212 La. 234

#### PICARD v. MUTUAL LIFE INS. CO. OF NEW YORK.

No. 38246.

Supreme Court of Louisiana

Nov. 12, 1946.

On Rehearing June 16, 1947.

Rehearing Denied July 3, 1947.

Richard B. Montgomery, Jr., of’New Orleans (Louis W. Dawson, of New York City, of counsel), for appellant.

Monroe & Lemann, of New Orleans, Walter Lemann, of Donaldsonville, and Walter J. Suthon, Jr., of New Orleans, for plaintiff-appellee.

ICENNON, Justice.

Plaintiff, holder of three insurance policies with the defendant, had been collecting monthly permanent total disability benefits for more than 10 years prior to March *7841944. Alleging that Picard was not totally-disabled and had not been so since January 1, 1936, the defendant' company, in April 1944, discontinued payments and entered suit in the Federal Court, praying for refunds and requesting a declaratory judgment as to whether the insured was totally and permanently disabled within the provisions of the policy. Picard filed a counterclaim in the Federal Court, seeking judgment for disability benefits from March 1944, with penalties and attorney’s fees under Act No. 310 of 1910. The jury in the Federal Court gave Picard disability benefits to April 1, 1945 (date of judgment) denying him penalties and attorney’s fees. Each party perfected an appeal to the United States Circuit Court of Appeals and in August 1945, while the Federal Court appeals were pending, Picard, exercising the right reserved to him in the Federal Court judgment, filed the suit now before us for the monthly benefits that had accrued since the date of that judgment, and prayed for penalties and attorney’s fees under Act No. 310 of 1910. After a denial of the company’s plea that the trial of the case should be delayed pending the decision on its appeal in the Federal Court, the State district court awarded judgment in favor of Picard for the monthly disability payments sued for, plus penalties and attorney’s fees.The present appeal is from that judgment.

Since the trial of the case in the State district court, the United States Court of Appeals, 5 Cir., 155 F.2d 105, with one judge dissenting, has affirmed the district court judgment, monthly payments are now being made to Picard as they accrue, and appellant here has conceded that there is no further contest on the monthly payments covered by the State judgment. Therefore, the only question now before this Court is whether or not the State district court was correct in awarding penalties and attorney’s fees under Act No.. 310 of 1910.

Appellant’s contention here is that the judgment of the United States District Court denying penalties and attorney’s fees is res adjudicata as to all questions except as to whether or not the insurance company was reasonable in refusing to pay until a final decision in the Federal Court, and cites authorities that a matter once determined in a Federal Court is res adjudicata as to this same matter between the same parties in a State court. We concede the principle of law set forth in the cases cited but our examination of the record of the case before us — and of the Federal Court record, which was introduced in evidence and by stipulation became part of the State proceedings — does not lead us to the conclusion that the Federal Court judgment is res adjudicata on the question before us, namely, whether defendant is responsible for the 1945 penalties and attorney’s fees for which it has been cast.

The payments for which Picard received judgment under his counterclaim in the federal proceedings began with the month of April, 1944. The judgment states that “ * * * there is reserved to defendant Henry M. Picard the right to sue for any disability income payments claimed by him to be due, and not paid, accruing after April 1, Í945, the date of the accrual of the last disability income payment merged in this judgment.”

The Federal Court judgment did not award or deny plaintiff any penalties under the Act of 1910 or even any monthly benefits under the policy for any time after *April 1, 1945.*However, the April 1, 1945 Federal Court judgment did in paragraph 3, provide: “That the demand of defendant Henry M. Picard for statutory penalties and attorney’s fees be' and it is hereby rejected.”

At first glance, it would seem highly persuasive, if not binding, in making a decision as to whether penalties were due for the months of April, May, June and July, 1945, that a Federal Jury should have rejected the same penalties, etc., for the period up to April 1, *1945.*However, a study of the Federal Court record shows that the issue of whether or not the company should be condemned to pay the penalties and attorney’s fees was based completely upon the situation of Picard and the status of his records, etc., with the insurance company as of April, *1944.*

The company had read to the Federal Jury a stipulation containing the following:

> *785“ * * * if Mr. McKinley of the Mutual Life Insurance Company were present on the stand, that he would testify that he had before him (April 1, 1944) the various documents that were offered in evidence, the physician’s report, certain forms which were filled out by Mr. Picard, and that the only knowledge that he had of the case was that which had been derived from the record and *after inspection by Mr. Schew-maker and his report,*it was decided to discontinue disability benefits. * * * ” (Emphasis and parenthesis by author of this opinion.)

The Federal judge ' charged the jury thaf they should disregard, in determining whether penalties, etc., were due, any information or advice that came to the company after *April, 1944.*We quote from that charge:

> “ * * * The date as of which you will determine whether the insurance company had just and reasonable grounds for contesting its liability for these disability benefit payments would be thirty days after April 1, 1944, the due date of the first installment it refused to pay. Any information or advice that came to the company more than thirty days *after April 1, 1944,*should not be considered by you in determining its liability for statutory penalties and attorney’s fees.”

