Opinion
14046
April 16, 1935.
Before MANN, J., Darlington, March, 1934. Reversed in part and affirmed in part.
Action by Lewis J. Beasley against the Missouri State Life Insurance Company, for which the General American Life Insurance Company was substituted as defendant. From a decree, sustaining plaintiff's demurrer to the answer and granting in part his motion to strike out portions thereof, substituted defendant appeals.
Decree of Judge Mann directed to be reported follows:
This is a suit upon life insurance policies issued by the Missouri State Life Insurance Company. Following the institution of the suit, the General American Life Insurance Company was substituted as defendant in the place of Missouri State Life Insurance Company. The complaint is based upon three policies of life insurance containing provisions for total and permanent disability benefits as hereinafter set forth. The matter comes before me on a demurrer interposed by the plaintiff to the answer of the defendant, and upon a motion made by the plaintiff to strike out certain portions of the answer as sham, frivolous, and/or irrelevant.
The case is on the roster for trial at the present term of the Court of Common Pleas. Counsel for both the plaintiff and the defendant have brought to my attention the fact that the issues raised by the plaintiff's demurrer and motion would vitally affect the trial of the cause, and have urged upon me that these issues be disposed of before the case is called for trial. I accordingly appointed a time for a hearing, and have given careful attention to the arguments made by counsel at such hearing. The questions discussed by counsel before me are in some respects novel, and not without difficulty. However, in the limited time available to me, I have considered them with due regard to the importance of the issues to both parties.
The complaint contains three causes of action, each upon a separate policy, but the three policies are identical in terms except as to the amount of insurance.
All of the policies are dated November 16, 1928. The insured in all of them is Lewis J. Beasley. All are payable, in case of death, to "Merchants' Planters' Bank, Lamar, S. C., a corporation of which the insured is a director, its successors or assigns."
Each policy contains a provision that "the company will also pay to the insured a disability income of" a sum named, "and will waive the payment of further premiums if the insured becomes totally and permanently disabled before age sixty, subject to all of the terms and conditions on the following pages."
As far as the matters before me are concerned, the specific terms of the policies relating to the disability benefits are not material. However, the policies contained an "incontestable" clause, which is quoted in the complaint, and which presents one of the material issues in the case. It is as follows:
"After one year from date of issue, if the insured is then living and is not totally disabled, but after two years from date of issue in any event, this policy shall be incontestable except for nonpayment of premiums."
The original complaint is dated September 26, 1932. The complaint as amended (which is dated November 28, 1932), after describing the defendant as a corporation, set forth the issuance of the three policies, quoting the disability provisions therein contained, and appropriately alleges the applicability of such provisions to the plaintiff, the insured.
The following additional facts material to the issues are recited in the complaint:
That the beneficiary named in the policies, Merchants' Planters' Bank, Lamar, S.C. suspended business before the delivery of the policies, "of which fact the defendant was fully advised through its agents acting in the premises"; that the policies were delivered to and accepted by the receivers and kept in force by the payment of premiums "for the benefit of the depositors and other creditors of the receivership estate"; that under an order of the Court of Common Pleas of Darlington County in the receivership cause relating to the beneficiary bank the assets of the receivership were ordered sold, and that at such sale the policies in question were bid in by the present plaintiff (the insured), and that this sale was duly reported to the Court, and that by an order dated March 4, 1932, the said sale was confirmed; that these facts were reported to the defendant, and a request made by the plaintiff for a change of beneficiary so as to make the "death benefits" payable to the insured's estate; that on March 7, 1932, this change of beneficiary was indorsed on the policies by the defendant; that upon the facts thus alleged, the plaintiff is entitled to the disability benefits provided in the said policies.
The prayer of the complaint is for judgment for the disability benefits at the rate and according to the terms set forth in the policies, and for general relief.
The answer of the defendant sets forth five separate defenses. In the argument before me these defenses were substantially classified by counsel as follows:
The first defense specifically denies the ownership by the plaintiff of the policies in question, and the plaintiff's claim that he is totally and permanently disabled under the terms of the policies, and in other respects may with reasonable accuracy be characterized as a general denial of the allegations of the complaint.
