Court Opinion

ID: 3887072
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:16:29.672296+00
Date Added: 2024-06-11T14:15:30.827105
License: Public Domain

I respectfully dissent to that portion of the opinion of MR. JUSTICE FISHBURNE which finds no error on the part of the trial Judge in submitting to the jury the issue of punitive damages.
MR. JUSTICE FISHBURNE, in my judgment, correctly construes the insurance policy in question, notwithstanding considerable authority to the contrary, and hence the verdict for actual damages was warranted, but I do not think there was any evidence in the record which justified the submission of the issue of punitive damages to the jury; for if the verdict should stand the appellant company would be penalized or punished rather severely for the assertion of what it evidently bona fide believed to be its legal rights based upon the contract of insurance wherein it is plainly stated, "The acceptance of any renewal premium on this policy shall be optional with the Association, * * *," and upon the decisions of Courts of other jurisdictions commanding the highest respect.
Copy-modeling from the case of Prescott v. Mutual BenefitHealth  Accident Ass'n (the identical defendant in the present case), 183 So., 311, 119 A.L.R., 525, it must be borne in mind that the matter of fraudulent cancellation of a policy, accompanied by a fraudulent act, is not involved in this suit. The matter here is whether or not the insurer (appellant) acted fraudulently in declining to renew the policy at the end of a premium-payment period.
It should further be borne in mind that there was only a remote contingency that any liability would ever occur under the policy, which insured "against loss of life, limb, sight or time, resulting directly and independently of all *Page 166 
other causes, from bodily injuries sustained by the Insured through purely Accidental Means, (a) as a result of operating, driving, demonstrating, adjusting, riding in or on an automobile, or (b) as a result of being run down, struck or run over by an automobile, or (c) as a result of the burning or explosion of an automobile, * * *"; and that no claim had arisen thereunder between the date it was in force and the date the respondent was apprised that the appellant would not accept a renewal premium (nor even to the date of the trial, so far as the record discloses). Of course, if between these dates the respondent had suffered an accident compensable under the terms of the contract of insurance, the action of the appellant in refusing the renewal premium could be viewed in a very different light. Therefore, the fact that the appellant did not mail its usual notice of the due date of a yearly renewal premium, nor have an agent undertake to collect such renewal premium from the respondent, cannot be said to be any evidence that the appellantfraudulently failed to notify the respondent that a renewal premium was about to become due, or that it fraudulently
failed to collect the renewal premium through an agent as had been its custom. Indeed, it would have been highly irregular to call to the attention of the respondent that a renewal premium was becoming due, and then refuse to accept same.
In overruling the motion for direction of verdict as to punitive damages in behalf of the appellant, the trial Judge stated: "It is a pretty close question, I realize that. It is about as slim evidence as you might have to submit the question of fraud on but I think there is something there." The trial Judge based this ruling on the fact that it was customary for an agent to collect the renewal premium, and his failure to do so, in connection with the later refusal of the appellant to accept the premium. *Page 167 
Of course it is obvious that the refusal of the appellant to accept the premium when tendered, as set forth in the opinion of Mr. Justice Fishburne, and when no liability under the policy had arisen in the interim, can in no wise affect the issue now under discussion. In other words, if the respondent had tendered the renewal premium prior to or on May 1, 1943, the renewal date, and the appellant had refused to accept same, the legal issue would be the same. The appellant did not refuse to accept the renewal premium because it was not tendered or paid prior to or on the date due, but because of its bona fide belief that it had a legal right to refuse to renew the policy under the terms of the contract of insurance and the construction which had been placed on this clause in its contract, and similar clauses in other insurance contracts, by the Courts of last resort in several States.