Therefore, the verdict of the jury on penalties, etc., though rendered in 1945, must be considered as binding, either legally or for persuasive effect, as to what reasonable and justifiable grounds for refusing payment were in possession of the company in April, *1944.*

The question presented in the State court —and now before us for review — was whether penalties are due for May, June and July, *1945,*and whether or not the defendant company had just and reasonable justification for refusing to make those payments as of April, 1945. In the Federal Court the defendant elected to offer considerable testimony, reports and documents, including one more than 25 pages long — for the sole purpose of showing the jury that their Mr. McKinley — apparently the representative of the company who made the decision in 1944 to discontinue the Picard payments — had just and reasonable grounds for recommending that the payments stop and under the judge’s charge to the jury that they should not consider — in determining whether penalties should be assessed — “any information or advice that came to the insurance company more than thirty days after April 1, 1944”, it follows that the jury’s verdict would not be a safe guide — or even purport to be an indication of what the jury itself thought — as to the reasonableness or justness of the company’s position in refusing to pay payments as of April, 1945, after the company had had a year in which to continue its investigation, which no doubt was intensified just prior to the trial of the case and after the company’s attorneys and agents had been present during and participated in a three day hearing in court and heard a jury’s decision that Picard was permanently and totally disabled within the meaning of his policies.

Our study of the record and consideration of the applicable law convinces us that penalties were properly awarded in the District Court. The record sustained the finding of the district judge that the plaintiff suffered a heart attack in 1927 and that he was confined to the Touro Infirmary for the same condition in 1931, where his condition was diagnosed by Doctors Brown and Simon as “partial heart block, myocarditis, hypertropic arthritis and reflex cardiospasm.”

In the trial of the case the surviving one of these two doctors testified that Mr. Picard was not then in a position to resume his occupation without danger to his heart and that increased activity would likely provoke “more attacks of cardiospasm.” It is true that plaintiff was able — to give a limited amount of supervision to a wholesale oil business, the physical effort involved 'being carried on by employees other than plaintiff, but the evidence shows that the operation of this business is inconsequential as compared to the extremely active life he led prior to the beginning of his disability when, at one and the same time, he was active in the operation of the plantation store, the su*786pervision of cultivation of crops of cane, cotton and corn, the handling of the general business of the plantation owning •corporation with its tenants, including keeping and collection of accounts as well as the operation of the cotton gin during the fall season.

In 1945 the sole business connection was with the wholesale oil company. While he made a substantial income, this was accomplished with little physical and business effort, due to his being owner of the business, including the franchise for the bulk sale of Standard Oil products, the good will of his customers and the fact that he had capable employees. Plaintiff made trips every few days from his home in Baton Rouge to the trade area near Gonzales or to the Standard Oil Refinery near Baton Rouge, but he has not since 1931 operated his own automobile and an employee or some member of his family served as chauffeur on his trips.

Louisiana has accepted the well-recognized rule that total disability contemplated by an insurance policy does not require, in order for recovery to be had, that the insured be rendered absolutely helpless, but rather that the disability should render him unable to perform the substantial and material acts of his business or occupation in the usual and customary way.

The facts of this case are such as to entitle the plaintiff to penalties and attorney’s fees under the well-established jurisprudence of this State. Bankson v. Mutual Benefit Health & Accident Ass’n, 208 La. 1008, 24 So.2d 59; Campasi v. Mutual Benefit Health & Accident Ass’n, 207 La. 758, 22 So.2d 55; Harris v. New York Life Ins. Co., 195 La. 853, 197 So. 579 and Stern v. New York Life Ins. Co., 186 La. 381, 172 So. 426.

This holding is in harmony with the conclusion of the Federal Court of Appeals, .which while declining, under federal rules, to disturb the jury verdict, stated: “If this were a case of first impression, we would be inclined to grant penalties against plaintiff and charge it with an attorney’s fee. Mutual Life Ins. Co. v. Daigle, 5 Cir., 142 F.2d 1000, 1003.” Mutual Life Ins. Co. v. Picard, 5 Cir., 155 F.2d 105, 107.

The judgment of the District Court is affirmed with costs.

HAMITER, J., dissents.

PONDER, J., absent.

HAMITER, Justice

(dissenting).

The insured’s cause of action in this suit is identical with that urged by him in the Federal Court case, it being based on the insurance company’s refusal in April, 1944, to make monthly payments, under the provisions of three insurance policies, for ari alleged continuing disability that commenced in 1931 from a heart attack suffered in 1927. Thus, both causes present the primary single question of whether or not the insured in April, 1944, was disabled within the meaning and intendment of the policies’ provisions. Of course, each contains an issue respecting the' awarding of statutory penalties and attorneys fees, but it is incidental to the principal demand for payment of insurance proceeds.

When the insurance company, as was it's privilege, perfected a suspensive appeal to the Federal Circuit Court of Appeals from the Federal District Count’s judgment (an award to the insured of monthly payments but a rejection of his claim for penalties and attorneys fees) only that appellate tribunal had the right, in my opinion, to consider and pass upon the insured’s mentioned cause of action, including the incidental demand. Hence, I maintain that the trial and decision of the instant case by the state district court (both of which occurred during the pendency of such appeal) should have awaited the outcome of the proceedings in the Federal Circuit Court of Appeals.

The latter court ultimately affirmed the judgment of the Federal District Court. Whereupon (immediately on the affirmance becoming final), the insurance company tendered to the insured the amount of all monthly payments due under the policies to that date, including those covered by the single cause of action of both *787the instant suit and the Federal Court case; but the tender was refused.

If this tender had been accepted by the insured and thereafter the insurance company had refused to make further payments there would have arisen another and a different cause of action,- one arising out of this second or last refusal; however, such is not the case before us'. Here we have a cause of action predicated on the refusal of April, 1944, which with respect to the incidental demand for penalties and attorneys fees was decided unfavorably for the insured by the Federal District Court and, on a suspensive appeal, by the Federal Circuit Court of Appeals. Whether the final decision was correct or not we have no right to express an opinion; a matter once finally determined in a Federal court is res adjudicata as to this same matter between the same parties in the state court.