The second defense is intended to raise primarily the issue that the policies are null and void under the provision in the application therefor to the effect that "the insurance shall not take effect until the first premium thereon has been actually paid to and accepted by the company, or its duly authorized agent, and the policy delivered to and accepted by me during my life and good health"; and in this defense it is set forth that there is no "contractual relationship" between the plaintiff and the defendant; further, that the plaintiff was severely injured in an automobile accident about January 13, 1929, and that the receivers of the beneficiary bank, "with full knowledge of all of the facts concerning the said accident, and with intent to defraud, attempted on January 16th, 1929, to pay the first annual premium on each of the policies, and thereupon received the three policies of insurance mentioned in the amended complaint, in the hope and for the purpose of thus securing immediate returns on said policies of insurance either by way of disability benefits or by the possible demise of said Lewis J. Beasley"; and it is alleged that these facts bring the case within the quoted provisions previously referred to, and prevents the policies from having any legal effect. It is further set forth in this defense that the defendant had knowledge of the facts relating to the delivery of the policy as aforesaid, but believed that at the time of the delivery the insured was in good health, and that the policies were accepted by the insured and the first premiums thereon paid by him.
The third defense charges that the beneficiary bank closed in November, 1928, before the delivery of the policies in question, and therefore before receivers were appointed, of which fact the defendant had no knowledge, "until a long time thereafter"; and it is claimed that the said receivers had no authority to accept the said policies or pay the premiums thereon, and that no contracts of insurance resulted from their acceptance of the said policies or from the payment of the premiums thereon; it is further asserted in this defense that at the sale of the policies referred to in the complaint the insured was present and made "to those who were potential bidders at said sale" a misrepresentation as to the amount of a premium that was about to become due on the policies, and of the time of payment of such premium, the insured's purpose being to unlawfully obtain possession of the said policies; that as a result of these facts, neither the beneficiary bank nor the receivers thereof, nor the insured, has any claim to or interest in the insurance.
The fourth defense charges a "predetermined plan and design" on the part of the beneficiary bank, or of the receivers thereof, to defraud the defendant, and that the acts of the said parties constitute "an attempt to secure the three policies in question as wagering and speculative contracts"; on this ground it alleges that the policies "are void from the beginning."
The fifth defense alleges that the matters set forth in the several preceding defenses came to the attention of the defendant for the first time when claims for disability benefits under the policies were presented by the insured after his purchase of the policies at the sale of the receivership assets, and that as a result of the investigation then made by the defendant, the defendant declined to recognize the validity of the policies, and on November 12, 1932, tendered to the insured and his attorneys a refund of the net amounts paid as premiums on the policies, "since the attempted delivery thereof," including interest, and that this refund having been refused, the defendant now brings the same into Court. In this defense it is further alleged that under the terms of the policies no agent of the company has any right to waive or attempt to waive any of the provisions, stipulations, or conditions thereof, and that "the soliciting agents of this defendant work on a commission basis and are therefore agents with an interest," in consequence of which (so it is alleged) any attempted charge or modification of the provisions of the policies by such agents was without effect, and was done without the knowledge or acquiescence of the defendant.
The prayer of the answer is that the complaint be dismissed; that the three policies "be delivered up as void from the beginning"; and for general relief. The answer is verified by Marion Rich, "general agent for the defendant" in South Carolina.
The plaintiff's demurrer challenges the sufficiency of the answer on the grounds: First, that under the incontestable law of this State, and under the admitted terms of the policies, "the allegations in the defendant's defenses relating to the delivery, to the plaintiff's title, and to the present legality and enforceability of the policies in question are foreclosed, and the said defenses are sham and frivolous"; second, that the said defenses amount to a collateral attack upon the orders of a Court of competent jurisdiction under which the plaintiff obtained title to the policies; third, that the plaintiff's claims with respect to the disability benefits are not dependent upon his ownership of or title to the policies, and are enforceable independently of the question of such ownership, if the policies are lawfully outstanding; and, fourth, that it appears from the defendant's answer that the facts upon which the defendant relies as defenses were known to the defendant's agents at the time the policies were issued, and were known to the defendant within one year and also within two years from the date of issue of said policies.
