr hand, contends that the ■release was fraudulently obtained by appellant's agents and that such fraudulent procurement of the release constituted a fraudulent act accompanying the breach of the insurance contract, sustaining the recovery of both actual and punitive damages.
Respondent’s testimony shows that she signed the release on a second visit by appellant’s agents. On the first visit, she was told that the company had learned from the doctor that her husband had a prior illness which had not been disclosed, аnd that they would not pay the amount oj: the policy but would agree to return the premiums. She told the agent, at that time, that she would not sign the release, but “would have to think about it.” She testified that another agent visited her at a later time and, as a result of her conversation with him, she signed the release and a few days later was mailed a check by the company, which she cashed. Her testimoney fails to disclose any representations made by the second agent; she only testified that “he told me a lot of things,” after which the release was signed.
The foregoing evidence fails to, show any acts or conduct to sustain a finding that fraud was practiced upon respondent at the time the release was executed
However, the failure to proye a fraudulent act accompanying the breach of the contract will not preclude respondent from recovering actual damages, or the face of the policy, if she is otherwise entitled to, recover.
Broome v. Travelers Insurance Co.,
183 S. C. 413,
It is clear that the return of the premiums was made in an attempt by appellant to effect a rescission of the policy and that no amount was paid in settlement of any cl ami arising from the death of the insured. The allegеd release of all claims under the policy was clearly, therefore, without consideration and ineffectual except as a receipt for the returned premiums.
The real contention of appellant is that the release and return of the premiums evidences, as a matter of law, a mutual rescission of the policy. We do nqt think that it can be given such conclusive effect.
There can be, of course, a cancellation of a life insuranee policy by mutual agreement between the beneficiary and the company after the death of the insured. Whether cancellation o¡f the policy by mutual agreement has been effected depends on the intention of the parties as evidenced by their acts, conduct and words taken in connection with the аttendant circumstances. “There must be a meeting of minds, or mutual assent, to constitute a valid cancellation, an,d each party must act with knowledge of the material facts.”
Dill v. Lumbermen’s Mutual Insurance Company,
213 S. C. 593,
The record shows that the release was signed by respondent on July 28, 1974 and this action was instituted by hеr, about eighteen (18) days later,
The evidence sustains the finding's, implicit in the verdict ojf the jury, that the insured practiced no fraud on the appellant; and that the execution of the release and return of the premiums in this case did not constitute a cancellation of the policy so as to bar recovery by respondent oj the face amount of the policy. The trial judge properly submitted these issues to the jury for determinatiqn.
The contention of appellant that respondent should not be permitted to challenge the validity of the alleged release, because there was no tender of a return qf the amount paid at the time of the execution of the release, will not be considered, since the point was not raised or passed upon in the lower cqurt.
Falco Corp. v. Anderson Norgetown, Inc.,
263 S. C. 120,
The judgment for actual damages is, accordingly, sustained and the judgment for punitive damages is reversed.