A situation very similar in principle existed in State ex rel. Kennington v. Red River Parish School Board, 196 La. 291, 199 So. 123, 125. While there was pending in the Court of Appeal of the Second Circuit of Louisiana on a suspensive appeal, a salary action containing the primary issue of whether or not Mrs. Ken-nington, a school teacher, had been properly and legally discharged by the respondent School Board, she successfully prosecuted contempt proceedings (involving the same primary issue) in the. state district court against the members of that board. In passing upon the litigation under our supervisory powers, we said:

> “There can be little doubt that the effect of the sentence for contempt against the school board and its members would mean that the members must go to jail or pay Mrs. Kennington $505 for salary, which was the subject of the appeal in her second suit.

> “If the Court of Appeal were to hold that Mrs. Kennington was properly discharged by the school board, then the very foundation of the contempt proceedings would be swept away. On the other hand, if the Court of Appeal concluded that Mrs. Kennington was not legally discharged, her status as a teacher would be recognized and the school board’s liability for her salary would be irrevocably fixed. Consequently, it is clear that the identical question of fact and law is presented in both the salary suit and the contempt proceedings.

> “By the force and effect of the perfection of the board’s suspensive appeal in the salary case before the Court of Appeal, Second Circuit, the trial court was thereby legally divested of all jurisdiction over the matters covered by and involved in the sus-pensive appeal, and jurisdiction over these phases of the controversy between the parties was thereby transferred from the trial court to the appellate court. * *

The question of law, and fact presented in the instant case is identical with that in the Federal Court suit, i.e., whether the insured was entitled to monthly insurance benefits for his alleged disability existing in April, 1944, and further whether the insurer’s refusal then to make payments was on just and reasonable grounds. While the Federal Court case was pending on a suspensive appeal to the Federal Circuit Court of Appeals, only that court had jurisdiction to determine the question. And when the decision was rendered and became final, it served to-forever foreclose the issue involved and, hence, is res adjudicata.

Of no moment is the fact that the monthly payments sought to be recovered in this suit are not the same as those in the Federal Court case. The insurance company is not denying liability for certain or particular monthly payments; what it denies, and what is important -here, is its primary liability under the provisions of the policies for any and all payments.

Until this primary liability is determined by a court of last resort, the company is entitled to have stayed further proceedings under the policies; and for this purpose the law grants to it a right to a suspensive appeal. In this connection the following comment concerning the effect of a suspensive appeal, fo'und in State ex rel. George Ingram v. Judge of Sixth Judicial District Court, 20 La.Ann. 529, is appropriate :

> ■ “We find therefore, that the right to some sort of appeal, in a case like the present, exists, and we cannot discover *788any provision of law which prevents such appeal from being taken in the suspensive form. A careful examination of art. 564, 565, 575 and 580 of the Code of Practicei shows that the right to a suspensive appeal is the rule, and that it stays proceedings, except in cases specially excepted.

> “It is true, as urged by respondent, that inconveniences may result from such stay of proceedings. The ‘law’s delay’ is generally inconvenient for á plaintiff. But we think the inconveniences of the opposite course would be still greater.”

The conclusion announced in the majority opinion will, I think, lead to continuous litigation and to hardships pending the outcome of an action to determine the insurer’s primary liability under policies stipulating monthly disability benefits. During the pendency of the action, whether in the trial court or on appeal, the assured can institute suit after suit on monthly payments as they accrue, in which event the company must either satisfy each judicial demand as it is made or be cast forj penalties and attorneys fees on each if it is unsuccessful at the conclusion of the trial of the first action. Should payments be made as the new suits are instituted, the insurer runs the risk of recovering the funds so paid if and when final judgment in the original action is favorable to it.

The authorities cited in support of the majority conclusion are not appropriate. They concern merely the primary liability of the insurer; they in no manner relate to the rights of the parties litigant during the pendency of a suspensive appeal.

Therefore, I respectfully dissent.

On Rehearing.

HAMITER, Justice.

The appeal in this case, perfected by the defendant insurance company, was from a judgment awarding to plaintiff four monthly disability payments (May 1, 1945 to August 1, 1945, both dates inclusive) under the provisions of three policies of insurance issued by that company, and also awarding to him statutory penalties and attorney’s fees for the insurer’s refusal to make the payments.

Subsequent to defendant’s taking the appeal, the Federal Circuit Court of Appeals (Fifth Circuit) 155 F.2d 105 affirmed a judgment of the Federal District Court which granted to plaintiff previous monthly disability payments (April 1, 1944 to April 1, 1945, both dates inclusive) under the provisions of the same three policies and for the same continuing disability, but which rejected his demands- for statutory penalties and attorney’s fees. As a consequence of that affirmance, the defendant insurer (appellant) now concedes liability for the monthly payments involved herein; but it disputes plaintiff’s claim for the penalties and attorney’s fees.

Much of the factual situation of this litigation is well stated in the brief of plaintiff’s counsel, and from it we quote the following:

> “This is the second suit between these litigants on claims of this character under these policies. In 1931, some twelve years after the issuance of the policies, plaintiff filed a disability claim-on account of ill health, consisting chiefly of a heart ailment, which sharply restricted his business and working activities. Defendant recognized this claim and paid the stipulated monthly income payments continuously from 1931 down through and including the payments due on March 1, 1944. Defendant then challenged plaintiff’s claim and, in April, 1944, filed suit against plaintiff in the United States District Court at Baton Rouge, seeking an adjudication that plaintiff was no longer disabled and was not entitled to any further monthly income payments.