The plaintiff's motion to strike challenges the legal sufficiency of the several defenses on substantially the same grounds as the demurrer, attacking the pertinent parts thereof as sham, frivolous, and/or irrelevant, except to the extent that the said defenses deny the plaintiff's claim that he is totally and permanently disabled within the meaning of the policies.
In view of the identity of the issues thus raised by the demurrer and the motion to strike, prolixity in the further statement of the facts and of the applicable principles of law will be avoided by passing on both together.
The motion to strike is supported by various affidavits and exhibits, and upon the hearing of the demurrer and motion the defendant produced some counter affidavits which were then for the first time served on plaintiff's counsel. Both the affidavits attached to the plaintiff's motion and also to counter affidavits served by the defendant have been fully considered by me, and the three original policies in issue in this cause were presented at the hearing. In further stating the facts, I will deal only with such facts as are both strictly material to the issues raised, and as are also substantially undisputed, unless I otherwise specifically indicate.
The policies were issued on the application of the present plaintiff, dated November 1, 1928. The Merchants' Planters' Bank, Lamar, S.C. is named as the proposed beneficiary. Bearing in mind the language of the incontestable clause contained in the policies, "the date of issue" of the policies is November 16, 1928. On this point it is further to be observed that under the terms of the application for the policies as set forth in the defendant's second defense, since the premium was admittedly not paid in cash at the time the application was made, the insurance did not take effect until the first premium was paid to and accepted by the company, but the policy "in that event" is still to bear the actual date of its issuance, and all future premiums are to be paid on the basis of such policy date.
The record of the cause relating to the bank receivership which by reference was made a part of the supporting material on the motion to strike, shows that the beneficiary bank suspended business on the . . . . day of November, 1928, several days after the date of the application for the insurance, and several days before the "date of issue" of the policies. The application for the insurance was taken by R. C. Huggins, who at that time was associated with one E. H. Pate, the two being at that time and at all times since then and now agents for Missouri State Life Insurance Company (and now for General American Life Insurance Company, successor to Missouri State Life Insurance Company); the present plaintiff, the insured, was vice-president of the closing of the bank, and he and Mr. Huggins (the latter as cashier), were the active officers thereof; immediately upon the closing of the bank Mr. Huggins was appointed as agent in charge for the State Bank Examiner. In the first instance five receivers were appointed for the bank, being denominated a liquidating committee. These were L.J. Beasley, B.S. Josey, R.R. Oates, J.M. Dowling, and C.B. Windham. These receivers employed Mr. Huggins as their clerk, and he has continued in that capacity to the present time.
The affidavits involved some dispute as to the date of delivery of the policies. According to Mr. Huggins, however, and his affidavit in this respect is not disputed, he and Mr. Pate considered that under alleged instructions from the receivers (which instructions two of the original receivers deny) the first premium was paid by obligating themselves, in effect, to pay the said premium prior to the time that the insured was injured. Huggins states that delivery of the policies was made as the result of a meeting of the receivers, at which all of the receivers, including the insured, were present, and in this respect Huggins is sustained by the affidavit of Samuel Want, attorney for the receivers, who states that he was present at the time the policies were discussed by the receivers and delivered to them, and that at such time the insured's accident had not occurred.
It appears that there was some dissension among the several receivers and the two who make affidavits adverse to the claims of the plaintiff (J.M. Dowling and C.B. Windham) were later, by the order of the Court, permitted to resign. It further appears that prior to their resignation an order had been passed permitting the receivers to act by a majority vote.
The order appointing the receivers for the beneficiary bank is dated December 4, 1928. The accident sustained by the insured occurred about January 13, 1929.
