THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.
Submitted December 1, 2010
Russell Campbell, Jr. appeals from the trial court's denial of his motion for judgment notwithstanding the verdict, a new trial, and sentence reconsideration. Campbell argues the trial court erred in: (1) allowing the admission of expert opinion testimony; (2) not dismissing the indictment for obtaining money or other property; (3) not charging the incontestability insurance statute; and (4) not directing a verdict for Campbell. We affirm.1
The Richland County Grand Jury indicted Campbell for obtaining property by false pretenses and making a false statement or misrepresentation. The indictments alleged Campbell provided false information on an application for life insurance for Russell Campbell, Sr., Campbell's father (Father), with the intent to defraud Auto-Owners Life Insurance Company (Auto-Owners). The State asserted Campbell signed the applications. Father lived two years and eight months after the issuance of the policy, and upon his death, Campbell received $50,159.74.
Prior to trial, Campbell moved to quash the indictment alleging he obtained property by false pretenses on the ground that a life insurance policy is not money, valuable security, chattel, or real or personal property. The State asserted Campbell not only obtained the policy and collected the proceeds after Father's death, but the policy itself was a valuable security because other companies purchase life insurance policies before the death of the insured. The court denied Campbell's motion, finding the broad statutory language encompassed the right to receive benefits from a life insurance policy. At the conclusion of the State's case, Campbell moved for a directed verdict on both charges, arguing (1) there was no evidence the Auto-Owners' policy had any cash value at the time the company issued the policy; (2) the State could not rely on the fact that Campbell received the policy proceeds because the policy was incontestable under state law; and (3) the policy's effective date preceded the application date, thus Auto-Owners did not rely on it to issue the policy. The court denied the motion, finding the evidence went beyond mere conjecture or suspicion, and there was evidence that reasonably tended to prove Campbell's guilt.
After a three-day trial, the jury found Campbell guilty of both charges. The court sentenced Campbell to three years imprisonment and ordered him to pay $50,159.74 in restitution for the charge of making a false statement or misrepresentation, and ten years imprisonment, suspended on the service of three years with five years' probation for the charge of obtaining property by false pretenses. Campbell filed a motion for judgment notwithstanding the verdict, a new trial, and sentence reconsideration. The court denied Campbell's motion. This appeal followed.
Standard of Review
In criminal cases, the appellate court sits to review errors of law only and is bound by the trial court's factual findings unless they are clearly erroneous. State v. Wilson, 345 S.C. 1, 5-6, 545 S.E.2d 827, 829 (2001). Thus, on review, the appellate court is limited to determining whether the trial judge abused his discretion. Id. An abuse of discretion occurs when the court's decision is unsupported by the evidence or controlled by an error of law. State v. Garrett, 350 S.C. 613, 619, 567 S.E.2d 523, 526 (Ct. App. 2002).
I. Expert Opinion
Campbell argues the trial court erred in allowing expert opinion testimony by the investigating officer because it was hearsay. We disagree.
Joe Jordan, an officer with the State Law Enforcement Division, testified he learned in his investigation that the insurance companies would not have issued the policies if they had known Father's true medical condition. He also testified he sent copies of the application to the handwriting analysis unit and learned the signature on the application belonged to Campbell. Campbell objected on the ground of hearsay. However, the court held matters learned in the course of an investigation were admissible.
Rule 801(c), SCRE, defines hearsay as "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." See State v. Vick, 384 S.C. 189, 199, 682 S.E.2d 275, 280 (Ct. App. 2009) (stating the "rule against hearsay prohibits the admission of evidence of an out of court statement by someone other than the person testifying[,] which is used to prove the truth of the matter asserted"); but see State v. Thompson, 352 S.C. 552, 558, 575 S.E.2d 77, 81 (Ct. App. 2003) (holding an out of court statement is not hearsay if it is offered for the limited purpose of explaining why a government investigation was undertaken).