> “Plaintiff, as defendant in that suit, counterclaimed for monthly income payments together with statutory penalties and attorney’s fees under Act No. 310 of 1910. We refer to that suit as the Federal Court Suit.

> “The trial of the Federal Court Suit, before a jury resulted in a verdict for the insured (plaintiff herein) for monthly payments, and a verdict against him on his demand for statutory penalties and attorney’s fees. The judgment entered upon this verdict was affirmed by the United States Cir*789cuit Court of Appeals for the Fifth Circuit, upon appeals by both litigants; see Mutual Life Ins. Co. of New York v. Picard, 155 F.2d 105. Judge Sibley dissented as to that portion of the judgment awarding recovery of the monthly income payments. The opinion of the court in that case outlines and summarizes the factual and legal basis for the recognized disability claims of plaintiff.

> “The recovery had by plaintiff in the Federal Court Suit consisted of the monthly income payments, at the rate of $280.00 per month, during the period from April 1, 1944, to April 1, 1945, and inclusive of both of those dates. That case was tried before a jury in April, 1945, and the judgment rendered on the verdict comprehended all monthly payments accruing from the date of stoppage of payments up to the date of trial. While the Federal Court Suit was pending on appeal, the present suit was filed in the State District Court at Baton Rouge on August 24, 1945, seeking recovery of the four monthly income payments of $280.00 each accruing in the interval between that date and the period embraced in the judgment which had been rendered in the Federal Court Suit, together with statutory penalties of $280.00 each on the first three of these monthly income payments which (if recoverable) were in default for more than thirty days when the present suit was filed, and statutory attorney’s fees in the amount of $150.00.

> “Defendant first unsuccessfully sought to stay the present suit on aceount of the prior institution and pendency of the Federal Court Suit. Then, under an agreement of counsel, the present suit was tried upon the record of the Federal Court Suit plus whatever additional testimony either party elected to offer. Not much additional testimony was presented, and the factual case here is substantially that presented in the Federal Court Suit.

> “The present case was argued and submitted in the District Court while the appeals were pending in the Federal Court Suit and before the argument on those appeals. After the Federal Court Suit had been argued and submitted in the Fifth Circuit Court of Appeals, but before decision there, the District Judge rendered judgment in the present suit in favor of plaintiff for all items demanded. He filed a written opinion stating his reasons for this judgment on each branch of the case (Tr., pp. 27-50). The appeal of defendant in the present suit was taken before decision on appeal in the Federal Court Suit, but this appeal was perfected through the filing of the transcript here after the decision on appeal in the Federal Court Suit had been rendered and had become final.”

Supplementary to the quoted statement, it is appropriate to point out that the appeal of the insurance company in the Federal Court case was perfected as a super-sedeas, being the same as a suspensive appeal in this court, and sufficient bond was posted.

Moreover, as appears from a stipulation of counsel (with attached exhibits) filed here, when the Federal Court judgment became final the insurer paid to the insured the full amount recovered thereunder; and immediately thereafter (within 30 days after the Circuit Court of Appeals’ mandate was forwarded to the Federal District Court) it tendered to the plaintiff payment for all monthly benefits under the policies (including interest thereon) due to that date. This tender, which was refused, covered the four.monthly installments claimed in.this action. It covered also payments from September 1, 1945, to July 1, 1946 (both dates inclusive), which form the basis of another or third suit, instituted in the District Court of East Baton Rouge Parish subsequent to the commencement of the present action, wherein plaintiff is claiming, in addition to the mentioned monthly benefits, statutory penalties of $2,-800 and attorney’s fees in the amount of $2,500.

Since there is no contest in this suit now relative to liability for the four monthly payments involved (this was conceded following the affirmance of the Federal District Court’s judgment), the only question to be determined is whether or not defendant is obliged to pay the statutory penalties and attorney’s fees demanded.

In resisting the payment defense counsel maintain that, the Federal District Court *790judgment denying penalties and attorney’s fees is res judicata as to all questions, except perhaps as to whether or not the insurer was reasonable in taking a suspen-sive appeal from it and in refusing to pay until a final decision.

The insurer acted reasonably, in our opinion, in appealing suspensively from the judgment. Clearly, its appeal was not frivolous. The jury had just returned its verdict rejecting the insured’s demand for penalties and attorney’s fees, made pursuant to the provisions of Act No. 310 of 1910, which verdict necessarily was based on a finding of fact that the insurer’s delay in making payment and its litigating the claim was not, to quote the words of the statute, “ * * * without just and reasonable grounds such as to put a reasonable and prudent business man on his guard.” Furthermore, on the appeal one of the members of the court (Judge Sib-ley), as shown by his lengthy dissenting opinion, favored not only the rejecting of that demand but also the rejecting of the main demand for disability benefits. Said he in part:

> “The jury refused to award penalty and attorney’s fees, thereby finding there ‘were just and reasonable’ grounds for not promptly making the disability payments in *controversy.*If they had been more accurately instructed by the judge they might easily have found that the payments are not owing. * * * ”

> ******

> “In the present case there is abundant evidence amounting almost to demonstration that Picard is carrying on a new business amounting to a substantial occupation, though not his main occupation when he became ill. If so, the insurance company does not have to continue to pay disability benefits under its contract nor continue to carry the life insurance without premiums. The charges given and refused which dealt with this matter are I think reversible error.”