Accepting the defendant's claim as to the date of delivery of the policies, which is January 16, 1929, which is several days after the accident sustained by the insured, it is still an admitted fact that the premiums on the policies were paid at least to and including March, 1932, and that with the possible exception of the quarterly payment made in March, 1932, the premium payments were made by the receivers of the beneficiary bank. It is apparent from the record that the receivers took advantage of the loan provisions of the policies, in order to effect payment of the premiums, and that for this purpose they were called upon to execute, in their official capacity, notes and loan agreements for the deferred portions of the premiums.
Disregarding any disputed issues of fact, the record shows that certainly as early as December 23, 1929, the defendant, through its general agent, Mr. Marion Rich, was fully acquainted with the fact that the bank was in the hands of receivers, and that the policies were being serviced by the receivers. The exact date when Mr. Rich became acquainted with the fact that when the policies were actually issued (November 16, 1928), the beneficiary bank had already closed, and that therefore it was closed and in the hands of receivers when delivery of the policies was effected, is not clear from the record. However, he certainly had such knowledge in February or March, 1931, when he was furnished at his request with copies of the various Court orders under which the receivers were acting, and, of course, the local agent, Mr. Huggins, had full knowledge of these facts all the time.
It further appears from the record that while the insured discussed with Mr. Rich in 1929 his right to disability benefits under the policies, it was agreed between Mr. Rich and the insured that the latter was not entitled to such benefits at that time.
Thus we are at this point brought to the factual conclusion that at the time of the delivery of the policies, taking the date of delivery as contended by the defendant (January 16, 1929), the defendant knew through its local agents that the insured had then sustained an accident; that the bank was in the hands of receivers; and that the policies were being serviced by the receivers. And in December, 1929, if not earlier, the general agent of the company had all of the same knowledge.
Under these facts the case is brought within the provision of the policy that the same shall be incontestable after one year from date of issue if the insured is then living and "is not totally disabled." If the two-year provision of the incontestable clause is applied, this provision of the clause being applicable "in any event," except for nonpayment of premiums, the facts still bring the case within the clause assuming the policies to be validly outstanding and owned by the insured.
Assuming the applicability of the incontestable clause, it is apparent that several of the defendant's defenses are at once eliminated from the case. Under either the one-year provision or the two-year provision of that clause, both of which are here applicable, the defendant is clearly barred from raising the defense of delivery of the policies after the accident; the defense that delivery was made by agents having an interest in the transaction by reason of their commission form of compensation; and subject to the other legal considerations hereinafter referred to, the defense that the receivers had no right or power to obtain the policies or pay the premium thereon.
The scope of the incontestable clause has been the subject of numerous decisions. The cases, including those of our own Supreme Court, will be found largely collated in annotations as follows: 6 A.L.R., 448; 13 A.L.R., 674, 35 A.L.R., 1491, 55 A.L.R., 549, 67 A.L.R., 1364, 85 A.L.R., 317.
Without discussing the cases in detail, it suffices to say on this point that I am satisfied that no reason appears why the incontestable clause is not applicable to the present controversy to the extent of the defenses hereinbefore indicated.
Independently of the incontestable clause, I do not think that the defense that the receivers had no power to accept delivery of the policies or to pay the premiums thereon is available to the defendant. The record and the statements of counsel show very clearly that the policies were applied for before the closing of the bank because of the importance to the bank of the continued life of the insured. The Court will take judicial notice of the serious conditions in the banking field that prevailed in the early part of November, 1928, and of the vital importance to the stockholders and depositors of a bank that the active and directing officers thereof continue to give their personal attention to the liquidation of the loans that were made by such officers. In the case of a small country bank, such as the beneficiary in the present case, and especially in an agricultural territory, this consideration assumes more than ordinary importance. Had the bank not gone into the hands of receivers, admittedly the question now presented could not have been raised. It appears to me that the closing of the bank under the conditions prevailing at the time increased rather than decreased the importance of the insured's continued life and co-operation in the liquidation of the bank's affairs, and this was patently recognized by the State Bank Examiner and by this Court through the appointment of the insured as one of the receivers of the bank. The benefits of the insurance to the receivership estate are thus obvious.
