Court Opinion

ID: 9639358
Source: CourtListenerOpinion
Date Created: 2023-08-22 16:13:54.015453+00
Date Added: 2024-06-11T15:35:27.706841
License: Public Domain

WOODROUGH, Circuit Judge
(dissenting).
The ZEtna Insurance Company, of Hartford, Conn., has issued five insurance policies, in the aggregate amount of $30,000, *699upon the life of one Edwin P. Haworth of Kansas City, in each of which the insured’s wife, Cora M. Haworth, is named as beneficiary. By the terms of the policies the insurance company is bound to the performance of certain obligations towards the insured and the beneficiary in case the insured has become wholly, continuously, and permanently disabled, and will, for life, be unable to perform any work or conduct any business for compensation or profit. One of the policies requires the company, in case of the defined total disability of the insured, to pay the amount of the policy in 20 annual installments, or to pay an annuity according to certain tables. Another policy calls for the payment of an annunity of $50 per month, and in the other three it is provided that the company shall waive the further payments of the premiums during the total disability.
The company has made loans upon each of the policies, and the loans remain unpaid. Premiums have been defaulted and the company claims that the policies have lapsed and it has canceled practically all of the insurance. But the insured claims that he became totally disabled within the meaning of the policy during the period when the policies were kept alive by the payment of *he premiums. lie claims that by reason of his total disability the insurance has not lapsed but is in full force and effect, and he has demanded and continues to demand that the company pay him the installments or annuities called for by two of the policies, and that it maintain the other insurance in force without payment of premiums. The insured- continues to press his demands upon the company by presenting written statements, affidavits, and demands to it at frequent intervals, but, although the insurance company does and at all times has denied that the insured is or has been totally disabled as defined, the insured has not brought suit of any kind against the company. He has a number of years of life expectancy, and after his death the state statute of limitations allows ten years for suit on the policies.
Accordingly, the insurance company filed its petition in equity against the insured and wife in the proper federal court alleging the foregoing facts (greatly amplified) and seeking to obtain a judicial declaration under the Federal Declaratory Judgment Act of June 14, 1934 (28 U.S.C.A. § 400 and note), that four of the policies have lapsed for nonpayment of premiums and have become null and void and without force and effect, and that under the fifth policy no obligation remains upon the insurance company except to an inconsiderable amount ($45) upon the death of the insured. The defendants moved to dismiss the petition (1) because no “case” or “controversy” was presented; (2) because there was no equity in the bill; and (3) because assumption of jurisdiction would deny defendants’ rights under the Seventh Amendment. The District Court sustained the motion and dismissed the petition. The insurance company appeals.
(1) I think the petition presents a “case” or “controversy” justiciable by the courts of the United States under the decision of the Supreme Court in Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U.S. 249, 53 S.Ct. 345, 346, 77 L.Ed. 730, 87 A.L.R. 1191.
It appeared in that case that tax officers of Tennessee asserted that a certain taxing statute was applicable to the railway company and they demanded payment of the tax in a specified amount and determined to enforce their demand. The railroad company brought suit in the Chancery Court of Tennessee under the Uniform Declaratory Judgments Act of that state to secure judicial declaration that the tax, as applied to the railway company, was- invalid as violative of certain constitutional provisions. Appeal was taken to the Supreme Court of the United States from the decision of the Supreme Court of Tennessee denying the relief prayed by the railway company. In ordering the cause set down for argument, the Supreme Court of the United States invited the attention of counsel to the question “whether a case or controversy is presented, in view of the nature of the proceedings in the state courts.” The court stated that if no “case” or “controversy” was presented for decision it was without power to review the decree of the court below. After argument the court concluded that the proceeding was between adverse parties seeking determination of legal rights upon facts alleged in the bill and admitted by demurrer; that the railway company was, not attempting to secure an abstract determination of the validity of a statute or an advisory decision on what the law would be on an uncertain or hypothetical state of facts, but that valuable legal rights asserted by the railway company and threatened with imminent in*700vasion by the state officers would be directly affected to a specific and substantial degree by the decision of the question of law; and that the question presented “lends itself to judicial determination” and is “of the kind which this court traditionally decides.” The court recalled that “while the ordinary course of judicial procedure results in a judgment requiring an award of process or execution to carry it into effect, such relief is not an indispensable adjunct to the exercise of the judicial function.” It declared that the Constitution did not crystallize the procedure of 1789 into changeless form, and that the court was not precluded from exercising its powers by the mere form of procedure “so long as the case retains the essentials of an adversary proceeding, involving a real, not a hypothetical, controversy, which is finally determined by the judgment below.” The decision of the Supreme Court was that a case was presented which was justiciable in the United States Supreme Court under the Federal Constitution.
It seems to me that by the same reasoning the petition herein also presents the essentials of an adversary proceeding and involves a real, not a hypothetical, controversy and one that may be settled by judicial declaration. The question presented, whether the insured is totally disabled as defined, is one “that lends itself to a judicial determination” and is “of the kind which courts traditionally decide.” It is true that the question presented for decision is a question of fact and not a question of law, as in the case of Nashville, C. & St. L. Ry. Co. v. Wallace, supra, but the Declaratory Judgment Act specifically provides for judicial declaration upon a question of fact as well as upon a question of law. 28 U.S.C.A. § 400 (3). The controlling consideration is that “rights” or “other legal relations” can be settled by judicial declaration upon the question, whether the question is one of law or fact.