Additionally, appeals, when not frivolous, are favored by the law. Of course, a stay of proceeding may be generally inconvenient for a plaintiff; but if not stayed the inconveniences for the opposing litigant would be much greater. State ex rel. George Ingram v. Judge of Sixth Judicial District Court, 20 La.Ann. 529.

It appearing, therefore, that the insurer was reasonable in taking the suspensive appeal, we proceed to determine the effect of the Federal Court judgment, especially with reference to whether it was res judi-cata to the demand now under consideration.

On this proposition plaintiff’s counsel,, in their brief, say:

> “Defendant in its answer (Article XIV; Tr. p. 20) pleads the judgment in its favor in the Federal Court Suit on this issue as res adjudicata against the demand for penalties and attorney’s fees in the-present suit. While the affirmance on appeal in the Federal Court Suit has made that judgment final and res adjudicata as-to our demand for the period involved in that suit, we submit that this plea of res adjudicata is wholly without merit as to-our demand for the later period involved in the present suit.

> “While this judgment pleaded as res ad-judicata was rendered in a Federal Court,, the case in which it was rendered involved no substantive question of Federal law and' was in the Federal Courts solely under diversity-of-citizenship jurisdiction. The settled rule in that situation is that the effect of the Federal Court judgment as res adjudicata is determined, not by the Federal law, but by the law of the State in which the Federal Court rendering the-judgment sits. Hence, the effect in the present suit of the judgment in the Federal Court Suit as res adjudicata is governed by the law of Louisiana, rather than-by any rule of Federal law. * * *

> ******

> “The issue on the plea of res adjudicata is accordingly to be determined by the effect which would be attributable to the-judgment in the prior suit as res adjudi-cata, under the law of Louisiana, if the prior suit, in lieu of being in the Federal Courts, had been in the Louisiana State-Courts. * * * ”

Preliminary to a discussion of this-issue, it is well to observe that the state district court was not deprived of its juris*791diction of the present suit by the pendency on appeal of the Federal Court action (this is contrary to an observation made in error by the writer in his dissenting opinion on the original hearing). As said in Kline v. Burke Construction Company, 260 U.S. 226, 43 S.Ct. 79, 81, 67 L.Ed. 226, 24 A.L.R. 1077, “Each court is free to proceed in its own way and in its own time, without reference to the proceedings in the other court.” But the further comment is found in that case that, “Whenever a judgment is rendered in one of the courts and pleaded in the other, the effect of that judgment is to be determined by the application of the principles of res adjudicata by the court in which the action is still pending in the orderly exercise of its jurisdiction, as it would determine any other question of fact or law arising in the progress of the case.” Thus, while the state district court had the right 'to proceed with the case in its own way, the Federal Court judgment (on becoming final) had the effect of precluding the Louisiana courts from adjudging whatever thing was thereby adjudged.

To test a judgment under the doctrine of res judicata governing in Louisiana, consideration, as plaintiff’s counsel point out, must be given to the provisions of Civil Code, Article 2286, reading:

> “The authority of the thing adjudged takes place only with respect to what was the object of the judgment. The thing demanded must be the same; the demand must be founded on the same cause of action; the demand must be between the same parties, and formed by them against each other in the same quality.”

Unquestionably, the demands of both the state and federal court actions are between the same parties and are formed* by them against each other in the same quality. Furthermore, the demands made in this case, both the main (monthly payments) and incidental (penalties and attorney’s fees), are founded on the same cause of action as those in the Federal Court suit. The cause of action in each arises out of the insurer’s refusal in April, 1944, and its continuing refusal thereafter, to make monthly payments under the terms and provisions of its three insurance policies for an alleged continuing disability that commenced in 1931. After that cause of action was finally adjudicated favorably for plaintiff in the Federal Court, defendant not only paid the amount of the judgment rendered but it also tendered (the tender was refused) all other monthly payments accruing to that date, including those involved here. True, pending the Federal Court apt peal, the insurer defended this action on the merits, after its plea of lis pendens had been overruled; but, on being forced to make such defense, it was contesting its primary or initial liability under the policies (plaintiff’s cause of action), not the amount due for particular installments.

This brings us to the third and final requisite of the test, it' being that the thing demanded must be the same. As to this, plaintiff’s counsel, to again quote from their brief, argue:

> “The plea of res adjudicata here does not come within the codal requisites in that, as to penalties and attorney’s fees, the ‘thing demanded’ in the Federal Court Suit and the ‘thing demanded’ in the present suit are not the same. The rejected demand for statutory penalties and attorney’s fees in the Federal Court Suit was for statutory penalties on the thirteen monthly income payments recovered in that suit, being the payments due on the first day of each of the thirteen months in the period from April 1, 1944, to April 1, 1945, and inclusive of both of these dates, and for statutory attorney’s fees for enforcing the payment of those particular monthly income payments (see pp. 29-32 of the printed record in the Federal Court Suit setting forth these specific demands in the counterclaim). The demand for statutory penalties and attorney’s fees in the present suit, for which plaintiff had judgment below, is for statutory penalties on three of the four monthly income payments sued for and recovered herein, being the payments due on May 1, 1945, June 1, 1945; and July 1, 1945, and for statutory attorney’s fees for enforcing the payment of those particular monthly income payments (Tr„ pp. 11,12).

> “The statutory penalties sued for in the present suit had not even accrued, and were *792still in futuro, when the Federal Court Suit was tried in April, 1945, and when the claims and demands of the insured down to the date of that trial were merged in the verdict returned by the jury and in the judgment entered on that verdict on May 24, 1945 (see pp. 537-539 of the printed record in the Federal Court Suit). Plaintiff’s claim to the first statutory penalty demanded in the present suit did not even accrue until May 31, 1945, when defendant was in default for thirty days as to payment of the monthly income payment due on May 1, 1945. This was several days after judgment hád been entered on the verdict of the jury in the Federal Court Suit.”