I am not dealing with the question of the legality of the acts of the receivers in using receivership funds for the payment of the premiums on the policies. That is a question that might arise as between the receivers and the creditors of the bank, and involves only the propriety of the acts of the receivers under the circumstances confronting them at the time, and their possible liability if their acts should be considered by the Court as having been improvident. It does not appear to me that the validity of the policies is at all involved in this cause. See Thompson v. Phenix Ins. Co., 136 U.S. 287, 10 S.Ct., 1019, 34 L.Ed., 408.
With reference to the validity of the sale under which the insured obtained title to the policies, I am of opinion that the defendants have not made out a case which affects the plaintiff's rights. The sale of the receivership assets at which the policies were acquired was conducted under the authority and jurisdiction of the Court. The power of the Court to order the sale, and to confirm the sale when made, is not open to serious question, and I do not understand that power to be questioned here. The policies were certainly assets in the hands of the receivers. It was to the benefit of the receivership estate that they be sold. The sale was made and properly reported to the Court, and by an order dated March 4, 1932, was confirmed by the Court. If the sale was in any respects irregular, the order of confirmation would be subject to direct attack upon a proper showing, but a collateral attack on the transaction, such as is made by the defendant in its answer in this cause, does not appear to me to be a proper method by which to challenge the validity of an act which has had the sanction of the Court, in a case over which the Court admittedly had jurisdiction. Connor v. McCoy, 83 S.C. 165, 65 S.E., 257; Bailey v. Cooley, 153 S.C. 78, 150 S.E., 473; Scott v. Newell, 146 S.C. 385, 144 S.E., 82.
It is pertinent to observe that if the defendant had any anxiety as to the true ownership of the policies, and desired only to be sure that any adjustments made by it were made with the lawful owner, several methods of procedure were open to it. I am not passing on the question as to which of those methods may properly be resorted to, but certainly the indirect method of attack here made is unavailing.
The defendant has not attempted to bring the receivers into this cause, as it might have attempted to do to protect itself against any claim that they might make in the premises. It has not undertaken to challenge the validity of the sale by a petition in the receivership cause; it has not brought a suit to set aside the sale for the purpose of having its own status in the premises adjudicated. On the other hand, it appears to have proceeded on the assumption, which is fully justified by the record, that the receivers make no claim to the policies in question, and that they are not in accord with the attempted attack upon the bona fides or validity of the sale.
Aside from these considerations, it is relevant to consider that there is no suggestion in the record that any bidder at the sale was deterred from making a bid by reason of the alleged misrepresentation on the part of the insured as to the premiums becoming due, while on the other hand, the announcements made on behalf of the receivers at the sale were admittedly made by Mr. Want, and with reference to the insurance policies were made on the basis of information as to the premiums and maturity dates furnished by the defendant's agent.
It is of some significance in this connection that at the time of the sale none of the present issues were in the minds of any of the parties, and that the defendant promptly and without reservation changed the beneficiary from the receivers of the bank to the estate of the insured when the fact of the sale was brought to its attention; and no suggestion appears to have come from any source as to the rights of the insured being subject to question until the institution of the present action, or just prior thereto. The defendant's answer itself shows that not until November 12, 1932, did it suggest the defenses now interposed, although it had full knowledge of the receivership of the bank for nearly three years before that date, if not longer, and had every possible piece of information as to the issuance, delivery, and ownership of the policies (except as to the change of beneficiary), to put it on notice of all of the facts now relied upon, for more than two years following the delivery of the policies, taking the date of delivery as that alleged by the defendant.
