Southeastern Life Ins. Co. v. Palmer

October 4, 1924. The opinion of the Court was delivered by I do not concur in the opinion of Mr. Justice Cothran. I think all of the exceptions should be overruled and judgment affirmed.

The company did not act upon the application and the report of the local medical examiner, but made subsequent investigations. Three specimens of applicant's urine were sent to the home office.

Palmer applied for policies on April 2d. The policies were not issued until June 10th and not delivered until June 20, 1920.

The evidence conclusively shows that the company not only made a further examination as to Palmer's physical condition, but an investigation of his financial standing. It did not rely, in issuing the policy, upon the statements made by the applicant or upon the report of its local medical examiner and the statements made by the applicant to him; in addition, it required three different specimens of the applicant's urine to be forwarded to Philadelphia. It had these specimens analyzed. It consumed the months of April and May in additional investigations. After a thorough investigation, it issued the policies almost 10 weeks after they had been applied for.

As to whether there was fraud on the part of the applicant was a question for the jury. Conscious fraud could not be inferred from mere inaccurate answers, especially when the answers were written by the agents of the company, and the testimony shows a subsequent thought investigation by the company of the applicant's physical condition, independent of the answers of the applicant.

His Honor committed no error in submitting the case to the jury for their determination. Under the case ofHuestess v. South Atlantic Life Insurance Co., 88 S.C. 31; 70 S.E., 403, a case very similar to this, this Court says in the opinion:

"There is no direct or positive testimony tending to show that the insured intended to practice a fraud upon the defendant other than the mere inference, arising from the signing of the application for insurance, containing the answers alleged to be false."

In that case this Court held that under the circumstances the question whether the insured was guilty of conscious fraud should have been submitted to the jury.

In this case the evidence is stronger, for we have an independent investigation by the company, running over a period of two months, before they issued and delivered the policies. The physician selected by the insurance company for the examination of Palmer was also Palmer's family physician and had treated him. If Palmer had Bright's disease, no one could have been in a better position to know it than Dr. Boykin.

If Dr. Boykin knew these facts, or if he were in possession of such facts as to have put a reasonably prudent man on inquiry, and if pursued with due diligence would have led to the knowledge of the fact that the applicant had Bright's disease, if he had it this would have been to the company the equivalent of actual notice.

We find in Black on Rescission and Cancellation, § 110, the following:

"A contract or obligation cannot be rescinded on the ground of false or fraudulent representations unless it is shown that the party to whom they were made placed his reliance upon them, that is, believed in their accuracy and depended on their correctness, and on the strength of his dependence upon them entered into an engagement or assumed an obligation which otherwise he would have avoided. In an English case it was said: 'Cases have frequently occurred in which, upon entering into contracts, misrepresentations made by one party have not been in any degree relied upon by the other party. If the party to whom the representations were made himself resorted to the proper means of verification, before the entered into the contract, it may appear that he relied upon the result of his own investigation and inquiry and not upon the representations made to him by the other party; or if the means of investigation and verification be at hand, and the attention of the party receiving the representations be drawn to them, the circumstances of the case may be such as to make it incumbent on a Court of Justice to impute to him a knowledge of the result, which, upon due inquiry, he ought to have obtained, and thus the notion of reliance on the representations made to him may be excluded.'"

Also in same Section 121:

"Where false and fraudulent representations are made concerning the subject-matter of a contract, but the person to whom they are made, before closing the contract (or before the time for payment arrives), inspects and examines the subject of the contract or conducts an independent investigation into the matters covered by the representations, which is sufficient to inform him of the truth, and which is not interfered with or rendered nugatory by any act of the other party, it is presumed that he places his reliance on the information acquired by such investigation and on his own judgment based on such facts, and not on the representations made to him, and therefore he cannot have relief because his bargain proves unsatisfactory to him."

Under these authorities, it clearly appears that neither of the insurance companies relied or acted on the representations as to the past history and the present condition made by the applicant Palmer, but, on the contrary, they took more time than usual for making independent investigations on their own account, and his Honor was right in submitting the question to the jury, the question whether they relied on and acted on the representations of the applicant Palmer, or whether they acted on their independent investigations without reference to the representations made by the applicant.

We cannot see how the Court could have directed a verdict as asked by the defendants without overruling theHuestess Case, supra. Ledford v. Metropolitan Life InsuranceCo., 97 S.C. 164; 81 S.E., 497. Turner v. ColumbiaNational Life Insurance Co., 100 S.C. 121;84 S.E., 413. Baker v. Metropolitan Life Insurance Co., 106 S.C. 419;91 S.E., 324. Fowler v. New York Life Ins. Co.,107 S.C. 21; 91 S.E., 1043. Wingo v. New York LifeIns. Co., 112 S.C. 139; 99 S.E., 436. McLaurin v. MutualLife Ins Co., 115 S.C. 59; 104 S.E., 327. Slighv. Sovereign Camp W.O.W., 117 S.C. 437;109 S.E., 279. Livingston v. Union Central, 115 S.C. 128;104 S.E., 538; Id., 120 S.C. 93; 112 S.E., 547.

I think judgment should be affirmed.

A majority of the Court having concurred in this opinion, it is the judgment of this Court that the judgment of the Circuit Court be affirmed.

MR. CHIEF JUSTICE GARY and MR. JUSTICE FRASER concur.

MR. JUSTICE MARION concurs in result.