Counsel’s argument, in our opinion, overlooks two important factors, these being (1) that the claim for statutory penalties and attorney’s fees is merely incidental to and dependent on the main demand for disability benefits, and (2) that in essence the main demand in each suit is for payments under the same policies for a continuing disability, and it arises out of defendant’s continuing refusal to pay which commenced in April, 1944. What is involved in both is only the right of plaintiff to recover for his continuing disability (not for any particular month or months), as well as the right of the insurer to deny payment until the dispute concerning that disability has been litigated and determined by a final judgment. For plaintiff to recover in the two suits, both on the main demand and the incidental demand, he must show initial and primary liability of the insurer under the policies and that the latter did not have just and reasonable grounds for refusing originally to pay. Here the disability claimed is not separable; neither is the refusal to pay. The disability . alleged on in both cases is a continuing one, and it gives rise to a continuing, refusal to make payment. The situation would be different if the cases concerned separate and distinct disabilities of separate and independent refusals to pay; but they do not.

In the brief of plaintiff’s counsel it is further argued:

> “The lack of identity as to the ‘thing demanded’ in the "Federal Court Suit and in the present suit, with respect to statutory penalties and attorney’s fees, is also demonstrated by the holding in State v. American Sugar Refining Co., 108 La. 603, 32 So. 965, that, on account of lack of identity as to this essential element, a judgment adjudicating the liability of a particular taxpayer for a particular tax in one year is not res adjudicata as to such liability in a subsequent year. * * *”

In the American Sugar Refining Company case thus cited, the court, in passing-upon the issue of the identity of the thing demanded, applied the test of whether the previous demand had been decided on a. question of law or on a question of fact.. Having found that only a question of law was the basis for the judgment pleaded,, it held the plea of res judicata to be without, merit. Had the question been one of fact,, the holding clearly infers, res judicata, would have been sustained. Said the court [108 La. 603, 32 So. 966]: “* * * there can be no objection to litigating a second time a question of law, provided the litigation is in connection with different facts.”'

The issue respecting penalties and attorney’s fees in the cases under consideration-is purely and solely one of fact — whether-the insurer had just and reasonable grounds-for refusing to pay plaintiff’s continuing disability claim. And the facts surrounding that issue are the same as is evidenced by-the litigants’ act of having tried this case almost wholly on the record of the previous, litigation. As to the trial in the state district court, plaintiff’s counsel say that, “Not-much additional testimony was presented,, and the factual case here is substantially that presented in the Federal- Court Suit.”'

An able analysis of the American Sugar-Refining ’Company case, as well as an excellent discussion of the distinction made-therein (for applying the doctrine of res-judicata) between a judgment determining, a question of' law and one adjudicating a, factual issue, is found in Carpenter v. Metropolitan Life Insurance Company, La.App., 167 So. 223, 226. Therein the-plaintiff sued for monthly insurance payments and the defendant pleaded in bar of" the action a judgment in a previous suit, involving the same policy but different month- - *793ly installments, which had decreed the contract no longer in existence. The court correctly sustained the plea of res judicata, pointing out that the issue in the two suits was identical and was strictly one of fact, and also commenting as follows:

> “It is settled by the jurisprudence that a court has the right to reconsider questions of law previously determined between the same parties, provided that the thing demanded has come into existence at a different time from the thing demanded in the prior litigation.

> “But, where the dispute has been determined on questions of fact, the principle of res ad judicata precludes the. court from entertaining it again, even though the thing demanded may not be identical with relation to the time of accrual as the thing demanded in the first suit. If it were otherwise, actions involving the same subject-matter between the same parties relating only to questions of fact might be brought and tried over and over again to the harassment, expense, and disadvantage of the litigant who was successful in the first instance.”

Further, in the course of the opinion in the Carpenter case, the following appropriate quotation from Carpentier et du Saint, vol. 2, page 92, is given:

> “ ‘It should be laid down in principle that if a right has been affirmed or denied in a •suit, there would be the necessary identity of object, if in a new suit there is put into •question the same right, even though the dispute be as to a consequence which has not been passed upon in the original suit.’ ”

The particular monthly installments, attorney’s fees and penalties demanded in this suit were not passed on in the Federal Court action, it is true; but they are only a consequence of the right of the insured to recover at all under the policies for his •alleged continuing disability, and that right, which was disputed by defendant, has previously been adjudicated on and determined.

If the Federal Court judgment had rejected plaintiff’s main demand for monthly benefits instead of sustaining it, the judgment, obviously] would have foreclosed plaintiff’s right to recover the monthly payments claimed in this suit; for, according to the allegations of the petition, they are asserted for the same continuing disability, arise out of the same refusal to pay, and are founded on the provisions of the same three policies. That being true, necessarily no recovery for attorney’s fees and penalties could be had here either; they are only incidental to and dependent on the main demand and fall with it. All of which argues favorably for the proposition that the two suits contain an identity of object.

Our conclusion is, therefore, that there is present here an identity of the thing demanded, and that res judicata, within the intendment and contemplation of Civil Code, Article 2286, bars plaintiff’s claim for statutory penalties and attorney’s fees.

