General American Life Ins. Co. v. Anderson

Decision Date24 June 1946
Docket Number9995.,No. 9994,9994
Citation156 F.2d 615
PartiesGENERAL AMERICAN LIFE INS. CO. v. ANDERSON. ANDERSON v. GENERAL AMERICAN LIFE INS. CO.
CourtU.S. Court of Appeals — Sixth Circuit

COPYRIGHT MATERIAL OMITTED

Wm. Marshall Bullitt, of Louisville, Ky., (Bullitt & Middleton, of Louisville, Ky., of counsel; R. Lee Blackwell, and Eugene B. Cochran, both of Louisville, Ky., on the brief), for General American Life Ins. Co.

Robert S. Marx, of Cincinnati, Ohio, (Nichols, Wood, Marx & Ginter, of Cincinnati, Ohio, of counsel; Frank E. Wood, and Harry Kasfir, both of Cincinnati, Ohio, on the brief), for A. M. Anderson.

Before SIMONS, ALLEN, and McALLISTER, Circuit Judges.

McALLISTER, Circuit Judge.

After fifteen years of litigation, embracing three trials in the District Court, this case now comes to us on its third appeal in this court. Missouri State Life Insurance Co. v. Keyes, D.C.W.D.Ky., 46 F.Supp. 181; Anderson v. Missouri State Life Ins. Co., 6 Cir., 69 F.2d 794; General American Life Insurance Co. v. Anderson, D.C.W.D.Ky., 46 F.Supp. 189; Anderson v. General American Life Insurance Co., 6 Cir., 141 F.2d 898; and the judgment from which appeal is here taken, rendered February 16, 1945, in General American Life Insurance Co. v. Anderson.

The controversy has had a lengthy and involved history both in the District Court for the Western District of Kentucky and in this court. At its commencement, the case turned upon the question whether plaintiff trustee's predecessor, Missouri State Life Insurance Company, was entitled to a creditor's claim in the amount of $500,000 against the insolvent National Bank of Kentucky, by virtue of two notes which it held in the amount of $250,000 each. The receiver of the bank disputed the claim of the insurance company, and proceeded, before adjudication of its claim, to pay 77% in dividends to other creditors on claims both prior and subsequent in point of time to the claim of the insurance company.

On the first trial of the case, the District Court decided in favor of the insurance company's claim, on the basis of the opening statement of counsel. On appeal, that judgment was reversed on the ground that the court should have allowed evidence to be introduced upon various issues raised by the defendant. Before the case could be retried, the judge before whom the first hearing was held, died, and there ensued a long delay in the proceedings. Finally, however, the case was again tried before a judge subsequently appointed, who entered judgment in favor of the insurance company but denied interest on the delayed dividends. That court, however, found that the company was nevertheless entitled to the dividends. This judgment was thereafter sustained on appeal, except for the determination on the question of interest, and on that phase of the case, it was remanded to the District Court with instructions to enter judgment for the General American Life Insurance Company for 6% interest on the delayed dividends, from the date when like dividends were paid to the other creditors of the bank up to the date when the dividends should be paid to the insurance company. However, the District Court, in the opinion on appeal, was further instructed to abate "interest for such periods as may be found to have been consumed as a result of inexcusable delay of attorneys for the insurance company in prosecuting its claim and in filing required briefs; and also interest shall be abated for a period of six months from the date our mandate herein is received and filed in the district court, which is deemed a reasonable time for determination of the issue for which the cause is remanded." Anderson v. General American Life Insurance Co., 6 Cir., 141 F.2d 898, 911.

Pursuant to these instructions, the District Court held hearings and heard arguments on the question of abatement of interest, and on February 16, 1945, entered a judgment abating interest on the delayed dividends for the periods: from March 2, 1939, to December 14, 1940, in the amount of $41,619.58; from December 14, 1940, to February 3, 1941, in the amount of $3,250.53; from September 11, 1942, to December 16, 1942, in the amount of $6,182.39; and from July 20, 1944, to January 20, 1945, in the amount of $11,663.69 — or a total abatement of interest in the amount of $62,716.19.