Assuming without deciding that Jordan's testimony was hearsay, "the improper admission of hearsay testimony constitutes reversible error only when the admission causes prejudice." Vick, 384 S.C. at 199, 682 S.E.2d at 280. "Error is harmless when it could not reasonably have affected the result of the trial." Id. "[T]he admission of improper hearsay evidence is harmless where the evidence is merely cumulative to other evidence." Id. at 199-200, 682 S.E.2d at 280.
Scott Brown, assistant manager at Auto-Owners, testified that Auto-Owners issues a policy if all the medical questions on the application are answered "no," and denies the application if any of the answers are "yes." A forensic handwriting expert also testified he examined the signature on the Auto-Owners application and determined Campbell "probably" signed Father's name as the proposed insured. Therefore, we find Jordan's testimony was merely cumulative to the other evidence presented at trial, and any error in allowing the admission of Jordan's testimony was harmless.
Campbell argues the court erred in not dismissing the indictment for obtaining money or other property because a life insurance policy is not property. We disagree.
The indictment reads: "Campbell, Jr. did in Richland County on or about July 11, 2002, with intent to cheat and defraud the victim, Auto-Owners Life Insurance Company, obtain a life insurance policy on his father, Russell Campbell, Sr., valued at more than five thousand dollars ($5,000.00), by means of false pretenses and false representations. This is in direct violation of § 16-13-240 of the South Carolina Code of Laws (1976), as amended." Section 16-13-240 of the South Carolina Code makes it a crime for any person to obtain from another person by false pretense or representation "any chattel, money, valuable security, or other property, real or personal, with intent to cheat and defraud a person of that property." S.C. Code Ann. § 16-13-240 (2003).
At trial, Campbell moved to dismiss the indictment for obtaining property by false pretenses on the ground that a life insurance policy is a chose in action, not real or personal property. The State argued Campbell received the policy and the money from the policy, and the policy itself was a valuable security because other companies purchase life insurance policies before the death of the insured. The court denied Campbell's motion, finding the broad definition of property includes the right to receive insurance benefits.
In support of his argument that choses in action are not considered property, Campbell cites to Brown v. Brown, 279 S.C. 116, 302 S.E.2d 860 (1983), and Tiffault v. Tiffault, 303 S.C. 391, 401 S.E.2d 157 (1991). In Tiffault, the court overruled Brown and held that vested military retirement benefits constitute property, which is subject to equitable distribution. 303 S.C. at 392, 401 S.E.2d at 158. Further, in Ball v. Ball, 312 S.C. 31, 33-34, 430 S.E.2d 533, 534-35 (Ct. App. 1993), this court, in determining that non-vested pension rights are marital property, held South Carolina courts construe the term "property" very broadly, and it "is a general term that is used to designate a right of ownership and it includes every subject of whatever nature upon which the right of ownership can legally attach, including choses in action." Thus, our courts have determined choses in action are property, and we find the court did not err in denying Campbell's motion to dismiss the indictment for obtaining property by false pretenses.
III. Insurance Application
Campbell argues the court erred in failing to direct a verdict because the insurance company issued the policy prior to the date of the alleged fraudulent application, and thus, the application could not form the basis for the fraudulent intent to receive a policy. We disagree.
The trial court is concerned with the existence or nonexistence of evidence, not its weight, when ruling on a motion for a directed verdict. State v. Brannon, 388 S.C. 498, 501, 697 S.E.2d 593, 595 (2010). The defendant is entitled to a directed verdict if the State fails to produce evidence of the offense charged. Id. "When reviewing a denial of a directed verdict, this court views the evidence and all reasonable inferences in the light most favorable to the nonmoving party." Id.
Campbell asserts the application for insurance was dated July 11, 2002, yet the policy was issued on June 28, 2002. Therefore, Campbell maintains the application, dated after the insurance company issued the policy, could not have affected the company's decision to issue the policy.