Entirely aside from the applicability of the incontestable clause, the undisputed facts above related clearly constitute, in my opinion, a complete waiver on the part of the defendant of such of the defendant's defenses as do not affect the actual validity of the policies under the fourth defense, and an estoppel against the attempted attack upon the insured's title. The applicable principles of law in this regard have been so repeatedly and forcefully declared in the decisions of our Supreme Court, that it would serve no purpose to review them here, but the following cases are indicative of the wide range of the doctrines of waiver and estoppel as affecting a case of this character: McMillan Son v. Ins. Co., 78 S.C. 433, 58 S.E., 1020, 1135; Rogers v. Atlantic Life Ins. Co., 135 S.C. 89, 133 S.E., 215, 45 A.L.R., 1172; Fender v. Ins. Co. (Syllabus), 158 S.C. 331, 155 S.E., 577; Cockfield v. Firemen's Ins. Co. (Syllabus), 146 S.C. 351, 144 S.E., 71; Simon v. AEtna Cas. Sur. Co., 151 S.C. 44, 148 S.E., 648; Allen v. Ins. Co., 139 S.C. 41, 137 S.E., 214; Galphin v. Ins. Co., 157 S.C. 469, 154 S.E., 855.
The defense which seeks to invalidate the policies on the ground of their alleged speculative or wagering character is disposed of by what has been previously said in connection with the other defenses. I can find no analogy between a case of this character and the various classes of cases in which our Supreme Court and other Courts have declared on grounds of public policy, that life insurance policies should not be accorded legal recognition. There is a direct relation in this case between the principles of indemnity, protection, and mutuality of interests of the insured and beneficiary that underlie the theory of life insurance, and the purpose for which the insurance in this case was applied for and for which premiums were paid by the receivers for several years, and obviously this defense can have no possible application, even from the viewpoint advanced by the defendant, as far as the rights and claims of the insured and his estate are concerned. The total and permanent disability benefits payable under the policies are in terms payable to the insured himself. They were never payable even to the original beneficiary named in the policies and the payment of the death benefits to the insured's estate can, of course, involve no violation of the legal principles involved in the decisions now under discussion.
As stated by our Supreme Court in the case of Croswell v. Association, 51 S.C. 103, 28 S.E., 200, and quoted with approval in Rogers v. Atlantic Life Ins. Co., 135 S.C. 89, 133 S.E., 215, 218, 45 A.L.R., 1172: "It is surely not a sound policy to permit insurers to contract to insure the lives of persons, receive premiums therefor as long as the insured, the beneficiary, or the assignee will continue to pay, and then, when the time comes for the insurers to pay what they agreed to pay, allow them to escape their contract on the ground of want of insurable interest in the life insured, unless it clearly appears that such contracts are pernicious and dangerous to society. Courts should not annul contracts on doubtful grounds of public policy. In such matters it is better that the Legislature should first speak."
The defendant's defenses recognize the admitted fact at every stage of the transactions now in question, the defendant's agents who solicited the insurance, obtained the application, delivered the policies, and received payment of the premiums, had full knowledge of all of the facts involved in every defense relied upon by the defendant. The defendant, however, seeks to avoid the consequences of this complete knowledge by the suggestion that such agents had and have an interest in the subject-matter of the agency, because they work solely on a commission basis, and that therefore their compensation was dependent on their delivery of the policies and the continuance of the insurance in force. That view of the matter is in any event no answer to the application of the incontestable clause, which itself validates the policies against any assumed or alleged fraud that could be involved in this situation. And with respect to developments after the issuance and delivery of the policies, it does not appear to me that the agents' interest in the situation is such as to impute to them a selfish viewpoint inconsistent with the interests of the defendant, or from which an inference of fraud or bad faith could be deduced.
The defendant itself, with full knowledge of the legal principle that it is charged with responsibility for the acts of its soliciting agents, and that it is charged with all of the pertinent knowledge which its agents obtained, adopted the commission form of compensation, and certainly it would be necessary to engraft on the law of agency an exception nowhere appearing in the authorities if under such circumstances the defendant could escape responsibility under the rules as generally applied, in the absence of some specific showing of collusion or fraud.
The Court may properly take judicial notice of the well-known fact that all soliciting agents for life insurance companies work on a commission basis. In none of the cases that have been cited to me by defendant's counsel, and in none of which I have knowledge, was our Supreme Court deterred from applying the principles of waiver and estoppel on the ground of the acts and knowledge of an insurance company's agents by reason of the commission form of their compensation.