Near the close of their brief, plaintiff’s counsel state:

“Undoubtedly, the insurer had the right to take the appeal which it took in the Federal Court Suit and to hope that this appeal would eventuate in a favorable result. However, the recent decisions of this Court in Campasi v. Mutual Benefit Health & Accident Ass’n. [207 La. 758, 22 So.2d 55] and Bankson v. Mutual Benefit Health & Accident Ass’n [208 La. 1008, 24 So.2d 59], cited and quoted, supra, show that the right of the insurer to litigate and the hope of the insurer that litigation would produce favorable results to it, do not protect against the risk of liability for statutory penalties and attorney’s fees — do not entitle it to conduct such litigation in effect ‘at the expense of the assured’, as this Court has expressed it, — unless it acts ‘upon just and reasonable grounds’. Under this decision, more than the mere privilege of a litigant to pursue his legal remedies to the bitter end, and to press to final judicial determination any contention which he may desire to present, must be shown in order to relieve the ultimately unsuccessful insurer litigant of liability for statutory penalties and attorney’s fees. (Brackets ours)

A casual reading of the cited cases discloses that they are not opposite here. Each concerned, in a single suit, only the primary liability of the insurance company and its responsibility for an unreasonable *794delay in paying the claim. Neither involved, as does the present action, the right of the insurer to withhold payment pending a determination, on a suspensive appeal in another action, of its obligation under the contract of insurance.

To sustain the position and theory of plaintiff in this case is to render ineffectual defendant’s suspensive appeal in the Federal Court, thereby destroying the status quo of the suit. State ex rel. Kennington v. Red River Parish School Board, 196 La. 291, 199 So. 123. Too, such a holding would lead to continuous litigation and to hardships pending the outcome of an action to determine the insurer’s primary liability for a continuing disability under policies stipulating monthly benefits. Thus, during the pendency of the action on a suspensive appeal, the insured could institute suit after suit on the monthly installments as they accrue (just as has been done under the instant policies, for three different suits have been filed) in which event the company must either settle each judicial demand as it is made or be cast for penalties and attorney’s fees on all if and when it is held primarily liable. Should payments be made as the new suits are filed, the insurer runs the risk of recovering the funds so paid in the event final judgment in the original action be favorable to it.

But even if defendant’s plea of res judicata were without merit, plaintiff, for another reason, is not entitled to recover the statutory penalties and attorney’s fees demanded in this action. The record does not show that defendant’s delay in paying the four monthly installments involved here (May 1, 1945 to August 1, 1945, both dates inclusive) was without just and reasonable grounds such as to put a reasonable and prudent business man on his guard.

This case, as before shown, was tried almost wholly on the evidence adduced at the Federal Court hearing. From that evidence the Federal Court jury found that the defendant was not unreasonable in delaying payment of, and conducting litigation with respect to, the insurance benefits; and that finding, with which we are in accord, was not disturbed on appeal. Moreover, as heretofore pointed out, one of the members of the Federal Circuit Court of Appeals was inclined to the belief that defendant should not even be required to pay the monthly benefits.'

The only additional evidence contained in this record is the testimony, given by depositions, of two physicians (equally prominent), one of whom was offered by plaintiff and the other by defendant. Plaintiff’s expert testified that his evaluation of the insured’s health was essentially the same as at the time he appeared as a witness in the Federal Court trial. He opined,, just as,he had previously, that the insured! was not able to undertake full time working activities, keeping regular hours on every business day. However, when asked r “During that period [1938 to 1945] there has been no change whatever towards his getting worse?”, he replied: “I think that Mr. Picard has actually improved over that period of time in his physical status”'.

Defendant’s expert, on the other hand',, examined the insured on November 16, 1945’ (after the filing of this suit), and it was his. opinion (based on that examination, on electrocardiograms made by him and by others, and on an x-ray), that Mr. Picard, could engage in a sedentary occupation. To the question: “Would you advise him. to do a full day’s work every day?”, he replied: “Yes, I believe he could do a full’ day’s work every day, provided you mean* the usual eight hours of sedentary occupation.” In explaining what is meant by a sedentary occupation he said it included “activities involved in working at an office, or in an office, moving about to and from the office, moving about without hurry to other business contacts, and no activities, requiring heavy lifting or pulling or what would ordinarily be called manual labor. * * * A sedentary occupation usually means that the greater part of the time the man is seated, though he is allowed to walk about and drive his automobile and walk to- and from his business.”

Further, defendant’s expert was questioned, and he answered, as follows:

> “Q. Would you say nervous strain and worry in business would he harmless to Mr. Picard in the condition you found him ? A. I wouldn’t be able to say definitely wheth*795er nervous strain or worry would or would not cause an elevation of Mr. Picard’s blood pressure.

> “Q. Well, getting away from blood pressure, Doctor, and taking his condition generally as you found it, would you say it would be a good idea for him to engage actively in full-time business work, even of a sedentary .nature, that would involve a good deal of nervous strain and worry as to the details of the business and possible arguments with persons with whom he came in contact in a business way? A. Yes; if Mr. Picard were my patient, I would be perfectly willing to allow him to enter into such activity, because I believe that in this type of case very often a certain amount of activity, as I have indicated, causes the individual to be under less emotional stress and strain than if he has nothing at all to do and only himself to think about.”

Clearly the testimony of these two experts does not overcome the conclusion drawn from the evidence adduced in the Federal Court case (on which this action is primarily predicated) that defendant was not without just and reasonable grounds for delaying payment of the monthly disability benefits.

For the reasons assigned (the original decree of this court having been vacated by the granting of the rehearing) it is ordered that the judgment of the district ■court be reversed, annulled and set aside in so far as it awarded to plaintiff statutory penalties and attorney’s fees totaling $990, together with legal interest thereon, and the demand with reference to those items is now rejected. In all other respects the judgment is affirmed. The right to apply for a rehearing is reserved to plaintiff. The costs of this appeal shall be paid by plaintiff.