Campbell contacted an insurance agent on June 28, 2002, to purchase a life insurance policy on Father. Campbell sought to purchase a term life insurance policy, but the agent mistakenly sent him an application for whole life insurance. Brown testified the company received the application for whole life insurance from Campbell via facsimile on June 28, 2002, and the original document with the premium payment on July 8, 2002. Campbell submitted an amended application on July 11, 2002, for a five-year term policy for $50,000. Auto-Owners processed the five-year term policy naming Campbell as the beneficiary on July 15, 2002, with an effective date of June 28, 2002. The company backdated the policy because Campbell had submitted the premium payment with the June 28, 2002 application. Campbell testified he supplied the information for the June 28, 2002 application, and the July 11, 2002 application contained the same information.
In both applications, Campbell indicated Father had no medical conditions, when Father had significant health issues, including cardiovascular disease and breathing difficulties, had suffered a stroke, and required assistance to do routine activities, such as dressing himself, eating, bathing, using the bathroom, and moving around.2 Father was also a smoker, and the applications indicated he was not. A nursing home admitted Father on July 5, 2002, due to his deteriorating medical condition, and Campbell signed the admission documents because Father was physically and mentally unable to participate in the admission process.3 Brown testified that Auto-Owners issues a policy if all the medical questions on the application are answered "no," and denies the application if any of the answers are "yes."
Therefore, sufficient evidence exists from which the jury could find the insurance company based the June 28, 2002 insurance policy on the July 11, 2002 application, and we find the court did not err in denying Campbell's motion for directed verdict.
IV. Incontestable Insurance Statute
Campbell argues the court erred in not charging the jury on the incontestability insurance statute because it directly affects whether his receipt of money was undeserved.4 We disagree.
The trial court's duty is to give a requested instruction that correctly states the law applicable to the issues and is supported by the evidence. State v. Dickey, 380 S.C. 384, 395, 669 S.E.2d 917, 923 (Ct. App. 2008). The court's refusal to give a requested jury charge must be both erroneous and prejudicial to the defendant to warrant reversal. Id. The failure to give one side's requested instructions is not prejudicial if the instructions given to the jury afford the proper test for determining the issues. Id.
In Blackwell v. United Insurance Co. of America, our supreme court stated an incontestable clause "means only this, that within the limits of the coverage the policy shall stand, unaffected by any defense that it was invalid from its inception, or thereafter became invalid by reason of a condition broken." 231 S.C. 535, 538-39, 99 S.E.2d 414, 416 (1957) (quoting Metropolitan Life Ins. Co. v. Conway, 169 N.E. 642, 642 (N.Y. 1930)). In Livingston v. Mutual Beneficial Life Insurance Co., our supreme court explained the effect of the incontestable clause:
The "incontestable clause" relates to the validity of the contract of insurance. It does not affect the construction of the terms of the contract. . . . The incontestable clause "controls all matters which would have the effect of defeating or destroying the contract of life insurance, such as those relating to the cause of death or the habits of the insured, although it will not control matters which affect the remedy merely."
173 S.C. 87, 88, 174 S.E. 900, 901 (1934) (citation omitted).
At trial, Campbell requested a jury charge on the incontestable statute, but the court denied the request, finding the incontestability was between the insured and the carrier and the court should not charge a civil statute in a criminal matter. Campbell asserts that under the incontestable insurance statute, even if some of his answers on the application were false, Auto-Owners must pay Campbell the policy proceeds because Father lived two years after he signed the application.
The State charged Campbell with making a false statement or misrepresentation in violation of section 38-55-540 of the South Carolina Code, which is a criminal statute found in the Omnibus Insurance Fraud and Reporting Immunity Act. S.C. Code Ann. § 38-55-510 to 590 (2002 & Supp. 2010). Section 38-55-520 provides the purpose of the Act "is to confront aggressively the problem of insurance fraud in South Carolina[,] . . . to prescribe penalties for insurance fraud[, and] . . . to establish a division within the Office of the Attorney General to prosecute insurance fraud . . . ." S.C. Code Ann. § 38-55-520 (2002). The Act does not provide any time limitations on criminal actions for insurance fraud.