The positions of the defendant were ably presented by distinguished counsel, and the authorities cited on the defendant's behalf have been carefully considered, but in none of them do I find the statement of any rule which prevents the application to this case of the incontestable clause of the policy, or the application of the principles of waiver and estoppel on the admitted facts shown by the record, or the rule that a sale duly made and confirmed by a Court of competent jurisdiction can be collaterally attacked in the manner attempted here.
Treating the above as my findings of fact and conclusions of law in the premises, it is my opinion that except as to the question whether the plaintiff is totally and permanently disabled within the terms of the policies, no issues are presented in the defendant's answer for trial before the jury. I therefore hold, and it is ordered and adjudged that the demurrer interposed by the plaintiff be and the same hereby is sustained, and that with the exception of the allegations of the defendant's answer which rely upon the defense of total and permanent disability, the plaintiff's motion to strike be and the same hereby is granted.
Messrs. Thomas, Lumpkin Cain and Dargan Paulling, for appellants, cite: Policy not in effect until premium paid: 153 S.C. 280; 124 S.C. 492; 105 S.C. 305; 89 S.E., 675; 58 S.C. 211; 36 S.E., 556. Fraud vitiates all contracts: 80 S.C. 395; 83 Fed., 636. Incontestable clause: 169 U.S. 139; 42 L.Ed., 693; 42 L.R.A., 261; 50 L.R.A., 774; 75 S.E., 915; 73 S.E., 79; 235 U.S. 99; 59 L.Ed., 147; 167 S.C. 162; 51 S.C. 103; 28 S.E., 200. Insurable interest: 92 S.W. 17; 104 U.S. 779; 26 L.Ed., 924; 8 A., 628; 44 L.R.A., 417; 19 L.Ed., 244. Public policy defined: 215 S.W. 90; 124 N.E., 168; 12 A.L.R., 1240; L.R.A., 1916-D, 576; 16 L.R.A. (N.S.), 1020; 61 S.E., 648. Agency: 50 S.E., 290; 74 S.C. 369; 148 S.C. 358; 79 S.C. 529; 60 S.E., 1106; 88 S.C. 31; 70 S.E., 403; 135 S.C. 89. Demurrer: 161 S.C. 490; 154 S.C. 138; 151 S.E., 274; 158 S.C. 425; 155 S.E., 627.
Messrs. Samuel Want, L.M. Lawson, Melvin Hyman and J. Wesley Beasley, for respondent, cite: Incontestable clause: 128 S.C. 239; 122 S.E., 586; 176 S.E., 333; 177 S.E., 40; 70 F.2d 59. Fraud: 6 A.L.R., 452; 35 A.L.R., 1491; 97 S.C. 418; 81 S.E., 964. Waiver: 135 S.C. 89; 133 S.E., 215; 175 S.E., 209; 176 S.E., 340; 112 S.C. 436; 100 S.E., 157; 157 S.C. 469; 154 S.E., 855; 177 S.E., 40; 128 S.C. 239; 62 F.2d 711.
April 16, 1935. The opinion of the Court was delivered by
The history of this controversy and the issues involved are fully set out in the elaborate decree of the Circuit Judge and need not be repeated or restated here. We think, from a careful study of the record, that the conclusions and holdings of Judge Mann are correct, except as to the alleged defense that the contract of insurance, if made, was a wagering one. It appears from the more recent decisions of this Court that this defense is available to the insurer after the period of contestability has run, for the reason that such a contract is against good morals and a sound public policy, and is void in its inception. See Hack v. Metz, 173 S.C. 413, 176 S.E., 314, 95 A.L.R., 196; Henderson v. Life Insurance Company (S.C.), 179 S.E., 680.
As to this defense, therefore, the decree, which will be reported, is reversed; in all other respects it is affirmed.
MESSRS. JUSTICES CARTER and BONHAM and MR. ACTING ASSOCIATE JUSTICE PHILIP H. STOLL concur.