O’Niell, C. J., concurs in the decree but not in the opinion that the plea of res judicata is well founded.

BOND, J., concurs in the decree.

FOURNET, Justice

(concurring).

I do not subscribe to that part of the majority opinion maintaining the defendant’s plea of res judicata for as was very aptly pointed out in the case of State v. American Sugar Refining Company, 108 La. 603, 32 So. 965, “The law of res judicata is stated with great simplicity and precision by article 2286, Civ.Code, as follows: ‘The authority of the thing adjudged takes place only with respect to what was the object of the judgment. The thing demanded must be the same; the-demand must be founded on the same cause of action; the demand must be between the same parties, and formed by them against each other in the same qualities.’ This formula was borrowed by our Code from the Code Napoleon (article 1351) ; by the Code Napoleon from Pothier, Obligations, No. 889; and by Pothier from the Roman jurisconsults. It brings out with great distinctness the salient feature of the law of res judicata, namely, *the identity that must exist as to thing demanded',*cause of action, and persons in the two suits. * * * ‘The exception of the thing adjudged is stricti ju-ris, and, *if there should he any doubt as to the identity of the things claimed,*or of the persons claiming them, *it cannot be main-*tainedWest v. His Creditors, 3 La.Ann. 529. ‘The plea of res adjudicata is without force, unless the object demanded in the former suit was precisely the same as that demanded in the action pending.’ Edwards v. Ballard, 14 La.Ann. 362. ‘The only test as to the effect of a decree is its finality as to the matters embraced in it, and its having the requisites of article 2265 (2286) of the Civil Code.’ Kellam v. Rippey, 3 La.Ann. [202] 203. ‘The authority of res adjudicata takes place only with respect to what was the object of the judgment.’ Succession of Durnford, 1 La.Ann. 92. * * * *Our court has never wavered, that we know of, in the rigid exaction of the three*unities.” (Italics mine.)

Thus it may be seen that in order for the plea of res judicata to prevail the demand must not only be between the same parties and formed by them against each other in the same qualities, and founded on the same cause of action, but the *"thing demanded must be the same.1’*

With all due respect to the views expressed in the majority opinion, it is impossible for me to conceive how the thing *796demanded in this suit, being *the amounts due*the plaintiff under insurance policies issued by the defendant *for the period beginning1 May 1, md ending July 31, 1945*(with statutory penalties and attorney fees for failure to timely' pay these amounts), can be said to be the same thing demanded by the insured in his reconventional demand *(the amounts due him wider these policies for the period beginning March 1, 1944, and ending March 31, 1945, -with penalties and fees),*in the former suit when the insurer sought a declaratory judgment against the insured in federal court on the question of his total and permanent disability, particularly when the federal court judgment contains the stipulation that *"there is reserved to defendant Henry M. Picard the right to sue for any disability income payments claimed by him to be due, and! not paid, accruing after April 1, 1945,*and date of the accrual of the last disability income payment merged in this judgment.” (Italics mine.)

Thus it may be seen that the monthly payments accruing after April 1, 1945, were not only not adjudicated upon in the judgment pleaded as res judicata but the very rights here sought to be enforced were specifically reserved to the plaintiff in that federal court judgment.

The fact that the insurance company had a right to appeal the decision rendered against it in the federal court and exercised that right has no- bearing on the issue raised by the plea of res judicata in this case now under consideration. , As pointed out in the case of Bankson v. Mutual Benefit Health & Accident Association, 208 La. 1008, 24 So.2d 59, 64, while the insurance company is entitled to its hope that it will ultimately secure a judicial determination in its favor and the hope that the federal court would not follow the Louisiana law with respect to what constitutes total permanent disability but would follow the law as laid down by the federal court in the case of Metropolitan Life Ins. Co. v. Pitcher, 5 Cir., 108 F.2d 621, it was not entitled to these things “at the expense of the assured — except upon just and reasonable grounds.” The judgment on appeal can do nothing except malee final the “thing adjudged.” In my opinion the company’s rights to an appeal can only be considered in determining, on the merits, the reasonableness of the company’s refusal to promptly pay under the policy upon demand in considering the assessment of penalties.

Under- the express provisions of Act No. 310 of 1910 insurance companies in this state are prohibited from delaying payments due the insured more than 30 days after due proof is made (Section 1), where such delay is “without just and reasonable grounds such as to put a reasonable and prudent business man on his guard” (Section 2), under the penalty of paying “double the amount due under the terms of the policy or contract, during the period of delay, with attorney’s fees to be determined by the tribunal before whom suit is instituted.” Section 3.

I do not believe, however, that under the facts of this case it can be said that the insurance company was without just and reasonable grounds in refusing to pay the amounts maturing after the judgment was rendered in the federal court and while the matter was on appeal. For this reason I concur in the decree in ithis case.

HAWTHORNE, Justice

(concurring).

It was my opinion on the original hearing of this case that the plea of res judica-ta should have been overruled under the authority of State v. American Sugar Refining Co., 108 La. 603, 32 So. 965, that case being cited in counsel’s original brief but not mentioned in the original opinion. However, after a careful consideration and further study, I think that case is distinguishable from the instant case, as pointed out in the opinion of the court rendered on rehearing, and that my original position was erroneous. For this reason I now concur in the reasoning and decree as expressed by Mr. Justice Hamiter, the organ of the court.