In contrast, the incontestability clause is between the insured and the carrier, and is a civil statute. The issue in this case is not whether the insurance company paid the policy, but is whether Campbell provided false information to obtain the policy in the first place. If the court applied the incontestability clause to a case for insurance fraud, it would inject civil law into a criminal proceeding. It also would allow an insured to make a false statement on an insurance application with no consequence if the insured lives more than two years after an insurance company issues a policy, which is contradictory to the intent of the Omnibus Insurance Fraud and Reporting Immunity Act. Therefore, we find the court did not err in denying Campbell's request to charge the jury on the incontestable statute.
V. Value of Life Insurance Policy
Campbell argues the court erred in not directing a verdict for Campbell because the policy had no cash value at the time Auto-Owners issued it, and the policy's value is measured at the time of receipt. We disagree.
The trial court is concerned with the existence or nonexistence of evidence, not its weight, when ruling on a motion for a directed verdict. Brannon, 388 S.C. at 501, 697 S.E.2d at 595. The defendant is entitled to a directed verdict if the State fails to produce evidence of the offense charged. Id. "When reviewing a denial of a directed verdict, this court views the evidence and all reasonable inferences in the light most favorable to the nonmoving party." Id.
Campbell argues the indictments allege the wrongful act was the filling out of the application and the receipt of the policy; however, he asserts there is no evidence the policy had any value at that time. Campbell maintains the only evidence of value is that two years and eight months after the time alleged in the indictment, when Father passed away, the insurance company paid the policy proceeds. He asserts that neither indictment alleges his receipt of the policy money was wrongful. Therefore, Campbell argues the court should have granted his motion for directed verdict.
Denise Miller, the owner of a viatical and life settlement provider, testified her company purchased life insurance policies for a percentage of the death benefit, and in 2005, a broker brought her six policies on Father to consider purchasing. Miller's company obtained Father's medical records and got an independent opinion that Father's life expectancy was only three months. Therefore, Miller advised the broker that it would not be in the family's best interest to sell the policies, but the broker said Campbell wanted to sell them anyway. Campbell completed the purchase contract and returned it to Miller with the original policies and applications. Miller's company then initiated an investigation and discovered significant inconsistencies in Father's medical condition and the applications. When Miller contacted Campbell about the inconsistencies, he stated they had completed the applications "to the best of their abilities." Campbell also told her it was beyond the two-year suicide and contestable periods, so the insurance companies would still pay the policy proceeds. Miller told Campbell she was unwilling to complete the purchase, and she notified the appropriate authorities of the potential fraud.
Therefore, sufficient evidence exists from which a jury could find the Auto-Owners policy had value from the date the company issued the policy, and we find the court did not err in denying Campbell's motion for directed verdict.
Accordingly, the trial court's order is
FEW, C.J., SHORT and WILLIAMS, JJ., concur.
1. We decide this case without oral argument pursuant to Rule 215, SCACR.
2. The insurance agent testified Campbell told her Father was still working in the landscaping business, and he lived in Columbia. Campbell never mentioned Father was ill or living in a nursing home in McCormick County. She also testified she had no knowledge anyone other than Father signed the applications.
3. The admission nurse testified that Campbell was very knowledgeable about Father's condition and his needs.
4. In his brief, Campbell cites to section 38-63-200 of the South Carolina Code; however, this section does not exist. Thus, we assume he meant to cite section 38-63-220(d), which mandates that insurance policies must contain "a provision that the policy . . . [is] incontestable as to the truth of the application for insurance and to the representations of the insured individual after they have been in force during the lifetime of the insured for a period of two years from their date of issue." S.C. Code Ann. § 38-63-220(d) (2002).