Upholding the right of this identical appellant, and other insurance companies having a similar clause in their contracts of insurance, to refuse renewal premiums on this class of term insurance, we find the following cases which we have read with persuasive interest: Prescott v. Mutual BenefitHealth  Accident Ass'n (Fla.), 183 So., 311; Davis v. MutualBen. Health  Accident Ass'n (Okla.), 34 P.2d 579;Mutual Ben. Health  Accident Ass'n v. Caver (Miss.),152 So., 897; Smith v. Mutual Benefit Health  Accident Ass'n, (D.C. Okla.), 10 F. Supp. 110; Vicars v. Mutual BenefitHealth  Accident Ass'n, 259 Ky., 13, 81 S.W.2d 874;Elliott v. Business Men's Assur. Co., Ohio,11 N.E.2d 203; Washington Nat. Ins. Co. v. Phinizy (Ga.),175 S.E., 387. Citation of additional cases is unnecessary. We find no decisions holding contrary to the above-cited cases, and none has been called to our attention.
The fact that the clause in the contract of insurance making it optional with the appellant if it would accept a renewal premium is not printed on the first page of the policy of insurance, *Page 168 
and the further fact that it is not printed in as large or bold type as some portions of the said first page, are apparently relied upon as evidence of fraud at the inception of the contract of insurance. It would not be feasible to print the entire contract on one page, and irrespective of which page of the contract this clause appears, it is still a part thereof; and is in no wise obscured.
The two cases particularly discussed in the opinion of Mr. Justice Fishburne, the Prescott case, a Florida case, and the Lyon case, a Federal case, are both strong and well-reasoned cases in favor of the view that the insurance company had the right to refuse to accept a renewal premium. He says with reference to the Lyon case that it is "persuasive", although the Court, in the proper exercise of independent judgment, is not disposed to accept its conclusions. Certainly our own case of Schultz v. Benefit Ass'nRy. Employees, 175 S.C. 182, 178 S.E., 867, is quite different, for there the policy was clearly labelled "Non-cancellable."
In the absence of a prior decision by the Courts of this State construing a policy similar to that in question, it does not seem to me that the ends of justice would be subserved by holding that the insurance company is liable for and can be mulcted in punitive damages.
As Justice Woods well said in the case of Ex Parte Hollman,79 S.C. 9, 15, 60 S.E., 19, 22, 21 L.R.A. (N.S.), 242, 14 Ann. Cas., 1105:
"Willful and unjust failure to perform a contract does not necessarily connote fraud. Bad faith is the test. One may wilfully or intentionally abandon a contract under a bonafide claim of right without being subject to the charge of fraud, though in fact the other party had not impaired his right to require performance." *Page 169 
And in the case of Gwynn v. Citizens' Telephone Co., 69 S.C. 434,48 S.E., 460, 67 L.R.A., 111, 104 Am. St., Rep., 819, it was held that an act based on the belief that it was legal and done for the sole purpose of protecting actor's right, would not subject the actor to vindictive or punitive damages. Even in a case of willful trespass or other willful tort, if the same was committed under a bona fide claim of legal right, although a mistaken claim, no punitive damages can be recovered. See Walker v. Glenn, 124 S.C. 501,117 S.E., 723.
A similar principle is that punitive damages are not recoverable where a defendant in good faith acts under the advice of counsel. The rule is thus stated in 15 Am. Jur., 726. "Exemplary damages are not recoverable against a defendant who acts in good faith and under the advice of counsel."
If the respondent really desired this policy of insurance, instead of suing for damages, he had the alternate remedy of going into a court of equity to have it declared that he was entitled to a continuation of the policy, and under the opinion of Mr. Justice Fishburne affirming the judgment for actual damages, the respondent would have been entitled to this relief.
The trial Judge correctly charged the jury: "If you find the policy was wrongfully cancelled by the defendant, under a simple mistake or under a misapprehension as to the plaintiff's rights, the defendant would be liable for the actual damages that the plaintiff suffered but for no further damages than that." However, when under the facts of this case and the contract of insurance he also submitted to the jury the issue of punitive damages, it is my opinion that he committed error. *Page 170 
The judgment of the lower Court is reversed as to punitive damages, and the case remanded for entry of judgment in favor of the appellant as to such damages.
MESSRS. ASSOCIATE JUSTICES TAYLOR and OXNER concur.