The controversy here is whether the legal relation of insurer and insured exists between the parties to the suit, together with the attendant rights, duties, and privileges. Such relation did exist for many years and was fully recognized by both parties. Was it terminated by the failure to pay premiums or continued by total disability? The issue is not vague or indefinite. But it is argued that as the insured never has sued the company it may be that neither he nor the beneficiary ever will sue, so that there is no imminent invasion of any legal right of the insurance company by the insured; and, along the same line of thought, it is said that all the insurance company needs to do is to maintain reserves to meet the claims on the policies if such claims are ever made and established, which, it is said, involves little more than bookkeeping entries that will not substantially affect the company’s investments.
There is a sense in which it may be said that the TEtna Company can carry the $30,000 of insurance in issue herein for the period of the insured’s life expectancy and for years beyond without much overt action other than making some entries in its books of account. In the same sense, it can be said of an automobile manufacturer that his delivering a car or two more or less is a matter of blowing the factory whistle a few minutes sooner or later. Where mass enterprise is concerned, overt effort upon the single unit seems slight. But rightly considered, a life insurance company exists to insure lives and its profit is the excess of income over cost. It will cost the company to insure Haworth for $30,000 through the coming years, and, if the allegations of the petition are true, the company will be obliged to incur such cost and such cost will be irreparably lost to the company.
Although it is possible that ultimately the company might never be sued on the policies, the threat appears to me nonetheless imminent because litigation is being deferred during the lifetime of the insured and perhaps may further be deferred into the period of the statute of limitations. But there is a present, clearly-defined claim of right on both sides. The threat to the company’s right is imminent in the controlling sense that it is practically certain to materialize in action; being deferred in point of time merely, to the detriment and increased vexation of the company. The insured demands present payment of certain sums and makes present demand that certain insurance be maintained. There is an alleged determination to hold the company to certain obligations, indistinguishable from the alleged determination of the taxing officers in Tennessee to hold th.e railway company as set forth in the Wallace Case. That case is completely controlling.
In the later case of Ashwander v. T. V. A., 297 U.S. 288, 56 S.Ct. 466, 80 L.Ed. 688, the Supreme Court epitomizes its prior deT cisions applicable to the question of what *701constitutes a “case” or “controversy” justiciable in the federal courts. (297 U.S. 288, 56 S.Ct. 466, loc. cits. 472, 473, 80 L.Ed. 688). Neither the d'ecision itself nor any of those referred to therein qualify or restrict the doctrine of the Wallace Case. Muskrat v. United States, 219 U.S. 346, 31 S.Ct. 250, 55 L.Ed. 246; Liberty Warehouse Company v. Grannis, 273 U.S. 70, 47 S.Ct. 282, 71 L.Ed. 541; Willing v. Chicago Auditorium Ass’n, 277 U.S. 274, 48 S.Ct. 507, 72 L.Ed. 880; Nashville, C. & St. L. Ry. Co. v. Wallace, supra; State of New Jersey v. Sargent, 269 U.S. 328, 46 S.Ct. 122, 70 L.Ed. 289; State of New York v. Illinois, 274 U.S. 488, 47 S.Ct. 661, 71 L.Ed. 1164; United States v. State of West Virginia, 295 U.S. 463, 55 S.Ct. 789, 79 L.Ed. 1546; State of Arizona v. California, 283 U.S. 423, 51 S.Ct. 522, 75 L.Ed. 1154. It is made perfectly clear by the court that “the judicial power does not extend to the determination of abstract questions” and that jurisdiction should not be taken “of issues too vague and ill-defined to admit of judicial determination,” and “that claims based upon ‘assumed potential invasions’ of rights are not enough to warrant judicial intervention.” In the Ashwander Case the conclusion was that the “plaintiffs [as stockholders] had no right to demand that the directors should start a litigation to obtain a general declaration of the unconstitutionality of the Tennessee Valley Authority Act [16 U.S.C.A. § 831 et seq.] in all its bearings or a decision of abstract questions as to the right of the Authority and of the Alabama Power Company in possible contingencies.” It seems to me that no purpose to deny jurisdiction in such a case as is here presented can be inferred from the opinion itself or from the cases cited therein.
It was pointed out in the Wallace opinion that a justiciable “case” or “controversy” could be presented without allegations of irreparable injury.
(2) In this case the loss which will be inflicted upon the insurance company by the continuing assertion of his claims by the insured is “irreparable.” The company will be. obliged by the continuing demands made upon it to treat the policies as contingently in force, and so will incur all the cost of maintaining the insurance. If it finally wins a suit on the policies, or no suit is ever brought, such outlay of expense will be lost.
(3) As the Federal Declaratory Judgment Act fully preserves the right of trial by jury, the motion to dismiss the bill herein was without merit in so far as it was based on alleged denial of rights under the Seventh Amendment to the Constitution. 28 U.S.C.A. § 400 (3).
The decree of the District Court should be reversed.