Plaintiff's chief contention is that the insurance company's right to interest on the two delayed dividends was an absolute right; that such interest was recoverable as of right for the reason that it was both statutory and contractual in nature; that there is no discretion lodged in the court to deny or abate any part of the interest; and that this court was in error in its judgment on the second appeal in supposing that there was any power in the court to abate interest for delay in the prosecution of the suit. Plaintiff declares that this court, therefore, should disengage itself from everything that it has heretofore said on the subject of abatement of interest for delay on the part of the insurance company in prosecuting its claim to judgment, and direct the entry of a judgment for full interest on the delayed dividends from the date when like dividends were paid to the other creditors of the bank.

Plaintiff did not appeal from the prior decision of this court or file petition for rehearing. In seeking to reverse the judgment of the District Court, plaintiff asks us to reverse likewise the prior decision of this court contrary to the doctrine that the decision of an appellate court in a given case is the law of that case and that no question therein decided will be considered in a subsequent appeal in that case. This rule of "the law of the case," is a salutary rule, necessary as a matter of policy in order to end litigation. It is based upon the ground that "there would be no end to a suit if every obstinate litigant could, by repeated appeals compel a court to listen to criticisms on their opinions, or speculate of chances from changes in its members." Roberts v. Cooper, 20 How. 467, 481, 15 L.Ed. 969; and it would be impossible for an appellate court to perform its duties satisfactorily and efficiently if a question once considered and decided by it were to be litigated anew in the same case upon any and every subsequent appeal. Great Western Telegraph Co. v. Burnham, 162 U.S. 339, 344. But, as was said by this court in Chesapeake & Ohio Ry. Co. v. McKell, 6 Cir., 209 F. 514, 516, "we find no occasion to doubt the abstract power of an appellate court, upon a second review, to reach a result inconsistent with its decision on the first review of the same case (Messinger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 56 L.Ed. 1152); but this is a power to be exercised very sparingly, and only under extraordinary conditions. The practice that such a decision be treated as the law of the case, to be followed by the appellate court itself as well as by the trial court, is most salutary, and its violation (save in rare exceptions) would intolerably unsettle all litigation." The power of an appellate court to review questions involved in a former decision and reach a different result may not be rightly exercised except in a very clear case. Williams v. Order of Commercial Travelers of America, 6 Cir., 41 F.2d 745.

In this case, there was a definite determination on the last appeal, that, upon remand to the District Court, interest should be abated upon the delayed dividends for such period of time as might be found to have been consumed as a result of inexcusable delay on the part of counsel for the insurance company in prosecuting its claim. The District Court proceeded to abate interest in conformity to the directions of this court, and, certainly, except in case of extraordinary circumstances such as clear mistake or gross and manifest injustice, its action in compliance with our instructions, should not be questioned on a second appeal. People of State of Illinois ex rel. Hunt v. Illinois; Central Railroad Co., 184 U.S. 77, 22 S.Ct. 300, 46 L.Ed. 440; United States v. Camou, 184 U.S. 572, 22 S.Ct. 505, 46 L.Ed. 694. Yet, because of the fact that the insurance company bases its chief claim on appeal upon the asserted error of law of this court in directing abatement of interest upon findings of the company's inexcusable delay in prosecuting its claim, we turn briefly to consider our prior determination. "This court," says the insurance company, "has absolutely no discretion whatever to allow, to withhold, or to abate (interest). Upon that rock, General American builds its house."

The basis for the foregoing contention, as has been observed, is that the interest became part of the debt, and that the obligation of the receiver to pay interest on delayed dividends was (1) statutory — being implied by the very nature of his promise to make a ratable distribution to creditors (12 U.S.C.A. § 194)1; and, (2) contractual.

From an examination of the language of the statute, we are unable to agree with the reasoning that deduces that the receiver was therein directed or obliged to pay interest on the delayed dividends.

With regard to the contention that the obligation to pay interest on the delayed dividends was contractual in nature, and that, therefore, the interest became part of the debt and could not be separated from it and abated, we have again reviewed the authorities cited by counsel for the insurance company. On this point, the receiver insists that interest on the delayed dividends is not contractual in nature, but, rather, is allowable, on the theory of damages for the withholding of the funds from the insurance company, and may, therefore, be abated in whole or in part for the fault or self-imposed delay of the claimant in prosecuting its suit. There seems to be no question that if the interest in this case on the delayed dividends is allowable as damages for withholding funds, the court may abate such interest or portions thereof for inexcusable...

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