Winborn Ex Rel. Estate of Winburn v. Minnesota Mutual Life Insurance

Bussey, Justice

(dissenting) :

Being convinced that there was reversible error in more than one particular, I most respectfully dissent. It is elementary that in the consideration of a motion for a directed verdict by a defendant, all of the evidence and the inferences reasonably deducible therefrom have to be viewed in the light most favorable to the plaintiff. It is also well settled *579that where an insurer seeks to avoid liability under a policy on the ground of contended fraud in the application, the burden is upon such insurer to prove such affirmative defense by clear and convincing evidence. See numerous cases collected in West’s South Carolina Digest, Insurance, Key Nos. 301.2 and 301.4.

Viewing the evidence in the record, including some clearly admissible evidence erroneously excluded by the trial judge, in the light of the foregoing principles, I have no difficulty in concluding that the defendant’s motion for a directed verdict should have been refused and the case submitted to the jury. In September 1958, the defendant insurer issued its group policy to the Federal Land Bank of Columbia whereby it agreed, among other things, “to insure the lives of persons indebted to the Bank for loans on farm property.” In 1960, when the husband of plaintiff’s testate died, Mrs. Winburn took over the operation of the Winburn farm and continued such until her death. When her husband died, the farm was under mortgage to the Federal Land Bank, which mortgage was assumed and paid off by Mrs. Winburn. For some four or five years, however, she was an insured under the aforesaid group policy issued to the Federal Land Bank of Columbia in 1958, the precise years not appearing in the record.

She again became an insured under said policy when, on November 18, 1969, she applied to the Federal Land Bank for another loan in the amount of $6,000.00, at which time the Federal Land Bank took her application for insurance, in the amount of the loan, which coverage is currently in litigation. Said application is in evidence and reference thereto shows that it is on a relatively brief printed form obviously prepared for use by the Federal Land Bank and the defendant in providing insurance under said group policy. It is entitled “Application for insurance covering indebtedness to — The Federal Land Bank of Columbia”. The form contains only two questions as to the health of the applicant, *580both of which are stated in the majority opinion, and opposite each of them on the form are small boxes for checking “yes” or “no”, and in each instance the “no” box was checked on the particular application. It is clearly inferable that credit life insurance was at least encouraged, if not required, by the Federal Land Bank.

Mrs. Winburn’s lips are sealed by death, and incidentally, death not at all attributable to any bad health on her part, now asserted by the defendant to be a material consideration. In anticipation of the asserted defense of fraud in procurement, her son and executor, who was not present at the signing of the application for the loan and the purely incidental application for credit insurance, sought to testify from his familiarity with his mother’s handwriting that the application, while signed by her, had not been filled out by her. Objection was interposed and sustained on the ground that he was not a handwriting expert and could not so testify. The ruling was patently erroneous. See Stoddard v. Hill, 38 S. C. 385, 17 S. E. 138; Desbrow’s Assignees v. Farrow, 3 Rich. 382, 37 S. C. L. 382; 29 Am. Jur. (2d) 895, Evidence, Sec. 806.

Mrs. Winburn, according to her son, had only a sixth grade education and was not too literate. The fact that some one else actually filled in the application, I think, is a relevant circumstance to be considered along with all other circumstances of the case in determining whether or not there was, in fact, -any fraudulent representation or intent on her part. Such fact has been treated with some significance in more than one opinion of this Court, including Huestess v. South Atlantic Life Ins. Co., 88 S. C. 31, 70 S. E. 403.

It is clearly inferable from the evidence that the Federal Land Bank of Columbia acted as the agent of the defendant insurer in taking the application from M^s. Winburn and that the application was purely incidental to the principal thing which she sought, to wit: a loan in the amount of $6,000.00. Other than medical evidence, the defendant of*581fered only one witness in proof of its asserted defense, to wit: an underwriter from its home office who testified as to materiality of the representations but who had no firsthand knowledge of the particular application. Counsel for plaintiff sought to cross-examine him as to the agency relationship existing between the company and the Federal Land Bank and the manner and details of handling the applications by the Federal Land Bank. This line of cross-examination was excluded by the trial judge as being irrelevant and I am of the view that such was erroneous and prejudicial, particularly since the defendant was in a better position to know just who connected with its agent, The Federal Land Bank of Columbia, had actually taken the application and what transpired at the time, the burden being upon the defendant to prove that any inaccurate answers in the application were there at the instance of Mrs. Winburn, or at least with her knowledge, and with an intent on her part to deceive and defraud the insurer.

In the final analysis, the critical issue or question in this case is whether any false representations were made by Mrs. Winburn with fraudulent intent, and the intent of a person is, of course, locked up in the heart and conscience of the person. It may be shown by express words, or deduced from the circumstances, but the law is well settled in this jurisdiction that the mere signing of an application containing answers alleged and proved to be false is not conclusive as to the intent of the applicant. Johnson v. N. Y. Life Ins. Co., 165 S. C. 494, 164 S. E. 175; Huestess v. South Atlantic Life Ins. Co., supra; Smiley v. Woodmen of World, 249 S. C. 461, 154 S. E. (2d) 834. It is also well settled that it is only in very rare cases that a verdict should be directed for the insurer and this Court has followed a liberal policy of allowing juries to pass upon quéstions of alleged fraud in applications for insurance. Atlantic Life Ins. Co. v. Beckham, 240 S. C. 450, 126 S. E. (2d) 342. See also numerous cases collected in West’s South Carolina Digest, Insurance, Key No. 301.5.

*582In all of the South Carolina cases cited in the majority opinion in support of the direction of a verdict in this case, there is the clearly distinguishing fact that there was evidence, aliunde the application itself, to prove that the inaccurate answers in the application were actually given or furnished by the applicant. Here the defendant relies on the application alone, filled out by some one other than the insured, to prove that inaccurate answers were furnished by the applicant, with intent to deceive and defraud the insurer. No case has come to the attention of the writer where a verdict has been directed for the insurer, when the only evidence of inaccurate answers being furnished by the applicant was the application itself, all decisions being to the effect that the application alone is not sufficient to be conclusive of the question favorably to the insurer upon whom the burden of proof rests.

I would reverse and remand for a new trial.